♪ >> good morning from bloomberg's european headquarters in the city of london, i am nejra cehic with manus cranny live from dubai. this is "bloomberg: daybreak europe." parliament rejected all options deal.lace theresa may's losing steam, the global stock rally comes to a standstill in asia, and the u.s. futures point lower. treasury yields it dipped after the biggest surge in three months. and the european commission president jean-claude also talks trade as

china's top negotiator heads to washington. ♪ manus: it is daybreak europe, we are live from dubai and london. the question to put our guests, has lebron market just had a basisg moment, nine points move. this is the biggest one-day move in three months. as a marker gone too far ahead of itself, pricing in a new recession? goldmann joins sachs and others cutting their revenues for this year, saying tot yields will go down 2.05% because the fed will go easy. but there is a turnaround in those numbers with china and the united states. i want to show you a couple of commodities. iron ore on a virtual tear, the

best quarter since 2016. china trade deal gets done and you have a choke off in supply, where can iron ore go to ? could it go to $100? there are cycle and impacts. higher.rages opec drops production for a fourth month in a row. you are looking at wti ripping up. what happens next in the oil market? we will discuss. goldman sachs is $85 is attainable on the market. a quick line on india, manufacturing, europe was a little different, but for india, 52.6, below where we were last 54.3. from a little bit disappointing on the pmi from india relative to where we were march versus february. that is the lowest reading since september of last year.

nejra: good morning. you of pmi's, we had manufacturing from u.s. yesterday coming in better than expected, pushing the s&p 500 to its highest since october, just 2% from the record high. we are seeing the global equity rally take a breather in today's session, and it is reflected in u.s. futures as well, a little bit weaker. taking afutures also pause, you can see the pause in the global equity rally reflected in asia as well, after the best quarter for double equities in the first quarter 2010. you were talking about the bond markets, the three-month 10 year yield curve is no longer inverted. cable is on the back foot, the house of commons failing to find a plan b to theresa may's deal. there will be another cabinet meeting today. goldman sachs is saying that the biggest opportunity in development of currencies is the pound.

although cable is on the back foot at the moment. speaking of cable, they have closed their short position on the dollar against the yen. the has been a reach read on the yen in the past few days, but you are seeing dollar strength this session, gaining against most of the other. currencies the euro dropped below 1.12 the session. we had better than expected u.s. and china pmi's yesterday that spurred a risk on rally globally. it is theope, achilles heel, because europe e&p in my came in a bit weaker than expected, manus. manus: yes, let's pick up a bit. i just had best european pmi came in a bit weaker than expect did. you are not going to have this cataclysmic drop in terms of sayth, but analysts that yields will stay at 2.5%. i think what you saw yesterday was one of these moments where

we will hang a hat on some better data, whether that was the institute for supply management a manufacturing in united states of data. i would read that with caution him a because consumer numbers were more of a red flag. peopleyes, you see commenting on the china data as well, saying that it might come through as a relief, but we cannot focus on just one data point. gains in then the market, today we're seeing a pause. volatility has remained fairly subdued. for now, let's get the bloomberg first word news with olivia. narrow.s, european governments are struggling to reach consensus when it comes to trade talks with the u.s., which could further irritate the white house. this comes after the european bloc refused talk about agriculture. is advancing on fresh

evidence of the opec cuts to outputs. production fell for a fourth month in much. meanwhile, the ongoing political crisis and power blackouts in venezuela further squeezed supply. the reserve bank of australia cap is cash rate at 1.5% as expected by money markets and all but one economist. the nation's budget is due to be released later today. the government is expected to -- out about 9 billion dollars in tax cuts in a bid to win back voters ahead of a likely may election. ryan air is the first airline to become a top 10 polluter in europe, the first for a company that doesn't run any coal-fired power plants. a brussels-based research groups found that this underscores the airline industries growing input into pollution, which has risen

by two thirds since 2005. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. nejra, manus. manus: olivia, thanks for the roundup. let's get into the markets. juliette saly has the latest from singapore. juliette: hey, manus. ready flat on the msci pressure asia -- msci asia-pacific index. levels, buttober you can see some upside coming through on the nikkei in late trade. in hong kong there was a rate decision -- there was a rate decision in australia. stocks have done well on the back of the fact that the federal budget is being handed down tonight, and there are tax expectations. new zealand stocks still at a record highs, and indian stocks trying to hold on to the record highs reached on the sensex

yesterday. hong kong casino plays on a tear, the galaxy has been on the best performance for two days in a row on the hang seng index, adding 4% today. tencent is in focus because we are hearing that it could be coming through with $3.5 trillion trying to raise a dollar bond. we could get that as early as tomorrow. lyft close below its ipo price, kkutan, a shareholder underr shareholder, pressure. nejra: juliette saly, thank you so much. sterling has fallen as you can lawmakers failed to agree on a plan b for brexit, rejecting all options put forward. ae comments debated for policies, yet none commended a majority. this leaves the prime minister with no clear idea of what to do next.

