>> good morning from bloomberg european headquarters in london. this is bloomberg daybreak: europe. no concessions. the u.s. president uses the state of the union to address a second nuclear summit with north korea but offering democrats little. speaking of solutions, the irish prime minister goes to brussels and theresa may wants to modify the backstop. cutting the profit forecast. european results continue with bnp paribas this hour. ♪

nejra: good morning. para get to the bnp ibas numbers. lowering the 2020 forecast revenue and profitability in tradinguarter equity coming at 145 million euros, a miss on the estimate of 421 million euros. the bnp par of us equity on control, 9.5% versus the 10% initially land in the cost cuts. an additional 600 million euros in annual cost cuts from 2020. on the dividend, bnp proposing a cash dividend of 3.02 euros a share which is in line with the estimate to the focus is the lowering of the 2020 work as your revenue and profitability.

banking 30% on the speaking cost cuts. the cfo told bloomberg it is on track to meet the revised target. >> we should look at overall revenue for the last few days. it is little more moderate than in the past. we have cost reduction so another $600 million. $2.7 billion recurring cost savings in 2020 to $3.3 billion. that means the three businesses will have positive jolts. >> look at the balance sheet. common equity of two month out and present. on top of that, dividend of 3.05 euros a share. we should look at that and confirm we are well on track for

the ambition. nejra: let's get a recap of the utter earnings we have coming through. i will go to carlsberg and take you to some of the numbers. the four-year adjusted,\ is coming in line with estimates. that is exactly what the estimate was. four-year sales at 62.5 billion danish krone. it is beat on the four-year sales. of 4.5g a share buyback billion danish rona. the 40 a dividend per share, 18 danish krone. 17.08. let's talk about the organic growth. mid-single-digit percentage in operating profit and for your organic volume growth. the estimate was a drop of 2.2%. is that a significant feat? up 6.5%.

i could bring you the net income number as well for carlsberg at 5.3 one billion damage to. let's recap the softbank headlines just before we got to the air. numbers coming through as soft take is to buy back up to 10.3% of shares. that is the key lines of focus on. the red headline on the bloomberg and it is the by that with proceeds of the mobile unit. another unit coming through. atrd quarter operating ¥438.29 billion. 237.stimate was that is a significant beat on third quarter appraising income for softbank, to buy back up to

10.3% of the shares. funding that would proceeds of the mobile unit on apo. if we take a look at soft take at the moment, it is not moving a huge amount. not a huge impact. we also bring you ing. thick and fast on the early morning in daybreak. ing, i am looking that for you. if i can find it. this is a bank we will be speaking to the ceo later in the program, fourth order coming at 1.6 9 billion euros. beat ona significant the fourth quarter, underlying pretax profits. %.ratio of 13 points 5 the fourth-quarter net interest income coming in at a beat. dividend at a share. we will get back to the numbers

when we speak to the ceo later in the program. let's get straight to a big interview. for the fourth quarter of 492 million euros. that is a nest of the endless expense but a four-year dividend per share of 60 9/10 which is below average. of notom and the results where we want to be in joining on the phone for the first interview of the morning. good morning kurt great to have you with us. thank you for giving us your time. just to recap, the fourth quarter net income was a miss. coming want to focus on on the dividend per share. the estimate was 17 so that is a miss on the expectation. what is the outlook the dividend? >> we have a progressive dividend. we have delivered on the

dividend. weis increasing and i think have not guarded anything to the thinkers and that is what we're delivering. policy continues. youa: how confident are that you can continue to increase the dividend every year? as you say, it is increasing from what you were dividing before. casper: we are not running it for dividend. we start to always be well-capitalized. we have one of the strongest and well-capitalized banks in the european marketplace. need to meet the underlying demand from the customer's which in this environment is subdued. the dividend agreement, the and result is which is why we have that you.

it is more important when we look at this, not only the quarter of 2018. we have made some key deliveries on the transformation. we have today a much more simple and resilient bank. we are within the banking union as of october and a much platform. more importantly, we have brought them cost . we see successive costs decreasing in the coming years. we have invested in the stronger platform and well-positioned, strong balance sheet, very high credit quality and high position which is somewhat more volatile, uncertain environment. i'm very pleased and what the breeze. i am disappointed in the result. the income lines, having the big ones are saving and the training side. we have had extremely difficult

barton where you have had asset performance in the fourth quarter of the level which we have not seen since 2008. i am confident moving folder. we have a strong platform to its we can go for the transformation that we have been doing. let me ask you on the cost. nejra: the activist investor recently bought a stake in previously today has wanting you to cut costs faster than you have proposed to do. to what extent and you meet the demands on the cost cutting. they said they should meet a cost-based of 4.4 billion euros in 2021. >> the direction -- no difference. we could take down structural costs through we have done it.

