>> good morning. from bloomberg's european headquarters in the city of london, i am nejra cehic, with manus cranny, from dubai. these are today's top stories. global thoughts jump in the hang jumpheads for a -- stocks and the hang seng heads for a bull market. any port in a storm. the house of commons will attempt to take control of brexit again as conservatives take pragmatic steps. smooth sailing. world's largest oil producer, saudi aramco, gets an a plus as it repairs for its bond offering.

manus: a warm welcome to daybreak europe. the drop in yields. have a look at the sixth day yield in the united states of america. we saw a pretty nice ramp-up in the pmi. it you see this risk on mood in the equity market. let's take a look. that is a six-day rally on the yield in the united states of america. morgan stanley abandons the fed hike call. 2.25 percent.at drawn a line in the trough? morgan stanley shifting the view to 2.05%. on, up she goes.

oil and aussie dollar. you're looking at oil coming off the strongest quarter since 2009. russia is making inroads towards meeting their pledge. aussie dollar up. they double bump the pmi. breaking 71.20, the 50 day moving average. good morning. did you miss me? nejra: as you were going down on the ski slopes, we saw that go down. 2017 bouncing back. local equities rallying as well. quarterone was the best since 2010. the best quarter for u.s. equities in a decade. day ofd see a third gains overall in the s&p 500 and the yen retreating. 111.r-yen touching hedges on volatility in dollar-yen and we are seeing the dollar inst the

today's session. the lira weakening after the municipal elections set to show perhaps that president erdogan has lost some of those key cities. we saw that last week in those gutwrenching moves in the turkish market. juliette saly in singapore has more for us. great to see you. talk about the risk on rally. nothing gutwrenching here. they finished off on a very solid quarter at the end of march. it was the best quarter in seven years. we know april is often a good month for equities as well and we started on a very solid footing. those pmi's out of china, both of them are beat. you did have a week reading on the japan survey of large manufacturers. weaker yen.

up by 1.3% in japan. another hour before japan closes, but we are seeing the csi 300 very strong, up high 2.4%. australia's market had a good session and in fact the regional benchmark index is now at october 3 highs, so a seven-month high for asian stocks. let's have a look at some of the companies in detail. we have been watching them surge the most in 27 years after it came through with a fourth-quarter profit of $2 billion. this is double what the market was looking for. they are doing well. the ceo saying it is expecting demand to recover. this is the second-biggest supplier of semiconductors used in cars and it is listed in tokyo. this company rallied very strongly on friday on the back of that astrazeneca deal and is continuing to rise, adding $8 billion in value in those two days since the market heard

about its drug. thank you very much. juliette saly in singapore. let's get straight for your update on brexit. jean-claude juncker says the e.u.'s patience with britain will not last forever. the warning comes as the house of commons again seizes control timetable, debating the options for a way forward over brexit. that's get straight to westminster. let's getds -- straight to westminster. anna edwards. how likely is a no deal brexit now looking? is it becoming more of a central risk? good morning, manus. let's not forget that it is the default position. comeril 12, is nothing -- april 12, if nothing is done, we will see a no deal exit from the european union. a lot of conservatives quite

like that idea. this is a popular option must week amongst the mts in the conservative party. over the weekend, we saw confirmation that 170 tories, including 11 cabinet members, have written to theresa may. it does remain something that is popular. maybe they think that will be popular with the grassroots. we see another stage of the indicative votes process taking place today. narrow that down. we will be dr. talking about a second union, some referendum. so there is still very much the possibility that something softer might emerge. would that require a delay after april? summitil 10 e.u. leaders which has now been called.

nejra: good morning. what about the chances of another general election? we are hearing the conservatives are taking pragmatic steps to prepare for a snap election. -- anna: the deputy chair of the conservative party saying they are making these pragmatic steps. they are sort of in the background, getting ready in case it is deemed necessary. the conservative party of the one hand, you think why would you call one when you risk diluting what control of the house you have right now? if you step with from the red lines that theresa may set out in her manifesto, there is an argument that maybe a general election is needed. the people of britain actually really want it. other means of delivering brexit or indeed changing course are also being talked about here. there is a wide possibility of is soes, and that is what

amazing. we thought things would be so different. the former prime minister is calling for that. george freeman also making the point that this could be something that is important. conservatives are trying to unite to up the pro-european voices. there is a lot of confusion about the way ahead. the focus is on narrowing down these indicative votes. anna edwards in westminster. thank you so much. we will come back to brexit later in the hour. stocks in asia and u.s. equity futures on the rise after china's latest manufacturing data eased concerns about the pace of the global slowdown. the first gauge for march and surveylowing private thir offer some relief for investors. joining us to discuss is the fund manager. the two have you with us this

morning. good to see you. bloomberg economics does expect even more easing from the pboc. they are seeing a cut to the rrr as early as the first half of april despite the stabilization. is the stabilization we are seeing enough to ward off more stimulus? there may well be more stimulus coming from monetary policy, but i think the broad backdrop is you have now had six haves to nine months to stimulus out of china. it is difficult to gauge the order of magnitude. the asset price response. what is clear to me now is if you do get anything like positive global growth data, you are going to get a very pronounced response in risk assets. manus: we certainly are. good morning to you. let's delve into a couple of the asset classes. this is the outperformance of chinese bonds. rrr's are expected.

