anna: morning from london. i'm an edwards. nejra: these are today's top stories. anna: rbs says it has reached an agreement to pay out billions for its long-running mortgage probe. nejra: and six decades of political continuity in asia. anna: expectations crushed. a rate hike by the bank of england today. will carney deliver a hawkish hold?

anna: good morning, this is "bloomberg daybreak: europe." it's 7:00 if you are over in italy. that's where he had for breaking news. first quarter net income, one one billion euros ahead of estimates. a nice beat in terms of the net income number. the ratio on the balance sheet full in loaded 13.1%. the backstory around italy's top lender, wrapping up cost cuts and improving asset quality is the mantra over this business, promising to build a leading pan-european back. that's what they been talking about for a long time. further reducing bad assets. he's raised 13 billion euros since taking over and has simplified the governance

structure. all of that seems to be paying off at the bottom line. first quarter revenue numbers also beating estimates. a solid start at unicredit. much in the for with midnight -- malaysian elections. will get those latest results shortly but this is the picture on the asian markets. in thea markets not open main today but up by .5%. geopolitics in the focus. focusing on the mood music around the release of those north korean prisoners. nymexinutes up by 71% -- up 71% for the first time since 2014. on the risee dollar against the new zealand dollar, the kiwi falling today. central bank leaving the door open to a drop in interest rates as inflation remains fairly contained. oil,: investors are buying

but not gold as much in relation to oil. i'm looking at the gold-oil ratio, the lowest since 2014. favor, falling out of part of it due to global growth and rising u.s. interest rates or at least the prospect of them. and a stronger dollar playing into this as well, overshadowing geopolitical tensions. where is the safe haven? it doesn't seem to be gold at the moment. tore was talk of it going up $1400. that perhaps scenes further way. this the lowest ratio since 2014. it does beg the question of where the safe havens are because we been seeing the dollar gaining against the yen. shows, gold is falling out of favor. anna: we'll talk to these gentlemen later in the program, a couple of them on the earnings story.

of bt, gavin ceo topical,, gold is very the interview with mark bristow, and a little bit of talk about brexit with a member of the house of lords. that's get a bloomberg first word news update with juliette saly. juliette: president trump said he will be at andrews air force base later to greet three american detainees freed from north korea. they are climb back to america with secretary of state mike pompeo. he said he had a good meeting with kim jong-un. he said it will be happening in the demilitarized -- in the demilitarized zone, taking singapore now the most likely venue. donald trump's attorney rudy giuliani is that the president didn't know about payments to -- his personal lawyer received

from companies. it was revealed by another attorney representing the adult film star known as stormy daniels he was paid $130,000 by: just before the 2016 -- by cohen to remain silent about an alleged sexual encounter with donald trump. in malaysia, a stunning victory in the country's election. rule ofthat six decade the prime minister's party in a landmark shift for the southeast asian nation. the nation's longest serving premier defected to the opposition and will return to the power at the age of 92. markets are closed today and tomorrow after the government declared a public holiday. said itnk of scotland has reached a tentative agreement to pay a penalty to

resolve a long-running u.s. probe into its packaging and sale of mortgage backed securities. before the fall of it 2008 financial crisis. the lender say most of the cost will be covered by money it had already set aside. it will cut second-quarter earnings and deutsche bank had estimated rbs might have to pay $9 billion to resolve the matter. italy's former prime minister silvio berlin's gone he has said he is open to the formation of a government by the anti-establishment five-star movement. saying he would not veto such an administration and would support the policies of the alliance led by the leak. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

you can find more stories on the .loomberg at top checking on asian market activities, positive session, the regional index relates recouping what loss yesterday. by knee key -- nikkei up .8%. the indonesian market we've been watching closely, up by 2.3%, the biggest jump in about a year. there is speculation bank of indonesia could be moving to raise rates, although it's all about malaysia, closing today, but it looks like the market could be heavily hit when it comes back online on monday. that's which it out and look at etf that's listed currently unchanged but we had been seeing some downside. see theou could malaysian market fall by 8% when it reopens on monday. in latehi looking good trade in tokyo, up by 9% after came through with sales being

consensus. againice target of 900 and it's been all about the energy sector with crude at $71 a barrel. with that petroleum leading a huge rally in energy producers across asia today. anna: thank you very much from singapore with the latest on the market. following president trump's decision to pull out of the iran nuclear accord and the conflict between israel and iran ratchets up, we've had data from the wayne intoes on oil the price rise. israel said a run fired missiles at soldiers in the: hides retaliated by striking targets in syria. north korea has released three prisoners and the president was thus that he will be at andrews air force base to greet them.