we will take down further costs despite the we have bought the bank. we think we can it down. off, i think we can take more than 10% down after 2021. we are looking at the prospects. we need to also calibrate that and make sure we don't hit on the revenue line. structural costs will come down and continue down after 2021 because the system and the decommissioning opportunities we have will come post 2021. we don't see a big difference beyond moving downward and the cost. not only 2021 but after 2021. nejra: yes, cuts on the scale imply a need to reduce headcounts further or faster? casper: i think we have -- we are on the plan to if anything, we are ahead of the plan in

terms of cost. i have said all along, there is a shift and there is no doubt. and this is something that we also need to take responsibility in how he manages, how will manage it with the employees and how we can retrain them to the best extent, etc. not only be the theme in 2019 but into the future. we will be having less people. nejra: let me ask you a final question on the future in terms of the outlook for 2019. will you be able to increase revenue, profit, and return on equity in 2019? casper: revenue, i think the buildings is no doubt

heavily on the platforms that i mentioned. we are a much stronger, more focused rank. momentumfocus is on and getting underlining. we have actually reduced some of the income level by actually selling or the risking some of the asset classes we have. the main focus is now increasing moment, i.e. volume and i think we have created a form to do that. that is where we are focusing. it is all about institution. nejra: just before i let you go, you have mentioned market volatility throughout the conversation. a lot of ceos have it. the volatility in the market might actually scare off companies from the capital market and boost lending. would you agree?

casper: of course, there is an element that will come. when you have more volatility market from time to time, also being less accessible. shop for a while and open up, we have seen that in the past. i've always said the balance sheet in an environment like this will have more value and we can use that in the right and cautious way. i think a bank like us with a leading position with corporate's, both on kind of an intermediation side but also the balance sheet, i think we come to force. we are well-positioned. i do believe it will be more challenging and the balance sheet comes into play. do you have any pause about placing focus on such a competitive field on asset

management and wealth business, tough in the fourth quarter for the business? casper: when you look at fourth quarter, there are two things that you come in. the attention business for good reason and we have also sold the banking luxembourg. , an i look at asset forces challenging environment but i just take those out. we have a solid days and i think what we have today, we can grow. i think we have shown it over the last few years. let of the strongest players in the european market of the last several years. very challenging and we can take that forward. nejra: thank you so much for joining us this morning for that wide-ranging interview. great to speak with you. is get a check on the markets. number one direction on equity markets, flat on the index. &p futures are flat.

movement on dollar yen, to the downside. intogb 10 year yield moves negative territory. the aussie taking a bit of a hit. that jumped yesterday with the best performer. it is reversing back on what is being seen as dovish comments from the rba governor after the rate decision yesterday. a big jump in iron ore on the headline from vale. next, an ing report fourth quarter unaligned profits beating estimates we speak to the ceo. this is bloomberg. ♪

♪ nejra: bloomberg daybreak: europe. let's get the first word news with olivia howard. olivia: president trump deliver the state of the union, calling for bipartisanship on his terms.

he announced the second summit with kim jong-un and said the u.s. economy is the hottest the world. economic trump: an miracles taking place in the united states, and the only thing that can stop it are foolish wars, politics, or ridiculous partisan investigations. if i had not been elected president of the united states, we would right now, in my opinion, be in a major war with north korea. much work remains to be done, but my relationship with kim jong-un is a good one. nd irman cam and i -- kim a will meet on february 27 and vietnam. -- in vietnam. >> good evening, my fellow americans. i'm honored to join the

conversation about the state of our union. growing up, my family went back and forth between lower middle-class and working class. yet, even when they came home weary, my family found a way to show was all we could be. my library and mother -- response,official stacey abrams said the president has left the nation's middle-class adrift. >> in georgia and around the country, people striving for a middle-class where a salary equals economic security. familiesad, are being crushed white republican leadership that does not understand real-life. nejra: global news 24 hours a day, on air on tictoc and powered by more than 2700 journalists and analysts in more than 100 2700. ing has reported fourth quarter

unaligned pretext profits of 1.6 billion euros, beating the average interest. also.as let's talk to the ceo of ing. great to speak to you this morning. thank you for giving us your time. looking at these numbers, the beat on the fourth quarter underlying pre-cost tax -- do these results allow you to begin the new year with a blank slate, putting the reputational issues behind the- -- you? >> if we look at last year, last quarter, the reputational issues have not dented the commercial momentum. that is very clear. we have gained more customers and primary customers. lending continues to grow at 3.2 billion. we have $7.7 billion in savings

in the last quarter. as a consequence, the net result of was 25% higher than the last year in the quarter. momentum.onou good the other side , some of the issues we had to come out with, the shortcomings we filed in the processes to prevent you cannot decline. that needs to continue. nejra: yes. so, how might that, if that were continues, impact your result going further out to this year? of howwell, it is a mix you shift investment in order to ensure that the processes are up to date going forward. it is about having the right tools and monitoring in place. and, it is a lot of work around clients. in the end, it is a mix of front office people that otherwise would also do commercial business.