she will hold a cabinet meeting this morning, with a no-deal brexit 11 days away. besides that, goldman sachs says upon projects the best wil opportunity for development of currencies. >> we think we are angling towards a softer brexit package, possibly a permanent customs union, possibly packaged together with a second referendum. we think that will be coming together in the next 1-2 days. we are coming to a big finish here, but i certainly would not say it is not tradable. we think this is an important market opportunity. nejra: david merritt joins us to discuss. what could that look like? controlnt could take again on wednesday? david: yes, another attempt, it seems. last night we had no clear conclusions. but we got closer particularly

on the two questions, it customs union and also perhaps staying in the single market, and even a little closer on the question of a second referendum. maybe a third attempt. what we have learned in this seems. is that no vote to be final not only will probably might have another go, but theresa may could potentially try to bring her twice-defeated deal back for a ful fourth attempt for survey tomorrow or friday. we will find out possibly after her cabinet meeting, this epic five-our meeting at the cabinet this morning. manus: everybody is not talking about -- david, good morning to you -- the possibility that she might go for a general election. if you look at the voting last night, the customs union and staying in a single market, this is rather is the most limited of tory support.

are the right-wing tory, the erg, are day sufficiently frightened to get behind her deal at this stage? david: i think that would be theresa may's hope. in the last couple of times voting, she has made various threats to the more brexit-leaning part of her party, whether it is an extension or brexit not happening at all. still, there is that hard-core group of brexiteer tories who say they will never vote for this. time around, jacob rees-mogg, borris johnson, all can run and said that they would hold their votes. the dup, they are still holding the line, and they have said stayin the last few days, in the eu rather than accept theresa may deal. so without those three votes in difficultt is looking

for her to get this deal without the support of labor. and why wouldn't labour mps rally behind theresa may at this point, when they are seeking a general election, which could put mr. corbyn into no. 10. manus: we know that the last time she got the support was with the effort of a billion pounds, political support. david, thank you so much. our senior executive editor, david merritt. our guest here in dubai is raffaele bertoni, head of fixed income markets at gulf investment corporation. it is going to be the biggest opportunity you have on the pound according to goldman sachs, a pound in the customs union and possibly a second referendum, a big finish. is that goldman's optimism talking? rafaelle: it is difficult to say because we have been talking about this brexit discussion for very long and every time we

thought we were close to a were disappointed. delay best will bring uncertainty, but we are closer it to a decision. we know that the u.k. pound is very cheap and if there is any outcome come of the pond well a rally together with the equity market, of course. there are a fish i wonder if that will also have anything to do with the fundamentals. economicshows a global surprise indices, a number of them reclining, that the u.k. outperforming. does this and coverage you to thision a different way on versus other bond markets like the u.s. and other zones? raffaele not necessarily.

the u.s. bond market attractivehe most bond market in the world, the only one that is still in positive territory. treasuries trading around 0.6 real rates. if there is any positive resolution of brexit, i think that will lead the bank of startd to normalizing monetary policy, therefore, i see much upside. manus: let us look deeper into the potential. you talk about normalization from the bank of england. i wonder, will they go for normalization given that the fed pause and other central banks are on this stepping back pose, does this

give mark carney the latitude to allow the economy to right foot itself? so, for thethink simple reason that the fed has in march ofalized last year. europe is in a different position, compared for example to the u.k.. so the u.k. economy is performing relatively well in hasicular, the consumer been quite resilient despite of the uncertainty in the market, and inflation is really high compared to the level of operation. so i think they could have room for normalization. nejra: indeed. tohave seen the pmi rising the highest since february, 2018 week. u.k. this stay with us, fila bertoni,

senior portfolio manager at gulf international corporation. today we are asking the question on mliv . we touched on central banks. . which developed markets central bank will cut rates first? you can chat with our team on your bloomberg. coming up, double standards. the european commission president steps up his criticism practices.trade we get into that conversation and the conversation around europe, next. manus: and, live on your mobile device, you can listen to bloomberg radio. this is bloomberg. ♪

♪ manus: this is bloomberg daybreak: europe. i am manus cranny in dubai. nejra: and i am nejra cehic in london. we saw a bond market rally,

after the first quarter since 2010. the dollar is on the phone foot, gaining against most of its g10 years. itsman sachs has closed short on dollar yen. the 10 year yield jumped the most in three months, a nine basis point rise. we are down three basis points today, manus. manus: and the curve has actually come out of in version of its three-month versus 10 range, and we are in a bit of a reprieve. opec cuts production for a fourth straight month. goldman sachs says it will be a big finish for brexit and the opportunity will be in the pound. we have a big finish and it is coming. s&p futures a bit later on their feet, stocks overall making new 2019 highs. profitability is actually getting better getting a year.ack sweep of