andrew, good to have you on the program. we've seen an uptick in violence in the middle east. this is connected to the iran announcement? how are things playing out overnight? andrew: i don't know if it's directly related to the u.s. ,ulling out, but it's related where the reasons the u.s. backed out of the agreement was precisely because they felt that the accord wasn't covering the extent of iranian activity in the region. the u.s. accuses iran of entrenching in syria, of meddling in lebanon and supporting has the law and saudi arabia -- supporting hezbollah. sense, it's the broader activities they are looking at which they think is entrenching israel deeplyng

uncomfortable. rockets were fired directly into the goal on and they responded. golaned directly into the . nejra: what kind of escalation could we see here, and how significant is this? andrew: anytime you have military conflict i think it's a significant escalation, we've seen israel hit iranian targets with greater frequency, but this brings them into more of a direct confrontation, as we wrote last week, the region has been on fire now since basically 2011. we haven't seen a head-to-head confrontation between major regional power since 1980's. the threat of that is much saying ifw with iran we stay in the jcp 08, it was

willing to consider restarting enrichment and the rhetoric between israel and iran is heating up. will have to see rigorously but there are definitely worrying signals. andrew barton, thank you so much. we hear day by day of more worrying signals of general geopolitical risk, but the treasury markets seem to be focused on other things. >> i think you are right. the markets like risk. rates markets are the safe haven asset class and on the whole, when risk escalates, that tends to give a bit of a bid to the rates markets. that's not the only thing going on in the rates market. that's why at the moment in spite of the uptick in geopolitical uncertainty, we're still having yields bouncing off this 3% on the u.s. 10 year.

learn fromdid you the auction yesterday, bumping up against 3%? laurence: we just coming up to the last day of the quarterly refunding. push't quite managed to decisively through the 3% u.s. 10 year yield yet, but i think it is coming. it's a question of when and not if, is my perception. the u.s. supply is only part of the whole wall of supplies coming is your. we have a huge new guilt benchmark, i think it's a 52 i'm unlikely to be talking to you when it matures. let's hope. that we've big change in europe as well where last month there was a net reduction in supplies.

this month there's going to be an increase in supply because of a change in issuance. the difference between last month and this month in europe is 70 billion euros. you got that come you got the u.k., the quarterly refunding. it's a lot of paper for the market to take down. nejra: i want to show you a chart on the yield spread between the treasury and australia's 10 year yield. australia's falling to the since 1981. when you look at treasuries versus other markets, where are the opportunities in rate markets, given where spreads are? laurence: and look how long it's been trending downward, it's a different situation between australia and the u.s.. we just had the budget day before yesterday in australia, the fiscal situation is fantastic. in the u.s., because of the big fiscal package, it looks like the rba doesn't have to do much in the fed keeps going.

i it looks like the spread continues to lower their. in the rest of the world, the big surprise has been between bunds and treasuries. the spread keeps widening. i think the reason is the fed is already in motion, it keeps increasing rates and as we know, the ecb is still a while away from announcing the end of qe so it keeps pushing that spread wider. we heard from the fed last night, talking about inflation saying it's not problem for policy. this goes back to what we heard from the fed around the minutes and how much they're prepared to let things go on the inflation front to the upside in the same way inflation is under shop for such a long time. laurence: it seems like a subtle

difference to insert the description of symmetric into the inflation target. everything is subtle in central banking but i think it's very significant. what policymakers are signaling chancere's a reasonable we will have a 2.5% principal causene, is he going to warning bells to go off? you were notelling going to be freaked out by 2.5%. nejra: does it suggest that the fed could be more elastic, and we get more -- i want to say filing, but more volatile market reaction to any inflation price to the upside because you are not sure where the fed limit is? laurence: that's right, they have to tread a careful path between don't get the markets on a high inflation rate to pay any that the fed is going to act quickly, but at the same time,

we don't know what the market to start feeling that the fed is complacent about rising inflation because that will cause long-range yields to rise. that's the past to take. as long as they can communicated effectively, then the market is willing to believe it. lawrence will stay with us for the rest of this hour. silvio burlison tony said he they stand in the way -- could be closer than ever to forming a government. nejra: an upset in malaysia. the prime minister is ousted. what is next for the nation after this landmark shift? this is bloomberg. ♪

in london, 6:19 here

1:19 in singapore. that's get the bloomberg business flash. here's juliette saly from singapore. juliette: royal bank of scotland has said it's reach a tentative agreement to pay a penalty to resolve a long-running u.s. probe into its packaging in sale of mortgage backed securities before the 2008 financial crisis. class willst of the be covered by money it had set aside, you cut second-quarter earnings of $1.44 billion. analysts had estimated rbs might have to pay $9 billion to resolve the matter. former chairman has been sentenced to 18 years in prison after being convicted of fundraising fraud and embezzlement. according to the official news agency, he will be deprived of for fourical run years. $1.7 million of his assets will be confiscated and any illegal

