♪ president trump may push back the deadline for higher tariffs on china as the countries continue to negotiate. the recession, germany posts zero growth at the end of the fourth quarter is it a blip or the worst to come and turning it around, credit suisse is trading losses eclipses gains and wealth management. >> i am convinced we will outperform. we're seeing signs of that, positive. welcome to "bloomberg:

surveillance." neighbor has a look at your look at-- nejra has a your markets. >> in the u.s. looks to be joined by today's session. is this just adding to risk around the trade headlines we have had? we do getgue that if any kind of extension, does that not just extent of the uncertainty? anyway, the bloomberg dollar index is on the front foot. dxy, but he sees weakness in e.m. affects and equity so it is not a clear -- clear-cut picture, but perhaps some are getting swept up in some risk on sentiment in terms of trade war optimism.

oil gaining for a third day. we did see an export drop, in some sense outweighing gains. finally, just showing the euro there. and have that fourth-quarter data from germany showing static. let's get bloomberg first word news, here's viviana rotondaro. days, the day president trump is willing to push back the deadline for adding new tariffs. he has already indicated his willingness for letting the date flip if the countries are close to a deal. this as top-level trade talks resume. president trump has indicated he will need to meet president xi before agreeing to a deal. china's export growth unexpectedly rebounding engendering. the results were likely boosted by companies trying to ship ahead of the lunar new year holiday. outbound shipments rising over 9% while inbound deliveries slipped 1.5% and left china with a trade surplus of $39.2 billion.

patrick harker is adding to the voices calling for patients on the rate path. he said that one in 2019 and another in 2020 is appropriate. he adds that on balance, risks are slightly tilted to the downside. harper is a full voting member in 2020. later today, theresa may takes her brexit plan back to parliament. there are just six weeks before the u.k. is due to leave the union. the prime minister could face a revolt from anti-eu lawmakers in her own party. they are reportedly insisting that leaving a block with no deal must remain an option. new rules mean online giants must pay creators for things that appear on the website. say theych activists could result in censorship online. google has recently said they will pull their flagship news service from europe in response

to the law. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine.u, francine: let's get back to the top story. besident trump is said to considering pushing back the deadline for higher tariffs on -- tariffs. joining us now is roger jones, head of equities at london capital. also joining us is the head of equity strategy at saxo bank. let me kick off with you. how much of the positive sentiment we are seeing is due to the top of things making progress with these chain talks -- trade talks? >> it is a combination of two things. it is progress on the trade talks and, obviously, the change

from global central banks. more firmly the view that emerging-market central banks are now in easing mode. latest being the central bank of india, and more easing from china, indonesia, and other asian countries. the main point here is that we will get a trade deal between the u.s. and china, to what extent will it be a grand deal or a small off deal? we'll probably have a short-term isst, but the real issue still intellectual-property theft, that is a key issue and one of the reasons why u.s. are moving out of china. that is still the real issue. francine: roger, do you agree with that?

that would be anything more of a smoke and mirrors to help with the equity market? i think so, nobody wants to put all of their cards on the table at the moment. it'll be a case of china to keep things back in terms of getting what you want, that protection of property. in terms of this, as we look at this in a bigger context, this is for all the folks at the moment. it question is it will really change the outlook for the global economy in the next six months? i question that it will. what do you see as being the main driver of volatility in the months to come? we have more accommodating central policy, u.s. trade we are talking about. nursing brexit in zero politics taking over the market. the most important thing here

is that the global economy is operating below the recent trend. we have some downside than index in the policymakers have acknowledged that. there's a change in central banks and also stimulus coming through from china. that is a confirmation. -- we are in the most critical phase of the business cycle. to avoid a recession, or if they respond to light, the downside zenimax are too strong to avoid -- avoid it. it is the most important years since 2012. and given indicators, we are still cautious. we're not all out in terms of they havecation, but a lower than normal exposure,

despite the rebound seen in january. there will be overconfident on policymakers, steering or engineering policymakers. francine: peter, i would ask you to down fence question. this is our question of the day, our markets block tough question. it is what assets have won your heart, not your head? i know it is unfair, because you are an equities guide, but what asset has one your heart? >> this is easy.

then gold for us is pretty well. we think gold will be an asset for valentine's day, and hopefully the rest of 2019. francine: peter? >> yeah, i actually like to go contrary, despite painting a bleak picture here. i think history shows there's a strong it in equities, so the contrarian bid would be to fall in love with south korean equities. those the ones with the highest beta, if you believe china can deliver. francine: brilliant, peter. you cannot say we not very romantic here on bloomberg. both stay with us. coming up, we will have plenty more on banks and go back to what we heard from credit suisse. the chief executive talking to me a little early on, and dodging the recession bullet, germany posts zero growth at the end of the fourth quarter. is it just a blip, or something uglier? this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." now we will get back to the , but first, second let's get the bloomberg business flash. airbus is pulling upon on it slow selling 8380 superjumbo after just 12 years. the plane maker will cease deliveries of the double-decker jet in 2021. emirates is the only remaining major buyer, cutting its order book by 39 aircraft. 3500 jobs will be impacted and they say the ramp-up of other models could offset some of that. trading losses at credit suisse are eclipsing a gains.

the swiss bank posting a larger than expected loss in its global markets division. there is one bright spot, the bank saw steeper outflows than many competitors. >> i am convinced we're going to outperform. on a relative basis, we see signs that. i read sale is down, revenue is up, so the key indicators are the right direction. if we keep on going, it will be reflected in the share price. >> the french government is reportedly considering delisting and energy giant. sources say interview the first deputy corporate restructuring. this is to address the talent of replacing the country's nuclear power fleet. they own 84% of etf -- pdf. -- edf. that is your bloomberg business flash. francine. --ncine: thank you, video

wevi will have plenty more todayviana. viviana. we will have plenty more today. this is just part of what we are seeing in germany. the gdp stagnating at the end of 2018. germany narrowly managed to dodge a recession bullet. europe, the global economy's weakest link come at the moment. our guests are both still with us. let me start off with you. when you look at germany, it is meant to be powerhouse in europe. if you do see a trade tension easing between the u.s. and china, can they recover? or whatever happens, german gdp muted?ow be you did -- >> germany is all about the exports. deal coulda trade

include data out of china. it is one of the biggest worries. i would not call this a new long-term reality. we see them on stronger footing. it is quite worrying. if we get the next recession, europe will be in the worst situation. we'll have quite negative interest rates from the ecb. we'll have the last overhang in the corporate and private households in europe. toby very little room and we will have to go the fiscal way. the germans, they don't want to do the fiscal stimulus. and probably want to do other fiscal stimulus. it will flare up the whole concern and can they hold it all together? i'm very worried about europe, i would like to see them rebound, and has come by china, because they don't see it.

francine: do you see a better first quarter? itthat in the cards and does have to come from stronger chinese growth? yeah, there is a big sensitivity for emerging markets. >> the fiscal market would be the big game changer. germanyspecially see release with a bit more fiscal stimulus. they clearly have a fiscal position where they are able to do that. i think that would be very helpful and change investors opinions quite quickly about the potential for europe. the back of investors minds, and the longer-term, this tale risk remains. is verysomething that difficult for investors to get over. it can put across in terms of discounts and asset prices in the eurozone.

