♪ apple bears francine: fruit, strongest revenue growth since 2015. it is returning more money to shareholders of from its mountains of cash. special counsel robert mueller is considering a subpoena if the president refuses a voluntary interview. decision day for the fed, as inflation bounces back to its 2% target. investors await forward guidance from chair powell. ♪ francine: welcome to bloomberg surveillance. you can see investors, market

participants back after the holidays. the stoxx 600 gaming 0.5%. technology stocks, the dollar is , andr, gains in crude gains in gold. april manufacturing pmi figures as expected around 56.2. we will get a breakdown country by country. coming up on "bloomberg surveillance," we talk tech. a little later we hear what the commerce secretary had to say about tariffs. ge eu in the next hour, m and thes -- let's get to bloomberg first word news with nejra cehic. nejra: prosecutors have made clear to president trump that bob -- robert mueller will consider a subpoena.

according to two current u.s. officials, he has legal standing to subpoena a sitting president even though such a move has never been used. the trump administration is playing down expectations for a breakthrough on trade issues with china as senior officials prepare to visit beijing. the u.s. trade representative, it is a big challenge to resolve differences. by stevejoined mnuchin, larry kudlow, and commerce secretary. ,> china, as you probably know talks a lot about free trade. their behavior is entirely protectionist. much more protectionist than the u.s.. china, it hasg of weakened its currency by more than analysts expected before high-ranking u.s. officials arrive in the country to discuss trade issues. the people's bank of china cut the level, weaker than the

average. the turkish lira has weakened after the credit rating was deteriorating inflation outlook, and the long-term appreciation and volatility of the exchange rate. it put it on a par with brazil and vietnam. that is below where it is rated by moody's and fitch. -- to resolve the irish border question could take years. he was speaking a day before ministers were due today, to discuss how they see britain's trading relationship. negotiate his talks in brussels. they spoke is rolling out a dating feature that will connect people who are not friends.

ceo mark zuckerberg says he wants to help build real long-term relationships, and not just hookups. >> it is totally optional. it is opt in. you can make a dating profile. a lot of you will have questions, so i want to be clear we designed this with privacy and safety in mind from the beginning. your friends will not see your profile. you will only be suggested to people who are not your friends. nejra: global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. i am nejra cehic, this is bloomberg. francine: let's kick off the show with the world's biggest company as apple shares rise. they are in line with industry estimates at $61 billion. that is the biggest revenue

growth since 2015. it sold millions of iphones and is returning more money to shareholders. $100 billion worth. webb, ourned by alex text correspondent. ,lso joining us on set investment director at global equities. thank you both for coming on. alex, investors like the results. it is because forecast for the future or they're getting hard cash back? alex: both essentially. the forecast is not disappointing. the iphone could be an eye nightmare and doing badly but they have spent 150 dollars billion that is getting investors excited. you want to move to a cash neutral position in the next few years. francine: the chief executive is

showering praise on iphone. it is it doing as well as he says it is? alex: he says it is but that is what you expect. they have so many phones across the product palette, it is easy to be the best iphone. they are split between more competition internally. the average sales price missed expectations. $728, it is moving toward lower end models. about facebook. it is launching into dating. match was not too happy about it. alex: facebook has been stealing , the amount of time people spend in the app, they did not release a number for the march quarter. what is happening with the dating operating, and that

demographic that advertisers love. francine: do you like these technology stocks? here, it isappening now what is happening in equity markets. it is less correlation between individual stocks. , now they short-term have not disappointed. they are doing what shareholders want them to do with cash. it looks as though shareholders -- it is interesting to contrast that with what happened with the other technology stocks over the last week. thele looks respectable but market did not take it well. big similarities between these companies. they have been market leaders for the last decade.

theyicipate going forward will be increasing investor differentiation. it is well recognized. will it depend on if they go for driverless cars? driverless car's will be investors worst nightmares. owning fleets of cars is an exposure to diesel -- to depreciation. for apple, it remains a hardware company, the iphone company. they want to get more into services. --1 are ther francine: other parts of it that you like? great earnings trends. these companies have put strong earnings numbers.

they are also quite expensive, and well owned. it is the most popular overweight across a number of different investors that we look at. , itthe good earnings story leaves us equal weight, we are looking for market leadership to come out of other sectors like energy. overall, you are seeing those factors battle it out, and that leaves us neutral. is it possible to model the regulation they may face? that is another uncertainty. anytime company is trading at a multiple, there is a risk if you ,ring in additional uncertainty longer-term, it will get that valuation. i think the bigger challenge for the sector is it is well owned and owned by large segments of the market that have come in with high expectations. we are seeing those expectations

met but not sick exceeded. francine: is there something new and fun and iphones? we would likely see september be the face id, that technology trickle down to the lower models. ipads come out in the early summer. francine: we have a great chart looking at the iphone revenue growth. at theh do you look rivals coming in from china? alex: it is in china that is the problem. aboutre concerned intelligent services might use and access these phones. in china, for the past decade has been apple's biggest growth

market, they see increasing pressure from investors. you can make phones that are as good, but cheaper. younger generations by the chinese brand. apple's ability to compete that will -- compete with that will be crucial. placing icloud services in china, there is movement in that direction. they are hoping it will prop them up. francine: are you looking at is if china will be the holy grail for apple doing well,? ali: asian phone interests is different. one of the reason for g is taking up rapidly in india is because people can buy smartphones for $100. our focus has been more in india. our guests will stay

with us. if you are a bloomberg customer you can watch as on tv . directly using the id function. up next on surveillance, decision day for the fed. inflation bounces back to the 2% target. we will talk central banks. this is bloomberg. ♪

♪ francine: economics, finance, politics. this is "bloomberg surveillance ." i am francine lacqua here in london. despite a strong economy and inflation hitting target, the decision will not be accompanied by a press conference.

for guidance will be the focus for investors. for what investors want from powell, what they want from fmc, still with us is ali miremadi, and andrew sheets. when you look at the fed, what you look at first? the last time you were on i asked if the u.s. economy is overheating, and now we are seeing a slowdown. most interesting thing going into this meeting, the fed has preferred inflationary measure has been below the 2% target for a long time. it is now basically at 2% year over year, and that is happening three quarters before the fed thought it would happen. the key question for this meeting is twofold. how does the fed frame that? and, how much tolerance is therefore and overshoot? there has been a theory, this thinking that because we have missed consecutively and

consistently below our target for inflation, we should be fine missing above it for a while. economists view our is that the fed will be the main point. francine: that me bring up my charts, the probability of more rate hikes in 2018. it goes back to the narrative you were telling us. what happens if there is a yield inversion? a economic slowdown? is it a dilemma for the fed? andrew: i think it is a dilemma. i heard you will not get an inversion of the curve he could the fed would not allow it. they would see it and be afraid. that is not our view how the fed thinks, they're tried to a,'s monetary policy. we have had that inversion in the past, there is a reason to explain it away read you can see that again. we would interpret that version as a troubling sign.

assigned at the bond market is skeptical, but that that can continue the rate hike path they have. this is a bull market, we do not think it is extended by tax policy, technology, or other factors. francine: do you agree with that, that the market is where it should be? ali: we were discussing before we came on that the market is an interesting place with the fed and central-bank guidance in general. the central bank broadly it has produced more uncertainty than the reversed. my view is that the fed set its course 18 months ago. in the absence of radical change, they are probably halfway through the tightening cycle. to see do not allow us

the new set of data, people in the real economy and financial markets would have the greatest confidence. , as the banko much of england governor has established a situation where they have given themselves the option of changing their mind. broadly speaking, what is happening when the economy is doing well? it is important to get rates so they have ammunition to respond when necessary. i don't see any strong reason to disagree with consensus. francine: thank you both. let's get to some of the other stories moving the markets. equity futures are edging lower. special counsel robert mueller has raised the possibility of a subpoena for president trump. the president's lawyers told hasler that the president

no obligation to talk to the investigation into alleged russian meddling in the election. mueller responded saying he could issue a subpoena to have the president appear the four a grand jury. let's get to our senior writer, stephanie baker, who has been following this read what would happen if mueller goes down the subpoena route? >> if trump decides to fight a subpoena, icad extend the investigation four months. certainly pass the november midterm. if trump tries to find it in the court,- fight it in the -- president clinton was issued a subpoena by ken starr, and he eventually relented. he did not fight it in the court to the end. extend the special counsel's investigation. mueller is like we conclude his investigation without a sit down with the president. doesn't change in any

way the special counsel's investigation? it change in any way the special counsel's investigation, the route it is taking? stephanie: it would be difficult politically for the investigation to drag on for that long. there would be -- it would open up opportunities for members of complain that this has dragged on for too long. it gives trump opportunities to challenge it, and say that with hiss interfering ability to do his job as the president. harder.lly, it makes it in terms of the investigation, it makes it harder for mueller to find out what trump's intent was when he took various decisions, the decision to fire fbi director james comey for instance. when he contemplated the firing