let as get your business flash with all the via. via to >>with all the thanks, manus. is trading well below its $72 ipo price, and ominous sign. readou cannot necessarily too much into the first few days. facebook dropped to its lowest ipo price on the second day of trading. outlook has been cut by the s&p to negative, to a-, after this chief executive stepped down last week. wells fargo has struggled to tame a range of scandals. there are now looking for a permanent replacement. has reportedly alerted french prosecutors to payments made by carlos ghosn, following reports of them anyway have been used to repay personal debt. bloomberg has learned that the payments totaled millions of

euros. a spokesman for carlos ghosn's family denied any wrongdoing. that is your business flash. manus: thank you very much, olivia. the chinese government says it a suspension of retaliatory tariffs, and include opioid fentanyl and a list of controlled substances. the vice premier is arriving in the united states for talks. nejra: it is a slightly different tone out of the e.u., as the european commission president stepped up his criticism on china, after said -- iti jinping can't stay like this, the chinese companies have access to our markets in europe where we don't to the markets in china. is still with us, head of debt capital markets and senior portfolio manager at gulf

investment corporation, raffaele bertoni, joining manus in dubai. does this latest rhetoric on trade worry you after the pmi's we had yesterday? raffaele: the answer is yes. for a number of reasons. first of all, i expected that as soon as we approached the presidential election in the we would receive some kind of announcement on the trade war between china and the u.s. and that would be maybe the opportunity for the u.s. administration to turn their attention to europe. there would obviously be a significant risk, we know that germany in particular is quite u.s.ed to exports to the in the auto sector. the auto sector, which is also facing a lot of headlines at the thent, and is one of

sectors that is a dragging down gdp growth in china. so that is something that we should monitor carefully. manus: we have a bit of breaking news, don't worry, i will not ask you to respond on bitcoin. $5,000, up 22% this morning, busting over $5,071. i have confirmation that this is more than a three standard deviation move. go on there, bitcoin. 64 hundred up to the dollar level? raffaele bertoni, senior portfolio manager at health investment corporation. i know that you would not deal in anything as aggressive as it going. back to the relationship between china and europe. it is fascinating to see the destruction in terms of yield in the bond market, it has been quite stunning -- in the bund

market. the inflation story in europe, if i look at hicp, back at 2016 lows. are we at the worst point in europe? the think the responsibility of reprieve, or do we go lower in ?und yields raffaele: it is difficult to say, bund is moved by technicals rather than fundamentals. stillis only 10% of bunds available in the market, the rest is in the hands of standard banks and other financial betitutions, so the bund can moved easily. also, the bund is now used to hedge other risks in the market, it is one of the cheapest way to for example hedge the equity risk. so technically, it could move lower but fundamentally, there

is no reason in my view. , are you taking any opportunities in the european credit market? raffaele: very good question. three weeks ago, i would have said yes. we recently changed our view on the european credit market. we think there are other opportunities in other markets. it is becoming very tight as other markets. but the problem is that europe is probably the biggest risk to global growth less year, and no matchupthere is in terms of spread tightening, -- there is not much upside in terms of spread tightening, it thisbe a story of carry year. manus: ok, stay tight. we will dig into where the

opportunities for equities live at the moment. coming up on this show, and market -- bond market clues. is a market flashing recessionary signals? yieldree-month tenure come back over the 3.0 line. we talk about the next. this is bloomberg. ♪ this is bloomberg. ♪ want more from your entertainment experience?

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♪ let's take a look at the world map in asia. we are seeing a little bit of a in asian equities. we saw big gains yesterday. the s&p 500 just 2% from a record high and in a golden cross. a strongite risk on yesterday. bitcoin, what a move today. manus: [laughter] it was an outrageous move and i love it. we are now just shy of $5,000. n caught up with a

ex-goldman sachs fund manager who's said you can still make it back to $8,000. this is an amazing kind of move that you are seeing. i wonder what it actually says about volatility and risk, or is it just one of those standard moves? nejra: it's a great point. sudden swings and bitcoin used to be -- in bitcoin used to be not a big deal at all. suddenly we get this big move today and you wonder why. if you look at equity volatility, the vix still just at 13. manus: i love this headline. you have to jump onto the mliv team. bitcoin is back, baby, at least temporarily. 23%, the biggest day

begin in more than five years. there you go -- daily gain in more than five years. there you go. will it last? let's check in on the markets around the world. in london it is annmarie hordern. good morning. let's get into these indian markets. a little subdued, certainly compared to bitcoin. what's driving the weakness? >> i hope the indian markets do not have a rally like bitcoin. in today's session, very subdued for the indian market and in line with what the asian markets are doing as well. quiet, even the banking stocks very quiet. i would reckon that the data from the indian side is not looking the prettiest as well. everybody monitors what happens to the gdp numbers and the central bank policy.