do you consider there will be further outperformance on the bond side first of all? u.s. andelative to the global bond aggregates. it has been a stellar performance on the bond side. more to come? eric: i think the big call really is in risk assets and chinese equities. if you look at the asian equities that are exposed cyclically to chinese growth and european equities because i actually think china has been the marginal force in terms of global growth. when you look at them will slowdown that happened in the second half of last year but initiating in the first part, people did not have a coherent explanation of what was causing it. the most plausible when are ni-cycles coming out of china. you could have extreme moves in japanese banks, which were strong this morning in european

cyclicals. all of that is interlinked. the firepower will be in the risk assets. nejra: you could see big moves. it could feed through to european sickle close. would it make you want to take more risks? eric: there is a plausible case you see the outperformance of non-us equities against this backdrop because if you look at, back out what has been happening over the past 18 months, a big concern for u.s. markets has been about the fed, but globally, it has an largely about local growth. whether this means, you know, we still do not know. issue is ultimately unresolved. you're in a much better backdrop. crux for global equities is an improvement in profits and an improvement in global growth. manus: although stopped because we want to delve deeper into the bond market. thoughts because

we want to delve deeper into the bond market. dani burger has the detail. let's take a listen. : happy bond inclusion day. the details here, over 300 yuan- denominated bonds will be added into the bloomberg barclays index. this is going to be a huge injection into the market. take a look at the value. billion, rather. that translates into $3.3 trillion worth of bonds getting included. treasury as well as three different so-called policy banks that is getting added into this index. it is going to beat the gradual inclusion. this is the bloomberg's berkeley energy. $52 billion. a lot of investors track this and we are likely to see some inclusion. when we have been talking to different investors, vanguard says that they are not ready to totally include as much.

there are still some market structural concerns, but still, this is a big step for the china bond market as it gets included into the bloomberg barclays act. much. thank you very great round up. more to come on this bond markets and a quick note -- chinese bonds are being added to the bloomberg barclays global aggregate index. bloomberg lp is our parent company. barclaysloomberg, indexes. try that for an iteration on monday morning. the parent company of bloomberg news said that. there you go. twice. let's get your first word news. the conservative party are making preparations for a snap general election. with only 12 days left, the party is still deeply divided over brexit. the deputy party chairman made the admission on sky news but

says it is not the option the government is pursuing. the u.k. may be headed for its third election in four years. the lira is falling after president erdogan'ruling party lost control of key cities. polls show the opposition leads in ankara and in cities on the coast.ranean both sides are claiming victory in a close race in istanbul. ukraine's leader will face a runoff next month against zielinski, according to an exit poll. it shows the 41-year-old man got over 30% of the vote. bid tok is making a shape the conversation about internet rules. they are urging regulators around the world to agree on standards regulating online content to make it difficult for international companies to comply. it comes off the back of growing

treatment of facebook around the world. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: olivia. us.ly to have you with coming up on the show, stocks in asia climb with the u.s. and european futures all in the green. we are going to focus in on the market moves. that's next. nejra: when you are traveling to work, tune in bloomberg radio on your mobile device or on dab digital radio in the london area. this is bloomberg. ♪

manus: and it is a deal. this is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra: i am nejra cehic in london. we have got some breaking news coming through, manus. manus: we have indeed.

it excited about this. dsb is to buy -- 196 swiss franc per share. it looks like this deal will close in the fourth quarter of foundationand the and artisan have agreed to the tender, so this is another deal that gets done. raisestart and coaching the second quarter -- curtain raise the second quarter. nejra: olivia. >> saudi aramco is the most profitable company on earth. surpassed apple and exxon mobil. last year, aramco generated of $224 billion. it rated the saudi oil giant as a plus ahead of the debut.

tsa and fear chrysler are discussing a way to build cars in europe. bloomberg learned any eventual partnership will likely include sharing investments with new electric cars. the partnership to develop into a wider combination but the current focus is limited and that is your bloomberg/. -- business flash. very much.k you will equities are coming off the back of one of the best quarters since 2010. that is as investors anticipate more policy support from major central banks to prop up earnings and growth. the bond yields remain near multi-year lows over concerned about deterioration in growth. robert kaplan has commented about the inversion in the yield curve in an exclusive interview with bloomberg. curve of some magnitude and some duration i think is significant and something i will watch.