of jeff sessions, the attorney general. without the ability to get the president to sit down and explain what his intent and motive was, it would be hard for him to conclude the investigation. much,ne: thank you so stephanie baker, our senior writer following u.s. politics. let's talk trade in paris. the eu is warning of an market uncertainty following the decision to delay aluminum and steel tariffs for another month. the trump administration said it would allow another 30 days for negotiations. brussels says business decisions are already being affected, but washington insists progress is being made. the commerce secretary wilbur ross spoke at the event in beverly hills. reason is we are having productive discussions. we are hopeful we can come to a mutually agreeable solutions

that will protect the national interests, the national security for steel and aluminum. doing overl you be the next month or reach an agreement? >> i have been having --, i cans talk impart they are almost every day. those will continue. >> what do the europeans need to do to get permanent relief? >> the right way to negotiate things is in the conference room, not in the press room. understood, but from the european perspective, they would say the u.s. is making demands that would force them to break wto rules, for instance lower tariffs on imported cars. if they would comply, they would need similar terms of from other

wto countries, in which case, china would be a big beneficiary. howdy respond to that? >> that is really not the case. there are many technicalities. it is an oversupply vacation. oversimplification. example, they have a free-trade agreement with mexico . it clearly can be done. >> one could make the observation that europeans are offended because they are being asked to negotiate in the first place. they feel they are having to do so under threat. the administration is annoyed because they have to go through the eu rather than individual countries. this is a big picture question,

how do you find common ground when the u.s. and europe do not often cii? eye?ten see eye to the european position is the official trade negotiator for all of those countries. does individual countries eventually have to -- francine: how does the trade story play into markets? we are talking with ali miremadi , how much do you worry these tariffs and trade, the tensions will escalate? andrew: i think a couple things are important. the vast majority of economists agree that tariffs see an outcome for all parties involved. you have this other major

challenge that markets do not like uncertainty. a lot of terror of headlines out of the u.s. have been characterized by uncertainty, uncertainty over their size and scope and timing and over whether the timing will be pushed back to react all of that, the market is rightfully right to be uncertain. in terms of the economic impact, we think that will be more modest and play out over a longer periods of time. for the markets, it is the issue of, i do not know the endgame, and i will charge a higher risk premium. francine: what does that mean for monetary policy and the impact it has on equities? ali: it is more apace of acceleration than growth am a which is slowing. in most parts of the world a have had a fantastic few years of growth matrix. with these pmi's in asia and america, that is what we see contraction in the

economy. on trade, these things are hard to price. ultimately, strong companies will do best, whatever the environment. nothing material has happened. it should not enable people to change portfolios yet. francine: how do you choose a strong company? on earnings or forward guidance? when you look at earnings reporting is, investors, how they see the environment in 18 months rather than bank the sales figures they had the last quarter ali:. obvious, andost increase price in most market environments. it is hard to disagree with consensus. almost all economists and thinkers about markets tariffs

will slow global economic growth at the margin and be a negative. you have to think, who will do better? companies that can price products effectively and is a fairolumes, that simplistic definition of a stronger company. also, it is dangerous to overreact to what is largely political theater. notoriously has not read many books, but he has written one area in the book he wrote, he was clear about the way to go about negotiations is by throwing your weight around and making demands. it is obvious what he is doing with the eu. economy,is a smaller he is involved in a transparent process, trying to lean on negotiateountries to

on a bilateral basis. it is possible for us to overreact. francine: for the moment he is picking a fight with china. let me talk about markets and evaluation's. hit it against the 50 day moving average. is this what you are looking at? andrew: i think this is an important chart. our u.s. equity strategy team have been animated that their and thefor the market, market has bounced off that level multiple times. now, that is quite important because i think if you were to arethat fail, you know you going into a summer. where pmi's are declining and inflation is picking up. that is a more difficult environment. we are expecting these levels can hold, and the market can have one more rally. francine: do you think these

levels can hold? earnings on the s&p will be up 10%. it is more richly valued than the major indices. i do not see any reason -- francine: has the european economy peaked? andrew: i do not think so. i think there has been too much they are still describing an economy that is strong. it is a more accurate description that economists and investors got too excited about economic growth in january. actual numbers have missed those estimates. we feel more confident about the durability of the european economy and european economic regions. than in other francine: does it impact your view of european equities? andrew: in that sense, it is one

reason we are positive on europe. i'm not taking it as a reason to sell. i see it as an opportunity that sentiment has francine: we are expecting some figures out of u.k. construction , pmi better than expected for the month of april at 52.5. for the month of april, better than expected. we were expecting 50.5. pound, 1.3644. andrew, if you look at a lot of the data, the u.k. is jumping all over the place. is it difficult to figure out how the real u.k. economy is doing? >> there are a lot of moving parts. you have other factors layering in. you've just started to have the pinch in deductions in people's paychecks coming into effect.

you have large currency swings. you have a lot of uncertainty around brexit negotiations. ultimately our economists still think that you see the bank of england hike this month, but then pause for an extended time. francine: let's talk about politics and get your view on these assets in the u.k. theresa may's government is under more pressure this week. cabinet convenes to further discuss brexit policies after the prime minister lost key allies. talks in brussels today. the irish border still a major sticking point. practical measures to resolve the issue could take years. tomorrow local elections are being held in england. the result can be an indicator of how much support there is for the conservative party. we're also joined by dave,

bloomberg's london bureau chief. david, how big a deal -- are they really wore cabinets? are they tearing each other's eyes out? written isn't technically at war with anyone. of course there is a dispute with brussels. there's also internally. we have the first cabinet meeting today of the inner circle, who are convening to hash out the brexit strategy. this is the first one without the former home secretary. it is interesting to think how that is going to tip the balance. you've been talking about trade just now. it is about the customs union. they've got to sort this out fairly soon. this is going to be on the agenda at the next european council meeting. they've got to come to some sort of strategy that keeps everyone on board.

the reports are that both sides are far apart. francine: what about the local elections, is it a test on whether people want brexit or not? >> local elections, midterm, they tend to be volatile, strong anti-incumbent vote. forexpectations are different outcomes in different parts of the country. labour expect to do well in london. i would caution against reading too much. the conservatives are expecting . badge showing they don't want to blow up their support base as well. i think we can expect nothing too controversial coming out of that cabinet meeting. it doesn't look good to see the cabinet at each other's throats. francine: i don't know how much is the media. do you like u.k. assets? >> i don't think about things

that way. the opportunity would be, logically, people getting pessimistic about brexit, that would only increase the possibility of buying u.k. assets more cheaply. we find more value in the eurozone because the shares are simply cheaper there. , i think it is too easy to argue that a good brexit is bad for the u.k. economy. the pound is already quite low. materially. -- any reasonable expectation, this is going to remain a strong country and economy. found that it

could capitalize on that. francine: andrew, mark carney went to a letter of lengths to reprice the market. is it almost impossible to vote for a hike? andrew: our u.k. economists do think they will go ahead and hike. that is based on that we think the mpc looks several years out and the economy, the labor market does look quite tight. you do have building domestic inflationary pressures and policy well below the neutral rate. we think they hike, but then pause and take stock after that. domesticy, you do have inflationary pressures in the u.k. that are growing and that are going to put pressure on the mpc to raise rates. francine: what will it take to move pound? is there something politically that could move pound? as of -- if we had this

conversation two weeks ago, the pound was close to where it was prior to the brexit vote. u.k. 30 year rates were near lows and the u.k. equity market is arguably the world's least liked equity market. there is a wide range of sentiment on u.k. assets. i think the challenge the pound has is that it did run ahead of those other things and that probably needs to normalize. i think that is one of the reasons we think u.k. rates need to go higher. to get a pounded chart, but i don't think it is the best one. when you look at the war cabinet, it is a great headline saying they are fighting, customs union against the customs union, but will the conservatives come together to make sure there's not a second election? david: this is a very important

question. the polls are still very tight. only just over a year after losing their majority. there are still a range of voices. , maybeaper today urging it is time to silence the critics by having another election. how far can the tory rebels feel they can push theresa may without pushing her over the brink and triggering some sort of crisis -- i think the prime minister's advisers are betting that they won't go that far, that the prime minister can hold the line and get a united response. if you look at the history of what has happened, that has been the pattern. controversy,s of but in the end everybody has

fallen into line. do we need to look into it a little bit more? a lot of our global audience heard about it, but isn't familiar with how bad it could get. she was the home , onetary for a long time of the longest serving home secretaries, when a lot of these policies were put in place. this toxic phrase about a hostile environment seems to have come from her department. she will be hoping the departure of amber red will have taken the sting out of that particular scandal. that is yet to be seen. and the question about her judgment in this whole episode. it hasn't gone away as yet.