today the nifty auto index is one index that i would leave you with. at three-year lows. just in the last six months it has been slightly unfavorable and this month data has not been very rosy. looks like it is under pressure. but to you -- back to you. nejra: snp markets taking a bit of a pause after a strong rally yesterday. what are you focusing on? >> msci asia-pacific index relatively flat. we see other asian markets maintain some of that momentum. you can see singapore is higher, thailand. some of these other markets are trying to maintain some of those other gains we did see. foreign-exchange this morning is all about the aussie dollar. it is weakening. rba kept rates. on hold. the statement.

is giving some -- on hold. the statement is giving some encouragement. i want to bring your attention to iron ore, up a little bit more than 2% this morning. bhp just joined rio tinto. london, i am back in am taking a look at the pound and what has been going on with brexit. while the pound is lower today, i'm looking at what's happening for the end of 2019. analysts forecasting that the pound will be higher, robert -- the dollar.against optimistics very amongst developed markets. manus: ok. well done. we see rather -- whether the bagels comment expensive on the credit card -- come in expensive on the credit card.

let's get to the question of the day. here you go. the developed market central-bank, who is going to cut rates first? that is the question. nara and myself are part of that jra and myself part of that. olivia, good day. parliament has failed to agree on a new blueprint for brexit. it rejected all options put forward to replace theresa may's unpopular deal. although a customs union with the eu was the most popular, it lost by only three votes. the cabinet minister is holding a meeting today. jean-claude juncker has stepped up his criticism of china trade practices, just days after president xi jinping sought to seek the european consent of his trip to europe.

greece is reportedly planning to pay back some of its imf loans early. early repayment of loans is a long-standing ambition of the greek government as it seeks to bring down the cost of debt refinancing. china has reportedly named a new chairman for the sovereign wealth fund. bloomberg has learned that the current chairman has been tapped to leave it. may put an end to a time of uncertainty in the fund that saw several senior executives depart. elon musk has praised the his tesla systems. he says this has been addressed by security updates. over half of norway's car sales are now electric. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

nejra: thank you so much. the three-month the 10 year yield curve is positive again -- the three-month 10 year yield curve is positive again. dani burger is here to explain. >> is really hard to imagine how volatility stays depressed from here, whether or not you believe the signals from uecker -- from jean-claude juncker. ,olatility really low right now but historically the yield curve is a great leading indicator. i have them both on the board. you can see just how well the vix on a happier lagging here tracks it -- half year lag here tracks it. if the yield curve is flashing a recessionary signal, naturally we will see an uptick in volatility. even if it's not, just that

shatter -- that chatter could spur volatility from here. right now traders are the most short the vix. since 2009. on this right here, this data below zero in short, above is long. this in itself is not enough to cause volatility to turn upwards , but if we get any of those tail risks to materialize, be it brexit, traded, investors will be caught extremely wrongfooted. they will need to cover their short positions and that could cause a really big explosion of volatility. that debate is whether the bond market volatility traders versus the yield market volatility traders have it right. our guest host is a speciality in this area, raffaele bertoni. taking into consideration what she has said, that would market

has not spiked. would you think it is folly at the moment to be a seller of volatility across assets? raffaele: i don't think -- i'm not a big fan of selling volatility at this point of the cycle, especially with all central banks in a very accommodative mood. i think the spike we had in the bond market was more an early assessment of central-bank expectations than a technicality -- and a technicality of the u.s. market rather than expectation on the future economic development. expecting thatre we might see a bit of volatility , given it you have said you would not want to be short it, how are you looking for kerry in inse long markets -- carry

these long markets with the tightening by central banks pretty much done? raffaele: i think from now on it will be a story of kerry in the the market.rry in government rates are very low. u.s. trip will be sector of the investment grade market was -- triple b sector of the investment grade market that was sold off last year represents a great opportunity. we calculated that they have this year something around 700 billion in terms of potential stock buyback, 500 billion in dividends. if the companies would start prudent, and they will realize that the

deleveraging on their balance sheet at this point in the credit cycle and economic cycle makes sense to them. i think we could have a very good performance from this part of the market. manus: so a little bit more 'smpression on the triple b over treasury. you would say at the end of the left section you said i am -- left section, you said i'm done with you -- last section, you said i'm done with you. if you want to reach into emerging markets, does china feature at all or are other emerging markets where you would prefer to put your bond exposure? raffaele: china represents a very good opportunity at the moment. it's a very good market, about 12 trillion. it has just been announced the ir inclusion in the bloomberg markets aggregate index.

it's going to be a very good diversifier within a portfolio. generally speaking, emerging markets are still the most market in the world. especially if you look at currency. it was the major underperformer last year, has recovered this year. stillk the asset class is a very attractive risk-adjusted -- nejra: it's interesting what you say about chinese bonds being a potential diversifier. they have a low correlation to other markets. you talk about emerging-market debt. you prefer local currency over hard currency. what about emerging-market corporate debt?