francine: roger, do you like german equities? talking about some of the risks that could dissipate, what exactly is happening in germany? is it because of the threats of tariffs from carmakers in the u.s.? or are they just a byproduct of this trade spat? >> there were definitely some one-off that occurred recently them especially for automakers. we had difficulty in terms of clearly, a big pullback in terms of auto demand. the result season, there is a lot to factor into the price. expectations became very low. that,ality of that was yes, there is a slowdown, but has not collapsed. a situation the equities have not started to factor in, a much worse and

environment in the preceding period. you have got to be selective, but there are clearly areas there that are still good, global businesses. dependent,obal gdp but they are quality businesses to be bought. francine: thank you both. andr garner at saxo bank peter jones -- and jones at sex. saxo.es at and the german sector, 11:30 a.m. live from frankfurt. coming up, we also speak exclusively to the chief executive. we talked to him about company earnings and risks from brexit. that is next, this is bloomberg. ♪

francine: this is "bloomberg: surveillance." speaking to the leader of credit suisse. this morning after becoming posted mixed results. may 1 saw a solid outlook.

they said the exposure to europe will be a of greater concern as the deadline for brexit looms. joining us is cap germany's --- executive isf brexit your chief. -- chief concern? >> the question is, with all of the volatility, do we see a continuing appetite? the digital challenge, the fact that e-commerce and the data is completely transforming industry is the big engine for growth.

that, what is your answer? are they likely to invest, are they retrenching a little bit? >> it is clear we have a strong appetite. the start of 2019 is quite solid. the pipeline of opportunities has been growing 11%, which is good. of course, if the economy was turning a little sour, that cost competitiveness would become the main driver. we see a few large deals coming so the appetite for radical and wide transformations with large clients, today we are well equipped. we were struck by the fact that it is larger than last year.

this year, we have a wider range of 5.5%. ready tothat we are adapt to a little more volatility, but it remains solid. francine: you offer a number of services. where do you see the main growth coming from? first, i was said that the smallest is cybersecurity. everywhere, there are threats and attacks, this is growing. and there is digital, the digital challenge. besiege to a big transformation challenge. china and thef but we haven china, not seen car manufacturing still an investment.

the digital engine, we were 22% in 2015 of exposed to digital and cloud. it is now 45% and moving past 50%, probably by the middle of next year. so we are well equipped to take advantage rooted -- advantage. francine: thank you so much. weing up, we talk brexit talked the future of politics in the u.k.. that is with the liberal democrats that the leader. meanwhile, u.s. equity futures are also up as the white house is said to postpone tariffs on china. ♪

francine: economics, finance, politics. this is "bloomberg surveillance."

let's get straight to bloomberg first word news in new york city. viviana: president trump is pushing back the deadline for higher tariffs by 60 days. he already indicated his willingness for letting the march 1 date slip if the two countries are close to a deal. esume intrade talks r beijing. china's export growth unexpectedly rebounding in january. the results likely boosted by companies trying to ship ahead of the lunar new year. outbound shipments rising over 9% from a year earlier. in done deliveries slipping while bit 5%. and left china with a trade surplus. paul manafort's plea deal is off. he reputedly lied to federal prosecutors after agreeing to cooperate with special counsel robert mueller's investigation.

the ruling doesn't bode well for manafort who pleaded guilty to two counts of conspiracy.he is said to be sentenced on march 13. patrick harker is adding his voice to those calling for patients on the race path. -- rate path. slightly tilted to the downside. new rules mean online giants will be with required to pay creators for content that appears on their website. free-speech activists say this could result in censorship online.google recently said it may pull its flagship new service from europe in response. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

nejra: lose bank of england policy response is likely more appropriate if we get a note yield brexit. it is interesting because we have had comments before from mark carney that we may need to see interest rate hikes if we get a spike in inflation on a no deal. there is a chance that the only make -- boe may tighten. the passes slower than a year ago and domestic and global growth are weaker than expected and they will wait for more inflation hikes. smooth, a 25 basis point rate hike per year is likely. theresa may faces a potential revolt from pre-brexit members

of her party. anti-lawmakers have insisted that no deal must remain an option. the prime minister is seeking another two weeks to secure legally binding changes to the deal. a scale of any defeat could show how little room she has to maneuver. how little room of theresa may have maneuver with u.k. lawmakers at this point? >> what she is not doing is showing leadership. that has been lacking throughout the for -- last two and half years. that has really been putting party interest about the national interest. 2.5 years ago she had plenty of room to maneuver. she could reach across the party divide. but even now, she is the prime

minister and is leading the government. all the preparations you are about, all of the contingency that businesses have in place for the possibility that we may crash out of the eu without a deal in just six weeks time is a position that no prime minister should reasonably be putting the country and. what she could have prevented and could still prevent by making it clear that that is an outcome she will not allow to happen. nejra: how likely is the prospect of no deal? jo: i think it all depends on the decisions that are made by theresa may and others within her government. i would have imagined that knowing what she knows about the impact in our security and our economy that she should not even contemplate that. from speaking to people in the conservative party, there are those that say she is prepared to do that. there are others in government who are responsible, who will

need to step up to the plate. i think we are to see that today in the vote in parliament. maybe that might happen in two weeks time. the clock is ticking. we are scarily close to that march 29 deadline. when we didn't have a plan about what was going to happen, about what our negotiating position was going to be, the it even come to an agreement about that until the laughter a year after triggering article 50. it is an atrocious mess. it is quick to take leadership from those in government to roll out no deal. -- rule out no deal. the prime minister is not doing a terrible job in terms of negotiation. if you take away the no deal specter, it means she doesn't have the stick to date the curate with is a vote for my deal.

jo: the prime minister's deal is not like some great deal for our country. i think you are beyond the point where she could conceivably make the case that no deal needed to be on the table. we are six weeks away from this potentially happening and it is more serious than that. we shouldn't even be at this level of negotiation at this point. she needs to be taking her job seriously and rolling that out. -- ruling that out. membership of the european union is the best deal. the will of the people is something that never changes. shows there is much more support now for staying in the european union. given how huge this decision is for our country, the severe consequences there will be for generations, it is time to put this back to the people and stop the chaos. francine: we are three days away is it noweadline,

time to say let's forget a second referendum, but find a solution that does not involve a no deal brexit? jo: putting it to the people is that solution. to have very strong views from the european countries that if we ask for an extension of article 50, that that will be something that could happen. march we haveh of the option to say unilaterally to with draw the notification, if that is what we choose to do. we do have important cards to play.we're not at this stage dependent on those other european countries. we're at a strong position to ask the extension and make sure we do not embark on this just because the premise minister has decided to trigger article 50. there is a way out of this and we should make sure this is put back to the people.

it is too important to just go ahead and say in one day that is what people said, despite the fact that we now know how bad this is going to be. we need to ask the people again. nejra: let me just bring you in here and get your reaction to the comments saying that loose boe policy would be more appropriate in a note yield brexit. deal brexit. how does your expectation of bank of england policy factor into your view on u.k. equities? roger: i think valuations are lower in the u.k. but also in europe. that is before we consider emerging markets which historically are even lower. for us, it is that the u.k. has all of this uncertainty at this point in time. equities if you have a global equity mandate?

it is too difficult with the printing moving around as much as it does. a think if we consider u.k. equities, with got to be very selective. international stocks are likely to do well. nejra: what response do you get from the business community in terms of the people's vote? to the think this is the most positive outcome out of all this or are they just focused on a note of brexit? jo: many businesses are backing the campaign for a vote. manufacturerncrete in my constituency and the problems they are having is about their axes just deal because -- access to steal. -- steel.

we do need to get a resolution. the idea that that this all gets resolved if we get theresa may's deal pass is nonsense. that is just the beginning of many more years of uncertainty. anyone that is a bit sick of , if anyonet now thinks this is going to go away anytime soon if her deal gets through, that is not going to be the case. this is going to be money for the years of wrangling and negotiation. the quickest way out of this would be to have a people's vote and the option to stay in the eu with the vote the people chose. francine: thank you so much. us.nd roger stay with coming up next week or what the credit suisse chief executive had to say after the bank swings back to profit. wealth management much better than expected. that interview next.

this is bloomberg. ♪

francine: this is "bloomberg surveillance." the restructuring at credit suisse has ended. executive the chief on how the plans to grow the bank regardless of market conditions. >> we have been growing for years.if you look at revenue , it is up about 15%. to have a very simple approach.