now they do that in the combination. it is a good way to work. the real effect on the cost side, you cannot really say. it is a mix of activities that people have to do. we are committed to finish this and continue the program that we started two years ago. cost has beenat blended into the pnl over the last year. nejra: you also said in the commentary that you see the need for further cost discipline, specifically how you will achieve that cost discipline. ralph: if you look at where we are in the cycle, we have basically already a quarter ago indicated we would be more cautious and selected and how we grow the business. we will also look at repricing at some of the business with the

requirements. if you look at the financial market performance in the fourth quarter, it is not unlike the markets. you can see some of the headwinds there. have to continue to look at cost. we look at that, it is the effectiveness of the salesforce and the other side, you go through how the systems work. you go through further investments in being in efficient. it is a continuation of the story we have started five years ago. baby to accelerate in some areas. nejra: yes. some might say the european banks more broadly, it is a bleak perspective because higher profits are about cutting costs. is a merger something that ing but consider? -- would consider? ralph: we are actually looking,

we are probably the only one that is growing. we have an approach in the market that is fully digital. as a consequence, we are gaining market share. grow in a non-growing environment. that is the first and foremost important part of the strategy. when it comes to european consolidation, we have to look at the benefit. there are only three benefits. the first one is capital optimization, the second is liquidity, and the third one is cost optimization. capital optimization and liquidity, you will not get. it is not successful in taking away the local barriers around these components. the only reason why you would want to consider a merger in the your in the old is you can work on your cost side. that means you have to look at the local component of the cost

and look at the mortgages that would work for my local cost efficiency perspective. it is not the strategy. you.: thank the ceo of ing joining me this morning, great to speak with you. coming up, theresa may continues talks in northern island. heading to ibs, shifting assets out of the u.k. we will bring you the latest on brexit coming up next. when you are traveling to work, tune into bloomberg radio on your mobile device or radio in the london area. you can kiss me there anywhere from 8:00 as well. we have a questions for you today. we are asking the question -- can the world escape the low rate trap that japan is stuck in? negative in today's session. you can join the debate today on your bloomberg. this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. nejra: this is bloomberg "daybreak: europe." the softbankome of headlines for you. i brought you some of those headlines at the top of the hour, but also softbank mission fund sold all shares in nvidia worth ¥398 billion. i just want to update you, earlier i told you third-quarter operating income for softbank group came in at a strong beat and that they will buy back up to 10.3% of shares funded with the proceeds of the mobile unit ipo.

if you want to get across all softbank, youon can get all the information on the bloomberg. dividendad raising its , 9.25 euros versus 8.6 euros. the forecast was nine, so that is a beat on the forecast for munich re. and the four-year prelim that income is at the on the estimate of 2.21. let's check in on the markets around the world. here in london is bloomberg's dani burger. market scripting in asia, a lot of them closed for the lunar new year. talk us through the indian markets. we are still looking ahead to that r.b.i. rate decision. tomorrow sooming up i don't know the banks will be active. the last few days have been talking about how the large caps

are doing well in the mid-caps are not. in today's session, that is the case. the important number to watch , it's a fact that the they has crossed above 11,000 mark for the first time since october 1. conglomerate stocks are coming off in a hurry because of some government issues and otherwise. the benchmark index has done extremely well. psychologically important over the 11,000 mark. it helps the long positions in a big way. from a bullish perspective, it's a good morning of trade. there you can see on the screen. you are looking at the

aussie dollar and yesterday it's down today. it comes down to the rba. >> it absolutely does. you can see that volatility on the chart. you can see how much back and forth. as you say, it's all about the rba. we have the governor of the rba making a speech saying he's shifting more to a neutral outlook. it since the aussie dollar plummeting more than 1%. the biggest loss in about a month. that's a shift from over here when the rba didn't make any change in their rate decision. that allowed some rally to come. but with asian markets closed and no fresh trade headlines for policye central bank really is what is dominating traders today. everybody is out on holiday, at least most asian markets. what will greet them when they return? there might be a case of selling the rally when they do get back.