gains will be retrieved. the remarkablels downfall of a dealmaker who was accused of masterminding a $10.2 billion fraud. all major activities after the u.s. crippled its ability to buy crucial american technology, signaling the potential collapse of one of the ofld's largest makers networking gear. china's second-biggest telecom equipment maker remains intent on resolving it seven-year blockade washington imposed punishment for violating the terms of a 2017 sanction settlement and then line about it. that cut off access to the component it needs to build most of its products. u.s. national transportation safety board will investigate the fatal crash of tesla model s that burst into flames after colliding with a concrete wall on tuesday. the agency does intend to -- does anticipate the auto pallet

technologies will be part of the probe. investigators will focus on how firefighters and others responded to the battery fire caused by the crash in which two people were killed. is the fourth active probe into a collision involving vehicles made by tesla. the republican governor of ohio has said he wants to make estate the wild wild west for self driving car testing, regardless of the recent fatal crash involving uber. an executivesigned order to allow companies to test car from any public road in the state including without anyone behind the wheel. saidhile the uber ceo has his company has learned important lessons from the fatal accident in phoenix, arizona. us it reallyr brought home the idea that safety has to come first. as it relates to that tragedy, we have grounded our autonomously, and that was a decision that we may.

>> it will be within the next few months we start driving again. juliette: and that is your bloomberg business flash. anna: in italy the chances of a populist government maybe rising . gave them until this afternoon to decide whether they can forge a majority. our guest is still with us. day feelingndhog around the italian election story but it does seem to be being reflected in the italian bond market a little bit now. a little nervousness around the nation of an anti-establishment five-star the government, or will they take it in stride? laurence: i think it's interesting that if you compare this to help the french market was before the last french possibilityth the

of a more an establishment party, you might ask the question why is the reaction of the btp market so muted? i think the answer is because although the markets are uncertain for what it would mean for the fiscal outlook, not desperately positive, in terms of the big risk to european sovereign bonds, of any political outcome, is always if you have a party in place that looks like it wants to take the country out of the european union. the market response is telling you that even is outcome is not taking us down that road. therefore the markets will not be that phased, at least by the establishment of the government. and we go down the road and say what policies are we looking at? the bond market take the view that if it's a somewhat fragmented government, it can't do that much damage as well is not doing that much good, and the whole world economy and the

european economy is running very fast, the italian economy is looking way above trend. that's why the reaction is muted and stays muted. i have the chart that goes back far enough to show that compares and you make with the french election as well. given what you said, if it's not yet an opportunity to go into btp. >> we've got it even here. i think it goes like to 100 over bunds, and the advantage of eating there is the low volatility environment. where ban environment -- take a little bit of extra risk. that makes sense for the market. if other thing to say is,

you try and figure italy should trade relative to all the other european sovereigns, it still looks 20 basis points to cheap. anna: in terms of the data coming out of the eurozone, saying it's too early to tell the nature of the slowdown in the eurozone. how do you characterize it and the impact it has on your world? clear, it's ae slowdown from a very fast level. if you look at the economic surprise, european have been to theseby pledging low levels. it's because expectations have been raised so much. the european economy was really surprising people on the upside around february. people have felt more confidence in italy. so it's very much of growth slowdown. at the moment we are still above trend and looks like we stay above trend. the european economy is still growing strongly.

next, malaysians this story election, politics shipped in a landmark victory. we are live in kuala lumpur. this is bloomberg. ♪

anna: good morning, "bloomberg daybreak: europe." tokyo, the governors saying is not appropriate to talk about conditions for exit now. no plan to conduct a comprehensive assessment. these are comments he made overnight. broadcheck in on the markets. >> let's start in japan. the nikkei up about .4%. asia relatively flat or edging higher, bit of positivity after strong session on wall street. market still bound to the trading range with uncertainties in the middle east and prospects for the higher treasury yields and the dollar.