do you look for specific name opportunities there at all? view, what isy very interesting at the moment is asia, in particular. india is one of the markets that suffered a lot the last year and represent a good opportunity. in south america, it is a little bit different. we might have some opportunities during the year in brazil. mexico is very interesting, especially on the corporate side. eastern europe is the only part where i think we should stay away from. the obvious relationship with the economic growth and the rest of europe. manus: the next -- i think emerging-market bonds, emerging-market stocks had the best performance in a number of years. does it take something very

significant from other central banks, or indeed another dose of qe to deliver that and returning em -- return in em? raffaele: yes. i think the best value at the moment is more on the equity side rather than on the corporate side, but as i said, most of the tightening is probably -- has probably happened. there are some segments of the market where there are opportunities for further tightening. as far as quantitative easing, i think it's going to be negative. we already have a very low level of interest rates, both nominal and real. of low rateseriod generally speaking tends to lower -- force misallocation of capital. this is, in my view, quite

negative. that's one reason why i am negative on europe. europe is back again below despite a low level of interest rates. it seems to me that in a short amount of time it is a good support for the economy. eriod of time, negative rates can really affect economic growth. nejra: on the misallocation of capital, has the compression we have seen in high-yield spreads, both in the u.s. and europe, than a little of a misallocation -- been a little bit of a misallocation of capital? raffaele: i don't see misallocation of capital there, to be honest. we did not see an economic recession last year. last you the economy, especially in the u.s., was growing above

trend and this year they are back to tread. they're the spread tightening is not in my view -- there the spread tightening is not my view a misallocation of capital. nejra: thank you for joining us this morning. raffaele bertoni, head of capital markets and senior portfolio manager. losing its luster. gold on the decline. yep, and if you are traveling to work, you know what to do. we are with you every step of the way. bloomberg radio live on your mobile device or on dab digital radio in the london area. they are live and good to go. ♪

♪ is "bloomberg

daybreak: europe." i am nejra cehic in london. manus: let's get you a business flash. olivia? needs moreays it time to finish a software fix for it to grounded 737 max planes. this has company engineered updated the system that has been linked to two little crushes in fed months -- fatal crashes in five months. the big four accounting firms should be forced to legally separate their consulting work from their auditing business, according to a u.k. parliament committee. lawmakers also propose an absolute cap on the market share of the big four. they control more than 90% of u.k. audits. for large companies. tencent is planning to raise about $5 billion for a dollar bond sale.

the chinese social giant is recovering from a bruising year of crackdowns and slow game approvals. in december the company missed on earnings by the most in a decade. and that's your bloomberg business flash. nejra: thank you so much. gold is on the decline as a rebound in u.s. manufacturing and signs of stabilization in china ease concerns about the outlook for global growth. our next guest also sees the fed as a key driver for the gold price. joining us now is tom holl, portfolio manager at black rocks natural resources team. we have been seeing a little bit of a decline in gold since the 25th of march. what are the prospects for the mental -- metal? what you have seen in the last few weeks is completely expected. that's what we have expected to see. i think investors should focus on the fact that during october

and december when you saw these big drawdowns in risk assets, that gold provided a safe haven status and rallied, despite the strength in the u.s. dollar. the pit we have seen from the fed i think -- and it -- pivot we have seen from the fed i think is going to be really important. manus: what does it take to significantly shift gold? tom, good morning. given the fact that we seem to doubt that those really urgent levels of an -- there is really urgent levels of inflation. tom: i think what you have got to look at is not just the level of inflation and isolation, but also the fed's policy, and therefore think about the outlook for real interest rates. gold typically performs well when real interest rates are below 1.5%, and especially well when they go negative. our base case on our resources

team would be for a benign global growth outlook, if there were any external shocks to that, and we have seen the impact those could have in october and december of last year, i think gold will be very well-positioned to rally, after the will seek it out for its safe haven -- as people will its it out first -- out for safe haven status. nejra: why isn't gold doing better? tom: i think gold has done quite well. that rally last year, and we are now seeing some consolidation below that. i think as an investor with a diversified portfolio, you would have been very pleased with the way gold performed during that fourth quarter. it provided that portfolio --ersificationrole. diversification role. manus: let's talk about iron

ore. i see notes after note talking about $100 on iron ore. what does it take to get there? side on thepply constraint or maybe a constructive trade deal at a global level between china and the u.s.? tom: when we look at iron or at the moment, we see a market that is very finely balanced. the disruptions we have seen out of brazil have been compounded by the disruptions at australia, which have been affected by the cyclones of late. you are seeing in china, as workers return after the chinese ,ew year, activities picking up as we saw with some of the data yesterday, with the rebound in the pmi's, for example. purchases of iron ore in china have held back after the first price rally with hope that prices would fall. we are looking at very low levels of iron ore inventory at the moment.

