nejra: good morning from europeans london headquarters. i am nejra cehic. i am manus cranny and these are the top stories. nejra: worse than expected results, the cfo says they are more concerned about the u.k. than china. >> we are certainly able to grow our u.k. business. we are cautious on outlook for credit given the lack of certainty on the direction of the u.k. economy. nejra: collision course talks between the u.s. and china resume in washington, but transatlantic relationships causing angst over car tariffs.

as a delay isit raised again. legalfficials work on the text for the backstop. manus: it is "bloomberg daybreak: europe." let's get you a snapshot of the markets. , down sheit of oil iss, one cannot say what driving the pound it down. what does it mean for brexit? what does it mean for the landscape? we are in gods hands according --

is trade optimism between the u.s. and china, you might have car wars coming into play. nigeria's output is down. saudi exports are falling. i want to show you 10 year yields. this fascinates me with where we go. to sell theoment bonds. they reckon you will see a rally rise in yields in the medium-term. they want you to sell the bonds. the fed minutes can change that. have you sent me the communication manual for the fed? that is what i asked myself at 3:00 this morning. nejra: get rid of the dot plot. the note you highlight is interesting, the interview with should notere you believe market pricing on the fed.

that's get to the asian markets, unchanged. below the surface you are seeing losses in china and hong kong. dollar strength for the first time in four days. does that have to do with the dollar or weakness in other areas? let's think about emerging markets. the most overcrowded trade. merrill lynch survey recently, you have j.p. morgan asset management, but sounding the warning on emerging assets more broadly, hsbc and merrill lynch. some to virgins coming through in the big houses. we have had big reports today. let's get into the metals in the minors. they have come in with their annual capex guidance, midterm unchanged.

running 6.7 to 6.8. iron ore could get to $100 because of the tragedy at the dam. for guidance for capital spending and underlying profits, 4.03 was the number. let's try to make sense of the capex, the numbers, and the possible outlook for iron ore. formanaging editor joins us the commodities team in singapore. always good to see you. what are the indications on the impact of the slowdown from china? alex: good morning. it is obviously a concern for bhp. they get revenue from china, their biggest market, and they flagged what they see as a modest slowdown in china of economic growth over the next year. that will be a headwind for the

company. they are not going over the top, but clearly it is in the back of their mind. longer-term ac that continuing, deceleration in economic growth in china. for iron ore, they see demand steady. it is in the supply side that there is uncertainty after that disaster in brazil. nejra: that brings me to the next question, alex, has the company commented on the disaster in brazil and the impact on higher iron or prices? alex: it did not go into it much in this report, but the ceo did offering comments by deepest sympathies to anyone affected and the company is committed to learning from what happened. the industry needs to redouble efforts to avoid things happening again. it said it was monitoring for potential impact on its own operation.

it has suffered a similar disaster in 2015. it says it still intends on restarting that operation, but only when it is safe and it makes economic sense to do so. much, ournk you so editor for commodities in singapore. trade tensions are heating up on this side of the atlantic. the european union has said they will react properly to any tariffs from the u.s.. to discuss what a trade war between europe and the u.s. would mean for their economies, kallum rn to our guest,, pickering, senior economist, berenberg, the eu could hit back at

the u.s. harder than china. kallum: the eu is in disagreement, apart from trade, u.s. is -- the eu sees the as big, and more specifically there is no geostrategic rival between the u.s. and the eu. we would expect not a broad-based retaliation but a retaliation thinking ahead of the 2020 election where the eu can make it difficult for trump and the republicans by targeting trade issues across the u.s.. be in for what , car wars, episode one. another 90 days of angst on autos. when i look at global trade, synchronized slowdown, another 90 days of prevarication in auto wars, would that knock global growth?

certainly not european growth? kallum: it will knock confidence. the global trade cycle drives the global economy and global equity markets. we see this as more of a bargaining chip from the u.s. side rather than a ratcheting up of tensions in a major way. in a gray currently winter, economic data is weak in andpe, mixed in the u.s. soft in china. the last thing we need is a trade war issue to knock confidence out of global economies. i expected the economic news to get worse from here. the trade tensions took the risks further to the downside. as long as it is only a bargaining chip, and we get progress by summer, the economic data can improve and so can the global risk environment. nejra: you talk about it being a bargaining chip, how likely is this conflict between the u.s. and the eu escalating to a level