a tug-of-war remains in the market and 10 year yields flirting with 3% reflects just that. they see with happening in malaysia where the market is closed today. take a look at the currency, when bertie the chart here so you can see that drop. this is after the election surprise, being called the ringgit brexit moment. showing that foreigners did not expect the 92-year-old to win. staying in asia, looking at the one and the kospi this morning, as north america -- north korea releases three american detainees. this is led by builders and companies linked to inter-korean projects. that should continue to give it

a boost. you can see a bit of a spike at the tail end. this all branch from north korea brings optimism as well for the upcoming historic meeting between president trump and kim jong-un. they will be arriving in just about a half hours time. nejra: a stunning victory in the , and aan election landmark shift for the southeast asian nation. using words like stunning and landmark, is it a done deal, though? >> it is a historic moment, but whether it's a done deal remains to be seen as the new prime minister has yet to be sworn in. that was anticipated earlier this morning, with speculation

he will go to the royal palace to be received, but that was not to be the case. but in a press conference held earlier this afternoon, he sought to affirm the victory, stating that the coalition as a whole has secured 135 222iamentary seats of the that were contested. a simple majority, that is 112. indicating the simple majority had not been won by any single party. he did say that the government has been put in place quickly as no ruling administration is currently in place for malaysia. he spoke of efforts among the opposition parties to ensure the swearing-in ceremony would happen by 5:00 p.m. local time in malaysia, so we are

anticipating that he has conceded that the. good morning from london. what kind of change can we expect from someone who has already been mere in malaysia and returns the political stage? what expectation of big change is there? markere was a big question on what he could bring to the table after 12 years absent from the leadership of malaysia, but he campaigned on policy promises related to the rising living costs, and there was a note -- and oh that counts for about a quarter of the government's revenue. when asked what it might mean for the government budget and revenues going forward, but when

it comes to what he can offer, there was a concern that we might see harkening back to the era that we saw in the 1990's. it looks like the populist, including the young demographic of malaysia has been able to overcome some of their initial anxiety about what it might mean to have him at the helm, given that ultimately he's looking to focus on concerns around youth unemployment, around those red and butter issues as well as campaigning on a pledge to look the scandal that has long plagued the other administration. let's talk about emerging markets and the overall threats guiding those markets at the moment. our guest is still with us. we will get your thoughts on what's happening in the emerging market space.

a lot of this is being driven by the dollar, which you clearly follow. argentinianthe story, which i find fascinating. the issuance of hundred dollars debt over in argentina, we've seen bonds hitting a record 8.4% yield. this has a special place in the bond market, the argentinian story is such a roller coaster. laurence: it is a roller coaster. context of all emerging markets has been enormously supported by decade of qe, from not just the fed but the ecb, bank of japan, bank of england. there's a lot of liquidity, oh yields, there's a lot of money flowing into emerging markets. as the u.s. has come out of qe and has started to raise rates. qe is being well down globally, how much of the

liquidity that's gone into emerging markets sporting financial markets and supported emerging market growth will come out again, and will emerging markets be able to weather the storm? think it is down to why is qe ending? it's because the global economy is pretty strong, then it's probably not a bad outcome for emerging markets. if it's ending and razor going up because of inflation risk, and growth is not so good, that's not such a good outlook. we can talk about oil in the context of emerging markets and how it affects there is emerging bond markets, but how about how that feeds into your world of g10? laurence: sometimes he goes up and down in response to demand, which is fine. sometimes it's because of geopolitics and supply in which cases morgan exogenous problem

for emerging economies. right now the prices being driven in the short-term by the latter rather than the former. for us, it means that we can ,xpect someone higher inflation doesn't mean it's going to be through into inflation in the end. it's probably a slight drag on growth. the way policymakers are going to respond to it to the extent they have to respond at all is more to worry about the downside effect on growth and the upside effect on inflation. nejra: and the question is does it already feet into core inflation as well. gears, let's talk cars and tech. uber's says safety is a top -- hety when it comes to

spoke about the incident at an uber event in los angeles. us, it really brought on this idea that safety has to come first. tragedy,ates to that we have grounded our autonomously and that was a decision that we make. >> any sense for when you will start driving again? >> it will be within next few months, i don't know. the time will be right when the timing is right. we are doing a top to bottom safety review, both internally and went independent folks coming in to take a look at our culture and practices, etc. so that when we get back on the road, we know as a team that were getting back on the road in as safe and responsible a way as possible. it's just one more way that it hits halt how important safety is and how important it is for us to engage with our regulatory partners and the various

aeronautics players who have played this game and have worked in a safe environment for a very long time and have established a long track record of success. anythingu tell us about the status of the ntsb investigation? >> it is ongoing. we have been working hand-in-hand with them and giving them all the data they need. we will not be tweeting ahead of their findings. elon, take note. >> i know what you are talking about. >> this is a group that has been marking -- moving fast to meet benchmarks and deadlines by the end of the year. what do you take from that, and as you set these ambitious goals. >> you cannot sacrifice safety. life,are trade-offs in

and i do think you have to beware of unintended consequences in everything that you do. there is a balance, you want to push teams to be ambitious, you want to push them to innovate at the fringes. -- you have to check yourself and go back to first principles and asked yourself, are we doing the right thing? are we pushing too hard, and is it coming at the cost of safety? and if it is, then you have to take a step back. that was the uber ceo speaking to bloomberg. you can interact with all the charts we use during our programming and you can take in use them in your own research. bloomberg tvhe feature charts in there. nejra: one try to focus on is the boe rate curve.