this week is going to be about the elections. we can expect more questions to come. francine: thank you so much, david merritt, and ali, and morgan sheets -- andrew sheets from morgan stanley. says costs inered 2018 may be slightly higher. we talk about banking in the u.k. and emerging markets. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." , winter isartered closing in after three years struggling to transform, but the bank still hasn't shaken off

concerns about growth. stephen morris, our u.k. banking reporter, the lead writer on the standard chartered story, joins us. thank you for sticking around. shares initially rose this morning, but now that investors are concerned, they are looking at other things. >> we saw the highest quarterly revenue under bill winters. since junen charge 2015. the shares jumped on optimism they may hit targets. then the cfo spoke to investors. they revealed that costs may rise this year, which has been a perennial issue for them. we've seen a swing in the share price. it is now down about 2.5%. all the same concerns about stability and growth remain. francine: what are they saying

about the outlook? >> it appears a big chunk of their gains was in volatility. it is almost 1/5 of their revenue that comes from their trading business. they said the conditions subsided, much like the other global investment banks. we are looking at cash management, transaction services, the more bread and butter banking. they are already fairly modest. francine: are there any culture problems remaining at the bank? what are you looking at in the next couple of quarters? >> bill winters started a massive campaign to clean up some of the behavior within standard chartered, and it appears some of that hasn't got through. the bank had to replace its global head of compliance for allegations including harassment.

clearly the message hasn't got through. when asked to comment, they said this is a central part of the turnaround of the bank. hopefully they will make some headway on that. francine: ali, do you like banks? banks, is it valuation or because they are going to consolidate at some point? weightings inarge banks, but those are in the eurozone and japan. ,he biggest is unicredit followed by bnp. standard chartered, as long as i can remember, has struggled to control costs. sprawling geographic reach. wheret think of a period they were getting that under control. we have a straightforward and compelling valuation and growth

story. [indiscernible] unicredit, there's always consolidation rumors. see.it is very hard to the future is a struggle. that that hard to see would be allowed to happen. francine: do you like financials? please predict the future. andrew: i think it is a sector that still trades at a very deep discount. it also does have a growth story. long growth in europe is rising. cost inyou are seeing

terms of default still being quite low. yields are higher this year. that is going to be a small boost. francine: thank you all for joining us. stephen morris, our u.k. banking reporter. ali and andrew sheets from morgan stanley. bloomberg users can interact with charts using g tv . andh up on key analysis save charts. take them, use them. this is bloomberg. ♪

economics, finance, and politics. this is "bloomberg surveillance ." let's get to the bloomberg business flash. here's nejra cehic. nejra: apple shares jumped after second-quarter revenue rose 16% on the year. the company sold more than 52

million iphones and announced a new $100 billion stock repurchase plan. the tech giant also gave a bullish revenue forecast. growing at a double-digit number on the year-over-year basis. change andind of with the services that we have now, and others that we are think this is just a huge opportunity. nejra: facebook is rolling out a new dating feature that will help connect people who are not facebook friends. the news sent shares plunging in tender. ceo mark zuckerberg says he wants to help build real long-term relationships. >> it is totally optional. if you want, you can make a dating profile. i know a lot of you have questions about this.

we designed this with privacy and safety in mind from the beginning. your friends aren't going to see your profile. you are only going to be suggested people who are not your friends, who fit your preferences. nejra: a disappointing message from snapchat. the recent shakeup hasn't gone down well. user growth and sales slowed. parent snap says revenue gains will be even smaller. that since shares plunging. ceo evan spiegel says the changes will work eventually. francine: thank you so much. thatarrick's believes special counsel robert mueller to conduct the investigation into alleged meddling by russia. he spoke to bloomberg's erik schatzker at the conference in beverly hills. >> the president has said on a number of occasions that people

keep telling him he needs to fire either the attorney general , deputy attorney general, --cial counsel bob mueller are you one of those people? >> no. i'm not. whenever i give the president advice he reminds me that if he would have listened to me, he would still be on the apprentice. that is the wrong advice. bob mueller is the best pro you could find to do that job. fbi,eton, marine corps, he's rocksolid. allow him to do the job. get this over with. the president knows that he was not culpable of any wrongdoing with regards to russia. it is frustrating to have so ,uch focus constantly on him

but everybody is just doing their job. let it go forward. you've got the best team in front of you to do it. >> who has his ear on this? who is inciting him to say these , and who seems to advance in him the idea that he has to do something about it? >> it is politics. i can assure you, nothing gets under his skin. this man is one of the strongest human beings i've ever seen. it is everything around him. everybody's been loyal. they are all doing the best job they can. it is a complicated matrix of relationships around him. who is the chief of staff? the president. the president dictates his own policy. that is the bottom line. francine: that is tom barrick speaking the bloomberg's erik

schatzker. we are getting some breaking news. this is rocco's capital. if you look at the assets under that have been reported by the group, overtaking brevan howard. okos made profits of about $4 billion between 2002 and 2012. he left in 2012. it is always fun to put them against each other. asos overtaking howard assets under management have grown. plenty more throughout the day. we were talking with andrew sheets of morgan stanley about the u.k. construction pmi and i promised him to look at trade weighted pound. here it is. this is trade weighted pound. we brought it all the way back to 1998.

is this the right and only way we should look at pound? andrew: it is not the only way. valuation is often in the eye of the beholder. is weaker because a number of emerging-market currencies are stronger. pound, think about the valuation is part of it. it is still a cheap currency. is an economy that is running a large current account deficit. interest rates are still near the lowest in the developed world. i think you can create a reasonable case that there should be a valuation discount. francine: like what, euro-dollar? andrew: the euro is a long-term currency town. we like the malaysian ringgit. those are currencies that we

think have better fundamental stories. francine: great pleasure to have you on the program. andrew sheets for morgan stanley. "bloomberg surveillance" continues in the next hour. tom keene joins us out of new york. we will be talking to and richards. we will talk to her about the fed, fomc, and all things brexit. we want to figure out if there's maybe in -- something in it for her. s versusd about roko howard. what comes next? this is bloomberg. ♪

♪ francine: the iphone maker posted the strongest revenue

growth since 2015 and returning more money to shareholders from the mountain of cash. making trump talks, robert mueller is to consider a subpoena if the president refuses an interview. and inflation bounces back to 2% target. investors await guidance from chair power. good morning, everyone. this is "bloomberg surveillance." we had little p.m.i. construction figures, better than expected in the u.k. and looking at economic growth, slowing 0.24% in the euro area and matches estimates. we turn to the u.s. for politics and the fed, tom. tom: the fed has a different mandate. seeing economic looks into this quarter of 3% g.d.p. which is make america again great g.d.p. and he has a different look

than carney. francine: first to taylor rigs. taylor: robert mueller's team is putting the pressure on president trump's lawyers, according to u.s. officials, prosecutors have told the white house if the president does not agree to an interview they would consider a subpoena to compel him to testify and could lead to a prolonged legal fight. policy makers at the federal reserve are expected to leave interest rates unchanged when they wrap up their meeting today. their meeting after inflation rose to 2% in march. it will reinforce expectations of a rate hike next month. china is weakening its currency more than expected before the start of trade talks with the u.s. one strategist says that gives beijing room to strengthen the yuan if needed. officials are arriving to discuss ways to reduce the trade deficit. in the u.k., prime minister

teresa may brexit war cabinet meets today on an explosive issue and have to decide what to do with the future customs arrangement between the u.k. and e.u. if they can't find a satisfactory soon, the u.k. could end up leaving the block with no meaningful deal. global news 24 hours a day and tic-tock on twitter powered more than 2,700 journalists in 120 countries. this is bloomberg. francine and tom? tom: i want to get through it quickly because i have a apple chart to show. the euro 119 per yesterday, a little bit of a rebounder at 120 even. canada, good morning all of you watching in canada. it's an all canada data check. flipped the canada ciprocal and canada renminbi

and sterling for the queen and commonwealth. francine: we welcome all the viewers in canada. they're starting to watch in 45 minutes. i know mark carney is watching and he's a canadian. bloomberg surveillance, tom. tom: manitoba won last night and beat the nashvilles. francine: i think we're moving to hockey which i don't know. i know you'll give me a full hockey briefing which is why i show up on time for bloomberg surveillance. investors are returning from the holidays trying to ingest earnings and the outlook. if you look at the shift of what market participants are doing, it has everything to do with the federal reserve meeting and with gold.