where it does start to be harmful to the economic data? kallum: i am not sure what the endgame is. it is easy with the chinese, the u.s. has a deficit, let's try to rebalance trade. but the eu and u.s. have a surplus and data, to what end, i am not sure. it seems to be a german specific issue. for donald trump to ratchet up trade tensions, the u.s. economy is fading from the fiscal stimulus late last year. in 2018 it was protected from trade noise between the u.s. and china. with the softer u.s. economy, complaints domestic about autos where it will not be so protected, and you will see downside risk from trade faster, and heading into the 2020 election, if trump once a good economy, it is hard to do those two things. manus: i had a great line from a

guest this morning, he says we delusionalvlovian state in markets in terms of risk on that we have. i have not seen that word since 1986, pavlovian delusion. do we have a touch of that? sounds interesting, markets sold a lot on bad news late last year, that made sense. to discount.sks if i look at those risks one by one, i do not see how they have improved that much. the fed has removed itself from risk from the markets, and we may be in a powell place where the markets will protect against downside risks. as an economist, this makes me concerned. if we get major economic consequences from these political or economic risks, and markets correct, what you end up with is a double whammy where the market exacerbates the

economic momentum. about when we talk u.s.-china trade tension, and any headline positive or negative, we see it reverberate across markets, but equities and currencies certainly. what is most vulnerable here? carmakers and the euro? kallum: carmakers in euro, yes, but you will see across economies in europe, especially of gdp is from0% exports, we got that last year from the u.s.-trade war. ina trade war. even though there is no geopolitical rival for the u.s. and eu, you would think that limits the scope for this trade war really breaking out in a major way like it can with china. the one thing donald trump wants the eu to do is reduce barriers on agricultural products.

i think mr. macron dealing with the yellow vests will be reluctant to open up europe's agricultural markets to the u.s., and this coordinated chicken issue -- coronated chicken issue news in europe. manus: thank you, kallum pickering, senior economist, berenberg, our guest host for the next hour. >> brexit negotiators are working on new legal context for the most controversial part of the deal, the irish next up. theresa may's cabinet are trying to take no deal off the table. this this array has led the european commission to raise the prospect of delaying brexit. president trump has upped the risk against the brazilian regime, he calls on the nation's army to switch -- against the

venezuelan regime. he calls on the nations army to switch allegiances. president trump: you can accept president guaido's offer of amnesty to live in peace with your countrymen. does not seekdo retribution against you, and neither do we. you must not follow maduro's orders. >> today donald trump was giving orders. listen up military officers, donald trump was giving orders to the armed forces. who is the commander o in chief? donald trump in miami? >> china's aim is to transform the region into a metropolis to rival california's silicon valley. hsbc says they will have ve --

it will eclipse japan is the fourth-largest global exporter. 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. thank you so much. we are asking the question on mliv. reach out to us and the mliv team. will gold be the right protection? manus: absolutely. it is that a nine-month high. fed hikingis the prices done? we discussed jay powell and his communication strategy next. if you are traveling to work, tune into bloomberg radio. on your mobile device, dab digital radio in the london area. join the team there right now. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic nejra cehic in london. manus cranny. let's get you a snapshot of markets. we may be going into a new trade war between the u.s. and europe. asian stocks this morning lighter, dollar index, would retaliate -- would europe retaliate? they have a hand in this potential dispute. crude is up. nejra: we are not seeing a huge appetite for risk today. judging by futures, it looks like they needed gain. -- a muted gain. markets were closed yesterday for president day, but we did close up on friday. copper a little weaker. two-monthnearing a

high. gold is a touch weaker today after being close to a 10 month high. beay we are asking, why bullish on gold right now? you can reach out to us and the mliv team on your bloomberg. let's get to the bloomberg business flash. >> hsbc is selling an upbeat note despite a bruising fourth quarter. the bank aims to meet key financial targets as it reported worse than expected results due to the global market meltdown. to be more said concerned about the u.k. markets than china. u.k. are able to grow our business. we are cautious on the outlook for credit given the lack of certainty on the direction of the u.k. economy. in the biggest blow yet to a british blow, it is the

fourth-largest car factory employing three and a half thousand people to produce the civic. the industry is reeling from cuts and lost production in the run-up to brexit. huawei says there is no way the u.s. can crush us. they denied the company helps by or beijing. he said they may relocate investment. this as britain looks to resist the trump administration warning, and allow huawei technology to be used. manus: thank you very much for the roundup. tomorrow the federal reserve releases the much-anticipated minutes from the january meeting. a u-turn on policy surprised the markets. assets fell the immediate impact. jp morgan sees no change. growing chances that the u.s. and china will resolve the trade dispute, and a weaker dollar.