that's because the msci asia-pacific index is heading into overbought territory. it's about to cross over into 70 which is overbought at 69.4. we are getting really close. return to get a trading, the rally that is drifting slightly higher may not sustain itself. much. thank you so let's get the bloomberg business flash from dubai. bnp has lowered its forecast for revenue and profitability as france path biggest lender said it's planning additional cost cuts. income from trading site 40% in the fourth quarter but the bank cfo says it is on track to meet its revised targets. >> if you look at our balance , very well on track to our target of 12%. that, all in all, we are

well on track. >> disney is embarking on a mission to become a streaming company along the lines of netflix. traditional tv is holding up better than expected. sales and profit helped the media giant beat expectations, but disney has warned that this year will be tough. net of licensing revenue apr, we estimate would be a decrease of about 150 million year-over-year. that will be more heavily weighted in the second half. to put some context on that, captain marvel, which is coming out in the second quarter, is the first film that we will withhold from our output deals.

>> following the suspension of one and an operation in brazil state, work at the mine was halted when a judge questioned its position. it has not said how contracts may be affected. that is your bloomberg business/. nejra: thank you so much. the latest central bank chief to throw his support behind a patient approach. in a new essay, the dallas fed president encouraged officials to wait on interest rate moves into the u.s. outlook becomes clear. so great to have you with me this morning and thank you for your patience this hour. you have been sitting through all the earnings interviews i been doing and now we get to talk about the fed. what will you be looking for specifically in the data in the

next six months to see what the next move from the fed is? >> i think the fed is aware that the labor market is very strong. there is no news from there. i think we'll need to look at more stronger data from the rest of the economy. for instance in industrial activity. goodnk that area has been in the fourth quarter because of the spillover from the trade tension. he also wants to look at some recovery in housing market that has been hampered by high interest rates. i think over the next six months, we expect a pause in the and alicy decision broader recovery in the data aside from the strong labor market. nejra: do you think the next move from the fed is more likely to be a hike? i think if they just

recover over the next six months, i think the next hike would probably be a hike of 25 basis points and the pause within reason -- resume. the labor market is still strong, we expect some recovery in the second quarter of this year, the first quarter deftly affected by the shutdown. continuations of trade tensions, but we see those headwinds will start to recover going into the second half. there are reasons for that head -- for the feds to hike one more and see how it goes. the market is quite pessimistic, earlier in the year they were expressing -- expecting cuts. nejra: begin a market pessimism, a lot to talk about china. you brought up one of the headwinds being the u.s.-china trade went tensions. -- we've seen quite a bit of stimulus. do you think chinese equity

markets are going to pick up from here? i have a great chart showing the chinese stocks have started to climb as the 10 year yield has been approaching 3%. it speaks to the effect that stimulus might have on the equity markets. janet: i think there is a case for a full of such a chinese equity. of course there's concerns from equally, thereut are a few catalyst like chinese equities may see a rebound. there's talk of a more dovish fed for emerging-market stocks and secondly, there could be a resolution in the trade tension in the coming months because i increasinglyen't sure that both sides want to come to an agreement. chinese stimulus will shrink them in the near term. the thing to watch would be more tax cuts coming in the people's congress.

existese conditions can and there's some resolution in the trade tensions and if growth positions have been quite bearish last year and valuations are attractive. nejra: when it comes to the stimulus, you mentioned tax cuts. is that mean you expect the stimulus to come more from the fiscal side or do you expect a two-pronged attack from chinese authorities? stage of expect more coming from the fiscal side on tax cuts. i don't think the government like to have a large-scale think it's more by tax cut from consumers and companies more affected by the trade tensions. butchinese government can consumers in the market decide how to spend the extra cash in their pockets instead of

directing the castle into the economy. i think they will also implement more cuts because the policy stance so far has been to improve the liquidity in the system. i don't think it will be directly having a large-scale stimulus package like previous episodes. nejra: when does the stimulus start to be felt in the economy? at the moment. that's still talking about a concern of a slowdown in the economy. but i think the stimulus will start to come through after the second quarter this year. -- usuallyd measures stimulus that comes through quite quickly in china because it is a centrally planned economy. i think the transmission mechanism from policy easing has lengthened compared to previous because although the government

is supporting liquidity, the banks may not be willing to l end. so there is a lack, but i do believe that it will come true. if you look at the charter the credit change as a percentage of shows a recovery after credit impulse starts to recover. i think it will happen probably in the later part of the year, but i think investors have to be a bit patient. nejra: if the stimulus shows through in the chinese economy later in the year, but then we get the fed start to hike again, as you were saying it might happen earlier, what is the net effect of that in terms of china and the em concept? janet: the fed has been decisively more dovish and markets have taken it as a positive sign, but this is a