tom: apple, use the cash, back to the advent of the iphone and its log rhythmic, slope matters and this is a classic concave chart where the arc is down. usually we think convex with the arc up and apple is a giant cash driven machine is doing exactly what you think and this curves out into the distance here as they deploy cash in ividend and for share buyback. all the apple gloom brushed aside by the juggernaut of cash, fran seen. -- francine. it's a text book long concave chart. francine: that's what we do. we're looking at the moving average and s&p, let's bring it up for you. it just means the 50-day moving average is proving a hurdle for

the s&p. and if you look at all 11 sectors, closing down on monday and the gauge seemed to be failing to sustain early gains sparked by takeovers and solid sales from the likes of mcdonald's. let's get to top story, decision day for the fed, the central bank is not expected to hike rates despite a strong economy and we'll see what the shareholders want. we're pleased to be joined by ann richards, chief executive of m.n.g. investments. you make us smarter. what do you need from j. powell, is it forward looking on rate hikes or something on the inverted yield curve and what is means if it happens or continuity. ann: no surprises. people are not expected fireworks today and delivering that would be a good undermining -- underpinning to the markets especially what we

saw. it changed the tone of the markets with equity moving down and not up and going the wrong way, people don't like the correlations to go. the fed here, we had interest rates up to now and the market isn't expecting anything. no surprises would be a good result. francine: what is the fed's main dilemma? anne: passive growth and earnings and copper earnings are ahead of expectations. coper. it looks like we're on target on inflation. i don't think there are too many dilemmas. i think the challenge is simply don't do a misstep that spooks anybody at this point particularly when you set it in the wider context of a lot of uncertainty around trade or the degreeo political relationships. the man thank you true is -- the mantra is steady as she goes.

tom: when you look at bond yield markets, yield higher, prices lower. there's never a smooth gradient but always jump conditions. what are the kind of jump conditions we could see in the bond market where we get jumps in yield and lower prices suddenly? anne: so always against this backdrop, it's stuff that could happen that would shock the market into doing difert things. it's very hard to protect where those are in advance. it's a trite thing to say, we know that. we're moving this year from the position of next bond purchasing by central banks and then we have net bond issue around the world and the market is adjusting to what that feels like. you have a big buyer who no longer will be buying if you like right around the world. that is the tipping point. it's about the demand and supply for those bond issues that are out there. so i think to me that's the big one we're navigating this year.

it is a different backdrop to bull markets in general. she goes to microeconomic principles. i agree this is about microeconomics here forward for chairman powell. francine: it is, if we bring you back to the markets. what do clients want, what kind of strategies do they ask of you? anne: smoothing has definitely been something. people have gotten used to the low volatile world especially in listed markets, conventional markets. there's been a lot of volatility. nonconventional like bitcoin and stuff. the traditional markets have become subdued and suddenly a shock back in volatility growth. removing that volatility and trying to seek out where you have countercorrelation assets

to smooth the path is out there. having said that, i think a lot of people are looking at the earning power of earnings from the corporate sector and looking at the tradeoffs of the risk you see and not getting a lot of yield out of bond markets and getting a powerhouse from equity markets and the price of volatility and equity markets might be worth paying because you see the fundamentals coming through so what is it most important to individuals and it's no one summary where you can say all individuals. so those are the two things we would see in coming through with conversation with clients. francine: has the conversation shifted in the last few weeks because there's a slowdown in economic growth worldwide and what does it mean for market sentiment in the future and correlation with monetary policy? anne: it's fascinating, quickly sentiment changes and what people talk about. the things i perceive people are talking about, inflation,

gold, suddenly we didn't talk about that six months ago and that's back on the conversation again and that's one thing. i think the oil price, frankly, is another. you've seen the oil price which was subdued for a long period of time instead of gradually moving into the territory and you haven't seen the investment come in again. there's some interesting conversations around oil price commodities and the knock-on effects of that and we'll see change in tone with some of these conversations. the whole tech conversation of what does a successful business model look like in technology, again, 2016, 2017, big tech was winner regardless of what it did. much more discrimination coming into the conversations with clients about what a good business model and bad business model is. tom: a story where is inflation, we'll hear about it

in the nonpress conference in the dead meeting. where is the inflation? anne: gosh, what an interesting question. inflation comes in all sortse of different places and unexpected places, i think. conventional inflation is varying by country by country, market to market. all oil prices will feed in but if you see what's happening on the retail high street, you see the high street is challenged still by falling prices in many other side on the you have internet prices going up. i think overall in inflation, it's a very difficult picture for anybody to grasp the totality of it. the oil price peeking through is definitely onened some of the big currency ones. you're seeing currency induced inflation rather than underlying fundamental inflation. tom: anne richard with us.

allen russ of deutsche bank will be with us next hour. arlet fu leading our coverage, love, love, love doing the show because of the conversation with guests, jeffrey rosenberg of black rock is with us and scott mine will be with us from guggenheim. looking forward to a spirited conversation, the state of the fed at 2:00 p.m. new york time. stay with us for anne richards worldwide. which is bloomberg.

taylor: this is bloomberg surveillance, i'm taylor rigs. standard charter c.e.o. bill

winters may finally have some momentum behind his turnaround plan. the british bank posted the highest revenue since winters took over three years ago and centered around banking in china. it is a turn around on equity. apple plans a slowdown in mobile phone sales. they gave a bullish sales forecast and highlighted a surging business. apple raised the dividend and announced a billion dollar stock repurchase plan. the one time prote jay of allen howard has overtaken him. chris rokos managing more money for the first time and the hedge fund company had middle performance and manages $8 billion and more than 75% of its peak in 2014. rokos overseas now $8.2 billion

it. that's bloomberg business flash. francine: special counsel robert mueller's team is putting pressure on president trump's lawyers according to u.s. officials. prosecutors have told the white house if the president does not agree to an interview they would consider a subpoena. joining us now is bethany baker, our bloomberg senior writer following the trump administration from the beginning and with us anne richard of m.n.g. investments. this is incredible, uttering the s-word, the subpoena word, changes the tone and what impact does it have on the investigation? bethany: in several ways. first mueller wouldn't have said he could subpoena without a nod from the justice department he would have the ability to do so for one. two, i think trump is expected to fight this. all indications are he does not

want to sit down for an interview now and could end up being appealed all the way to the supreme court which could extend the mueller investigation for months. francine: if we are expecting a showdown between the two side, the trump legal team and robert mueller, if he needs to testify at the end, would it not make it worse for the president? stephanie: exactly. if he doesn't back down it means he could end up before a grand jury without a lawyer and without any kind of, you know, circumscribed questioning to stick to. it could be an open-ended, extended period of questioning by the grand jury without any protection. tom: now to dr. stephanie in london. we have a brillian summary of these questions and who leaked them, blah, blah, blah. what i want to know is what in god's name is state of mind, for mere mortals worldwide when

we read these detailed legal articles, what is state of mind? stephanie: what mueller wants to get is to trump's intent when he took various steps, whether it was when he fired james domi -- he james comey as f.b.i. director and when he considered firing jeff sessions because he recused himself from the russia investigation. he needs to establish motive and intent in order to prove any obstruction of justice charge and that's difficult without getting trump to sit down and respond to a series of questions. the questions that have been leaked, it appears according to the "washington post" they were drawn up by one of trump's lawyers based on a conversation that he had with mueller about subjects they wanted to cover. they weren't actually ver bit from robert yeses

mueller but based on a conversation they had about likely subjects they'd cover. tom: this is an important point that didn't come out in the coverage yesterday as stephanie said, maybe they were a summary of questions coming from the attorney. stephanie baker, we jump now this morning to this word "subpoena" which i couldn't spell until i had to put it in the script. what does it mean mr. mueller maybe will subpoena the president? what does it actually mean? stephanie: it means he feels like he's got the grounds and enough evidence to warrant issuing a subpoena for a sitting u.s. president. as you know, this has not been tested fully in the courts. ken starr subpoenaed president bill clinton and initially resisted but relented and complied with the subpoena and

it's not been applied in the u.s. courts. there are some experts who believe if it went to the supreme court, the supreme court would rule against trump but politically what it does is extend the investigation through the november mid terms when the democrats are in many people's mind likely to increase their numbers in congress, possibly gaining control and changes the political calculation and means wearyness ikeyhood with this investigation could get more pronounced if it does extend it through a contested fight in the courts over whether or not a sitting president could -- would have to comply with a subpoena. francine: how much do we care about security issues? the current people of -- team of lawyers hired by president trump lack the security clearances needed to discuss sensitive issues related to the

probe. what does it mean exactly? stephanie: it's important and there have been issues with security clearances in the white house and many white house officials are lacking in security clearances. in one respect it's not surprise and there's been a bit of turnover in the trusm's legal team. it is important given the many issues at hand. francine: stephanie baker, our senior writer focusing on the trump administration for us. let's talk tariffs. the e.u. is warning uncertainty in the growing market delaying steel tariffs for another month. brussels said business decisions are already affected but washington insists progress is being made. the u.s. commerce secretary we spoke to experts in beverly hills. >> having very productive discussions and hopeful we can

come to a mutually agreeable resolution that would protect the national interest and security in steel and aluminum. francine: back with anne richard, chief executive of m.n.g. investments. when you look at how your clients position on the portfolios, trade tensions seem to be on the back foot because steve mnuchin is showing up to discuss. s it a main risk or monetary policy? anne: trade is out there as something people are concerned about because the totality of the pie has been expanded in recent decades by global trade. if that really is under threat there's a risk we end up fighting over a smaller -- share of a smaller pie. and i think that's the concern that's out there. having said all of that, the way that america has been