kallum pickering, senior economist, berenberg is with us this morning. op-ed writtene for bloomberg, it is said, scrap the dot plot. you need simpler communication. i put it to you if we scrap the dot polot, that can be treacherous. that can be a treacherous affair. the problem with the dot polot, no matter -- the dot plot, they are the voucher confidence. even if you have trend growth over the next two your pricing by the fed, and continuing to expect rate hikes, it casts a ray of the uncertainty that the fed comes up with state contingent guidance which is, so

long as this happens, then we will hike interest rates, or keep them the same, or we may cut them. you mentioned the bank of england that had that weird employment-unemployment commitment that was a little teething problem that the fed can learn from. the fed should probably try to soften its tone a little to help markets out. say, if growth remains above trend, if wages creep the low 3.5%, we have to have emergency policy otherwise we risk a premature end. nejra: speaking of markets, i was having a conversation yesterday, and the question was put on these minutes so elegantly i will steal it. i am looking to find out whether that dovish turn was an insurance policy or a true change of heart from the fed. is that what you are looking for in the minutes? kallum: that is a good way to put it.

i think what the fed did, after -- remove itself is a risk in january, and we saw the immediate benefit. the interest rate policy and the balance sheet, they can handle a high interest-rate. the issue seems to be this drainage of global liquidity wherearkets in a period we are risk averse. i think in a way, the markets retrofitted liquidity and balance sheet reduction as a cause of the selloff last year, it was the political risk that caused the selloff. the central bank over the last 10 years in the u.s. and elsewhere has become one of the key drivers of markets. the central bank is the supplier of liquidity, not the monopoly supplier of liquidity, and the risk the fed runs is putting itself in a situation where

reinforces the belief that it can only provide market liquidity where that is simply not true. manus: we are trapped in this era of central banks. i will invent the word, puttage. you have the aussies this morning saying we are justifying neutral. the central banks are the beggars at the door of markets. kallum: it is a very good question, remember, the reason why central banks went with to boostnary policies asset prices and liquidity is because 10 years ago we faced a massive balance sheet recession, and the quick fix was to boost asset prices and get the economy functioning again. the real acid test will be when inflation comes, if and when inflation comes.

the markets seem to spiral and you have wage and price inflation, that is a different story. i do not think we are there yet and that would be the acid test. nejra: markets seem to have bought into the idea of a dovish fed. for anybody who takes this market pricing as fact, there is danger there. i would be looking for interesting places to put shorts on. what do you think of that? kallum: the long-term bottom yields have been surprising me for five years. i thought five years ago we healed from the financial crisis with the big issues, the debt imbalances, the structural imbalances in major economies. and we were going through a -- we sawre long-term a little bit of that when we whereisk on in 2017

long-term bond yields were rising in line with elevated gdp expectations. when the risk returned in 2018, the bond yields came back down again. much, thank you very kallum pickering, our guest host from senior economist, berenberg . on u.s. trade policy, slowing global economic growth, that a big piece we are focused on in terms of global growth. wing theicies sloping global economy. up next, the market is not as upbeat as hsbc earnings missed. work, are going to bloomberg radio, we are live, we , dabhere on the job digital radio in the london area. stevenson is the

cfo of hsbc. he joins us shortly. this is bloomberg. ♪

nejra: a bit of a mixed picture in the asian session, we are seeing green on the screen in japan. some gains yesterday, emerging-market equities are in the red today. when you see the diverging views on e.m., in terms of em stocks, you have j.p. morgan asset management in the bullish camp, but hsbc cautious on a hawkish fed. hsbc took me back to yesterday's story. lynchf america, merrill

surveys are a great insight into where is the herd. they say one of the most crowded is developing nations. they have had a stellar run since the start of the year. nejra: the question is if you want to get out now while you are seeing the consensus in the markets seeing the dovish fed. we talked about going against the grain and markets are getting it wrong, surprising the dovish fed. that is the call you have to make and to some extent on the dollar as well. manus: they say now is your opportunity to sell in the u.s., and backup, it is a big debate whether the fed is pushed into a corner. let's get to the first word news . eu has vowed retaliation if the u.s. follows through with auto tariffs.

this dispute follows american tariffs on u.s. steel and aluminum imports. nationalusing the same security justification. exit negotiators are working on the most controversial part of the deal, the irish backstop. members of theresa may's cabinet are trying to force her of taking the threat of no deal off the table. this division and disarray has raised the prospect of delaying brexit. officials could push rate hike plans further into the future. the central bank is set to end it in may. china has announced a sweeping plan to link hong kong with cities in southern china to transform the region into a high-tech metropolis to rival silicon valley. hsbc says the region will have