risk you might want to reassess six months ahead. , is going tohike be once and then pause again. if it does pause, that's it does hot, that's a good sign because it is a sign the u.s. economy in the global economy is recovering. it is a good signal to the market. it's really hard to say, but i would say it could be slightly positive. nejra: great to speak to you, janet. coming up, trading in the year of the peak. .- the year of the pig we will take a look at what to expect, next. ore in to bloomberg radio digital radio in the london area. this is bloomberg. ♪

nejra: this is bloomberg

"daybreak: europe." today were asking the question on mliv. can the world escape the low rate trap japan is stuck in? let's get the bloomberg business flash from dubai. >> the u.k. government is delayy planning to according to the telegraph. candidate members have secretly discussed plans to delayed exit date two months. ubs has won approval to move 32 billion euros of u.k. assets to germany. with with that goal is to keep operations going amid post-brexiton rates. the dallas fed president expects the picture to clear up in coming months. fomc pivoted at the last meeting, declaring it would be patient while deciding the rate

path. italy's populist government is said to be selling to the north worth of state on property to rein in soaring debt. sources say finance ministry has identified addresses that can be offered, mainly military barracks, and hospitals that are no longer in use. italy has fallen into recession although the prime minister sees recovery in the second half of 2019. opec is said to be seeking a full partnership with a group led by russia, according to the wall street journal. saudi arabia and its gulf allies are said to be planning to .ebate at a meeting in vienna the two groups have already worked closely together. the ongoingmalize relationship. that is your bloomberg business flash. dubai,deadly humphrey in thank you so much. markets across asia remain close -- desley humphrey in dubai.

, thelonged trade battle year of the pig outlook is anything but certain. but some optimism may be warranted. explain it all for us. >> i know the zodiac maybe pure superstition, but there was a note saying it's not unusual for traders, people who celebrate the lunar new year, to link them together. in that spirit, i have crunched the numbers for you. the year of the pig is typically a big outperform or. the% return is double typical yearly average. for the hang seng, it is 33%. again, that is double. perhaps we are having a bit of a bullish setup in the cards, just based on this. if you don't buy into the superstition, perhaps you will pay more attention to money flows. i have a chart for us here that shows just that.

largest -- largest china etf fund flows based on a month. monthe seen outflows this and in january, nearly one billion was pulled from this etf. that is not actually a bearish thing. it is actually traders getting more excited about china stocks. they are pulling out from etf's and investing in individual stocks, looking for more of an active approach as we get some progress on trade talks coming into the new year. china a-shares look like cannot be more included in the msci index is. this setting us up nicely for perhaps a bullish right in the year of the pig. nejra: i'm still stuck on that chart for you have bullish, bearish, or piggish. let's talk exit. as theresa may begin -- let's talk brexit.

her irish counterpart travels to brussels for his own brexit talks. a london judge has approved plans by ubs to shift some of its u.k. business to the e.u., amid uncertainty. janet is still with us. you to going to ask predict where the negotiations will go, but happy to take it if you have a view on that. where does the u.k. economy stand as we head toward march 29 in terms of growth and wages? janet: we are seeing a slowdown, just yesterday we got the u.k. purchasing manager index. it is below recession levels, which is 50. there is clearly weakness because you can see consumer cost has been slumping and that will affect the economy, no doubt.

continuingncertainty until at least march 29, we think the first quarter number will be pretty weak. so it is a bad outcome. nejra: in terms of inflation and wages, wage growth has still been picking up. so should the boe be hiking now, but it has its hands tied because of brexit? is that the situation we are looking at? right, wagere growth is rising at the fastest pace in a decade. the labor market is very tired. i think the bank of england has of theds tied because brexit uncertainty. i don't think they can really do clarity isfore any given on the brexit situation. inflation, which is an important indicator they look at, is actually slowing. i think it will slow to below 2%. the current inflation trend is

below what the bank of england has been expected. aside from the brexit discussion, only inflation front , i don't think that will be a reason to hike in the near term. nejra: ecb, any reasons to hike there? i think i know what your answer is. janet: it's very difficult for the ecb to hike. they don't want rates to be it's at legacy levels, but hard for other major central banks to hike because it will mean the currency would appreciate and for the eurozone, it would be particularly that. there is a significant slowdown in eurozone activity. in this environment, it is quite high. there is no need to hike at all this year. nejra: is the bad news in europe