conducting trade policy negotiations and indeed other international negotiations has been about ripping up the playbook, throwing everything up in the air, getting everybody uncertain and coming to a outcome in a bit. you think last year it was about who would hit the big red button first and now we've come further than anyone anticipated than a year ago. there's a little bit about this whole global trade tariffs conversation which will be affected in the same way. on the european thing, i do not believe the u.s. wants to mess up a relationship with europe. president trump clearly wants to get the max pull it possibly canout any bartering they have with europe despite the conversations with mr. macon or

angela merkel the last week or so. i think that's what will play out and most investors think it's the scenario but there are risks. francine: do you worry about european growth having peaked? the data is not clear and depends on the p.m.i.'s are better in certain countries and worse than expected in others. should we assume it doesn't get any better than this for your portfolios? geoff: i think still there are a lot of things going in the right direction but things have come together and people are getting used to the term brexit on mainland europe and is getting to be a little bit of a concern and you see people shaping some of their investment plans because of that and will have a feed-through on that. the facts that in germany and frand and italy, the big countries over there, there are tensions and unclear and

insecure governments in different shapes and places. it's not helping the view we'll get a coordinated segment on anything very much but there are a few things in the background that make people feel less comfortable than they did six months ago in europe. but actually, direct travel is still ok. tom: margaret wolf with a brilliant walk-through of china's attitude as the u.s. officials travel to china to have a big argument on trade. what does it mean for your international investment at m. n.g.? do you lighten up or acquire pacific rim shares? anne: on the whole china story and that's been driven through the china story, i think you are seeing a change yet again in the outreach that's coming out of china and that is very, very powerful. the ability of business to get

direct access to markets it wasn't able to before in mane looks been a very significant announcement. the act tease in place longer thans anticipated and will drive forward in the economic empowering, i think creates a very positive backdrop to what's going on in china. i think we would remain positive on the direction of travel. m.&g, e: anne richard of and mr. mobius is coming in to talk about a new fund at 6:30. this is bloomberg. . ♪

francine: this is bloomberg surveillance. tensions in the middle east are rising as president trump threatened to pull out from the

iranian accord. tom spoke with eric about the difficulties of investing in the region. >> these messages are all very difficult to interpret because you have a religious rift, you have sunnis and shi'ias and jews. you have geographical rifts. you have the sensation of the oil appetite. so i think the messages are appropriate at different times. this is a regional conflict and should be left to the regions to resolve. they know how to resolve it among themselves. i'm a believer with american support the regional issue will drift away and with the leadership of these new young arab leaders. they'll find an answer to the $200 -- 200 mill dwron youth that are spread from egypt to iran under 25 that don't have

jobs. that's the issue. you want to stop terrorism, you need to give them hope. >> how is it you're able to maintain such good relations with people on both sides of the conflict, the saudises and iraqis on one side and then the other side. it's remarkable. tom: because i don't have much brain matter. i only have artificial intelligence so it doesn't get in the way of thinking. i have great respect for all of them and have been a trader in the desert with all of them and i under their cultures. they all come from the same family and it has to be resolved but we have to allow them to resolve it in the right way? air i: and they're all friend. erik: you have done work with the public investment fund, investing in akor. tom: phenomenal.

erik: where can colony north star do to help the crmpt i.f. in its efforts to make more deals and make more investments in the west we'll call it. tom: you have sanan who revolutionized the kingdom and he needs expertise and belief. as he's moving the culture slowly and elegantly further to the west, he needs western expertise and entertainment and infrastructure and solar, he's building a new $500 billion city. he need us to weigh in by investing there as much as c.i.f. is investing in major companies everywhere. what we can do to aid that process is weigh in by believing in that system and being an investor in the egion. hospitality, enter obtainment and resort and saudi arabia is

beginning to blossom. tom: always interesting to hear tom talk about it. here's taylor rigs with the first news. taylor: the economy is losing momentum. g.d.p. in the region expanded .4 of 1% in the first quarter and the slowest growth rate in six quarters and poses a challenge for the european central bank deciding to ease back monetary stimulus measures. the trump administration is downplaying prospects of a breakthrough in trade talks with canada. a delegation of official is preparing to visit china this week. u.s. trade representative says d west and china could spend next year learning how to deal with each other. south koreans have dramatically changed their view of the north korean leader kim jong-un. only 10% of those approved of

kim last week. in the wake of last week's summit 78% of those polled say they trust him. south korea yeah's president came in at 86%. the justice department official overseeing the investigation is warning white house republicans he can be intimidated. deputy attorney general rod rosenstein said critics should know the justice department is not going to be extorted. they have drafted articles of impeachment against rosenstein. global news 24 hours on air, power bid more than 2,700 journalists and analysts in more than 120 countries. i'm taylor rigs. this is bloomberg. tom and francine? francine: let's talk about the world's biggest company by market value apple. apple shares higher premarket trade after they posted revenue in line with most industry estimates at $61 billion. that's the biggest revenue

growth since 2015. the company sold 52.2 million iphones in the quarter and returning more money to shareholders in the mountain of cash, more than $100 billion. joining us is the director for european devices and anne richards of m&g investments where she's chief executive. what did we learn about apple? >> we learned the powerful brand continues to perform when they consider to deliver value consumers perceived as something that improves over time and after 10 years when the first -- after the launch of the first iphone and when the market is already contracting and last year the decline for the first time the smart phone market, apple delivering this kind of result at the higher price point is remarkable and a stellar quarter for apple. 's francine: let me ask about the iphone and then the financials

surrounding apple. this is a really good one in candle charts. the iphone 10 was stellar and best performing and what you'd expect. how does it continue on the trend in the quarters to come. francisco: it really shows the position and perception of consumers, also, they have about apple is not just about the good-looking iphones, it's about everything that comes with the device. the he can by system and all the services and also a very important topic, the privacy and security. there was a survey in europe and we found out that the top reason why enterprise is choosing iphone is because of -- per and the per session we have for security and is a important value for

enterprises in the smart phone markets particularly now day with the scandals around privacy leaks and all those problems. francine: we talk about-face book and snap. i'm going to find tom on snap he's keeping it secret. when you look at apple they have a lot of cash and they're returning it to shareholders, do you like stock? anne: $100 billion coming back to shareholders will be quite nice for markets putting liquidity in the system. and a lot of central banks would like that knocking around. it's tremendous. the thing you need to learn about apple is maturity as a business is showing through and don't mean mature illustrate in terms of product range but a company that has proper mechanisms in place and isn't making this up as they've gotten unexpectedly larger like the new competitors in the general space has and you see that coming through. what's fascinating to me,

innovation is not a product, a box. it is in that ecosystem as you mentioned, it's in the services it is persuading us to subscribe to and has been very successful in doing that. its service rescue is a overall important phenomenon. and it takes a strong summit. we don't have exposure to but you have to give credit to it for its ability to innovate in different ways. tom: that was so brilliant, folks, the mathematics of anne richard, we'll stop the show and show a chart and continue with the mathematician from edinborough. she used the word "maturity." so anne, on a second derivative basis is long concave. the media is long wired to congress convex, i.d.c., francisco's company is brilliant with a tempered view. is apple trending towards a

utility like cash flow, anne richards which goes to the maturity of the concave chart? they're not the normal growth company anymore, are they? they are just as you say, a mature company. anne: i would probably go with the view they are a mature and growing company, a company that's not going through the stellar, almost exponential growth you see coming back to talk about snap and how that works as well. give credit to apple who is managingo innovate its business model and is coming through in a more robust and sustainable market. but the business model looks sustainable. tom: we have a major financial act in anne richard and francisco geronimo, help us with the unit partial differentials as you go up the

cell phone price point. the apple doom and gloom crew says the iphone x costs too much. baloney, they're selling them like crazy. where is the tip point per unit? is it $900, is it $700? where is the tip point where expensive phones become a gravy train? francisco: the tipping point is when there is no traditional value consumers are wanting or getting from the product. the criticism we hear about the iphone 10 is exactly the same criticisms they heard in 2007 when they launched the if first iphone. everyone was saying this is crazy launching smart phone at this price point when the average selling smart phones at that time were much lower and this is exactly the same. of course it doesn't mean apple can continue to stretch the prices up because there definitely is a limit where consumers will ask themselves whether it's worth paying for

that kind of device or not. but at the moment, apple continues to do very well and the thousand dollar price tag continues to be an achievable average selling price for their products in the next quarters. however, the market is contracting. so even if a -- if apple wants to sell less products at the higher price point there's a limit because the market is not growing for every single person around the world and in regions where people cannot afford this kind of price point as apple continues to do the older versions of their devices and pushing those previous versions to consumers at lower price points. if the value is there, consumers are willing to buy. francine: talking about-face book, they're going into a dating app, and this is snap. it was down 18% in premarket

trade because their redesign isn't working. what happens to snap? anne: it's burning through cash at a rate, it's got a lot of cash on its balance sheet. i think it's a prime cash burn story, can it turn around the user experience in such a way it puts on user growth the same rate as it did before and get the ad revenue going to support it before it runs out of cash. we've seen loads of businesses that usually aren't this big when they go through this and this is the classic problem and is the situation we're in at he moment. anne: the ecosystem argument is definitely leaking out and all these companies are thinking how do we expand from our

simple one product, one business model and revenue fuel model into something that is expanding. we don't know who will be the winner and those doing something different is likely to succeed than those that aren't? tom: anne richards with us. francisco, thank so you much and look forward to speaking to you with john farrell on bloomberg radio. and et a market expert we'll do that next hour. mark mobius will drop by with a new project in merging markets and dennis garthman will join us. i want to talk to him about trading and red wheat. red wheat, dennis garthman. ere is washington, kevin

cirilli joining us as well.