67 million residents and a trillion dollar economy and it will eclipse japan is the fourth largest level exporter. 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. thank you so much. , the keyming through line i am looking at is four your trade and operating income ,oming in at 3.5 billion euros the estimate 3.61, a very significant miss. it sees 2019 light for sales , andh coming in around 3% 2019 operating margin above 15%. line is the four year operating income at a miss.

good to have you with us. i have been talking about a mixed picture in the asian session. where does india fit in among the green and red? >> you must be getting bored hearing me talk about how the markets are not doing well. for a change, the markets are doing better than the last seven or eight days. the benchmark index after correcting for a trading sessions is showing glimpses of green today, which is not a bad sign. it is good to see banks leading the charge. , today wemarkets should look at the real estate stocks. meeting of the dax council to reduce taxation on

real estate. from the broader market perspective, real estate. downtrend has taken a stop in today's session. manus: thank you very much. dani burger is standing by. the pound is under a little pressure. investor who has done a 180, why do we care? dani: one investor we are hising at has renewed bearish stance against the pound that might draw some iron. -- might draw some ire. yesterday it was defined the narrative as turmoil kicks up. members leading from the opposition labour party vowing

to have no deal on the table. it is now making more sense with the chaos. some of the gains we are seeing in the dollar, dollar rising by 0.2%. fed minutes on wednesday, will they be as dovish? that could send the dollar for a lot of volatility in the meantime. oil trading even higher, this day of gains. about a56 a barrel, three month high. other market stories that will be important, walmart earnings. i want to take you into my terminal to show you what options are pricing for earnings volatility. that line is here. we will see this is hitting 4.5. option traders believe walmart shares will move either up or down 4.5% today after they report earnings. that is far above the average

line which is 2.5. this has been kicking up more as we got retail sales that fell 1.2% in december, and walmart margins as well as their online business comes into hyper focus. manus: let's see where the dice rolls on walmart numbers. dani burger in london, thank you. let's talk about another market. hsbc is not as upbeat after fourth-quarter results. a little lower in hong kong. short of estimates. the bank is saying it aims to meet a key financial target. i spoke earlier to the companies and i askedevenson him about the ratio and what is deliverable. give youm not going to actual numbers, but john and i

like the discipline internally. underlying our cost growth at the moment it is important to remember we are in the middle of a standard investment program. investment spending grew 10% last year and we intend to grow it again this year. big investment into digital transformation. we do expect and continue to commit to positive. manus: to achieve that, people have said you might have to readdress that investment commitment you made last summer, the $15 billion to $18 billion. there is no reduction in that? ewan: i think we are already being more cautious as we look out for the year. we have slowed some investment. we have slowed investment, and we will continue to be cautious until we see how the revenue

environment lays out this year. it is a particularly volatile avenue as we look at the year, particularly around the u.k. and to a lesser extent with the u.s.-china trade discussions. manus: which of those worries you the most? you are fenced in in the u.k. you are the gateway into the soul of china. how does the china slowdown manifest in your numbers? ewan: it is very hard to see that at all in 2018 numbers. we had revenue growth here in hong kong a 14%, 14% in mainland china, and international customer revenues up 7% for the year. where we are seeing credit softness is in the u.k., and the u.k. is the market i am more concerned about at the moment than hong kong or china. manus: you have capital to deploy in the u.k.

i am told you are aggressively trying to grow market share. is that proving hard in the current environment? , the team did a great job there last year, revenues were up 7% in the u.k., mortgage growth at 10%, another 50 basis points of market share in the mortgage market. we have the share we want to take at the moment, and are able to grow u.k. business. i think we are cautious on the outlook for credit given the lack of certainty on the direction of the u.k. economy. manus: ewan, what have you and the board discussed regarding brexit in your boardroom? assume we haved been working on this for years now. we have the big operation in france that we have had for a long time. it is easier than some of our peers.