priced in? think the negative in europe has been priced in. if you look at the performance of european cyclical stocks, it has underperformed by about 20% from the second half of last year versus defensive stock. it's clear if pricing in some sort of recession scenario already, which we are seeing from the pmi numbers. think from that perspective, it is being priced in. if you look at the price index of the eurozone, it has reached a trough already. economists have already revised down there forecast significantly. the bar to further disappoint is much lower now. nejra: you send some notes ahead of this and said that not only

do expect the ecb to remain on hold for the rest of the year but also it could soften its forward guidance. that brings me to the bigger picture with central banks and rates. our question ask about the bank of japan and what it means for other central banks. i'll asked the question to you, basically, will the world escape the low rate trap that japan is stuck in? janet: i think it is a very good question. beensomething we've talking for a while, which is structurally lower row and hence lower interest rate. is a function of the demographics, which is labor force growth, and also productivity growth. on that front, as you know, the demographic situation in the developed economies such as japan, europe, italy, the west asian population growth has

slowed, and productivity has turned structurally lower since the financial crisis. in terms of real growth, we expect that to be structurally lower, and in terms of inflation butee a strong labor market wages are still quite subdued. it is hard for the world to get out of this low interest rate environment as result because of lower gentle growth. question is,b which central bank i hike first next? i imagine most people would say the fed. do we get divergence or do other central banks follow? janet: i think we are in a situation where we might see divergence again. the capacityed has to hike because of the economic situation.

europe's economy is slowing so i think it is hard for the central banks. nejra: fantastic to have you with us. thank you so much. we continue the conversation next. this is bloomberg. ♪

nejra: good morning from bloomberg's european headquarters in london. i am nejra cehic. these are today's top stories, the president's state of union to announce a second summit with north korea, but he offered democrats little. he said a wall will be built. the irish prime minister traveled to brussels, as theresa may says she wants to modify not remove the backstop. nordea misses on fourth-quarter profits. the ceo says results are not where we want them to be.

7:00 a.m. in london. welcome to "bloomberg daybreak: europe." lots of earnings coming through today. daimler numbers, fourth quarter 3.4billion euros, down from billion a year ago, and daimler forecasting a slight growth in 2019.e for fourth-quarter revenue coming in at 46.6 billion euros. in four-year dividend comes at 25 per share. a bit of a mess on the four-year dividend. comes-quarter ebit 2.6 billion euros. 3.4 billion euros a year ago.

those are the numbers from daimler. sticking with germany, german december factory orders, falling 1.6% month on month. the estimate was at 0.3% gain, so quite a bit worse than expected. it continues to paint a picture of a slowing eurozone economy, focusing on germany. reacting, i can get the chart here. the markets have been quiet across the spectrum. asian markets are closed. euro lower by 0.2%. let's get to the futures. yesterday, we saw the stoxx 600 gain. it was led to the upside by oil majors after earnings from bp. yesterday looks like we could see a softer session, with the best shifting for direction,

lackluster is the word i would use. dax futures, down. cac 40 futures, down. a hit on plunging oil prices in the fourth quarter, reporting net income of $1.54 billion. commodity markets, raised its quarterly dividend. to talk through all this we have a special conversation on set. ,oining me is eldar saetre president/ceo, equinor. thank you for joining us. let's get to the bad news, the fourth quarter adjusted net income coming in at a miss. operating profit also coming in at a miss. we have had strong numbers come through from some of your peers like shell and bp. why this disappointing number quinor?

eldar: we are slightly below expectations, the from an accounting perspective, it is slightly below. there are some specific issues in the numbers that i am sure we will explain, it has to do with the pricing structure in a falling market. , soave a big differential as we move forward we will have higher activity than might have been expected. these are specific issues, but the cash flow is strong, and the year is a strong. 18 billion in adjusted earnings, strong cash flow. by we raised the dividend 30% going forward. say these are quarter

specific issues. give us your outlook for 2019. to 2021, we19 going will increase earnings. we have a cash flow generation organically, 14 billion. to 40%.raise our return strong outlooks for the next couple of years. also pointing to strong production growth, 3% production growth going to 2025 on average. also supported from the norwegian -- strong outlooks and earnings, and cash generation and strong production. nejra: let me talk to you about the outlook for buybacks. you saw a year ago buybacks emerging. when can we expect that to begin? eldar: our preferred way of

giving capital to our shareholders will be the cash dividends. we raised the cash dividend policy, and the intention is to continue to grow the dividend from that level. in line with the underlying earnings. .hat is the priority, an nejra: you said before you expect the market will start feeling the effect of underinvestment by the end of this year, and that could support oil prices further. oil prices have recovered somewhat since the slump at the end of last year, is there a chance that this year will be less volatile, and prices will settle with a floor at $60? eldar: i expect continued volatility. we dropped from the end of the quarter to the beginning by 30 u.s. dollars. balanced thanmore