wednesday "bloomberg surveillance." now a spirited conversation is active managers make tough decisions. yesterday the bombshell rumor that alliancebernstein will migrate leadership and staff, management staff i believe, to nashville. it is a cheaper venue to run a

firm. mmg,ll the teams like you, is this the reality, that you have to leave the big cities? >> i don't think so. i think there are different reasons and business models why people choose to do things. you can over extrapolate what is going on, but you can see that active management has been under pressure to prove itself in recent years, and i think that we think when you continue to deliver the outcome that the customer wants and the client wants at the end of the day, the product is still very robust and compelling. we have to all challenge ourselves on our cost-based to make sure we are delivering for our clients in the most efficient way we can, but it is not just about location. innovative much more use of technology, for example, to run our operating systems and so forth. tom: one of the interesting things to me is making money and a fixed income money management

space -- in a fixed income money management space. what are the margins like, and how do you manage fixed income in the future? key thing to be successful in fixed income markets in their broadest sense is the flexibility to go across the boundaries. simplistically, what i mean by that is the ability to go long-short duration tween investment-grade and high-yield, even across the boundaries of public versus private markets. the key money has been made across those boundaries and the ability to use that. too often in fixed income historically we tend to have very narrow pockets. you are really -- narrow buckets. you are really limited, and if the market goes the wrong way you have nowhere to go. and doing thelity things that are hard to do in private markets, those are areas where it has been possible to deliver really good to turns --

good returns. it is a little bit like the french revolution. we feel like it is a bit early to say. the biggest impact people will talk about is the fear that we have seen some liquidity, some trading capacity taken out of the market. it has not been a major issue yet, but there is a concern that in some kind of serious market correction in might be difficult to find the volume and liquidity to shift things around. people are worried that there are signs that has happened. we are all working behind the scenes to make sure we find a way of staying within the rules, but nonetheless working constructively with regulators and others to make sure we don't lose that liquidity. pitching and are you for the money from lloyds that they took out? guest: i would never talk publicly, so i am going to plead the fifth on that one.

francine: that is a very elegant way of not answering a question. tom: you just killed it, francine. absolutely brilliant. investments, you can do no better. look at this. up, ut apple, s&p 500 up, p. you evil and get an ugly bar whilefrom francine look -- francine lacqua. tv go is spectacular. ♪

♪ francine: this is "bloomberg surveillance." --ning us now guest: we shouldn't read too much into these local elections. governments tend to not do very well in these midterm local elections. we are expecting a different result herein london. london. here in

labour expected to do very well here in london. today,inet is meeting the inner core of the cabinet, to hash out a strategy on brexit. on the table is this big question of the customs union strategy that still hasn't been resolved. you've got very different views among the tory party on this, threats about leadership challenges, also some aggressive words from europeans. the threat of no deal still being there. everyone thought we were ok with the transition agreement. ireland and the customs union still stands, so we still have a long way to go before everyone can relax. francine: you can relax on the markets. do you just ignore the politics and focus on fundamentals of

economics and the u.k.? >> the different parts of the market are doing well, or better or worse. retail is struggling, but you have other sectors like construction doing well. we are not in brexit yet. this is the thing that people sometimes forget. we have not yet had the brexit, so we are still benefiting from the relationships we have. the question is what happens when we move into that real world, and we still have no visibility as to what that structure will look like. the only tangible thing we have seen so far which gives you some sense of measure of that is you have seen investment flow decisions deferred. not to say that it has all stopped, but we have seen that. is it just a deferral that will come through when we are through this period of uncertainty, or

has it really all gone away? between now and when we get the final terms of what the final deal looks like, desperately important to get some visibility on that. francine: thank you so much, anne richards and david merritt joining us on brexit. up next, we speak with deutsche strategyobal head of and hear from chairman powell and the person who writes the government ledger. ofn we speak with a partner mobius capital partners. this is bloomberg. ♪ we use our phones and computers

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it is fed day, a meeting aligns with the guesstimates of if and inflation.ing hour, gartman, ruskin, and mobius. "impeachment" comes up overnight. francine, give us a brexit update right now. we were just talking to david about it. looking: today we are at tomorrow, because local elections are the midway point, so we don't know whether people go to the local authorities and think of brexit, but there may be a bit of an inflection point when it comes to conservatives. we also hear from the commissioner for brexit, and there's a little bit of concern

in the market that a no deal brexit is back on the table. lots more and the united states, including a fed day today. let's look at the data right now. a little more activity than in the last few days. dow futures up. ruskin.talk with alan anne richards talking of oil in the next hour. we welcome all of you in canada. i was only going to do this chart if winnipeg beat nashville. winnipeg crushed nashville 28-25. canadaiprocal of dollar are likely two pairs slipped. canada we do from the commonwealth. francine: we do, and we also say good morning to all of our

viewers in canada from this week. i am looking at european stocks advancing, u.s. stocks up. we seem to have trading floors shrug off some of the asian declines. investors returning from holidays, digesting those earnings figures and refocusing their shift on the fed's imminent rate decision. tom: let me go to be bloomberg right now and show this chart. we just put this out on twitter. thanks to ann richards for brilliance on this. this is apple. what is really important here is it rolls over. it is a negative second derivative, a concave chart, which is what you expect to see from a long-term cash generating chart. surprise, that is just what we saw from apple yesterday away from all the 20 and 30 years of growthiness is the idea of a cash juggernaut. francine: i like your chart a

lot, tom. goldstar from me. the 50 day moving average is important. we will push it out on social media are our radio listeners. the equity benchmark seems to be stuck between that and 200 day moving average. gorgeous -- a we have been looking at that arefully -- a gorgeous pennant. we have been looking at that carefully. i want to go to kevin's a really -- kevin cirilli.

many of these questions begin with "what did you think about" of."hat was the purpose the prospect of a sitting president refusing to cooperate in a criminal investigation by his own justice department is galling. it remains the president's safest play. reporter: the president at 10 of 5 a.m. is heading over to the state department to get -- at 10:00 a.m. is heading over to the state department to get the swearing-in of his new secretary of state, mike pompeo. we will see whether or not this is really weighing on the president's mind, but also if he is taking the advice of his legal team telling him to keep quiet on this. tom: stephanie baker brilliantly

laid out who wrote the questions and all the stuff that is in the gossip out there. the new item this morning is his lawyers maybe even can't get security clearance. kevin, when does he get frontline washington-based experienced legal counsel? everybody, i would think, once that for our president. reporter: the moment he decides to listen to it am a that's when. i think what you have seen is that this president has largely look at his past and said that he has always been in charge and in command of his legal advice and his own communicative strategy. that aided him to where he is. to him and his supporters and those who work frequently with him, they believe that him being in control has allow this to go further. , and i said note this yesterday, it is incredibly difficult to prove a charge of obstruction of justice, particularly in this lens. i think the bigger takeaway is what is the report that bob

mueller team is going to be putting out publicly, and the point that will get us there is the surrounding of whether or not -- or the framing, rather, of whether or not the president does sit down for an interview with his team. francine: this feels big. i don't know if it is because we are using the word subpoena or whether we are misinterpreting it, but if there is a showdown between president trump's legal team and robert mueller, does it then become even harder if the president really have to testify? reporter: yes. i think should the president have to testify, any time a sitting president testifies with investigators is a huge deal. there is no timeline on that. it would be interesting to see what gets leaked as a result of those conversations. don't want to downplay by any stretch of the imagination how large this is. we just don't have the timing of

it. the only person who really holds all the cards right now is bob mueller. tom: thank you so much. an eventful day in washington. look forward to your reports throughout the day. right now we bring in alan ruschel can -- alan ruskin. escarpmenting in an -- bring in dennis gartman and mark mobius. this is the famous chart i've done over the years which i call the two trudeaus, the collapse of dollar canada back in the 1970's and 1980's. i got that wrong. that was my john madden limited skills. for those of you in canada, he is a football guy in america. down we go with major american -- major canadian strength, and here we go.