today'sd have seen results that we have taken additional provision for the uncertain economic outlook in the u.k. hsbc cfo, ewan stevenson, speaking to me on the group's fourth-quarter earnings. we chatted yesterday and covered a broad number of issues. what i took away from the conversation, he was not as battered and bruised on china as i thought he might be. what did you make of it? not been he has talking about spending if the revenue growth this lower-than-expected. if you think back to q1 and q2, when revenue was what we

expected, i think they are indicating their are growth stories and concerns as well, and they are looking to digits rot up to double in eight years. nejra: you were saying ahead of this they should report a negative%, and we got 1.2%. jonathan: they needed to report. andissue we have, you look they have negative jaws, they kept investing. now, the at consensus biggest issues, loan growth is about right, 4.5%, but revenue is implying net interest margins are higher. net interest margin fell on the quarter. there is an amish pressure,

a little bit of a slowdown, ongoing u.k. growth means revenues are a disappointment. ,t some point markets will say growth is not what we expected, and everybody has to invest in digital or banks. digital, digital, digital. billion onover $4 investment last year. i wonder when we will see something tangible rather than market fluctuations. , you: you and i chatted said do not get distracted by the buyback, that is not what the story is about. what do you mean? jonathan coley this was a restructuring story. when we were wondering if they could build management capital, the buyback, the regulators were happy with where they were. managing the share and

this is a growth story. my concern if growth slows down, this is not a buyback story. being a buyback shares, and it becomes an emerging markets trade related at which point it is high be. aeat. nejra: time is running out for theresa may to pull together a plan that parliament will back. brexit negotiators are working on a new legal text for the most controversial part of the deal, the irish backstop. members of the prime ministers own cabinet are tried to force her of taking the threat of a no deal off the table. this division and disarray has led the european commission to

raise the prospect of dealing brexit. kallum pickering, senior economist, berenberg is still with us. you have a great flowchart laying out the probabilities. probability highest on a hard brexit. kallum: yes, 30% chance. a hard brexit is the default option unless by march 29, the date they can agree to a deal or a delay, i see a lot of theresa may. the time wasting two does things -- the time wasting does two things, what did the creation of the new independent group do yesterday? push -- and i listened

thenna say this could push tory party to get behind theresa may's deal. kallum: there are two trends explaining brexit. jeremy corbyn is the glue that binds the conservative party together, and i do not think the seven left change that dynamic left much. they probably worry less than government. corbyn at the margins, some of the extreme views in the conservative view will be less worried, and the second factor mps oned two thirds of close ties with the eu and i do not expect them to sit on their hands. that seven is part of that group. nejra: if you look at risk

reversals on cable, it shows you negativity is being i stand, but nowhere near what we were in 2016. could there be a bigger shock ? kallum: from a hard brexit? brexit noerling is in man's land. if we have a hard brexit, sterling will selloff, that depends on how bad sentiment gets. if we get resolution, sterling will rally. my base case, at a bad minimum, we get a semi-soft brexit deal. on any scenario, i expect cable by the end of 2020 to be 147. significant upside. mind, i wanthat in to get your sense as an economist, we need time to

repair and heal ourselves from the economic confidence trauma we have been through. is it really serious at the bank of england -- if we get a soft brexit, whatever version we itht get -- they may go for a knock on given where we are. it takes time to rehab. kallum: part of the pain we have suffered over the last two years is supply-side pain, and that shows up in price and wage inflation. ,f i look at the u.k. wage data which is close to 3.5%, record labor demand, i think the bank of england expecting a further upside increase in demand will want to hike interest rates soon, but signal the pace thereafter will be gradual. i expect the first hike in may. nejra: kallum pickering, senior economist, berenberg stays with

us. up next, the second official in as many days to flag a potential shift in language. we get that conversation next with kallum pickering. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra: i am nejra cehic in london. >> hsbc is sounding an upbeat note despite a bruising or quarter. they aim to meet key financial targets. during parts of the global market meltdown, ewing stevenson says the bank is more concerned about u.k. markets than china. able to grow our u.k. business, we are cautious on the outlook for credit given the lack of certainty on the

direction of the u.k. economy. >> that is your bloomberg business flash. manus: thank you very much. policy is growing, the latest to signal concern over the economic slowdown, the officials could push back on a plan to raise interest rates if the downturn worsens. kallum pickering, senior economist, berenberg is with us. these voices are rising in terms of concern about the length of a downturn. if there is a trade dispute between europe and the united states, how perilous could it be the german economy? we are just kissing growth in recession. the germandamentally economy is in good shape, the problem it has is it has a large earns 30%ector and

from exports. because it has such a large external sector, if you get global weakness, you get seepage into the domestic economy and mastic spending. you look at germany, ok fundamentally, in good shape, but vulnerable to a lot of risks. unless risks they'd, the german economy will not gain significant momentum, and the res same goes for the rest of that european economy. nejra: spring could follow a gray winter, it is contingent on things going right. one thing that needs to go right is? need to not go wrong. pausexit goes ok, if the stabilizes china, central banks will not spoil it, as long as we get progress on the trade front, that you do enough to stop weighing on confidence and lift domestic demand. it was the bulk of external risk