we do not have either yet, by the way. manager.e fund he is still with us. eric, a great deal of debate happened last week in regards to the inversion. was it a prophetic moment for you? it is different this time because the economy and consumer are in a better place. yes and no. i am not particularly concerned by a modest inversion of the yield curve, flattening of the yield curve. if anything, the broader context is much more interesting. what is profoundly different this time is the absolute sense of a symmetric fear by monetary authorities. what i mean by that is they have absolutely no concern about inflation and they are terrified about the prospect of a recession, and that in and of itself dramatically reduces the probability of recession and

there is a very fundamental shift happening within global monetary policy that people are underestimating in its significance, and there is excessive focus on the yield curve, which is secondary to this issue of a kind of a symmetric set of preferences in central banks. nejra: interesting, your use of a symmetric. asymmetric. i wonder if you take that view. we were talking about risk earlier. the msci index of companies outperforming companies with weaker financial profiles, however, you saw high yields do really well. is there any asymmetry? if you follow logically what i am saying, so risk assets are really about recession insurance. you are being paid a premium to take on the risk of recession. central banks are now more extremely recession averse than they have been before.

the probability comes down. you should rerate cyclical assets. people are not going to necessarily like to hear me say this. the asymmetry is going to be with a profound outperformance of cyclical risk assets. as people understand the consequences of central banks pre-much saying the fed -- they are saying we do not care about inflation because we don't even -- to all intents and purposes, it never seems to move. our job is to present recessions. now, that is a very profound shift in the balance of risks. essence ais in third mandate. you talked about -- thetake the e.u.al -- asymmetrical discussion forward. is this a kind of asset class you want to take more exposure to given everything you just said?

eric: yes. i mean i don't have a strong sense of the relative performance of resources, but i am very comfortable. i have modest overweight in resources. it absolutely makes sense. tradeking commodity prices from my perspective is a bit of a game. there is a lot of cyclical pessimism. you are likely to get positive cyclical surprises. up a free cash flow generation in the energy sector, in the mining sector, these are businesses that are deleveraging very rapidly. they are very cheaply priced. they have high risk premium. your odds are very good. nejra: u.s. money market assets are at their highest in eight years. while we talk about taking risks, let's talk about protection. is it worth getting defensive in any part of your portfolio? it always is. would you be doing that in cash? it is probably appropriate

now to have a portfolio if you are interested in developed markets where you have a lot of risk within the stock market. you want to have a value cyclical disposition and you want to be very long of equities. hold cashly want to relative to bonds. as a multi-asset investor, as a global investor, the medium-term call here is very clear. i don't want to own government bonds. you are going to get a negative your return. from oneefy those odds quarter to the next, but cumulatively, you cannot. it is still the case you have lost money in global bond markets since brexit. been a big difference by geography, whether you have been in europe or the united states. where yields are, it is inevitable. manus: this is one of the arguments we were having this morning. do you think the pmi's in china

do the green shoots recover on a global basis and therefore major are a line in that drop in bond yields if you look at treasuries from last week, bunds from last week, and jgb's, could it be a draws -- it draws a line? eric: i would not want to point to a single point at which they are turning, but it is very plausible to me. think abouty i markets, i would say what happened in german bonds in the last eight weeks looks very episodic. that is the kind of price action that is still considered. -- ill-considered. genuinely takingll that. when you see that rapid shift in yield, which should take a year to happen, and it happens in four trading days, you are very vulnerable to a reversal. sometimes, markets

overreach on one side. stay with us. we have more to get through. we're going to talk about the most profitable company in the world. aramco.

manus: 6:30 a.m. in london. downtown dubai. risk on across the world. we are rising. the question is this. it is not my on. in 2016, we were both around then. in 2016, the last time the pmi rose above 50. it did not go back to 1989. the markets went on the rally. asia-pacific went on to rally by 25%. sayingst house has been -- post said he wants to be long risk on the back of the major market moves. this could be one of the

reflective moments in markets. >> it has been a really good course of the risk assets. we saw global equities have their best quarter. we saw a good quarter for commodities and for credit as well. the question becomes whether you whileo enter quarter two adding to risk or if you want to enter with trepidation. where is your protection? he would rather have the protection in cash rather than bonds. manus: take a look at the bond market volatility. what do the equity people do? the bonds are braver than the equities, aren't they? walk on by. it barely budge. nejra: we have also talked about the inclusion of china's bonds in the globe either get index and in terms of that, bloomberg economics got some great writing out on that. if you are looking for diversifiers, chinese bonds tend to be less correlated to other assets. they got a higher risk-adjusted

return. of china'sership bonds is 3% compared to 30% of the u.s. bond market. manus: they expect another 100 to 150 basis points of triple ores to come.-- it is the world's largest oil company, saudi aramco, and it is the world's most profitable company. aside.on the ratings it is the first public assessment of a credit quality as it prepares for the international bond market. moody's has given the oil giant -1 plus.time rating of a good morning. aramco, the most profitable company on earth. we are starting to get some glimpses into aramco's account

from what has been coming out of the ratings agencies. s&p expecting that later on today. we will all be on the lookout for the bond perspective itself and what further information we can get from there. what we know some far is aramco's income last year was $111 billion and that puts it far ahead of apple, which was about $59 billion and also far ahead of a lot of other oil majors like royal dutch shell and exxon mobil. the interesting thing in comparing to some of the other oil majors is the cause of aramco's massive tax burden that it has to pay to the state, the engine of the saudi economy. when you look at the cash generated by aramco, it is sitting slightly below some of the other major oil companies. nejra: great point. it is the fun flow from operations, isn't it? worry. i have been my reading this

morning. how big a bond issue are we now expecting? iswhat we are expecting now the road show starting today and finishing on friday. they have a $70 billion acquisition to pay for the .xpectation mostly from free cash flow generated from the company. industry minister says we might expect something in the region of 10 to 15 issuance being printed. maybe by the end of this week or early next week. and the key consideration will be how much can aramco beat investors down on pricing? they have been a super price sensitive issue in the past and we will be looking for a possible deal with this issue undoubtedly as well.