where is canada according to deutsche bank? guest: i think dollar canada is going to go higher. the so-called loony, i think we are slowly edging towards 140 over the next 18 months or so. the economics of canada is they have low productivity. they are a better, more productive canada that allows for canadian dollar strength, or does it stay with the weaker tone you talk about? guest: the way productivity manifests itself is mostly through sterling accounts. canada's big achilles' heel is its external accounts. in this current mill you -- current milleu, if you add current account plus negative basic balance, that is the largest in the g 10. that is going to weigh down on

canada and push-up dollar canada overtime. tom: francine, we've got up-and-down when we talk weaker /stronger. francine: away from weaker/stronger is what is the world economy doing. is it slowing down? have we peaked? what does that mean for global central banks? guest: i think we are just starting to digest the , thinking itta would be on the weak side this month, but today it is actually looking half decent. if we are slowing, we are slowing very slowly. we might have actually seen the peak in terms of growth, but i don't think we are going to decelerate sharply. on: just quickly, your call strong dollar-weak dollar. guest: on the short-term there is a bit of momentum here. if the 10 year breaking through, up goes dollar strength. tom: there we go.

who would have thought that. vos -- at davos? with your first word news, here's taylor raikes. taylor: -- taylor riggs. taylor: special counsel robert mueller's team is putting pressure on president trump's legal team. he could be compelled to testify commode's would lead to a prolonged legal fight -- testify, which could lead to a prolonged legal fight. china is weakening its currency by more than expected before the start of trade talks with the u.s. one strategist says that gives beijing room to strengthen the yuan is needed. a group of officials is

discussing ways to reduce the trade deficit. in the u.k., prime minister theresa may's brexit war cabinet meets today on an explosive issue. they have to decide what to do about the irish border and the future of customs arrangement between the u.k. and eu. if they can't find a satisfactory answer soon, the u.k. could end up leaving the bloc with no meaningful deal. day onnews 24 hours a air and on talk -- and on , powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor raikes. this is bloomberg. leading our fu coverage, jeff rosenberg of minorock as well, and mr. will be with us from guggenheim partners. really looking forward to that conversation.

coming up, ruskin, gartman, mobius. mac inened for fleetwood 1987, i think. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." ceo may chartered's finally have some momentum behind his turnaround plan. the british bank posted the highest revenue since he took over three years ago, boosted by retail and wealth management in closing in on the goal of an 8% return on equity. the one-time protege of hasionaire ryan howard taken over asset management for

the first time. clients have quit howard's management fund, a fall of more inn 75% from his peak back 2013. howard in 2014. mobius has set up his own firm. he says he was ready for something new. we will speak with mark mobius a few minutes from now. that is your bloomberg business/. tom cup -- businessflash. francine: decision day for the fed. the central bank is not expected to hike rates today. for more on what investors are looking for from chairman

alan ruskin,omc, securities'k managing director and global cohead of fx research is with us. as long as the ecb starts to kick in as a factor, we could be back up and sense of euro-dollar, but it is a wild and messy right at the moment. francine: what is the biggest dilemma for the fed right now? do they have to prevent a kind of yield inversion, or do they withto have tools to deal a downturn, or they simply can't let inflation get out of control?

guest: inflation is very close to 2%, but it is no guarantee that inflation just stops on a dime and we remain in this comfortable space. i think the problems they face going forward is that is toward 2.5% ors 3%, they will be perceived to be behind the curve rather quickly. the ketchup could be quite messy -- the catch-up could be quite messy. tom: do they catch up, or do they wait for inflation to adjust? guest: you can't really wait. the proponents of price level targeting would say why can't you overshoot. i don't think the markets will take that lightly. overshooting would go into interest rates if the fed doesn't respond, or the front of the curve if the fed does respond. either way it is not great. 3%, anytion is near

sort of rule thereabouts would suggest that fed funds should be close to 5%. that is a long way from what markets are expecting coming case you noticed. tom: alan ruskin doing the math. just fell off the couch in the green room. we will get him on. coming up, this is great. i am thrilled to have with us later,skin, mark mobius and up next, dennis gartman on the taylor rule. good morning, winnipeg. ♪

♪ tom: good morning everyone. "bloomberg surveillance." mark mobius to join us. right now, alan ruskin of deutsche bank and dennis gartman. how has trading been? >> i've aged. i'm aging very quickly nowadays, but doing ok, and then left the past month or so. tom: it is a volatile environment. we were talking about the taylor rule and other theories of the central bank. bring up the screen. i want everyone to see this incredible bloomberg function.

on television it is a little noisy, to say the least, but these are the fill-in factors of the taylor rule. ,e all know the gartman rule which is don't follow the taylor rule because there is too much noise in it. what does chairman powell follow if there is too much noise in the system? guest: that is a good question. i think you will watch what is going on in inflation, and commodities, in labor rates. tom: but should he follow what we watched with tim cook last night on apple, which is a cash juggernaut? once again, earnings this quarter were extraordinary. isn't that as important as the taylor rule? >> it depends on whether you think the same kind of growth rate is going to continue into the future. odds are it is not going to.

things are slowing, only the rate of slowing is slowing. that is probably what will happen with earnings. they will not go into negative territory anytime soon. francine: dennis, so they do , andng at treasury levels should they worry about an inverted yield curve? guest: i think they have to worry about an inverted yield curve. more importantly, we have to worry about the fed worrying about an inverted yield curve. that is the great fear. when are we on the edge of inversion? >> we might already be on the edge of inversion. click and how high the five year yield is in relation to 10 come and relation to 30 -- 10, in relation to 30. they are in a tricky situation in terms of yield because we know there are qe-related

distortions that are going to weigh down on bond yields. qb york fed has said the distortions -- the qe distortions are worth roughly about 75 basis points. should we add those into the 10 year yield, the curve looks reasonably steep. but what level of confidence to we have that we can actually add that level of basis points back in? that is the trick, i think. francine: so alan, what is the level of confidence we can add then? i think there is a degree of confidence that this yield note is genuinely distorted just by what the fed has done, but what is still going on in europe and japan. i think there is that at play. there's possibly also some longer-term effects in terms of pension fund demand, but look, i think we have to be i think of to this as a factor.

i think the important thing is if you do get a slowing in the economy, i think you are going to see the market and the fed become doubly attentive in terms of the yield curve. right now, economy is growing fine. we don't have to really worry about it. fiscal stimulus in the works. i think we do see a slowing. that is when it will get tricky and messy. tom: alan ruschel can with us -- alan ruskin of deutsche bank with us, dennis gartman. mark mobius. we do that next. this is bloomberg. ♪ mr. elliot, what's your wifi password?

wifi? wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. [ child offscreen ] hey! let's basement. and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. ♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. let's discuss apple. apple shares higher in premarket

trade after a posted revenue in line with most industry estimate of $61 billion, the biggest revenue growth since 2015. gartmant back to dennis of the gartman letter and alan ruskin of deutsche bank. i will bring out the candle chart living at -- chart looking at your on year growth for the iphone. >> i think this is a story of share buybacks and dividend increase. i was quite surprised when they announced a 16% increase in dividends. suddenly i will has become a ,ividend in their earning stock something for widows and orphans. i think there's a number of things going on here, and you have to come away impressed. the market was certainly impressed in aftermarket last night. very impressive movement. francine: what happens from now on? how do they keep momentum up?

we are seeing the chinese operator handset maker possibly looking to ipo. >> i don't doubt that, but it is, after all, apple, and after rains to -- and apple reigns supreme. one can only be a buyer of apple, not a seller. it is simply that circumstance. it is simply about leadership, and leadership is about allocation of capital and resources. mr. cook looks to be simply exquisite in this balance of a growth company migrating over, as you say, to a widows and orphans mathematics. dennis: you cannot argue with the fact that the man is a genius. why should we expect them to do anything other than that going forward? tom: out on twitter i put a log

chart on apple that shows that widows and orphans nature which really could generate long-term generate -- generate long-term cash return. we will continue with mark mobius. first, our first word news. here's taylor riggs. taylor: the euro area economy is losing momentum, with the slowest growth rate in six quarters. theoses a challenge for european central bank, deciding whether to ease back monetary stimulus measures. is trump administration downplaying prospects of a breakthrough in trade talks with china. a delegation of senior u.s. officials is preparing to visit china this week. u.s. trade representative robert litehizer says they could spend the next year to figuring out how to deal with each other.

just six weeks ago, only 10% of those surveyed approved of can .ump on -- of kim jong-un south korean president moon jae-in came in at 86%. global news 24 hours a day, on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. it turns out mark mobius isn't one for retirement. the investment manager has set up a new firm to invest in and frontier markets. mobius capital partners has yet to lineup outside investors and once to raise about $1 billion within three years. i am very pleased to say that mark mobius joins us here on set in london. -- mark, wow. you are 81 and you still have an

appetite for this. why do you keep going? changingh the industry and all of this money going into eps, there's a real role for active management. it is not just yes g -- not just esg, but trying to get companies to respond to what is happening in the environment, but more importantly respond to shareholders. francine: i think six years ago i spent two weeks with you in south korea looking at steel mills. that was quite an experience for me. how have the emerging markets changed since then? now is all about artificial intelligence and chipmaking. mark: yes. you talk about apple and their success, but it is not only apple. it is cell phone manufacturers around the world. one billion smartphones are being sold. 70% of that is in emerging countries.