that weighed on the economy positive to lose momentum in 2018. the removal of risks will be like circuit breakers and continue the cyclical downward dynamic, and things can improve. manus: you talk about the growth outlook for the rest of the year, you have the gdp numbers for germany. talk about the rest of europe , remainingozone tilted to the downside. big does itn, how need to be? whenever it comes to liquidity measures, we are looking at confidence effects. my impression is the market typically likes liquidity measures much more than the relative improvement you see in the economy. it is a signaling effect. it makes sense that the ecb has become more dovish, but remember

the ecb is not as nimble as other central banks. there are political questions and hurdles which you need to overcome for you stimulate demand in a major way. hope from ecb is members to boost demand. if we get the uptick in data? banks: you can help the by raising the rate, yes. nejra: thank you so much, kallum pickering, kallum senior econom, berenberg great to have you for the hour. we will talk about the dynamics in markets. you can interact with the charts shown using gtd go. -- g tv

on your mobile device in the london area. this is bloomberg. ♪

manus: good morning from dubai. i am manus cranny and this is "bloomberg daybreak: europe." nejra: these are today's top stories. hsbc's profit missed, the first year with worse than expected results. the cfo says they are more concerned about the u.k. in china. >> we are -- i think we are cautious on the outlook for credit given the lack of certainty on the direction of the u.k. economy. collusion.

transatlantic relations causing angst after a rout rues over car tariffs. and warns on brexit as the prospect of a delay is raised once again. european and u.k. officials work on a new legal text for the next up as a divorced deadline looms. nejra: it has gone 7:00 a.m. in london. let's get the numbers in for intercontinental, revenue coming in at $1.9 billion. also we are seeing the intercontinental hotels final dividend per share is coming in at 78.1 cents. the guidance is unchanged and up to 350 million growth so a few

lines coming through from intercontinental and coming up to my we will speak to the ceo. that is what they have been a warner -- awarded, that is coming up. in good form.e aa is the award given which is the abu dhabi national oil company. let's give you this breaking news we have been given a aa rating, now i know why fitch was in time last week. that is who have awarded the long-term rating, on a standalone basis. giving a aa rating. gettingd said are the ready to issue bonds but they said we have no plans to sell bonds at a group level.

this is the first piece of breaking news from fitch. it is interesting because this will have a symbiotic relationship with the sovereign rating as well. adnoc are saying we are not in the business of issuing paper. fitch ranked $3 billion worth of wants secured against adnoc screwed pipeline. that has been -- adnoc screwed pipeline. this strategy is bringing in major partners from outside. along with omb, and the downstream and upstream, this is a new financial layer added to the national oil company on adnoc. part oft the rating as its efforts to seek international partners for its business and actively manage the assets and capital in the area. now i know why james mccormick had a chat with me and upper darby. let's see what that means for the rest of the sovereign in the

region. there is a bond market, big call from franklin templeton, this is what they are saying, straight into the bond market, they are saying that you are at danger levels on the market. you are pumped up, i will give it to you. are looking for shorts in the house treasury market saying we should not be fully believing what the market is pricing in terms of the fed. we could get hawkish suffices. in equity markets it is pretty quiet. let me update you on some more intercontinental lines. we were asking about [inaudible] increasing 2.5%, there is your forer on red part, on track 125 million, around about that in annual savings by 2020. the four-year adjusted operating profit comes in at $805 million. a bead on the estimate. we had the revenue number as

well, we have been given a number for the final dividend. it may be a question about the special dividend with the ceo shortly. the msci asia-pacific index unchanged, gains in japan and losses in china. we're not getting much direction from your us futures, the s&p 500 closed at more than 1% on friday. days ofo gains -- two gains and that might not continue today. if it does it will be in a muted fashion. all pretty much flat. manus: let's talk about the trade tensions. u.s.en europe and the that is what i am referring to. the eu has promised to retaliate to any tariffs imposed by the u.s.. onssels has prepared duties 20 billion euros worth of u.s. bids should trump pull the autos levy.he

here to discuss what would it mean for the global economy. joining us now from geneva, the global head of fx strategy. always good to get your opinion on these markets. our last guest said europe has a bigger bat than the u.s. when it comes to tariffs, would you agree? guest: indeed i would. their own.pose that is something that is underestimated by the u.s. administration. certainly if trump waits his finger and threatens the position of tariffs, they can respond in kind and pretty swiftly as well. to you.reat to speak would you be hesitant to be a euro bull at the moment with the risks of that trade dispute between the u.s. and eu but if