nejra: matthew martin, our reporter, thank you so much. let's get the bloomberg first word news and catch up with olivia hows. one of the biggest concerns for the global economy ease. manufacturing pmi rose up into -- new orders and new export orders rose to the highest levels in six months. for the first time in four months. the lira is falling after president are the ones ruling party lost control -- president erdogan lost control. the party stood its ground across the rural interior. thailand's king has issued a rare rebuke of a minister a week after an inconclusive national election. a promilitary party will form a government.

the shape of the next government may not emerge for many weeks. japan has named a new imperial coronation ofe the crown prince and it will start on may 1 20 replaces his father. when the emperor replaces his father. a host of documents mark the firstfrom when an emperor sat on the chrysanthemum throne. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: olivia. thank you so much. let's get the latest on brexit. you can lawmakers will seize oftrol proceedings. that is after theresa may's deal was voted down for a third time on friday. he said parliament needs to take responsibility for avoiding a new deal brexit.

>> a lot of people say just leave a deal. i don't think the british people us.d thank there are very significant consequences. we are on the following the referendum result. we have a responsibility and we need to take it seriously. nejra: the fund manager is still with us. in the break, you were saying that you are trying to see the sort of's lining in all of this. what is it for you? olivia: a resolution is happening. important.re very the one overwhelming majority is a rejection of no deal. that was crystal clear. you have some degree of compromise. i suspect we will get a lot more clarity about possibly even a majority in parliament about one nrs.e indicative if one stands back from all of this, i think what you are witnessing in burton is a thriving democracy and i think there is way too much pessimism about the fact that it looks

shambolic and everyone is disagreeing and parliament cannot get a majority. the fact that we keep on having votes and nothing gets resolved. that is inherent. it is an incredibly difficult issue to resolve and british democracy is working phenomenally well. there is no outbreaks of violence. this is being sorted out by due process and you can start to see scenarios where it gets resolved. if one tries to get some perspective, there is a more positive perspective. involved and too to close to it, we tend to think like we are banging our heads against walls. manus: indeed. and sometimes when you're caught in the weeds, it is hard to see the light. you talk about the indicative votes. one of the strongest indicative of last week was for a second referendum. this is what emily thornberry was saying. 268-275. in at do you think that if we go for a

second referendum, what are the risks? do you think we have simply assumed that a second referendum would vote to remain? olivia: no. -- >> know. personally, it's not clear to me that a second referendum nor an election guarantees the e.u. resolve anything. it is conceivable and depends on the nature of the second referendum. if theresa may says the deal is the deal, parliament cannot agree to it. parliament cannot tell me what it wants. unless there is a majority that comes out of one of the indicative scenarios that is constructed out of parliament in the next week or so, that she could say we either remain or that postwar referendum. that would be an entirely reasonable approach to take and could resolve matters. think, you know, there is a danger. if you have any kind of

open-ended referendum or a simple rerun, there are lots of problems. you might get a different turnout. if you get a lower turnout, it would have the same validity. it is the same problem with having a general election. the general election is highly unlikely to resolve anything because it is not even a clear vote on brexit and you could end up with a new parliament where you have to try and get agreement all over again. that does not seem to be hugely productive, but i would hope that within the next week or so, either a very clear majority in favor of one negotiating position, which is implicitly this national government -- parliament says the majority of us wants some version of a customs union, you know, you have got effectively a national government. nejra: given everything you just said, what does that mean for how you would allocate to you chaos that's? -- u.k. assets? eric: i have reasonable levels of exposure to the u.k. domestice running a

u.k. denominated fund, my preference is to significantly hedge my overseas currency because i think sterling is fundamentally very cheap. there is no doubt brexit has impacted the u.k. economy. investment spending has been lower. interest rates would be higher which would have affected sterling if this was not happening. of i think there is a lot value in u.k. assets. i think sterling is very cheap. i would not touch the gilt market with a pole. you are almost guaranteed to lose money in real terms. but other than that, i am pretty comfortable owning u.k. assets. manus: if we took one of your central planks forward and there was some kind of strong willingness in parliament for a customs union, what might that due to the bank of england? would that support your sterling -- do to the bank of england? would that support your sterling play? there are major hurdles. sterling, respect to

i am very much taking a medium-term view. tom thinking three years five years out. if you're are running a u.k. fund, if you are long of global equities, which you should be, what you do not want to happen is you get a positive brexit resolution and sterling goes up 15% to 20% and you don't make any money in your overseas equities. to me, it is absolutely logical that you want to be hedging overseas f x risk. x risk. sterling has been behaving pretty well. it is a diversifier. the fx market is being very sensible. the has been a relative price shift and you have had a reasonable degree of stability. manus: one could say sensible or deleted. that is a whole other debate. eric stays with us. our fund manager from m&g investments.