that, we believe, is going to be quite supportive of prices at these levels, which is six months ago nobody was forecasting iron ore to be between $75-80 five dollars per $85 per ton. nejra: we have the first quarterly price gain in more than a year for copper last year. copper,n you look at while you do have a couple of large mines ramping up, coming online this year, you have got a significant amount of disruption happening this year compared to the average of the last five years. mineave seen protests in a in peru, for example. when we look at the levels of inventory, it does very much indeed look like that any material disruption further to supply will have potentially a

material impact on price. i also think opera will be one of the most sensitive materials -- copper will be one of the most sensitive materials on any progress on a trade deal between the u.s. and china. manus: there is a great debate about palladium. the anglo american ceo says the palladium bubble will continue. would you agree with that? is it still stoked for you? is it -- the story still intact? tom: when we look at palladium, it's quite unexciting outlook in the short to medium term. in the long term, any price move of the scale we have seen will incentivize investment in new supply. to medium-term, that supply reaction is likely to be slow, if at all. when you look at the state of the physical palladium market, you have a very high short-term lease rates.

that for us means that pricing will be supported around his elevated levels -- around these elevated levels. manus: very well encapsulated. tom holl. guess what we are going to talk about? brexit. ♪

♪ manus: good morning from dubai. i'm manus cranny. this is "bloomberg daybreak: europe." these are today's top stories. u.k. parliament rejects all options to replace theresa may's deal. attention turns to potentially explosive cabinet meeting today. losing steam. the global stock rally comes to a standstill in asia, as u.s. futures point lower. bitcoin jumps above $5,000 as the crypto market suddenly springs to life. fighting on all fronts. european commission president jean-claude juncker takes another swipe at china's trade practices as china's top

negotiator goes to washington. ♪ nejra: good morning, everyone. welcome to "bloomberg daybreak: europe." just an hour from the start of cash equity trading in europe. we saw the stoxx 600 gain more than 1% yesterday. it looks to be a much more subdued session. %,se 100 futures up just 0.1 maybe outperforming slightly. globally, the equity rally seems to be taking a pause. yesterday we saw the s&p 500 at just 2% from a record high. not only that, it's at a golden cross and also hitting its highest since october. the european pmi's did not do quite as well. we are looking flat on the futures. matt mead bring you some lines coming through from -- let me

bring you some lines come through from swedbank. head of naming a new swedish banking. they also have named an acting cfo. those are the lines we have gotten in terms of the leadership around swedbank. we will keep an eye on those and bring you any more lines as we get them. how are we looking at bonds with the positive equity rally -- with the pause in the equity rally? manus: we had the biggest -- in as manyn months. you see those equity futures dip a little bit. you see a slight reprieve on the bond side. we have run so aggressively up in yields yesterday, down in price on the back of the pmi's. was this a one-off? do we need further data to come through? the bond market, you see right

there at 165.89. the three-year versus tenure has gone from inverted in the u.s. back to positive territory. as far as the german government bond markets are concerned, raffaele bertoni from gulf investment corporation suggests you have probably seen the lows in terms of the bond market. very easily. manipulated. only 10% of the bond market is in open market has. juliette saly has a very latest on the asian markets. pretty flateing a line on the msci asia-pacific index, which yesterday closed at its highest level since october, so still trying to hold on to those seven-month highs. japan closing out the session fairly flat. there was something good coming through in korean stocks. the sensex is continuing to hold at record highs, the highest levels in 40 years since the

index started in 1979. some good moves coming through in australian stocks today. let's have a look at the assets, in particular the aussie dollar and bond yields there. we had an rba decision. no change to that cash rate of 1.5%. they have cited increasing growth risk. the likelihood of a rate cut in australia is 60% by july, 80% by december. yields just a slightly higher on the 10 year after hitting record lows in terms of yields last week. also watching the weakness in the korean yuan. we had the cpi coming through out of korea, really just backing the case for a rate cut coming through from the bank of korea. a little bit more dovishness coming through from central banks around the globe. nejra: business from such a bit

-- dovishness from central banks? surely not. lawmakers failed to agree to a plan b for brexit, rejecting all options put forward by theresa may's deal. the eu split further into crisis. the stalemate leaves the prime minister with no clear idea on what to do next. she will hold a cabinet meeting with a no deal brexit just 11 away. goldman sachs says the pound presents the biggest opportunity within developed market currencies. >> we think we are angling towards a softer brexit package, probably a permanent customs union, possibly packaged together with a second referendum. that will be coming together in the next one to two days. we're coming to a big finish here. i would certainly not say it is not tradable. we think this is an important market opportunity. nejra: joining us to discuss is

david merritt. welcome back. top us through what happens next -- talk us through what happens next. >> we will have this epic cabinet meeting today and mrs. may has some tough decisions to make. those options were voted down last night, but some very narrowly indeed. the cabinet were instructed to abstain, so you could infer from that that actually there is a majority perhaps, if mrs. make let's it happen -- mrs. may let it happen. it will cause the brexiteers in her cabinet and party to possibly walk out. listening to the tory party, issue prepared to do that -- is she prepared to do that? could she do something more dramatic like calling a snap election? some of the comments in recent days have hinted that maybe where she is headed.