the last couple of years, and that means it is responding to geopolitical developments. i think that is something we down thef we look road, a couple years, we expect we will see that investment levels we have seen during the downturn. we will see a tighter market. when that will happen, i do not know. nejra: let me talk about your investment. billion.day $11 should we see that as confidence by you in the market outlook question mark how should the market reader commitment? eldar: we do not see any cost increases, we have good control of our projects. the 11 billion on average for the next few years, for this year. that is in line with last year,

same level. we came slightly down below that, but nothing transferred into this year or next year. same level, consistency, in good control of the project, and in control of cost development. the cfo ofoke to shell a few days ago, and she said shell would be able to do about theam talking expectations investors have of oil majors, which means returning cap of the shareholders to dividends or buybacks, investing in new projects and growth, and reducing debt. they said they could do it all. then you pledged to do the same? yes, that is what we are pointing at going forward. we have high quantities and investment that we can do organically. we can also increase the cash generation and continue to strengthen our balance sheet going forward. that also gives us

opportunities. there are opportunities for acquisitions. oil and gas is something we need to replace going forward. if we are patient when prices are right, we have a strong replacement ratio by 200%. that is a good position when it comes to resources. that,e the capacity to do and at the same time strengthen our balance sheet. nejra: you mentioned acquisitions, talk to me about your plans on that front. eldar: we look at the opportunities in the quality, we screen a lot of these and follow them across the world. we are patient. nejra: what assets are you looking for? assets for quality our industrial strength, that fits our strategy going forward. there is no specific geography,

it is more important to do things where we already are. beyond that it is the quality of the assets, and the price we might have to pay. nejra: that brings me to this talk abouten people u.s. shale oil production, what comes to mind? are you involved in u.s. shale? what i want to know, you said prices are too high to buy assets, is that the case you would not look to? shale,we look into u.s. there is significant production. it is the kind of asset you need to replace with new opportunities. i expect it to be highly priced and not a priority for us. nejra: thank you so much, eldar saetre, president/ceo, equinor.

can the world escape the low rates trap that japan is stuck in? you can join debate and reach out to us on your bloomberg. taking a check on markets, not a lot of direction from u.s. futures, u.s. equities those that a two-year high. yen -- speaking of low rates, negative territory down a basis point. the aussie dollar taking a hit from philip lowe. it has been read by the market as more dovish. trump callsresident the u.s. economy the hottest in the world. we will bring you the latest from his state of the union address. this is bloomberg.

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london, 45 a.m. in minutes away from cash trading. this is "bloomberg daybreak: europe." i am nejra cehic. let's get first word news. president trump delivered the state of the union address, calling for bipartisanship on his terms. he announced a second summit with kim jong-un, and said the u.s. economy is the hottest in the world. president trump: an economic miracle is taking place in the united states, and the only thing that can stop it or foolish wars, politics, or ridiculous partisan investigations. if i had not been elected president of the united states, we would right now, in my opinion, be in a major war with north korea.

much work remains to be done, but my relationship with kim jong-un is a good one. chairman kim and i will meet on february 27 and 28 in vietnam. and in the official response to trump's address, democratic rising star stacey abrams says the president has left the middle class adrift. then georgia and around country, people are striving for a middle-class were salary truly equals economic security. hopes aremilies crushed by republican leadership that ignores real life, or does not understand it. 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. this is bloomberg. thank you so much.

staying with that story we are joined here, thank you for staying up late and joining us. let me ask you, to what degree is trump's speech a game changer? there really is probably going to be little if any change at all coming from anything that happened out of that state of the union speech that ended five hours ago. one thing that did strike me, personally, it can across as more uplifting and moving, more respectful than the first state of the union he had. there was a very well social media moment that came out with regards to a lot of congresswomen dancing in their rose after donald trump said more women are in congress than

ever before. ngst of the congress sa happy birthday, i think the first time in history, it was to a holocaust survivor. as expected, the state of the union is strong is the quote from donald trump and every u.s. president who has made a state of the union speech. in particular in the early part of things he did focus on the economy, saying it was strong. reporting through our that the economy is expected to slow to 2.6% by the end of this year. donald trump did mention that manufacturing jobs are picking up from where they hit bottom in 2010 after the end of the financial crisis. bipartisanship, infrastructure, jog prices, he did not spend much time on that.