you look at economic surprise indices, the eu is lagging asia and the u.s.. -- be thatuld not afraid of being a euro bull. if you look at european surprise indices, they are out there at multiyear lows and it would not be selling the euro in an economic surprise index. we have seen better data coming from asia and from china in the last month or so. you would and for from that that we will get a little bit of a pickup in european growth and metrics coming forward. if you were to sell the euro in relation to the trade spot you would be doing so at the worst possible time in my view. not dugne thing we have that aggressively into, there is the chart that narrow was referring to in terms of

economic numbers and surprising to the downside. can i pivot to japan? i am looking at what kuroda said this morning. the bank of japan would have to consider additional stimulus if the exchange rate affected the economy. the pboc are wrapping it up and the fed is on pause. this is another piece in the start of the chessboard of central-bank policy for 2019. we are in a different mode. peter: we are definitely in a different mode, no question. it is good to see central banks taking, acknowledging we have changing data. i am -- and consequently theirng their's -- status. i struggled to think what more they could do at this stage. if you look at the qe side of things, it is clear they are not achieving the targets they said

last year and the year before. in terms of yield curve control, i do not see them doing an awful lot there. kuroda's comment strike me as being trying to avoid an appreciation of the yen. from his perspective it makes sense because if the fed continues to pivot, it is one thing going on pa's but if they engage in slightly more dovish language, that will lead to a loss in the dollar-yen and that could cause more problems for the japanese economy. his comments are timely but he has to back them up. expecthow long do you the fed of this pivot to continue and if it is so simple as trying a line between a dovish fed and a weaker dollar? it willt is how long continue, we will see it at least until june. they will keep rates on hold until at least june and market pricing does not believe we will see a rate hike.

there is some potential for a hawkish surprise at some point. we will have to see how the data develops. what it means for the dollar is that u.s. data releases will have an asymmetric quality for the dollar. good releases will be ignored and poor releases will be undermined. the dollary with selling off. i would not call it a straight line but we do have an asymmetric reaction to u.s. data in the coming months. manus: what did you make of mohamed el-erian? what do you make of his suggestion that you should ditch the dots? peter: it is very wise. i think at this point markets never really ought into the dot plot, they did not in 2016 and in 2017, they did in 2018. and then we have gotten rid of it since. i think it does make some sense because we are getting close to

the estimation of its interest rate and the dot plot where you would see another two or three hikes, that is unrealistic. point, with him at this we best get one more hike this year and we will have to see how the rest of the world's data is looking. think theth him, i usefulness of the dot plot is more or less expired. joining us, you for peter kinsella at union bank here. olivia.t the news with olivia: brexit negotiators are working on a new legal text. on the iris backstop. members of theresa may's cabinet are trying to force her to take the threat of a new deal off the table. this division in disarray have raise the prospect of delaying brexit. president trump has up to the

rhetoric against the venezuelan regime. he called on the nation's army support to the opposition. nicolas maduro hit back. president trump: you can choose to accept his general -- peace,s offer of president quite oh does not seek retribution against you and neither do we. you must not follow and euros orders. >> today donald trump was giving orders, listen up, military officers of the homeland, donald trump was giving orders to the national bolivian armed forces. who is the commander in chief? is a donald trump time -- from miami? olivia: adding to the growing course of concerns around the

euro area economy. he said officials could push rate hike plans further into the future. -- his timebank is at the central bank is ending in may. 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. thank you for the roundup. coming up, another conversation ceo at the intercontinental hotels, they beat on an adjusted operating profit. we will dig deeper. nejra: when you are traveling to bloomberg radio on your device or dav digital radio in the london area. this is bloomberg. ♪

nejra: 7:16 a.m. in london, 45 minutes away from the start of

cash equity trading. i am nejra cehic in london. manus: i am manus cranny in dubai. past seven in london, futures are up and running. the dollar breaking trends snapping three days of losses. you are going to hear from the met -- loretta mester. speaking tomorrow and then it is all about the futures, a bit later on the season. day five of the rally and the highest point in three months. saudi exports are dropping. a little bit of a move there. nejra: weakness coming through in emerging-market equities after gain just today. use,diversions in terms of bullish on a.m. equities and euro stoxx 50 futures flat, we may not see a third day --gains and softer

negotiators working on a new text. why besking the question bullish on gold? you can join this debate, reach out to us on your bloomberg as gold is trading near a ten-month high touched off in today's session. time is running out for theresa may to pull together a plan that parliament will back. brexit negotiators are working on a new legal text for the most controversial part of the deal, the irish backstop. members of the cabinet are trying to force her to take the threat of no deal off the table. this division and disarray has led the european commission to race the prospect of delaying brexit. -- iss is it a kinsella peter kent cella. -- peter kinsella. saw wondering if what we yesterday changes that view today.