let's check in on the markets from around the world. we have dani burger. good morning. dani: good morning, manus. i am looking at this massive respond rally. we have been talking about it all morning, german bund this beat in china pmi's, beating the highest estimate by bloomberg. china leading the gains up higher by nearly 3%. factan see the mass of the it is having on other cross-asset markets. bonds taking a breather from the rally, but just look at the rally in metals today. when there are any sort of feeling of growth, when it seems like we are going to get a big up, we will see a lot of developing nations on the list. you will remember the lira's liquidity was trapped. investors could not exit their long position. we had investors selling other yemen sets, but now, they are taking it back with that risk out of the way somewhat, so the

rand, a big gainer, of 1.2 percent. it also avoided a downgrade so that helped the rand. i want to fly one other aspect of this risk on rally and that is -- looking positive in chinese equities. here is the monthly change of margin debt from investors and the chinese markets. they increased by nearly 15% in march. biggest increase since 2015, so investors buying on debt here, which gives them a leverage exposure, a big fan of risk appetite coming into the market here as chinese in global equities posted their best quarter since 2010. you sodani burger, thank much. coming up, turkey's president loses key cities and local elections as voters expressed their dismay with a raging recession and a run on the lira. we will be in istanbul. when you are traveling to work,

tune into bloomberg radio live , on your mobile device and dab digital radio in the london area. this is bloomberg. ♪ ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in our dubai studio. party haserdogan's lost control. his ruling party alliance and the opposition are proclaiming victory in the commercial hub of the stumble. the opposition looks certain to win the capital at ankara. to see you. talk us through the results as we know them. seems to be on a knife edge for a stumble. are we any clearer? note are definitely

clearer. istanbul is still up in the air. and it is throughout the night and over the past few hours the main opposition party, chp's fromdate, has been going one press conference to the next, saying he has found victory in istanbul by a margin votes, but this is not confirmed at all and it could take weeks for us to learn what has happened in istanbul. as you mentioned, erdogan's willing party had a blow in the capital, ankara, losing power for the first time since 1994. citieso along the along the mediterranean coach. president erdogan's name was not on the ballot box, but this is a huge check on his popularity. it seems we have a picture over the health of that. -- the economy. at 20%.n is soaring

earlier, it was not a 15 year high. unemployment is at a nine-year high. president erdogan sd they will lay out new economic reforms. however, some economists say they will choose to introduce populist policies in order for short-term political gain. nejra: good morning. talk us through the market reaction. we are seeing a little bit of stabilization in the lira. earlier in the session, it was the worst performing against the dollar. simin: the lira is stabilizing against the dollar somewhat. it seems investors are in wait and see mode. a lot of uncertainty over istanbul. last week, we had absolute market mayhem in turkey. it prevented foreign investors from shortselling the lira, which helped the lira stabilize. foreign investors were something other turkish assets. istanbul fell last week.

erased most of its gains. a few months ago, it was a bomb the best performers -- among the best performers. saw thathis year, we it has fallen below 14%. over the next few weeks, investors will be watching turkey's domestic politics. economic challenges and also geopolitical tensions. thank you so much. great to have you with us. joining us on -- is the emerging markets strategist. great to have you with us and good morning to you. gutwrenching moves we saw in turkish markets last week. are you looking to buy anything now, perhaps particularly in the bond space given how high the yields are? pricesre, because asset have gone cheap in turkey. with the equity market dropping down to the start of the year, that gives it away.

i think an important thing to remember about turkey is asset classes have been hit but it's been pretty significantly stress tested. unnerving,ittle bit not knowing the results in istanbul. let's look where we were last in terms of geopolitical risks, in terms of the global market environment, and turkey bounced back. we have been cautious because of the evaluations but now we are looking for opportunities. manus: good morning. the kind of see restrictions we saw in markets last week and the overnight funding rate going to 25%, bring ais perhaps little bit more pressure to bear on the currency this morning where some of those restrictions are lifted? koon: i think we have already seen some pressure come through to the currency. remember, at one stage, we had overnight rates at more than

1000%. that was the key point. thursday, friday, those rates were coming down. the lira was already under depreciation pressure. we will get a little bit depreciation pressure. but beyond that, i think the worst is behind us in terms of the fx. one thing that helps a lot is the global environment. mentioned earlier, a lot of emerging markets are doing better because of the pmi's out of china. pmi's out of asia, which helped this feel-good factor. feel bad address the factor, which we had last week. people are worried about where global growth is going. yields were down. are a little bit better in asia. maybe that means global growth is better. placestart looking for where it has been beaten up where there is. that sentiment will help turkey.

nejra: what did we learn from last week in terms of the potential for turkey to have contagion effects on the rest of the emerging markets face going forward, bearing in mind the global backdrop and the fed you just mentioned? koon: you saw what it did. after theaction turkish rate went up. people looked at south african rand. sell.azilian reaeal to so there was a contagion. the contagion was relatively limited because of the worst point, the brazilian real was down 2%. the south african rand was down 1%. those countries can do that in 10 minutes. it wasn't that much. manus: i like the way you put it, which is turkey was really stress tested last week. it has shown remarkable results.