investors will be looking for any split in the ftc and one to hear what carney has to say about the rate curve. withhour we will speak gavin patterson in his first interview of the day, just after 7:00 a.m. u.k. time. this is bloomberg. ♪

anna: good morning, this is "bloomberg daybreak: europe." live picturesat of andrews air force base, where three u.s. detainees are expected to return from north korea. deftly part of the geopolitical conversation overnight. let's get the bloomberg business flash with juliette saly. bank of scotland has had its reach a tentative agreement to pay a long-running u.s. probe into its packaging and sale of mortgage backed securities before the 2008

financial crisis. saying that while most of the cost will be covered by money it had already set aside, it will cut second-quarter earnings by 1.40 $4 billion. analysts at deutsche bank had estimated rbs might have to pay $9 billion to resolve the matter. former chairman of an insurance group has been sentenced to 18 years in prison after being convicted of fundraising fraud and embezzlement. according to an official news agency, he will be deprived of for fourical rights years. $1.7 billion of his assets will be confiscated and any illegal gains will be retreat. feels the remarkable downfall of a dealmaker who was accused in march of masterminding fraud. gte -- signaling the potential collapse of one the world's largest makers of phones and networking gear.

china's second-biggest telecom equipment maker said it remains punishment of violating a 2017 section settlement and a line about it. u.s. national transportation safety board will investigate the fatal crash of the tesla model s that burst into flames after colliding with the concrete wall on tuesday. the agency does intend -- anticipate that the autopilot technologies will be part of the probe. investigators will primarily focus on how firefighters and others responded to the car's battery fire caused by the crash with -- in which two people were killed. it's the fourth probe into collision involving vehicles made by tesla. you so much, juliette saly. the boe is unlikely to hike rates with market pricing in just 12% likelihood of a change. from theastically down

90% chance investors were pricing in just over a month ago. governor -- a warning from governor mark carney dampened sentiment. i'll be heading to the boe later. i'm super excited for super thursday. we're joined by elizabeth martin, senior economist i -- at hsbc. elizabeth, you recently changed to call, so you were saying may is done, why such a small window of opportunity for the boe hike? elizabeth: reverse change the forecast back in november. urgencyst won't be the to tighten anymore at we thought there would be enough momentum just to may and then we would .et that rate rise in

the momentum has fallen away just a little bit sooner than we were expecting it to. it may be that a lot of the weakness we've seen in q1 is temporary or whether related but it seems like something deeper is going on. anna: what could they say today that would change your mind? to have another rethink. elizabeth: they have been pretty hawkish. we know they are minded to raise rates. was an't think there urgent case to raise rates, it was because the bank of england was sending consistent signals that that was their intention and what they wanted to do. i would be surprised if they completely turned around from that. so we are expecting them to be a little bit hawkish, but the problem for us is that they have been so weak and we don't expect a big improvement in that. nejra: if we look this chart, the market does seem to be still pricing in one hike in 2018.

is that right, should they be pricing that in? laurence: it has come back a long way from what it was pricing it with a more dovish comments at carney had. we're still going to look at and ,nflation outlook above target all the way out to the forecast horizon. it's worth asking the question why are they not going to respond? and there sort of it out of jail card has been this thing about exceptional circumstances. this is context of how will brexit develop, but there's an implicit thing that the bank of england is saying, we are tolerating above target inflation because of exceptional circumstances.

i think it's supposed to help the economy continued to run on, but to help the economy continued to run on and avoid the possibility of recession by allowing inflation to run high, frankly, it's a low-key version of the way the -- the u.k. economy has behaved since the second world war. i'm not sure -- it's a judgment call as to making that decision. anna: is brexit the reason that you don't see there will be another hike this year? there is some expectation there could still be one this year, but the timing when you overlay that with the politics, is that why you say it won't happen at all? elizabeth: it's part of it. we don't know what will be happening with brexit in november. it could go very smoothly. the broader view is that the goingand wait for to disappoint and there just won't be that argument. the bank of england will make the case -- anna: there could still be

inflation above target. elizabeth: absolutely, inflation is coming down now. argue it incorporates the market curve and the rate hike the market is expecting. if you didn't have both, then it would be much higher. so they are kind of saying there will be rate rises, but perhaps not just you -- not just yet. nejra: if you get mark carney saying that rates will rise somewhat earlier and to a greater extent than markets are pricing in, is the market on to believe him, given what has happened? will price in some prospect that it will continue. as you say, given the amount of change that is happen, not only in the rhetoric, but also the data, i think the market would go straight back to pricing what it was before. it would be nice to see the , unanimity would look more