-- we have a very simple approach. your adding one swiss franc of toatile, low-margin business one swiss franc of capital efficient revenue. i think the two doesn't tell you the story. is a business that has a 7% bygin and would replace it $2 billion of revenue. profits are 20% higher with 40% less capital. low-margintal from business to a capital light high-margin business has worked. we focus on the clients.

we can have a broader relationship with them and manage their assets. the interesting thing about that is that it makes assets more sticky because you have a proper relationship. we saw this in q4. market.$35 billion to it went flat. when you convert in swiss francs 2%. is down to present. -- i'm not frustrated. honestly, it is a very good job. we gave them a harsh capital target. it size down very

significantly. we exceeded the capital target in terms of reduction. in revenue, we did $5.1 million and we were aiming for six --lion dollars -- $6 billion we did $5.1 billion and we were aiming for $6 billion. he won in 2019 is much better than q4 of 2018. in 2019 is much better than q4 of 2018. bounce back. where things are positive is on the wealth management side. basically, all of the dip we had in december has been basically erased. 4 where you see the best

opportunity -- francine: where do you see the best opportunities and wealth management this year? >> we have a broad range of products and services. as the economy cycle unfolds, we do different things for our clients. asia has its worst fourth quarter in the stock market since q4 of 2008. had its best group quarter since its creation. where you usents the balance sheet. we are put capital to work to support our clients. if you don't desert your clients when things are tough, they want dessert you either.

in ourery important business to support the clients. that was our interview with the chief executive officer of credit suisse. let's keep the conversation on banking. if you look at the valuations for a lot of these banks, it could be ubs, a lot of the french banks and german banks, had they grow in europe? roger: it has been very tough for them over the last few years. they really dislocated from where the u.s. banks have gone whichever covered to a level of health and strength we would have thought we would see. in terms of what they are doing, it is the right measures, it just seems they are still quite a bit behind the american banks. that.has been a cost of clearly, they are struggling to compete in the investment side

against the u.s. banks. i think wealth management is one that a lot of banks are following making that business quite competitive. it really does become a challenge. the best example is commerzbank returning tangible equity targets. for an equity holder, that is very challenging to buy into. i think banks as an investment proposition -- francine: i was going to ask you, do you make a difference between the french, and german banks are deep with them in the same basket? roger: i think to some extent you put them in the same basket. they face the same challenges and have similar returns. they have different franchise businesses in terms of their makeup, but they still have a lot of work to do, all of them.

in terms of investing in banks, as an equity investor, i struggle with european banks at the moment until we get a more supportive economy. until we get more evidence that returns are going to be acceptable for equity investors. on the debt side, you see a much better scenario. on the credit side, you see a big buffer being built since the financial crisis. that makes the credit investments a lot more attractive, safer anti-soviet very good yields of corporate bonds. francine: thank you so much. coming up, we will have plenty more in the markets. plenty more on banks. we continue with roger jones coming up next. the chief financial officer of commerzbank speaking to our matt miller at 11:30 a.m. london

time. this is bloomberg. ♪

nejra: economics, finance, politics. this is "bloomberg

surveillance." viviana: airbus is going to plug on its superjumbo after just 12 years in service. 2021. these deliveries in and is the only remaining major buyer. it cut its order book other models that offset some of that. trading losses at credit suisse are eclipsing wealth gains in wealth management business. there is one bright spot.

to bank seeing fewer outflows than many competitors. >> i'm convinced that we are going to outperform. to see signs of that. are revenue is up. it will be reflected in the share price. viviana: the french government is reportedly considering delisting energy giant eds. sources say it would be the first step in a corporate restructuring to address the challenge of replacing the company's nuclear power reflate. it is likely to be taken into full state ownership. that is the bloomberg business flash. nejra: thank you so much. let's get a check on our markets. there was not really a clear-cut picture of markets in terms of risk today. we're starting with european equities. a bit of a mixed picture, banks underperforming and it. -- a bit. there is optimism around the possible extension of trade talks. diverting the t-rex deadline of march 1 -- tariff deadline of

march 1. em currencies and equities coming under some pressure. that might have something to do with dollar strength. wti and brent on the front. even though we have been seeing increases in production and the euro giving up gains from earlier. we have the fourth quarter data out of germany. it is stagnation that we see. francine is live from zurich in the next hour and tom keene out of new york. they will speak to the ceo of commerzbank. this is bloomberg. ♪

road.ne: down the

president trump met push back the deadline for higher tariffs on china as the two countries continue to negotiate. germany posts zero growth at the end of the fourth quarter, but is it just a blip? credit suisse's trading loss a clips is its gains in wealth management. >> i'm convinced we are going to outperform. this is "bloomberg surveillance." there is a lot to talk about. i think what caught my eye was the fact that germany is not in a recession, but flatlining. you wonder whether the trade agreement between the u.s. and china will really help lift germany out of this limbo it is in. tom: the window we are in, a figure interview moved the market little bit. story, it isglobal not just about zurich, frankfurt and london.

it is a global story of real eubank fragility. -- eu bank fragility. francine: yeah. let's get straight to the bloomberg first word news in new york city. viviana: president trump is reportedly pushing back the deadline for higher tariffs by 60 days. he already indicated his willingness for letting that march 1 deadline slip if the two countries are close to a deal. noting he will need to meet with president xi before agreeing to a deal. out of shipments in china rising over 9% from a year earlier. in down deliveries slipping 1.5%. it left china with a trade surplus of $39.2 billion. later today, theresa may takes

her brexit plan back to parliament. there are just six weeks before they u.k. is set to leave the european union. fromould face revolt leaders within her own party. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. let's get right to the data this morning. upwards.continue of not look at the year to date numbers. futures up. we are not near record highs. curve doesn't do anything. that is in itself a big deal. george is looking at the two-year 30 year curve, which shows much more of the long been dynamics.

the vix 15.60. yesterday's close advancing more now. there is real movement. dollar and stronger sterling. i want to get to our guest. this is the deutsche bank trade weighted dollar. it is a daily chart, but i have taken a weekly. what is so important here is you can extrapolate right out to the line of persistent dollar strength that we have seen. this is pushing against consensus. in a way, that is the case that most of us expect the dollar rally will ultimately come to an end. the highs of the dollar index

already last year. the price action of late maybe confounding some of that consensus to a degree. it is important to note that the that therm drivers, argument is in favor of weak dollar are still very much in place. it ultimately implies are highlights the fading yield momentum that has been helping the dollar rally for so long. that yield momentum is all but gone now. tom: is there a flow momentum in the dollar as well? this could be either the visible yield.r adjusted valentin: i have to say investors are still very much in love with the dollar. we do see that in positioning data. markets are still very long.