these are emerging-market bonds. have a look at this. this is emerging-market bonds in theelivered return first quarter. that is the most since 2012. looking at the glass half-full perspective from the fed and from the chinese data, do you expect a similar kind of outperformance in em debt in this next quarter or over the rest of 2019? koon: i think we are going to have to differentiate a bit. we will get some decent performance from the local market side, particularly currencies, because frankly, year-to-date, em currencies have not done that well. catch-up ingot terms of currencies. that is going to booster local market bond return. on the hard currency side, we have already had a stunning first quarter. i don't think we can stretch that. there will be more differentiation from the bad

place left behind. nejra: you were looking for opportunities in the emerging markets face. are you cautiously looking for opportunities, and how so? koon: actually quite constructive. in turkish bases, you have hard currency bonds of really good companies, which are giving you 8% yield. and you are not having to stretch out risk for that. , littleest of the year pockets here and there. manus: thank you so much for being with us. the lira trades at 555.58. canng up on the show, you -- economic data from the second-largest economy surprises on the upside. the pmi's beat. stocks soar. we are going to talk china. seeick reminder -- you can all the charts we show in gtv

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manus: good morning from dubai. i am manus cranny with nejra cehic in london. this is "bloomberg daybreak: europe," and these are today's top stories. global stocks jump in the hang seng heads for a bull market. china pmi beat estimates. debuts the nation's bond in a key benchmark. any port in a storm. the house of commons takes control of brexit again. theresa may's conservatives make pragmatic steps to prepare for a possible snap election. and smooth sailing. the world's largest oil producer , saudi aramco, gets an a plus as it prepares for its debut international bond offering.

nejra: good morning, everyone, and welcome to "bloomberg daybreak: europe." we're just under one hour from the start of cash equity trading. what a quarter it was for equities. for u.s. equities, best quarter in a decade. we are seeing u.s. futures on the front foot. we could see a third day of gains. put the futures higher by .4%. .9%.utures higher by they celebrated their best quarter in four years in the first quarter and cac 40 futures on the front foot as well. you're seeing a strong response tone. dollar-yen hitting a 111 handle. breaking news from easyjet as well in terms of a stock you

might want to watch at the open. easyjet with a first-half performance in line. total first-half revenue is expected to grow by around 7.3%. how are the bond market looking, manus? welcome back. manus: on yields are rising a little bit. was debatable all the way around. the question you need to ask dataelf is this -- has the drawn a line in terms of the yields? these are the prices you see. prices of on drop. likewise in u.s. treasuries. i like what morgan stanley -- they have abandoned their 2019 fed hike call. they are cutting their yield forecast. they basically said tenure paper will end. we are the markets have

underestimated chairman house appetite to deliver a preemptive strike against downside risks to the outlook for growth. that to a certain a momentaryawing line in the bond yield dropped. let's get into markets and a little bit more detail. by the way, that is an additional red headline, recapping. the secondutlook for half is more cautious, they say. it has gone red. juliette saly is in singapore. [laughter] juliette: that's right. i am ahead of the time here. we are seeing japanese stocks close out the session, up by 1.4% in japan on the weaker yen. despite a weak reading at 12 despite estimates, and you mentioned the two pmi pieces of data out of china. they both beat estimates.

the csi 300 has one hours trade left. watch hong kong because it looks like the hang seng index is getting very close to bull market territory. it rallied 12% in the first three months of this year. asian stocks holding at their best level since october 3. a seven-month high. let's have a look at some of the assets. we mentioned the yen weakness and the dollar up by .2% against the yen. you have seen the kiwi and the aussie really rally strongly in response to the china data. the kiwi is the strongest g10 5%.rencies, up . falling to record lows yesterday. rate decision rba coming through and also australia's federal budget tomorrow. nejra: juliette saly in

singapore, thank you so much. stocks in asia and european futures rising after china's latest manufacturing data eased concerns about the pace of the global slowdown. the first official gauge for march and a following private survey indicated the economy is stabilizing further, offering some relief for investors. joining us now is the head of investment strategy at rbc's wealth management. we are seeing stabilization and markets react quite strongly in terms of the risk on move today. is that telling you we should take part about the outlook for global growth and china? or rather just that investors are looking to put money to work at any opportunity? >> we should see this in a positive light. it is one set of data. perhaps two. been a lot, the has of concern about the chinese slowdown because the stimulus is not going to work.