dovish. best there are so many shades of the governor's language. is there a single thing he has to say? if he puts more emphasis back on the trajectory of inflation and reiterates inflation trajectory that he wouldn't have himself, i think that would probably do it. this chart that shows views on where the pound goes depending on how the voting turns out. the red circle is a 25 basis point hike. line, 9-0 tosh hold, that's the green circle. they say that would dictate in the short-term where the pound heads from here. this is also crucial to inflation expectations. laurence: the one thing about having a currency that's not

part of the european monetary union is at least you could absorb some of the economic costs of the uncertainties around brexit with the weaker pound. in a sense, that's another agenda of how the bank is itself forward. nejra: elizabeth, what is your assessment of the wage growth picture? elizabeth: there's anecdotal evidence that there is some wage growth happening in some pockets of the economy. the national living wage has given you wage growth at the low it income -- low end of the spectrum anyway. so yes, there's anecdotal evidence, unemployment is at a forgery -- 43 year low. interesting, the u.k. house price age dropped to a 5.5 year low according to surveyors. how much is this a concern?

elizabeth: i think the indicators for the housing market in general are weak. but it is seeing the most radical changes in pricing but i think activity across the country, is part of a broadly soft victor. if you not having a wrap in growth and consumer credit is slowing little bit -- anna: what about gilt? an opportunity, or no? laurence: the u.k. term structure is incredibly low. i'm sure that supportive of the entire economy, and a reason for the bank to want to move slowly. thatss for us, we thought long dated forwards were probably too low, below 1.5%.

it looks like they are at the top of the range. with the prospect of the supply getting out of the way and possibly more dovish year, i guess for now looks like guilt is pretty fairly priced. thanks for joining us. i will be on the ground outside the bank of england from 8:00 a.m. to bring you all the latest as the decision is made. let's check in on the markets, because the pound against the dollar. .10%.und is up by above $71 a barrel. nejra: and will speak to gavin patterson and mark bristow. their first interviews of

the day. this is bloomberg. ♪ mom, dad, can we talk?

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and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. anna: good morning from bloomberg european headquarters. this is bloomberg daybreak. here are today's top stories. nejra: rbs has reached a tentative agreement to pay out $4.9 billion to resolve its long-running u.s. mortgage probe. anna: opposition leader and six decades of political continuity in malaysia and becomes the world's oldest elected leader. we are live. nejra: market see less than a 20% chance of a rate hike that will carney deliver a hawkish hold?

crossing the bloomberg from randgold. first-quarter profit at 66 point $5 million. first-quarter gold sales coming in at 391 point $8 million. first-quarter gold production ounces.n at 286,000 we have some numbers coming through. we will be talking to the ceo shortly. mark resto will be on set. bp.: numbers from dividend per share 15th .4 pence against an instant -- estimate. deficit as of june 17 is a 11.2 billion pounds. keysize of the deficit a

issue for investors. the deficit will be met over a 13 year time so says bt this morning. we are keeping a close eye on all of this breaking news coming through this morning and we see bt talking about a three-year reduction of around 13,000. we will back with the numbers shortly. we want to bring you some live joint baseming from andrews. it is 2:00 a.m. over there. jong-un releasing the detainees, trump says he will be there to meet them. we will bring you these pictures now. we will return to the earnings conversation. ofning us now i'm a the ceo bt group. let's get back to your numbers. my's see, the first to get

attention is what you were saying around the pension deficit. how sustainable will that be? >> we were announcing quite a lot this morning. results in line with expectations, in line with guidance, slightly lower because of choices we made on revenue. the pension, we are announcing we have come to an agreement with the trustees around the triannual evaluation. the most important take away, there is too important takeaways. it is now shut for future accords. contribution cash that we're making over the next three years is in line with the previous plan. in spite of the deficit going up we're not putting more cash in in the short term. that is good news as well. the third thing is the plan we are now -- we are announcing

this morning. a significant implementation over the next three years. it should generate around 1.5 billion and benefits through headcount savings, simplifying our estate in terms of our newces states, but also technologies. you will see our capex go at the same -- go up at the same time. anna: that is something investors are keen to hear more on. you have pressure from the regulator to build and there are some rivals. some institutional money has put quite a lot of money behind. can you really out another five or build acceleration in the face of pressure from rivals and pressure from regulators? >> we are reaffirming our plans which we set out a couple of months ago. we set ambition to achieve 10