the currency is still a default long in the market. the is partly a function of fact that there is no real alternative to the dollar at the moment. overbought andd, has been rallying for so long. most of the consensus seems to be predicting downside. that is the case investors are in why they should be abandoning the dollar just yet, given it is still the currency with superior fundamentals across the board. could that change if you're it becomes stronger? if you look at the beauty pageants around the world, i would say the u.s. is looking pretty good compared to emerging markets in europe. valentin: it is still the case. something discouraging clients is valuation. u.s. stocks are looking quite expensive. at the same time, the cost of hedging any dollar exposure has

grown a lot. a function of the flatness in the treasury yield curve.the one thing that may help or continue to help the dollar from here is someone more aggressive reduction in the short dollar hedges. that as japanese investors have been running for so long because the cost of maintaining those short dollar positions have become too high. that may explain why the dollar is doing so well at the moment against the euro. don't think that is reflecting renewed inflows into u.s. assets. francine: do you expect china and japan to continue buying treasuries at this similar pace to what we have done in the past? if you look at the last time the fed was tightening, a process that ultimately pushed the treasury yield curve into invert territory, that was also accompanied by the end of --

we actually saw japanese investors stopping from buying treasuries for an extended period of time. i wouldn't be surprised if this were to happen before long. i would think eurozone investors that have been aggressive buyers of treasury since 2015, think we are seeing some indications that those influences in the treasury markets are slowing down considerably and ultimately will come to an end. tom: what is the measurement flight tong of quality flight to u.s. dollar this morning? dollar is still quite liquid. if you think of the cash available, dollar cash is still yielding something close to 3%. in the eurozone, your still being penalized by the ecb for

holding your cash. i think what may be driving the dollar at the moment is the fact that the reason why the fed turned more dovish not so long ago was the concern about the slow down outside of the u.s. abating.ks are now what seems to be happening in the u.s. rates market is that investors are gradually putting the next rate hike on the table. reason predominantly the why the dollar has been doing so well against the yen, the euro and so on, plus the fact that the dollar remains an attractive safe haven currency. talk to me about some of the obscure pairs in emerging markets you like. was still thing brazil could do well overall. we like the policy mix that the newly elected president has put on the table.

in an environment where the fx exchange rates are certainly the best tight ranges, some investors may hope for is to ignore direction where the fx market will be going. the south african ron has been another attractive currency with a somewhat different sets of reasons. thisll, we also think that partial trade you between the u.s. and china, we think asian currencies could become attractive again. dollars cnh has attracted

looking interesting. there are interesting picks and investors may be more than willing to differentiate or just ignore the broader picture. francine: what do you do with renminbi? if we have this u.s.-china traits that being taken off the table, what does it mean for renminbi? valentin: we expect to the tray conflict and associated negative growth impact on the chinese economy will start abating before long. we also note that the chinese stock market still looks quite cheap relative to the u.s. stock market. attracting some discussions with clients on a broader range of asset classes. you have all of these risks about an eminent trade war starting to abate, investors may start returning.to this view here is that investors will start looking for alternatives to the dollar. the --long assets all are the default, but before long asia may start attracting attention and that should benefit renminbi. tom: thank you so much.

will continue this discussion. a strong dollar front and center for all of global wall street. you may like it, you may not. care is explaining the end and death of the a-380. management changes going on at airbus. tom holding court as well. there are a lot of moving parts with the executives of airbus. a-380. with the a-380 and conversation with the executives later on. from zurich and from new york,

this is bloomberg. ♪

viviana: this is "bloomberg surveillance." airbus is pulling the plug on its low selling superjumbo after just 12 years in service. it will cease deliveries of the double-decker jet in 2021. book by cut its order 39 aircraft. up to 3900 jobs will be impacted. coming up, we speak to the president of airbus in the company's next ceo. after zeneca forecasting --

up, we will bring you our interview with the ceo of astra zeneca. an e-commerce giant saying it huaweiua -- shunned equipment. it is facing a global crackdown. sense the potential risk. to prohibit the chinese network to be used. huawei.d not to use viviana: that is the bloomberg business flash. much.ne: thank you so

the restructuring at credit suisse has ended, but the ceo is still facing a trading unit that is losing money. >> we have been growing. revenue, is up about 15%. we have a very simple approach. we don't look at total revenue because you are adding one swiss franc of volatile capital low-margin business to one swiss franc of high-quality stable recurring capital efficient revenue. i think the tw doesn't tell you the storyo. the story is that on the first, we have accepted -- $4have lost about

billion in revenue and have replaced it with a 30% margin. year are 20% higher with 40% capital in 2015. moving to a capital light high-margin business. we went for high net worth because we can have a broader relationship with them and manage their assets and also advise them on their business. the interesting thing about that is that it makes her assets more sticky because you have a proper relationship. we have seen this in q4. are assets and management, we lost $35 billion to market. $772 billion to

$771 billion. we are down 2% exclusively because of fx. francine: that was the chief executive of credit suisse speaking a little bit about the swiss franc. i think i paid my burger king last night like $30 for a burger and fries. what happens to swiss franc from here? valentin: swiss franc is still overvalued. that is part of the reason we expect it to weaken against the dollar. is clearly making its policy outlook dependent on where this was frank is -- the swiss franc is. there is no chance for the s&p to consider normalizing policy. from that point of view, the

swiss franc remain the one funding currency investors should be using from here. valuation relative monetary policy outlook make it quite bearish in our outlook. tom: thank you so much. it is a good time to speak on eu banking. kathy miller will drive that conversation forward in germany. --is maybe the most focused matthew miller will drive that conversation forward in germany. and most timely interview. commerzbank doesn't get the revenue story done in q4. stay with us. big focus on eu banking. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance." i really want to point out the backstory in davos when we were there was eu banking. francine is living that in zurich today with the challenges of credit suisse. this is three of the troubled eu banks. credit suisse in white. down below, the challenges of deutsche bank. absolutely germane to me is they actually were all -2012.d together in 2011

that is really where they broke apart into the ability to do banking. this ability to make revenue. what did you learn about revenue today? francine: the important point is that is that if you put it next it is probably also the moment u.s. banks are picking up. that you seeis european banks under a huge pressure. that he hased is had a lot of his targets.it is difficult in these environments to have a business model that makes money. that is very true in his trading units because he actually disappointed in not. overall, looking at a couple of analyst notes. they are saying that what he showed today

competition. francine only is walking on the streets and the fancy stores and all of that, but it is tangible in zurich between ubs and credit suisse. how does ubs compared to credit suisse in zurich? francine: we actually spoke to the head of equities from legal and general. the concern is that they are going after the same markets. they are trying to become a little more different. they say we want high net worth individual in asia, but credits lisa wants to service them differently giving them a little bit more. at the same time, if you look at all of these european banks that are trying to go into wealth management, it means wealth management gets more crowded by the day. tom: exactly. let me set up what we are going surveillanceerg bloomberg surveillance" this

morning. with cell within the commerzbank reporting from our bank team, the real tangible shortfalls at commerzbank and the challenges to credit suisse and on and on. we haven't even talked about italian banking this morning. whether you like or hate aircraft, it is a huge day for chicago from seattle in over to france. a-380 is dead. this is bloomberg. ♪

>> guy johnson is speaking about huge news on the a380. here is hercity

first word news. >> public at the democrats unveil the spending bill that would avert a government shutdown. the question is will president trump sign it? the president gets only a fraction of the money he wants to build a wall on the mexican border. he indicates he will reluctantly accept the deal. the white house will look for landmines in the bill. forstors gain prominence defending donald trump is in hot water. don barrett says it was a mistake to judge saudi arabia for the murder of jamal khashoggi. that true criticism in washington. he backtracked and apologized for his comments. echoing previous statements by the president. the malaysian prime minister in waiting says goldman sachs must bear responsibility over a scandal. the nation saying they won't compromise in the government is investigating potential crimes the bank may have committed.

they are not sure if the mage -- malaysia can get the $7.5 billion in compensation. >> the effect being the whole image of the country, the confidence of investors and the status of economics. they must bear responsibility. >> goldman sachs has responded bond offerings were designed to risk money to benefit malaysia and 100% of the net proceeds from the transactions were deposited into accounts and none of those funds passed through goldman sachs. a huge portion of those funds was stolen for benefits of the members of the malaysian government. it is clear members of that government and 1mdb lied to goldman. global news powered by more than 2700 journalists and analysts, this is bloomberg.