this is giving some relief to investors in terms of chinese equities. they had a very strong bounce already. earningssociating being downgraded. we think the market exposure is valid at the moment until we see provingmore data points that it is going to be optimistic. manus: it is the first sort of que.we have had, frederi the question is what more is there to come? iraq and another 150 basis points of cuts to come. do you think you think you'll see more stimulus of that nature? we are expecting more stimulus going forward, and certainly, the authorities have said so. we will wait to see how the economy responds before recommitting. nejra: we have had south korean

export data, a drop in that. i suppose that might be a reason not to bring gloom into the picture, but to say we are not quite out of the woods in terms of bottoming out in growth. frederique: absolutely. in terms of your overall perspective, if you got a trade and and you got more rrr's, the data began to get a little bit better, where do you want to be positioned in terms of your exposure? do you want more china and asia exposure relative to europe, relative to the u.s.? or canned europe benefit from some of these potential ticks in the boxes? frederique: china has had already quite a big bounce with respect to trade. we do expect some kind of deal eventually, but we do not expect a deal which will take all the the boxes.ck all we think tension will continue for quite some time. given where we are in the

economic cycle, we think it is probably best to be market weight in all regions and we don't want to take very many big bets. nejra: market weight in all regions. we had a stellar first-quarter across a lot of assets, both bonds and equities and commodities of course, and credit. as we look into the second quarter, are you approaching that with some trepidation or caution, and are you looking for your next move to be taking risk off the table? frederique: very strong first quarter. we had a very poor december. we do expect our next move, looking at six months to 12 months, will probably move towards a defensive position. inversion lastd week. and that, for us, is an important sign that over the next 12 to 14 months, economic conditions might be a bit more difficult, and we think that hilst the market is

going to higher highs, we would take the opportunity to pare down positions. manus: it is amazing how our .emories are quite short a raging bull theory. stay with us. a little bit of breaking news to bring to our viewers on the payments ipo network. they set the range for their ipo. 465 pence per share. that is the price range. that would give you an implied market capitalization -- 2.32 5 billion on the range. 2.325 billion on the range. it is going to be a secondary share sale. that is why it is particularly important for our viewers in the region. let's pivot back to china because it is the linchpin of all of our markets. it is inclusion day, and that is critically important. dani burger has a little bit more -- you know what? hold that thought.

we are juggling the pieces here. let's get back to -- where should we go to next? dani: i think i am here if you still want me. [laughter] manus: let's make a decision. take it away. is china -- good morning. dani: yes, good morning, manus. i am here. i am back with you to show you what is going on. four bonds are from issuers been included into the bloomberg barclays global aggregate. that is china's treasury and three so-called policies. 356. $3.3 trillion. china's inclusion will be phased-in slowly. china's economy, despite growing, is increasing 2.5 times faster than the u.s.. here is a look at the main index. the nation is set to be the world's largest economy. this inclusion could result in a

massive liquidity injection into the chinese bond market. this is under owned. here.ark to the ag right we will look at snapping up the very same debt. vanguard group is only planning a limited amount of adding chinese domestic bonds. are are saying there constraints to full inclusion related to market concerns, so we will see how this further develops. manus, narrow. -- nejra. nejra:nejra: a quick note on chinese bonds being added to the bloomberg barclays global aggregate index. apparent company of bloomberg news owns the bloomberg barclays branded bond indexes. let's turn back to our guest onset from rbc. we brought the mliv question of the day. market, less correlated with other markets? maybe it has diversification potential and the bonds tend to

have better risk adjusted return. market and's bond 30% of the u.s. china's bond market become a viable option for global reserve managers? frederique: you had to be very selective, but there is some value in chinese bonds as far as we can tell. premium, that outperformance by chinese government bonds relative to the u.s. and relative to sort of the benchmarks, do you think this conclusion that we had today gives perhaps a little bit more validity and overseas flows into china? frederique: potentially, but people will probably also look at economic data, not only at what is included in the index. nejra: would you look to diversified given that potential? frederique: we are looking at it. manus: stay with us.

strategyof investment at rbc wealth management stays with us. our guest host for this part of the show. olivia hows has your first word news. conservative party are making preparations for the possibility of a snap general election. with only 12 days left before britain's departure, the party is deeply divided over brexit. james cleverly made the admission on sky news that it is not the option the government is pursuing. it signals the u.k. may be headed to its third election. president erdogan's ruling party has lost control of some key turkish cities in a series of luck elections. polls show the opposition leads in ankara and in the cities along the mediterranean coast. the party stood its ground across the country's rural interior. both are claiming victory in a narrow race. ukraine's leader will face a runoff against comedian vladimir

is landscape -- letter manziel and ski -- against the comedian. with nearly 18%. facebook is making a bid to shape the conversation about internet rules. it is urging regulators to agree on standards governing online void patchwork. the push comes off the back of growing love and it -- government scrutiny around the world. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. coming up, is the u.k. heading for a new deal brexit as the house of commons makes a last-ditch attempt to reach agreement? we will bring you the latest from westminster. that's next. if you're traveling to work, tune in to bloomberg radio on your mobile device or on dab digital radio in the london area.