there is a question of another referendum. that got pretty close last night as well to getting a majority, did not quite get there. maybe she will offer that. all of this means. , long extension to brexit which is something she will have to request next week. it involves a couple of things like fighting the european election next month. there is a load of different options, none of them palatable at all. maybe we will know more by this evening. manus: it could be that that prospect of a general election could cause slight anaphylactic prospect,ause that david, could leave the door open to one of the more interesting tale risks, which is jeremy corbyn exceeding to power. aheadhead in the polls -- in the polls.

sorts has tried all of threats so far. vote for me or you will get an election. that's an interesting one. the polls are slinking around quite a lot -- swinging around quite a lot. does this hard-core group of 30 or so mps who say they will bow against mrs. ms. deal no matter what, -- mrs. may -- vote 's deal nos. may matter what. seats are pretty secure in any election in northern ireland. they have said we would rather just stay in the eu. it's hard to see her getting that deal approved without significant support from the labour party cited. they just -- side. they just want an election.

nejra: our thanks as always to david merritt. ,oining us now is ghadir cooper head of equities at bearing investment services. given everything we have just heard and what could happen next , how do you can equities feature in your global portfolio? ghadir: what is interesting about u.k. equities is that almost all of the earnings come from outside of the u.k. if you look at the ftse composition in terms of earnings , they come from global companies that have global franchises. u.k. centric companies, domestically oriented companies, make it far less portion of the benchmark of the indices. when we look at companies we look for their franchises, and the fact that they are in the u.k. or outside of the u.k. is not the issue. there is a lot of uncertainty that causes equities to go, to

do massive selloffs or run ups, depending on the outcome of the whole brexit scenario. manus: good morning. we were having this conversation with one of our guest hosts yesterday, who made it very clear this strategy for the u.k. is inextricably linked to what happens in china. were you heartened by yesterday's china's data? we have seen a shift in the pmi's, at least in america and china. does that in any way change the complexion when you look at you can risk -- at u.k. risk? ghadir: you are talking about the world's number one and number two economies. they are looking better compared to how they looked a quarter ago. for us that is clearly an interesting positive backdrop for all equities, not just the u.k. equities, particularly if

u.k. equities are outward looking. nejra: when i look through various equity outlets, including your own, the phrase that keeps coming up again and again is pricing power. how much pricing power to u.k. companies have? ghadir: very good question. when it comes to global companies, we look for franchises. we look for companies that can maintain their margins, that can maintain their ability to have that pricing power, or to be disruptive in the market and grow. you are companies like this, obviously, that are listed in the you can market. these companies are -- u.k. market. these companies are interesting for us and continue to be part of our portfolio. manus: in terms of the data you saw yesterday on the retail u.s., are you concerned about the global consumer, given the data flow we have seen? ghadir: we think of global

consumption as changing dramatically. we think there are issues to do with the way the market is organized. are we concerned about the consumer? necessarily, not because actually dithe consumer has been hit massively in terms of the last six months. we think from here on because of interest rates being so low, because of the dovishness of the central banks, that will allow the consumer to carry on being able to consume. the changes we are seeing in terms of going online, disruption, etc. changes the way consumption is happening. that is something you have to take into account in portfolios. manus: ok. stay with us. we have a lot more to get from you, ghadir cooper. let's get your first word news update. >> european union governments

are reportedly struggling to reach consensus when it comes to trade talks with the u.s. this could further irritate the white house. it comes after the refusal to include agriculture and the negotiations. france is expected to resist giving the green light to start talks. oil is advancing on fresh evidence to cut output. the cartel's output fell for a fourth month in march. power blackouts in venice limit further squeezed supply -- venezuela further squeezed supply. chevron's chief executive says prices are broadly where he sees them for 2019. and demand have become better balanced and you have seen some strength in prices. i would say, we are in the ballpark right now of what we what expect for prices. of australiae bank

kept its cash rate at 1.5%. this was expected by money markets and all but one economist. the central bank is waiting to analyze the economic impact of a fiscal injection. the nation's budget is due to be released later today. the government is expected to give out more than $9 billion in tax cuts. is the first airline to become a top 10 polluter in europe, the first for a company that does not run any coal power plants. underscore the airline industry's growing contribution to greenhouse gas emissions. pollution from airlines has risen about two thirds since 2005. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. coming up, the three-month 10 year yield curve is no longer inverted after stronger than

forecast manufacturing numbers in china and the u.s. manus: if you are traveling to work, tune into bloomberg radio live on your mobile device or dab digital radio in the london area. this is bloomberg. ♪

♪ 7:18 a.m. in london, 41 minutes away from the equity market open in europe. this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus: i am manus cranny in dubai. let's check in on the markets now. dollar, treasuries, and oil on the move. a breaking news like coming in from russia. russia has reached its pledged level of cuts under the opec plus deal. this will be critically important, because it was about compliance that has been driving the oil market. yields at two point -- 2.47%.