>> thank you. with just six weeks to go until the u.k. is due to leave the eu brightness still deadlocked over the brexit plan. theresa may could face a rose in her party.olt this is basically the eurosceptics that are threatening not to vote for an amendment that would take a no deal brexit off the table. erg threatening not to back the government and the vote. what the government has laid down is a mutual motion. it is not supposed to be contentious. it says the house feels the same as it did at the end of january and the prime minister has more time to negotiate brexit without this backstop or with less of a brexit. brexiteers in the tory party take issue with it wraps in

everything that happened at the end of january and that big vote. they made points about the backstop. the house voted to block no deal, it was not binding. is concerned if they back the government they are backing themselves into a corner where they can't have a no deal situation. isay's phot is not a -- vote not a meaningful vote or binding with the government. it would not look good for the government. if they lost erg support. >> i am so happy we have a brexit countdown clock. it is not stressful at all. >> we have a brexit countdown clock. anna, you know the bodies, who is the most stressed? the brexiteers losing their ground towards no deal? where is the hanks on the house of commons today? >> theresa may's strategy relies on asked on both ends of the

political spectrum. she warned there could be no brexit at all. she also warned there could be a no deal brexit. she has to keep pushing those divergent paths to create action at both ends. the chief negotiator was overheard in a bar in brussels this week by u.k. broadcaster talking about the u.k. brexit plants. something that perhaps he would not intentionally do. >> i find this remarkable. in america we is call this kick the can down the road. what road are we kicking the can down? there are many destinations available. it is unclear where the road stops. this vote might not matter. february 27, that will matter more probably. then we get to the march summit

and the eu leaders gather. perhaps this goes down to the wire and that is where we kick the can to. , we go we get a deal into transition. markets no doubt will breathe a sigh of relief if there is a deal. then we are in transition. 2020, end of december market that in your diary. that is when new arrangements have to be in place by to avoid a backstop. >> thank you. our agendas are filled with brexit votes in parliament and outside of westminster. we hear from the astrazeneca's chief executive. andill talk drug pricing some of the new findings on research in the pipeline. this is bloomberg. ♪

, a bigay good morning assignment on eu banking incirlik, switzerland. , we catchoria street up with him after a good conversation with anna edwards on brexit. i don't want to know a tactical call on sterling, can you give a strategic call on sterling for five years? >> we are still fairly bullish over the long-term horizon. we could be heading towards -- staying around 150 or 160. cable used to trade at two at one point in time. in terms of pure sterling we may be heading lower.

something in the vicinity of 70 by the years anend. end.ar's >> for the mortals watching what he said our china or miss moves -- ginormous moves. as we go to a 150 table or a strong sterling versus the euro, what is the effect on u.k. business, on u.k. society? is the caseole it that the currency has had an impact historically predominantly mainly on inflation. the u.k. is an open economy. it is tied very closely to the eu historically. the pound does not appreciate that much in the near term against the euro.

that may not change significantly the trade relationship or the dynamics there. where the u.k. could benefit from the u.k. will make a success out of it. the u.k. remains an attractive a distant -- i don't think that will change in a significant way down the road. the pound -- to your point on the purchasing power of the u.k. consumers, given the consistent account deficits it is i would say a testament to just mastic -- domestic demand. >> let me jump in. if we have a deal what does the boe do? going toaid they are

hike once per year for the next three years or so. they may ask one more hike per year on the back of that. , assuming the brexit risks are removed are not in such bad shape. presumably the damage done may not necessarily be sustained if that uncertainty is removed from us. at that point i would expect business confidence to return and consumers to go back to spending. that should help of the boe normalize policy at a quicker pace than at the moment. >> thank you so much. we speak so leadership of airbus. this is bloomberg. ♪

thing i knows one it is the democrats learned in the midterm election there is no other issue for americans accept health care. it was front and center. the big surprise in the midterm elections. all of that came down to the

tangible -- tangible emotion across america. america has had it with drug prices. there is no other way to put it. the most important discussion from cambridge, england with the ceo of astrazeneca. >> we do support the proposed changes to the rebate. we believe things have to change . we will provide transparency and enable companies to deliver rebates to patients directly at the point-of-sale at the pharmacy level. patients do benefit from those rebates. you have to think about our products in the case of our company. our net prices have been flat or declining over the last couple of years. chief the

executive offer of astrazeneca. we are looking here at the mix of the markets. what is so interesting within the market strategy is, it all comes down to international trade. agricolehe credit economists say about international trade? >> trade has been slowing. why is one of the reasons the global growth output has been deteriorating quite a bit in the last six months or so. that with some tentative agreement between china and the u.s. things may change. china remains an important source of demand and also a source of exports for the rest of the world. on the back of that, things may brighten up for currencies or by implication economies that are

relying somewhat more on trade. case in point the eurozone or the scandinavian economy or sweden. a range of emerging markets. and the lowew points at the slowdown in global trade and global growth for the that before are long the currencies of more open economies may emerge as the out performers. >> thank you so much. it was a celebration 50 years ago of the boeing 747. it was remarkable. that same celebration a few years back. more than a few years back was for the giant airplane in toulouse, france. guy johnson witnessed the advent of the airbus. what was that first day like in the airbus, what was it like to go up and something that big?

>> the first flight was incredible. my memory was we saw a small narrowbody go down the runway in toulouse. it was incredibly noisy. then you had this amazingly large but super quiet airplane taking off behind it, the a3 80. it was something to go out over the. knees. --. pyrynese. let's talk to the man that will take the helmet airbus. the current president of commercial aircraft and incoming ceo, guillaume faury joins us now. thank you for taking the time to join us on bloomberg. yearave spent the last reviewing the commercial aircraft operations at airbus. was it your decision to cut the 380 program?

380 is a fantastic airplane. unfortunately we are in a situation where we are not able sustain the aoduction beyond 2021 with decision by emirates to reduce their order. there are still 10023a3 80's flying. a380s flying. there is not enough production to sustain production longer than 2021. support those who fly this fantastic airplane, the premier airplane for passengers. a very silent and stable airplane. unfortunately we have to look at

things as they are. to the future. >> as incoming ceo are you relieve the decision has been made? the businessn in of airbus for last 12 months with our current ceo and we have looked at the situation together. shoulder to shoulder we tried to a380solutions for thi situation. now the solution is clear. emirates has renewed its trust in the airbus products with the a330 and a350. will go down but we have new products and we're with a into the future

positive mindset for these new products especially the a350 which is a modern product. we ramped up production. >> with hindsight, was boeing right to focus on point-to-point rather than focusing on the airbus decidedch to focus on with hindsight? >> i think point-to-point is going. this is the way this business is developing. airbus is having strong products. is the most modern one in this field. we think we are well-placed to compete with boeing. with our new products. as you have seen, emirates has 350 fourthe 330 and their fleet moving forward was we think is a strong endorsement in the confidence of these products.

>> you will be becoming ceo at the beginning of april, a few days before that the u.k. is theoretically going to leave the eu. of the vieweasingly that the first big decision you will have to make as ceo will be to deal with a hard brexit? know what brexit will look like. a no deal scenario is brexit or hard brexit. we are preparing for the worst. we have worked with our to meet inventory and stock. we hope for the best and we believe that common sense will prevail. this is what we have said clearly lately, that hard brexit would be a disaster for europe and the u.k. and for airbus.

we think this has to be avoided by all means. how would you respond to a hard brexit? what is your plan? preparation in the for these kinds of events. worked with have our suppliers, our supply chain and we think we can weather a crisis for a couple of weeks. beyond a month we will have to look for ways to react to a crisis. we are preparing this. it is expected that later on this year boeing will launch of their nma program, their new middle sized aircraft.

how would you respond to that? do you have a plan to respond if boeing were to make that decision? we think the potential launch of the nma that has been announced for a couple of years is the need for a bowling response to our very competitive products with -- boeing response to our very competitive products. we are not in a position to have to respond to a response that has not yet been revealed. we are in wait-and-see mode. we wish good luck to our competitors on what they have to do. on our side, we continue to improve and upgrade our products. last year we had the first a321 long range which is going into the middle of the market.