it is interesting you mention korea. but at the change taking place on the corporate governance front in korea. we never would imagine that samsung would respond to efforts by shareholders to integrate some change. tom: mark, good morning and congratulations on your new effort. from what i hear, this is not a templeton redux. no one can redux sir john's work. it sounds like it will be much more nimble and let's go oriented. how many earnings you expect to hold at any given time? mark: the description of what we are doing you just gave is perfect. we are probably going to be holding 2230 stocks. it is -- 20 to 30 stocks. it is very important because in traded and involved with them directly. it will probably be more mid-cap, even small cap.

nowadays small-cap candy $1 billion of market cap. the be some large cap as well. the main thing is -- there will be some large cap as well. the main thing is we want to get into companies that have the potential to change governance. are i am not sure you aware, but the venerable bernstein group has announced that they are going to move -- hasstein alliance group announced that they are going to move to nashville. mark, what are the ramifications intellectually of moving from new york to nashville? mark: this is a very interesting question, because now with the internet, with the means of communication, we could be anywhere. on london because

london is such a big center, so international, and relevant to ofrging countries because the empire, history with the united kingdom and so forth. luxembourg is a great place to get exposure, which would be really the beginning of our fund investors. we could really be anywhere. i would love to be back in nassau like john templeton is to be. francine: talk to me a little bit about oil. you are really the person who coined investing in frontier markets. are they very vulnerable to the price of oil? mark: some of them are, particularly as oil goes up dramatically and suddenly. that would be a real problem for oil importers. china would be affected, india would be affected. many emerging markets would be hit. some, like maybe saudi arabia,

would be helped. francine: would you invest in iran? the u.s. has until may 12 to decide what does with the accord. is it too risky? mark: we would love to invest in iran because they do have an active capital market, but because of the sanctions we cannot do that. but i think there will be an opportunity. it will be very interesting. tom: mark mobius in london, with alan ruskin and dennis gartman with us as well. do you buy international express through u.s. multinationals come up or individual stocks? dennis: i am going to leave the individual foreign stocks to men as genius as mr. mobius. when i use my own accounts, i am

going to use etf's. it is far more rational to me to do that to take a big perspective on germany and asia. i will leave individual stocks to mr. mobius. tom: is it multinational, international proxy, or more than that? mark: i will go more expensive than that to a european etf. it makes more sense for me to do that. francine: ok. mark, this goes back to what you were saying about etf. how do you convince people to give you their money? is it street knowledge? the market has found itself pretty binary in the past few years. when does it change? mark: etf for thedominated market past 10 or so years am about we've reached the point, particularly among institutional

investors, where they've had their fill of etf's and realize there's a need for more active managers to come in to add spice and active corporate governance. market.ms to be the we are seeing a lot of interest, particularly when we are talking about more active corporate governance. tom: we will continue. a lot going on. melaniatalk about greg joining us later on bloomberg radio. bloomberg radio coast-to-coast, boston, washington, new york, the bay area, and your digital radio worldwide. stay with us. bloomberg.

♪

tom: -- ♪ has rocked thek matchmaking business, rolling out a new feature that would help connect people who aren't facebook friends. of match plunging. snap shares are falling in premarket trading after first-quarter sales fell far short of the target. a redesign of the mobile app isn't working. snap forecasts that revenue gains in the third quarter will be even smarter. goodbyeance bernstein,

new york, hello nashville. they will relocate to the country known -- to the city known for country music. sayswall street journal" lower taxes played a role. tom: thank you so much. we are thrilled to have with us alan ruskin of deutsche bank, dennis gartman of the gartman letter, and mark mobius, who is launching a new career -- we don't know why -- with a really interesting front. you will launch into a new china. secretary mnuchin was on the other day. secretary ross was on yesterday. you know what? it is all boilerplate. it is all scripted blather. and ross right now on what is going to greet them n andina -- a brief mnuchi

ross right now on what is going to greet them in china. mark: what you are seeing in china today is strides in not only technology, but infrastructure that is really going to shock a lot of americans who have not been there and seen it. i think this is going to be a game changer when they sit down to talk. tom: it is a game changer of the x axis. the president working on a let's get it done one week come a one months, maybe to 2020. what is the timeline of president xi? mark: they are very patient. they are going to take the time to negotiate to get the very best deal. it is a one-sided race, so to speak. on the one side you've got china with one voice. on the u.s. side you've got 200 voices. the chinese negotiators can take advantage of that. but i think the chinese are

going to be very laid-back and careful to keep the americans happy. they don't want to create a war. that's for sure. francine: where do you see value in the emerging markets, and what could disrupt? is it trade tensions were too aggressive -- four two too aggressiver monetary policies from the fed? we were talking with the ioc about export led growth. that is over for a lot of emerging countries. exports are not a big deal for many of these countries. it is internal growth, and that is particularly true in china. the end of trade exports for some countries is not going to be a big deal. i think they can stimulate the economy by internal growth. if you ask me which countries

are you interested in, i am interested in those in which internal growth is fast. china, india, some parts of africa, some parts of latin america. brazil, for example. a big consuming country, and they can do a lot to produce goods that they actually consume. francine: if we are seeing a belligerent u.s. when it comes to trade surpluses and all that, could it touch other parts of the emerging markets apart from china. mark: definitely, no question. interesting way it is going to touch these other countries is if china is set off -- shut off u.s., theys from the will have to turn to other countries, particularly in southeast asia. in order to do that they will have to stimulate exports from those countries. it is already happening, by the way. the major trade partner in southeast asia is china already. tom: mark mobius with us with a terrific asia strategy.

dennis, are there any different dynamics -- alan, are there any different dynamics? alan: you can't really minute delay the currency weaker without the natural buildup of reserves, which then is a red flag for the u.s. treasury and administration in general. that game is just about done. up youropen up or close capital accounts, but for the most part i think it is going to occurrence.ear as you bring history into this dialogue, this debate that the president and secretary mnuchin will take with them is based on nixon, kissinger, and

even back to douglas macarthur. do we need to jettison that to get to a new dialogue with china? alan: what bothers me is we still have this great idea that the u.s. is supposed to run trade surpluses with the rest of the world. we've been running trade deficits for years, but it would seem that the more deficits we run, the better things are. larry step up and say we need a free trade dialogue here? alan: alan: what has -- mark: what has bothered me is we are sending two people on absolute opposite sides of the argument. i hope larry steps up and says it is time to let this currency freely flow. i believe that is what they will continue to do.

mark mobius, congratulations on your new effort. mark mobius, moby capital partners, based in bermuda. dennis: what an honor to have been on with mr. mobius this morning, what of my heroes. mark: thank you very much. tom: we will come back as well. from new york, please stay with us. don't forget your morning briefing. if you have a terminal, you will be as smart as alan ruskin. this is bloomberg. ♪. -- this is bloomberg. ♪

♪ tom: good morning, everyone. get ready for fed day. scarlett fu leading our coverage. bankruskin of deutsche will join us, and dennis gartman with the gartman letter. dennis, how can you fight this? how can the gloom crew fight this? every time i fight this,

and of paying a ridiculous price. don't fight it. tom: bring up the chart again. over on the left side of the chart, the unavailable happened. the british pound went down in flames. is there any indication of the dollar losing strength? -- alan:re are a few there are a few indications out there. at least in the next downdraft, you might have a situation where you are just left with monetary bullets. that would be quite a negative dollar scenario. there is something there. is it going down in flames? absolutely not. i think that is too flowery language. francine: that is so european.

"too flowery." the way you put it is you would not want to be in a situation where only monetary policy is left, but there's also a risk that you don't have enough monetary policy tools, right? alan: i'm actually less afraid of that now. the fed will have to tighten more than the market expects. i think we will have monetary bullets. what is interesting is europe, which is belatedly going to have no monetary bullets. they will have some the school bullets. it is exactly the reverse situation. either account is not a great situation to be in. alliancebernstein is moving to nashville. this is a huge deal for the city, a huge deal for london. dennis: you are going to end up seeing more and more of new york

moved to lower tax regimes across time. it is not a question it is because of the tax bill. people have moved from new york to florida, to nashville. untils not going to stop the fiscal authorities in the states begin to understand that. tom: dennis gartman, alan ruskin, mark mobius, thank you. what a great hour of "bloomberg surveillance." radio.n ferro and us on us for the live fed meeting. this is bloomberg. ♪ retail.

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consumers are less levered than precrisis. corporate are more levered. alix: the next big short. warns thatn corporate leverage in the equity market will be the epicenter of the next crisis. the fed walks the tight rope in the next -- between gradual rate increases. the apple gravy train. apple impresses investors with a $100 billion buyback. david: welcome to "bloomberg daybreak" on this wednesday, may 2, back with alix steel. alix: i miss you. -- missed you. i barely emailed. apple helping the market have a good time this morning. futures are up by about two points, the dow up by 21. euro-dollar pretty much flat. below