inverted tont from positive. the dollar is slightly stronger this point. good morning -- this morning. good morning. nejra: cable extending his losses. it's not quite the worst-performing g10 against the dollar. that's the aussie. we did not get any clearer on what parliament wants next in theresa may's big brexit deal. goldman says the best opportunity is the pound out of developed market currencies. the global equity rally taking in the bit of a positive a. ause-- positive today -- p today. better than expected pmi's out of the u.s. and china, but futures on the back foot today. let's get the bloomberg business flash. >> lyft has closed its second day of trading only 4% below its

price. you cannot necessarily read too much into the first few days. facebook's dropped below its ipo price on the second day of trading. wells fargo's credit outlook has been cut to negative after the bank's chief executive stepped down last week. tim sloan gave into critics after the veteran struggled to tame a range of scandals. wells fargo is looking for a permanent replacement. renault has reportedly alerted french prosecutors to payments made by former head carlos ghosn. this follows reports that the money may have been used to repay personal debt. bloomberg has used the payments totaled millions of euros. a spokesman for the family denied any wrongdoing. that is your bloomberg business flash. manus: thank you very much. the global stockmarket rally has lost some steam in asia.

treasury yields back down again by the most in three months. yield curve steepened yesterday after better-than-expected american and chinese manufacturing data easing global concerns. our guest has a particularly bullish view on chinese equities. let's bring back into the conversation ghadir cooper, head of equities at bearing. yesterday it would appear we have these moments of damaging conversion. u.s. manufacturing data improved. we saw this quite virulent repricing. given the quarter we have just put in on global equities, do you think we can continue and deliver that kind of return across the globe? ghadir: i think global equities will continue to be supported by corporate earnings. i think corporate earnings are likely to continue to be supported by strong changes

happening in markets, particularly if we get a resolution to the trade disputes between china and the u.s., because that will allow companies to go back into spending. it will allow companies to put their plans to work. in particular for china, which is sort of the question you talked about, we believe the stimulus that has been put by the chinese authorities since havehole tariff issues been put in will start to kick in. --are still happy with being , if you -- liking will, the chinese equity markets. nejra: the china a share market can be quite inefficient because of a large number of retail investors.

how do you navigate that as a global investor? ghadir: we have a very clear methodology of looking at companies that allow us to organize the data that comes out of companies. that gives is what we think is a competitive advantage over the longer-term. this implies that are analysts will look at companies on a allow us horizon, will to look at the companies in terms of their business model, their franchises, in terms of their structural changes happening that would support earnings going forward, and we also when we value those companies, we require a rate of return that hurdles the risk of those particular companies, whether it is to do with efg or the markets. that allowed -- efg or the markets -- esg for the markets. that allows us to see which companies are reasonably priced.

we have a view on the companies that is structural and long-term in nature, strategic. manus: those long-term investors keep companies going. the cfi 300 -- i know, i am one of the rescue -- pesky retails. cfi is up 32% this year. absolutelyndex is barnstorming ahead, up 14.4%, the best start to the year since 1993. we need to discern between onshore, offshore, and idiosyncratically into the hang seng, don't we? where is your biggest new allocation at the beginning of the year? ghadir: i have to say because we are not retail investors, we are institutional, we actually allocate company by company. we invest in companies that have these long structural changes. we don't think the retail investors are pesky, they just

react to news slow, which we are trying to look through and actually find structural growth companies, as opposed to actually going to wearing about what the next data point is going to be. we are still positive on chinese equities in our merging market portfolios. we still like the chinese equities company by company, whether they are in china were listed somewhere else. nejra: again emerging markets more brought -- in emerging markets more broadly as well, and you say that recession had positive effects because it allowed companies to adopt their business models to be increasingly efficient and cost-effective. are those qualities that you look for in a company? ghadir: absolutely. what we need to do -- what investors need to look for our resilient business models -- are resilient business models. they need to be adapted and not just -- adaptive and not just

after external factors to be the drivers of return. that is not just looking after your margins, costs, etc., but also understanding disruption and what's happening globally to technology, to competition, to carbon footprint. all of these things are going to be the drivers of the future. we like companies that actually take that into account. nejra: great to have you with us this morning. ghadir cooper, head of equities at billings with us -- bearings with us on the london set. some headlines coming from michel barnier. the current brexit deal is the only way for an orderly u.k. exit. he says the brexit deal is the only way for the u.k. to leave in an orderly way. these are headlines coming through from the eu's chief brexit negotiator, michel barnier, speaking in brussels.

he says he has a lot of respect for the u.k. parliament. this of course the parliament that has not been able to agree on a plan b, even though they have rejected theresa may still three times. that is it for "bloomberg daybreak: europe." bloomberg markets european open it is up next. this is bloomberg. ♪

anna: welcome to bloomberg markets the european open." good morning. today the markets say what year is it? bets on the rba -- that the rba will become the first developed central bank to cut rates rise ahead of the aussie budget. bitcoin bounces back above $5,000. cash trade is less than 30 minutes away.