>> a final, quick question on the new c series. is that aircraft living up to expectations? how is it selling? >> thank you for asking. we are happy with the a220 last year. in the six months that have passed we are extremely happy

with the way the teams of the joint forces are working, we have delivered 28 in the second half of 2018. we are ramping up. we have done the groundbreaking of the final assembly line for the a220 in the u.s. that will support deliveries to u.s. customers. as you probably know we have a220s-- 13582 in the second half of 2018. this is a very good product. our clients are very happy. we have a lot of trust in this product. in theery well-placed range of products of airbus. we are confident for the future of this plane. the current faury president of airbus commercial aircraft and incoming ceo. thank you very much indeed. back to you. >> guy johnson, thank you. say with us, this is bloomberg. ♪

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european banking, they cannot clear the mistakes of years past. swiss want to see the quote marks down. the germans want to get to 2020. we speak to commerce bank. in washington, manafort lied to mueller. the plea agreement is shut down. in seattle and chicago boeing stands stall, the airbus a380 is a failure for now. bloomberg live from our world headquarters in new york. what did you learn from the quarterly visits with the gentleman from credit suisse? in what of the targets he set out to do have been ok. a lot of the wealth management targets have been above average. there is a real disappointment when it comes to trading units. fix not sure how they will that if the market continues being so volatile. >> no question about that.

i see earnings coming up very mentioning the eight 220 discussion. i also mentioned as we move to first word news, the idea that commerce bank interview with their revenue shortfalls in germany. a morning briefing, huge news flow. here is vivienne a. >> 60 days is the number by which president trump is pushing back the deadline for higher tariffs. he has indicated his willingness for letting the march 1 date slip if the two countries are close to a deal being made. the search -- this as top-level trade talks continue in beijing. president trump saggy needs to before a president xi deal is made. the result was boosted by companies shipping goods ahead of the lunar new year's holiday. outbound shipments rising over 9% from a year earlier. inbound deliveries clicking up 1.5%. a trade growth of $39.2 billion.

theresa may takes her brexit plan back to parliament just six weeks or less before the u.k. is due to leave the european union. the prime minister could face a revolt from anti-eu lawmakers in her own party. they are insisting leaving with no deal must remain an option. trading offices at credit suisse are seeing gains in the wealth management system. posting a larger than expected loss in the global markets division. i am convinced looking at these numbers you can to the science of it. our revenue is up. indicators are moving the right direction. reflected in the share price. day onal news 24 hours a air and on tictoc on twitter

powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. barnier -- this is a confusing story. and wessed their targets will have more on that, francine >> getting some breaking news. be party leader, wanted to be prime minister now she is an mp. she is speaking at the moment and parliament. saying the brexit motion is meant to give government time for eu talks. what we found out is that there is a rebellion. we understand from tory brexiteers. today people vote on the next steps in the process to understand what brexit shape we will have. of these brexiteers, the rebels, say the government us motion-- government's

rules out no deal brexit and that would undermine negotiations. tom: important day for prime minister may has they attempt to move the can down the road. let me do a data checks. chris marangi states this is a bull market, futures up 98. vix?e to a 14 no. at 111.ar strained we are thrilled to bring in chris marangi to talk a lot equity markets. we always need a washington update. i don't want to go to the shutdown. this thing with mueller last thet, eurasian groups said sleeper for february and march is a mueller investigation. thatwas sort of a surprise mr. manafort was found lying, right? >> i don't think it was a

tremendous surprise. it was a question of whether or not the judge would accept that materiality. is het means for manafort is going to get more jail time. tom: let's go with a question i got in the living room. do you assume day-to-day, our ishington team, that this setting mr. manafort up for a presidential pardon? >> i think at this point a presidential pardon is off the table. i think if donald trump were to use it in the context of the mueller probe he would face real resistance certainly from democrats but from his own party. we are on that you've of this deadline to avoid the second partial government shutdown. will the president sign? >> every conventional wisdom scenario has him signing this agreement. he has indicated he is probably going to sign it.

until donald trump puts a pen to the legislation you have to allow for the risk that he may decide not to. tom: we will set up chris marangi with equity markets in just a moment. a lot coming up including an important interview in germany, stephen engle's of commerce bank . they did not make revenues. front and center in the merger talk is the salvation of deutsche bank as well. lease stay with us from zero, this is bloomberg. ♪

francine-- credit suisse reporting

fourth-quarter revenue and profits better than expected but the swiss bank says concerns over brexit and the u.s. china trade dispute remain. that has led to a slow start to the year in terms of debt and equity products. french automaker renault warned that a hard brexit would kill hopes for growth. they sold half there vehicles last year. they were able to meet forecasts for 2018. landlords in manhattan are seeing the light at the end of a long title. increased demand is allowing them to raise rent and giveaway fewer freebies to attract tenants. the share of new leases and genuine that included free rents or gift or sweeteners fell from a year ago. the first year-over-year decline after 43 months of gains. that is your bloomberg business flash. tom: we appreciate this, thank you. unimportant moment for

our -- important moment for our chief content officer. catchers, that is all that matters today. we speak to the largest shareholder of the atlanta braves. have you ever seen mario the is he out there with jane fonda doing the chop? >> we root hard for the braves. own a baseball team if you are a grown-up adult manager of money? >> the same reason many wealthy individuals by sports teams.

tom: do you get a dividend or buyback from the atlanta braves? >> the atlanta braves -- that is not what we are looking at. we are looking at the asset value. it is an asset played not a cash flow play. they have a lot of opportunities come opportunity to increase television revenue by gaining control of their retail support network. they have a new stadium that is doing well. eventually that company will get sold to some wealthy individual. tom: pitchers and catchers in marty schenker is here saying to we do yankees and mets, let's go. jump in here. francine: i am thinking can we do football and premier league. chris, where do you see the most value? >> the market in general has been under love. down 5% last year end up 10% this year it is like nothing happened. we have done a better background in terms of rates stabilization in the political situation. the market looks good generally. tom: marty schenker has seen the

ebbs and flows away from politics. he has done a lot for markets over the years. i want to go back to the doom of december and how we covered the spring of the spring. i give bloomberg credit for a lesser hysteria in december. the dow up 10% rounded up, the s&p up 10% year to date. the full nasdaq up 11.8% as well. what was the lesson you took away from the upset of december? lost sight ofple the fact that the gauge is -- gains throughout the year were so substantial and that the and overty over trade the political situation in washington will be with us for quite some time. we have to stay grounded. >> we have commerzbank coming up. talking with credit suisse incirlik. american banking and it looked better and did not perform.

are you overweight financials? >> there will be more in a wave of consolidation and financials. >> suntrust and bb&t. >> there is an appetite for banks to get bigger. there are regional banks out there. we like that. talk to me about what the curve is doing. is there anything that can make it more difficult for u.s. banks? optimismwas a lot of as tom referenced that steepening would be good for. the banks ended up having to give away a lot of interesting come to deposit holders to get deposit holders. a modest growth in the economy and a good economic backdrop along with consolidation.

and low valuations. you will see some gains. you look at trade concerns between the u.s. and china what is priced in? if we have an accord but not a real one, do stock still lift off on the back of that? >> of easily the market has been demonstrably sensitive to what is going on in these trade talks. i think the market is skeptical. we get a grand bargain with china. -- the market is skeptical we get a grand bargain with china. if we kick the can down the road with some modestly better deal with china. i look at the bank consolidation, what have you learned from u.s. banking here? i spoke to christine harper and others about the bigger picture. what is the theme bloomberg is seeing in new york city banking? >> there are a lot of pressures

on regional banks to combine. >> you are to young tour member this, not eddie mathews and the braves. what is important here, marty schenker is ian hutton. when he speaks somebody listens. what this is about is the technology. >> it is about tax, bring down , bring down costs and making sure they are profitable. size matters. are they constrained because of regulation over what would be normal growth? >> most of them probably are constrained. >> we would like some names. >> i don't know that i have any. >> come on! >> i think there interesting banks outside the u.s.. domicile