million by the mid-20 20's and where building a today. we will be at 3 million by 2020. many other people talking about it. we are getting on building it. at 3 million by 2020. anna: [indiscernible] making good progress on the plan we committed to. it started very well. we lost in eight cities across the u.k. him a we are coming to 40 in total. roles,our cutting 13,000 announcing a cash cost reduction. are you done with the cost-cutting after this or is there more to come? gavin: we are always looking to find new ways to make this is more efficient and we have to do that because technology advances mean competition and regulation. we're finding the most efficient

way of delivering the network and creating value for customers. this plan is a very ambitious one. it is the most significant we have had for the last 10 years. as you say, we will be reducing the number of roles in manager he -- managerial and back office over the next three years. as importantly, we will be investing 6000 new jobs in service and the deployment of net works -- of networks. also things like security practice which has grown quickly. anna: you are building up in engineering, we you -- you will need some engineers. how difficult is it proving to find those with exit looming? gavin: this is one of the most significant key success factors in terms of who is going to win .n the race it is not about the access to capital. expertise and

experience and ability to get the engineers in place. we are -- we have announced we are hiring 3500 new engineers, we did that a couple of months ago. academieslding 12 across the country and the fact we had so much experience in building these networks gives us a faster start. anna: in terms of that story around staffing engineering, is the government listening to what you want and do you anticipate wage rises, if it is proving competitive to get hold of these engineers? government are listening. they understand to build these fiber networks they can play a role. they can promote good investment. so shareholders can see a decent return. making sure that we can get access to street works in the right way and they can help in terms of the labor markets.

it will be more difficult with brexit. that any other way. ultimately we are going to be hiring more of our own direct labor. that is what we are getting on and doing. nejra: what can you tell investors about the stability of the dividend? gavin: what we are calling out today, it is a confident statement. we have decided to leave it unchanged for 2017-2018. we think the market will be unchanged and that is a confident statement. at the same time, we are increasing. we have announced this big transformation plan but some of that in the short term will be offset against the higher regulatory pressure particularly on leverage repricing. we can see that -- through that. see it onwards we can

grow again. anna: how is the integration of the mobile band ee going? gavin: it has gone really well. ease performance has picked up since we acquired the business a couple of years ago. --is the sixth sick consecutive quarter of revenue growth, it is the leader in , growth, we have the best network in the u.k., the highest coverage, highest speeds. we arey's announcement, talking about the next stage which is all around convergence. it is the convergence of fixed networks with wireless to create seamless services for customers. that allow you to move between without noticing. that is key to the next generation. can you give us more

detail on your strategy around convergence? gavin: it is about products that make the best of our fixed and wireless capability. theomers can move between networks seamlessly. they can share allowances between family members or they can switch the capabilities and redirect the services from fixed wherever they are. it is about combining networks and adding services and software on top that allow you to configure yourself. for sky see the battle being one of those. we see it elsewhere. and the like all talking about content. .ou managed to pay less update us on your intentions when it comes to content.

the --we are half in happy with bt sports. audiences are up significantly this quarter. behind champions league and cricket. we secured another three years of premier league football that gives us good visibility on our content portfolio and we have moved it from a free proposition to a paid proposition so it is an ongoingnable on basis. that has worked extremely well. a long-term tied relationship with sky allowing our customers to access their channels improving their suite of content. we are happy with the outcome. what about developments? gavin: you would not expect me to be signaling what we will do on investments. the future for

global? gavin: the last 12 months we have put focus on digital network services and that means -- are not just dependence that transformation is going very well. we are through the first year with a two-year treasury program and over the next year, you will see us began to dispose of some of the non-core network assets and expect to see progress in the next 12 months. anna: thank you for your time this morning. announcing a host of things this morning around pensions and results and the cutting of jobs and announcing cost reduction. of jointive pictures base andrews, trump has to part of the white house to meet with three u.s. detainees who are expected to return from north

korea. we will bring you those live images as we get them. nejra: we will speak with mark randgolde ceo of resources for the first interview of the day. roles royce motorcar ceo joins us at 12:30 p.m. u.k. time. this is bloomberg. ♪

anna: it is 43 minutes to go before the start of the european cash market open. we are expecting a boost to trading. u.s. futures narrowing. nejra: where going to see europe open slightly higher. dax futures up and the market opens in over 45 minutes. there are market in europe closed for trading.