most of it was for the more divisive areas like immigration and foreign policy. economy, there is a story saying he inflated his economic achievements, counting numbers that do not match with official data, and highlighting a competence that left out key context. i urge people to read that on the bloomberg. he mentioned the state of the union is strong, and immigration is one of the big notes of discord, and china was front and center. not the only country mentioned. tell us more about what we heard on foreign policy. >> it was a series, a potpourri around the world, he looked at china and said, the hardball i am playing is working, boasting about tariffs on chinese goods.

he claimed that put billions of dollars in the u.s. treasury. state ofon he used the the union to say he will meet with kim jong-un in vietnam that very 27-28. continuing this sunshine policy 1980's-19 90's. he gave a shout out to venezuela, not nicolas maduro, but the national assembly leader juan gauido. he said with regards to nato and the u.s. allies, the hardball he is playing is getting them to ante up for their own fair share. there is an agreed-upon 2% spending on gdp toward allied defense. on afghanistan he said he wants to pull out of the country. one quote people will be talking about, he said great nations do

not fight endless wars. we will think about that as we move ahead. clear and cogent despite the early morning hour, thank you for joining us. as president trump touts his economic achievement, our next guest says the u.s. stock market and the economic environment are exhibiting the same split personality as jekyll and hyde. cole smead, managing director, smead capital management welcome to "bloomberg daybreak: europe." , wellve your starry tie done for bringing that out. walk me through your thesis on jekyll and hyde, the economy versus the stock market. cole: the trump will be the first to tell you the economy has been strong, not only on its own but relative to the developed world. that has been the dr. jekyll, the mr. hyde is you wake up and

the stock market is in a tailspin. they are detached from each other. if you look at the revenue, it is not a domestic thing. if you look at the composition of tech, they get more revenue, that has been the driver of the last 10 years of the equity market, and that is detached from the economy. of heating up while stocks do not have the same levers involved, the biggest question for investors is what does the next 10 years look like? and from a historical context, not great, mid-single digits. it is the kind of situation where you have to ask, what would you want to own if the economy continued for a few years at a minimum? what would that look like versus selling products around the world. nejra: your approach is picking

specific stocks that you think will return capital whatever happens with the broader stock market. what are you looking at within that? where are your big where you can return money to investors? feel like we have to put a disclosure saying here is an active stock accor. .- stock picker do not confuse brains with able market. this passive era has set up the idea that google are buying returns, but ultimately that is what they own. in comparison there are uniquely interesting things to ask. liberty global is talking to everybody in europe. to beery was rumored bought by viacom. why is john malone, a traditional media guy, kind of boring and old, why does it look

interesting when tech is not having the greatest earnings, and people are not as excited? , we areotomy of markets going from a great to a black and white in terms of what is going on. nejra: you definitely are staying away from what you called glam tech. no question about it. google's revenue is down, and they dominate search. they have 95% of profits of all search in the world. at the same time they cannot control pricing what they charge customers. that seems odd. in comparison, we have discover on behalf of our clients. nejra: you also own it as a family. directly and indirectly through our mutual fund. that was supposed to be disrupted by distribution from netflix, that was going to ruin

content. and we find out home and garden is being sent across the united states and pushed across the world with the european relationships. nejra: we got numbers from disney yesterday. there is no other disney. it is very simple. disney has a platform, at any given time, certain parts of the business can do well in certain parts not. the theme parks were doing great. wars in thisstar quarter. abc is doing well for them. is a notess in espn pronounced but still soft. they have a great content platform that they do profitably. there is a big difference between that and what ethics is trying to do. it is a very stark difference. nejra: with some of your stock holdings are that on the housing

market, that is one area when i ask about the u.s. economy people flag as a serious area of concern. you are not concerned. it is going to be so fun, the demographics layout in such a way. ,here was a pickup in traffic rates back off, i am getting bargain rates -- the truth is you are not, it just feels like it on a relative basis. as long as we have 35 to 40-year-olds coming into the market, we will have a strong housing market. housing is always needed globally. you have to have a roof over your head. people doubt it because they say to sell these -- we can sell apartments, maybe we can sell a house. nejra: thank you for joining me this morning. cole smead, managing director, smead capital management, great to get your thoughts post-state of the union address. the european open is up next.

when you travel to work, tune into bloomberg radio on your mobile device and digital radio in the london area. futures are flat. this is bloomberg. ♪

anna: good morning welcome to "bloomberg markets: european open." london, i amn edwards alongside matt miller in berlin. today, the market say it is about the earnings with the fifth of stocks is hundred companies reporting 11% have beaten estimates. all of those companies have beaten estimates by a 11%, cash trade starts in 30 minutes.