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7:17 a.m. in london. 42 minutes away and counting from your cash trading. it is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra: i am there a change which in london. saudi aramco is the most profitable company on earth. according to -- it easily surpassed apple and exxon mobil. last year, aramco generated earnings before interest, tax, and depreciation. saudi oil giant as a plus ahead of the bond market debut. for 4.6 buying -- billion dollars. the deal is expected to be completed in the fourth quarter

of the year after a bid. the foundation owned 46% of the shipping company. shareholders had previously gone public in support of the takeover. chrysler is reportedly discussing a way to share investments to build cars in europe. -- fiat chrysler is reportedly discussing a way to share investments to build cars in your. partnership could eventually develop into a wider combination, but it is limited. that is your bloomberg business flash. nejra: olivia hows, thank you so much. u.k. lawmakers will seize control of poetry proceedings for a second time as they attempt to find a majority for a parliamentary proceedings for a second time as they attempt to find a majority. no agreement is reached, the u.k. could leave with no deal on april 12. let's get the latest from westminster. and edwards is there for us. great to see you again. good morning. how likely is it that no deal

brexit could actually happen? anna: good morning. let's not forget that april 12, if nobody does anything, the default position is britain leaves without a deal. for forget the level of support we see in the conservative party for no deal as an option. we saw in voted for by mp's from the tory party last week in the indicative votes process. we learned 170 conservative mp's, including 11 cabinet investors, have called on theresa may to go for no deal. that remains an option even though the prime minister herself might not be in the job all that long. she said she will not take the u.k. out of the e.u. with no deal unless it gets the support of the comments. talking of what the comments could support, could a softer brexit still emerge? you mentioned the indicative votes.

the government needs to pay attention to this process. it does seem as if we will be debating how much support there is for something like a customs union, but of course, that it's very different. -- that is very different. discussed very much against government policy. can we get a majority for something, as last week, that seemed elusive? see you.eat to the possibility of those indicative votes is a second referendum mounds of victory in the house. what shaped that second referendum is the whole of the debate, but one thing that is running center in brussels is patience. what are the noises? frederique: -- anna: absolutely. you mentioned the possibility of a second referendum. there is the potential for a general election. there is so little clarity. may going to brussels and asking for an extension and

participating in european elections were not. lots of questions about where we had from here. juncker of the european commission saying patience can run out. patience with the u.k. will not last forever. even describing the u.k. asked sphinx-like. talking about the fairly difficult to read aroundmiss -- miss around the sphinx. theresa may's plan is nebulous. we will see whether brussels have any understanding of what it is the u.k. wants. the u.k. needs to decide that quickly. angela merkel is going to be in ireland on thursday, trying to nail down no deal plans with the irish -- that has been a point of tension between the irish and the germans. the german fearful about ireland is not making plans sufficiently enough to protect the border of the e.u. if we are to see a no

deal brexit. manus: let's hope it does not return to anything like that. great job as ever. anna edwards in westminster. let's get to our guest host this morning. it is the head of investment strategy at rbc wealth management. she is still with us. will be much beating of brouse today about the indicative votes. let's see what comes from that. i want to focus on perhaps data, which you say is a more prescient issue. the pmi is remarkably resilient. even in is resilient all of this hubris. just how do you make sense of that? how do you square that with political hubris? frederique: the pmi's manufacturing, we do not expect any change. only have to look at is whether businesses are still stockpiling ahead of the potential of no deal brexit.

what we have seen over the last tend tohs is the pmi's overstate the slowdown. we expect gdp growth of 0.2% quarter-over-quarter for q1, so that is not very high, clearly, but it is respectable given the political uncertainty the economy is faced with. nejra: what does that mean for how you will be allocating to u.k. equities? are you looking at ftse 250 versus ftse 100? are you stockpicking? we are international companies. we think there is a good valuation case here. our base case scenario is that there will not be a no deal. it's a probability. it is not our base case scenario. if that is the case, then valuations are really attractive, and therefore, market weight with sectors such as energy, health care, big in portfolios.

manus: can we pivot to europe for a moment? we heard about preparedness for the worst-case scenario. when it comes to europe, obviously, it has had the china.ft from it has had the facilitation by the european central bank. anticipate growth momentum in the second half. how do you position for it? frederique: we do expect growth to resume over the course of the year. it is unlikely that europe will growth,to get to trend 1.5%, given the slow start to the year, but it might be able much lowerhing not than that. we think valuations are not demanding. it is a region which is very much under owned. resumption of growth, there could be some positive surprises in terms of earnings. nejra: what about the ecb? doesn't it have much left in its toolkit from here? there was a lot of -- does it

have much left in its toolkit from here? there is a lack of tools the ecb has. frederique: the liquidity injection will help. should they adopt this tiered deposit system, it could give them a new tool to signal interest-rate cuts or cut interest rates if need be later on in the year. the head of investment strategy at rbc wealth management, great to have you with us here. and that is it for "bloomberg daybreak: europe." "bloomberg markets: european open" is up next. futures on the front foot and -- in europe and the u.s. as well. when you're traveling to work, tune in to bloomberg radio on your mobile device and on dab digital radio in the london area. i will join you there from 8:00 a.m.. manus cranny and i will be back tomorrow for more markets. we will see if the risk rally continues and if those bond yields continue to move higher as well in the u.s.. this is bloomberg.

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morning.d welcome to "bloomberg markets: european open." the markets say don't look down. afteres continue to rise risk assets marked the best quarter in a decade. how much conviction is there in this rally? cash trade is less than 30 minutes away.