by .51%.futures up cap futures flat. let's get a bloomberg is this flash. juliette: royal bank of scotland has been -- agreeing to pay a penalty to resolve a intorunning u.s. pro mortgage backed securities before the 2008 financial crisis. the lenders said that while most of the costs will be covered by money at set aside, it will cut second-quarter earnings by one point four $4 billion. rbs mightad estimated have to pay $9 billion to resolve the matter. --ormer chairman of a ban to jail.ntenced he will be deprived of his

clinical rights for four years. his assets will be confiscated and any illegal gains will be retrieved. the downfalls here. major activities after the u.s. crippled its ability to buy american technology, signaling one of the largest pullouts. the second biggest telecom intentnt maker remains a sanction.ith that cut off access to components that use -- it uses to build most of its products. .he ntsb will investigate the agency does not anticipate that the autopilot technology will be part of the probe.

investigators will focus on how firefighters and others responded to the car's battery fire caused by the crash in which two people were killed. it is the fourth active rope into a collision involving vehicles made by tesla. ohio pelican governor of -- the republican governor of his state themake wild west for car testing regardless of the fatal crashes involving uber. s on any car in the state. uber's ceo has stated his company learned important lessons. >> for us it really got home the idea that safety has to come first. as it relates to that tragedy, we have grounded off our autonomous fleet and that was a decision that we made.

>> any sense when you will start driving? >> it will be in the next few months. that is your bloomberg business flash. anna: thank you. wrangled reported first-quarter profit of $66.5 million and maintained its fiscal year guidance. joining us now is mark bristow, ceo of wrangled resort. randgold.e are the challenges going away for the rest of the year? mark: the challenges added to us after quarter which was forecast . you and improving operational year. big push go through a flagship --molly

mine. anna: your lobbying to major changes to the law. have they responded? mark: we are engaged and we represent a much broader base. those are the key investors in the drc, mining companies. anna: will they remove the profit tax or not? mark: the argument is we are protected by a stability agreement but individually and under the old code, the 2002 code, it is an article 276 that provides for the 2000 -- 2002 code to remain for 10 years after parliament approves a change. that is the one aspect. the other is the engagement is

long-term investors. none of us are in the drc to exploit the assets we have got today. erc is a country that has enormous wealth and it has always failed to bring it to account. the size of the mine and the deposits are such that you need mega investment. industry that will be supported by smaller investors. invested $2ave billion and investors do not stand to make returns until the mid-20 20's. what happens to the prediction if the law is imposed without concessions? mark: not much. kibali was approved. that will only trigger after 2000. and it is in a remote part of the country and the new mining code has article 220 that provides for special

arrangements in landlocked assets. trump arriving to meet with the three u.s. citizens who were detained in north korea. regime.released by the part of the geological -- the stage setting. get back to mark. the video how ask there for the moment. congo and other parts of the story that we want to talk to about. your activities in northeast congo and expectations for what you might find there, take it from there. has always been about copper deposits and that whole point about the mining code changes are driven by the state mining company wanting more. only the copper deposits in the south.

it has enormous opportunities, diamonds, oil, and gold in the northeast. what we have done is opened up a new frontier to the drc which is -- has rarely been dormant since independence. the opportunities are enormous. the challenge is the infrastructure and getting there and that is why you need a code that is -- supports long-term capital. anna: managing costs has been a big part not just for you but the industry in general recently. with this new law, have you factored more costs in because of that? mark: that is the point, be careful about overdoing things because business miners will change the way they mine and you or highver exploiting grading deposits to make a return for your shareholders. you take away and leave a remnant resource in the country

which is not sustainable long-term. also the western world, a lot of like toike bloomberg see the fight between the mining titans and the government. we need constructive engagement because sub-saharan africa is a the tech space are -- is looking expensive relative to the developed world. it needs and we need to worry about bringing that young population in sub-saharan africa into the global economy. one of the first steps is unlocking the natural resources for the benefits of the people you on thatare with one. tell me about the gold price. you have 1300 or so? mark: 1300 is good. about listen to everyone

quantitative tightening and all andstability and good news growing economy. one have thought the oil price would be down but it has been resilient. there's a lot of anxiety in the world about whether this is a product of populist politics and people have to tell a good story or whether it is genuine. i believe in this the former. -- it is the former. gold is telling us that people are not in agreement with the rosy outlook. anna: great to see you as always. great composition about the price of gold and the places they operate. that is it for daybreak europe. the european open is next. a third dayght see of games -- gains. we had to the open and 30 minutes time. coming up, we will speak with a

u.k. [indiscernible] and dip into radio when you're traveling to work as well. this is bloomberg. ♪

guy: this is the european open. we are live in london. i am guy johnson. matt miller out today. cash trade less than 30 minutes away. settling subprime. almost 10 years after the crash, agreeing to pay $3.9 billion to the u.s. authority for soil -- selling margin -- mortgage backed securities. bro's gone he said he will not stand in the way of a populist coalition.