-- a yummy. >> that is cma institute level four. bill winters is a yummy yummy consolidation in my tummy. francine: it is a consolidation term. would this be a combination? you are a strong u.s. bank, why would you look at a european bank? >> it is in fact more asian, something like half or 40% of their revenue comes from asia and china in particular. we are making a long-term bet on that region and want to get bigger, it is an interesting target. you have to deal with the other baggage including brexit. we also have an interview with the leadership of commerzbank. there is so much speculation that commerzbank will at some point merge with deutsche bank,

does that need to happen for any cross-border consolidation, do we need to see domestic m&a first? certainly not an expert in the german banking landscape. that makes sense. a trend driving a lot of different industries and technology. >> coming up right here on bloomberg surveillance we will have plenty more on the banking sector. we will talk earnings with cisco systems chief executive. that is coming up at 9:30 a.m. in new york. this is too much -- this is bloomberg.

tom: bloomberg surveillance, pennsylvania avenue. on 7th street there is a new bar called the state and local test injection -- tax deduction. it is packed with people in washington drowning their sorrows over the greatest disaster known to mankind. joining us is marty schenker our chief content officer and chris marangi who knows nothing about state and local tax to the action and laura davidson come our bloomberg tax reporter is

wearing red. how big a deal is this? to me it is a huge deal. is it senators and representatives? >> this is a big deal to taxpayers and in new york and new jersey. the other states don't care as much. you hear a lot of complaining from a couple members of congress. the unlikely thing is it will become something that will reach the president's desk. we are having trouble funding the government much less making minor policy tweaks. tom: will they tweak it and amended or do they get rid of it and does it stay forever because somebody in nebraska says it has to stay? >> forever is a long time. while president trump is in the white house and even beyond that, you look at the people running on the democratic side who could challenge him it is unlikely a progressive candidate would be open to an idea of basically getting rid of a tax limitation that would mostly go

towards higher income people. tom: we talked to marty schenker who is in a low low tax state in connecticut. this is important. it is tangible. >> i think donald trump having an audience with governor cuomo of new york on this issue is just atmospheric. the difficulty of reopening the tax debate in congress and getting something past is to me exponentially difficult. i don't believe any movement whatsoever will happen. the marginal rate right now is higher even with state and local tax reduction's going away. theo be clear i live in third circle of tax hell in westchester county. tom: a moment of silence.

>> obviously it makes strange bedfellows. scarlet fu put an ice rink in her backyard and got an easement on that. jump in here on american taxes, francine. a europeanrom perspective i wonder whether you think the americans think it is the u.s. tax on the wealth that is long overdue overall. topichat be the dominant for the presidential election? the majority of democratic contenders in the way are suggesting some new of taxing wealth in the u.s.. .1% itu look at the top does seem like a great way to raise revenue and redistribute income. it is really about income equality.

that is what democrats will run on. to ameliorateping that situation is to tax the wealth of the 1% so that you can trickle it down to the 99%. tom: does this have any traction at all? had karl marx talking to the democratic donkey. that is where we are in socialism. any real traction in your world? >> it does which has been surprising to folks in washington. if you look at the polling data, in the abstract people have consistently said for years there is an increasing trend in america that they say the wealthy do not pay enough. the trick is to look at the specific proposals. the polling on this is good. elizabeth

polling above 60%. bernie sanders expanded state taxes popular. aoc higher marginal rates less popular. tom: i love that new restaurant in georgetown, wealth tax. it is gluten-free and they serve kale. thank you so much cup our chief socialist reporter in washington. marty schenker thank you so much come our chief content officer. chris marangi will try to stay with us to talk equity markets. if you are in europe this is the interview of the day. stephen engels of commerzbank. they have a lot of explaining to do about the future of german banking and a revenue shortfall. this is bloomberg. ♪ g. ♪

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unveil a spending bill that would avert a government shutdown. the question is will the president sign it? the measure gives the president only a fraction of the money he wants to build a wall on the border with mexico. he says he will reluctantly accept the deal. they willhouse says look for what the president calls landmines in the bill. an investor who gained prominence for defending donald trump is in hot water. mistake to it was a judge saudi arabia for the journalist of jamal khashoggi. -- for the murder of journalist jamal khashoggi. his comments echo previous statements by the president. news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 2700 countries. this is bloomberg. commerzbank reported net income in operating profits

for the fourth quarter that beat average estimates. matt miller joins us now with the chief financial officer of commerzbank. over to you. >> thank you. , am here with stephen engels the ceo of commerzbank on a day when shares are up 5%. let's start with what you thought was the most positive aspect of today's earnings report. >> i think there are a number of positive aspects. you can see escrow, the loan book grow. you see key revenue growing as , a strongniink -- a strong nii. whichve seen a strong q4 improve the resilience of the business model. the message is that this is working. if i look at the targets you

have had to abandon so far last time we spoke you had to abandon your 2020 revenue target. today you say you're not going to make 6% return on tangible equity and you will not be able to get had to 36,000. are you having to rethink your turnaround plan? 2016e basic set up in never saw such a prolonged. of negative interest rates -- period of negative interest rates. as you adjust revenue costs can be adjusting as well. your income ratio also adjusted as well as you return. is that important thing what we have been doing is paying off, not at the pace that we would have originally wished for. it is working to pay off and it is doing its job. on the headcount it is pretty

clear that the headcount reduction will stay the same. will cut jobhat we growth. -- learning from 17 and 18 with our compass. projects with a number of external -- what we are doing basically in 19 and 20 is setting up commerce 2.0 and ftesing project costs into which will make us a lot more agile and faster. >> you had a big digitalization plan and you are using external people and companies to do that. now you are going to bring it internally. how many employees are you going to add up how much is it going to cost? >> the original goal was 36,000.

we are now slightly above 38,000. you can guess that that part is encompassing that, that plus has been a lot more than we originally anticipated which is a prime example. you have to keep in mind that the compliance part is still growing. we swapped the i.t. project budget into ftes. we expect no additional costs for 2020 unchanged. what we see is a slight growth in ftes at the expense so to speak -- >> you have said it is difficult to get a competitive return i think you said in the press conference in germany. to get aossible competitive return in this country with the economy the way it is, the ecb is basically

stuck. how to you do it? what are your plans? are goingn is, things to keep doing the things that have been working which is growing revenue and cutting costs. think going for a proper return is what every management team is striving for. is one of themany most deposit rich countries around that is weighing on the business. >> it is a country that is narrowly skirting a recession right now. after a decline in the last quarter, bullock schultz and would like tor see the commerzbank get together with deutsche bank. is that a way to improve returns? >> we focus on the effects and the fact is the germany, and he -- german economy to grow in

2018. i expect china and the u.s. to grow and i expect u.s europe to grow. -- i expect europe to grow. in my opinion we are nowhere near a recession. >> in the diagram between commerzbank and deutsche bank what overlap do you see? i am sure you have thought about it. the smarty like approach to the issue but i don't want to add to any speculation. >> let's talk about consolidation in general. does that have to have an for banks to make returns? >> as i just said i don't want to add anything to speculation. let's talk about a sure thing. brexit looks like it is going to happen on time on march 29. i know you are moving some bankers already out, how much of your business do you want to

move out of london and how bad will it be for business if it is a hard brexit? >> the basic approach is we want to serve u.k. customers with our team. that is what the plan is. we have restructured the london operations for other reasons. what we have now is a focused set up for a u.k. business that is also the emc business. preferably that is what we want to do. wherever we get to now at march 29 or any other point in the , we have compensatory agreements. the focus is on our business value. >> we talked a lot about headcount and employees retaining, bringing on new town must be difficult with what has

happened with the stock price, german banks are underperforming. how do you get people to come, the smartest investment to comment commerzbank? >> there are a variety of people looking at what we are planning and what we have achieved on the campus side is that is something that is attractive especially to a more digital and agile generation. cominge not necessarily in for share price, variable pay or other perks. they have a different set of assumptions and wishes. they are at the very best catered in the somewhat agile clustered types of organizations. attracting talent for the relative stuff. not a problem. >> thank you for joining us. the ceo of commerzbank talking to was about the results but not about merger speculation. tom: you got that right. matt miller, thank you so much.