>> it does not yet and the reason is we have seen seven members in the party as of yesterday. it is not at a stage where critical mass are spreading from the legal -- labor party. not change my outlook, i am in the camp that we will see one of two things, an extension of article 50 or theresa may and the eu come to some agreement. articlecase would be 50. looking at sterling it seems to trade that way, we are not seeing any significant damage for cable. we are waiting for the white smoke to come from brussels and we can see what -- where we take it from there. brussels is telling us we are in god's hands and there is

a lot of religious references debateng into the which is not lost on anybody. they said it depends on whether it is a short kicking off the can or an enduring kicking of the can if you go for an extension. is there a difference when it comes to that if it is a short or long kick? >> if we see a much longer extension of article 50 there is no question it would collapse in a broad sense. what the market would be pricing in is it would be a hard or soft but rather a slow brexit. that would be analogous to continued membership. that wouldse collapse if we were to see an extension. we would definitely see an awful lot lower. nejra: great to have you with us

today, global head of ethics strategy at union bank care prevent. price could help bolster the full-year report. this after the world's biggest miner reports half-year results that missed estimates. underlying earnings for the melbourne-based company fell 8% but iron ore remains for the largest share of revenue. hsbc is sounding in a eight note despite everything fourth-quarter. the bank said it aims to meet key financial targets. they reported worse results during parts of the global market meltdown. the cfo said the bank is concerned about the u.k. market than china. oure are able to grow business, we are cautious on the outlook for credit given the

lack of certainty on the direction of the u.k. economy. >> now to your bloomberg business flash. manus: thank you. intercontinental hotels group on anat estimates adjusted operating profit level. while more than 60% of its revenue comes from the u.s., the company has expansion around the world including the middle east and asia. is the ceo of intercontinental. last time i saw you you are here doing business. let's do with the global perspective. you give us an indication on that, what is the strongest growth for your across the world? i we had solid results, up 2.5% and our growth is up 4.8% which is our test result in a decade. openingassigning and

more hotels than a decade ago which was extraordinary considering we were opening one and signing to hotels a day. our dividend up by 10%. strong set of results on a global basis, underpinned by the strategic initiatives we laid us andear ago to take strengthening our existing brands, create and acquire new brands and we did an acquisition which was based in asia. we are seeing great growth across the world, growing our existing bands -- brands and buying new brands. tora: good morning and great see you. i heard what you said on the special dividend. you mentioned acquisitions so let me ask what kinds of holes are you trying to filter acquisitions, what segments do

you find most interesting? >> there were some gaps in our brand portfolio that we were going to tap will -- tackle. hotels and we launched a brand in the upscale space across europe in into asia. we have 16 hotels. about --cited launching another. we are very focused at using our consumer and side target large pools of demand that are being met by our brands, those are the of -- organic approaches and the inorganic approaches is where we think is the best way to go. we acquired the region hotel hotels andad signed

kuala lumpur and bali and chengdu. 16 amazing resorts, 18 under construction and more than 50 deals and discussion. we are excited to see how the brand portfolios evolved quickly over the last year. we had the ceo here opening new businesses, you said i want to grow my business in this region by 25% and inside saudi arabia. have you changed any of your investment plans or are you sticking to your guns and saying i want to grow the number of rooms by the number i told you last him it was with you? keith: we have been in saudi for 40 years and we are encouraged by the vision for how tourism will open up the kingdom so there are amazing projects wet are being developed and

are looking to participate in those because we believe that tourism does help open up countries and travel connects people. we have been involved in saudi arabia for 40 years and continue connectingolved, customers and guests as they travel internationally and internally. much, thank you very keith barr, great to have you with us this morning. that is it for daybreak europe, the european open is next. futures pretty much flat after two days of gains for european itities, not any direction u.s. markets, we open after being closed for presidents' day. when you are traveling to work tune in to bloomberg radio on your digital device and dab -- dav digital in london. this is bloomberg. ♪ is bloomberg. ♪

anna: good morning, welcome to european markets, the open. we are live here in the city of london. i anna edwards. the cache trade is less than 30 minutes away. thane cash trade is less 30 minutes away. ♪ anna: hsbc takes a hit. the ceo brown's out his first year with worse than expected results and the cfo tells bloomberg they are more concerned about the u.k. than china. >> we are able to grow our u.k. business, i think we are cautious on