let's go to john right now. what a bunch of baloney. i do want to talk about the important points the banker made, you can't make money with negative interest rates. is eu banking really about the fiction of the ecb drive in the bond market into negative rates? nobody watching this program or listening to this program believes banks could survive on negative rates, is that correct? >> the problem in europe, take france. take commerzbank, they are growing single digits loans and interest income is coming nowhere. in french banks markets the growing five or 6% a year and interest rates are going backwards. the negative rates tracking are a huge problem. cfo i want to go to the of commerzbank who does not give us the courtesy talking about the only thing that matters which is the future of german banking. brief our audience unlike he couldn't on the regulation and

government overlay his bank faces? >> the fact is we are going to get back to cost again and again. the easiest way to cut costs is to put banks together. domestic consolidation is something that has to happen. i think a cross-border you need rule changes on liquidity and capital to spur that. in terms of what government is looking at now, they are probably thinking commerzbank and deutsche bank has to be a deal we have to do. is sittingmarangi with us, he talks about the bb&t and suntrust merger in the u.s.. is the discussion in germany and other countries that the smaller banks are unable to consolidate which makes it difficult for commerzbank and deutsche bank? -- all of the

shipping issues they have. there is a lot of work that needs to be done domestically. it is the same in italy and spain. francine: >> there is a doubt. will it necessarily need to be a full-blown merger? not necessarily. deutsche bank is working on cross bank which it acquired a long time ago and trying to extract liquidity. there is no quick fix. and this environment you don't want to the cutting jobs. when you look at the banks revenue is going nowhere. they have to do more on costs. >> by also wanted to ask you about credit suisse. i have been hearing because of the earnings they are hitting a trading, i have a problem with trading units, what do they do -- what should they do?

>> they have to trade. we have seen others adopt more realistic targets. when they talk about all the targets and the ones they didn't achieve the one that slaps you in the face is 6 billion in revenue they missed by a long way, they delivered 5.1. given he is talking about a structural decline in trading he is going to have to cut more cost which means headcount. i think most banks will stop talking about cost income ratios and have to talk about hard cost targets. everyone is going to ratchet down our ot targets. --rot -- that is why shares are trading at .2% of tangible. tom: thank you so much. go to the terminal and look for his writing for bloomberg intelligence. jonathan tice, our senior analyst on mergers to come across europe. terry. they will talk to us about markets within america and may salvation of

chicago blackhawks as well. this is bloomberg.

francine: -- >> let's get to bloomberg business flash. french automaker renault warning a hard brexit would kill hopes for growth this year. last year the company sold half of their vehicles in europe despite falling sales in europe and emerging markets they were still able to meet forecasts for 2018. landlords in manhattan are seeing the light at the end of a long title. increased demand is allowing them to raise rent and giveaway fewer freebies to attract tenants. including areas of free rent gift cards and other sweeteners fell from a year ago.

the first year-over-year decline after 43 months of gains. credit suisse reporting fourth-quarter revenue better than expected. swiss banks as concerns over brexit and the u.s. china trade dispute has led to a very slow start to the year in terms of seeing that inequity products. >> weather is the u.s. china trade discussion -- >> that is the bloomberg business flash. >> thank you so much. you spokes clear when to leadership of credit suisse that he was disappointed when it came to trade. this is not will be heard in switzerland today. the key wealth management division, the investment bank

beat estimates. it will be interesting to see how analysts take all of this. >> certainly better than what we saw from commerzbank and other banks across europe. i want to show one point on a chart going back 70, 80 or 90 years. chris marangi, the religion of 1980 we were used -- where the use of cash collected. own the use of cash. the use of cash is still supreme. >> it is critical. cap allocation is hard to judge. it sets apart good management from great management. when you look at cass it is reinvested in the business -- cash it is reinvested in the business and use it to buy off debt. , use tonnual reports get them in the mail and read them.

how do you figure out if somebody has constructive use of cash? >> you look at return on capital. you look at buybacks, this company buying back stock at prices lower than their intrinsic value. if they are not they are destroying value. for us as investors and management teams that understand what their intrinsic value might be and whether there is enough safety and buying back stock. overall when you look at use of cash are to investors and chief executives shy and putting their cash to work when it comes capex? >> it is difficult to come by growth opportunities these days. partially driving m&a which is another use of cash. we are seeing industries like cable for example. companies investing a significant amount of money in

their plans that technology. see google filling more data centers. it depends on the company and the industry. talk abouthen you m&a what kinds of consolidation are we going to see an industry groups? will it be good consolidation or will it be a messy and a day? >> -- m&a. >> we have been talking about this fifth wave of m&a driven by low financing rates and lower growth opportunities and decreasing boardroom confidence. that will continue and it is driven by new companies gaining global scale. you need to invest in technologies. with some ofter the insurgent companies like amazon. you are starting to see it in financials. tom: thank you so much, we appreciate it. bordering on double-digit returns as we slide into 2019.

this is the most timely and adjusting interview. the chief executive officer of coca-cola, i spoke to him and davos. there are challenges of a changing and a different coca-cola. in the 10:00 hour today james quincey. this is bloomberg. ♪

>> this is bloomberg surveillance. tom, we had the interview of guy johnson with airbus. airbus boeing the plug on its slow selling a380 superjumbo after just 12 years in service. they will see deliveries of the double-decker jet in 2021. we spoke with guillaume faury the president of airbus commercial aircraft and the next ceo. >> the decision made by emirates , theduce their order ambition with 123 a380s flying as a flagship of emirates. we have to look at the facts as

they are. there is not enough prediction to sustain the program beyond 21. >> we are joined by chris jasper. of one billion euros and they got rid of the a3 80. does this give a clean slate for the chief executive? >> it certainly does to a point. the outgoing ceo has taken a hit for the team here. he leaves in april. we expected him to have to face a380 aslling off the one of his first act so he is a to see that out of the way. they've written down the cost of other programs including one other point. he has challenges ahead. he will be the one who inherits the question of what to do with

the airbus u.k. wing. especially following brexit and whether that will be affected. >> is this a win for boeing? 7478 have aing whole new life with this announcement? >> to be honest, probably not. the 7478 is sold as a freighter. only a few planes and passenger format. a380 has never been competitive in the freight market because it has two dax and it has a small hull. it is smaller twin-engine wide-body that are cleaning up in that market. future s of the boeing 50 are thehe airbus 3 true inheritors. tom: what will emirates do?

how do they replace their huge commitment to a380? >> a bit of a blow from emirates. i did not walk away because they did not want it. they could not get the fuel burn enhancements they were looking for from engine provider rolls-royce. they said it will carry on operating the a3 80 into the 2030. some are about to disappear from our skies.

alix: china chases away slow down fears.

chinese exports crushing expectations, giving markets a sigh of relief. germany dodges a recession. in carmakers and pharmaceuticals -- dividendnk reduces its while credit suisse is hit by losses. david: welcome to "bloomberg daybreak." i'm david westin, here with alix steel. --have some earnings coca-cola had a slight beat in revenues. they gave some guidance giving forward for the fiscal year, saying earnings-per-share will and plus 1%.% their stock is down now almost 1%. alix: duke energy coming