nejra: from london, i'm nejra cehic with manus cranny live in dubai. this is beijing and washington appears to be making progress towards a trade deal. trump attacks the central bank again, this time for the performance of stocks as mario draghi expresses concern about the fed's independence. j.p. morgan shares jump the most since 2016 as earnings top estimates, but wells fargo tumbles. goldman sachs and citigroup report today. ♪

manus: monday morning, welcome to the land of risk. up go the stocks, down go the bonds. bond yields are dropping, moderately so. the bandwidth on bond yields this morning, this year, 2019, has been seven basis points on an average weekly basis. retestys you're going to the high and returned to the low level. cause,riod of said typically what you see -- pause, typically what you see is a drop of 100 basis points. i'm not saying right now, but 2.3%. the rollover for risk, let's look at the outplay. the south korean won moving the dollar down, the won higher .5%.

steven mnuchin upping the ante and saying we're ready for the risks of implementation for both sides. it is a trade risk, also china data risk. oil giving back some of its gains on wti as the rigs are rising in the united states of america. and a six-week rally in oil and the shorts are dropping aggressively, down nearly 20%. are we over and done on the upside? good morning. nejra: good morning. talking risk, the s&p 500 john to -- punched through. we have a third week of gains and equities, within 1% of a record high in the s&p 500, game 7 tenths of a percent friday -- gained 7/10 of a percent friday. but also the optimism around the data out of china. s&p futures today set up dead flat.

where do we go from here? do we see a pause? the emerging markets index equities. we saw 10 straight days of gains and a decline thursday, and then gained for two days. some of the technicals pointing to a bullish signal. mumford very bullish on em equities, saying this index could double by 2023. juliette saly in singapore has got more. good to see you. how is monday shaping up? juliette: monday not looking back here. we are seeing risk on asia stocks, holding at october highs. you have the asia-pacific index having the best gains since the beginning of the month. the nikkei up over 1%. some good buying in china and hong kong. we had that china export data coming through close to the bell friday, which was a beast, and then china credit data was

another solid story over the weekend. these are signs of stabilization, recovery, cibc saying they see the first quarter marking the low point for the chinese economy. the economy share marking flat but india and korea and tech stocks helping to lift the taiex, of 6/10 of 1% in taipei. in terms of stocks, korean air is the front runner on the mrr function. on friday, korea said they would halt shares if they continue to rally. they were up threefold last week, korean shares up 7.4% while we have seen the preferred stocks surge on a 5%. and this is in india is off -- on 25%. snd thesis in india -- emphasi in india is off. the biggest drop since november, but holding at a two-year low, infosys, after we

saw the car and motorcycle manufacturer say it reported in next ordinary loss in the first quarter. this is on the improper auto inspection procedures starting to see more impact on that in terms of the japanese car industry. manus? manus: thank you very much, juliette saly, ever watchful, making sure i'm on the right track. let's stay with the markets and the latest on trade. stocks rallying in asia as the u.s. treasury secretary says talks with china are hopefully getting close to the final round. a sign that two sides are edging closer to the deal. steven mnuchin says the u.s. is open to facing repercussions if it doesn't live up to the commitments in an agreement. data released after trading ended last week showed growth in china exceeded estimates last month. joining us is henrietta, head of

investment rate credits for europe at wells fargo asset management. great to have you with us. there's an op-ed piece saying the data we've had from china is good. he's just not convinced of the long-term nature of the growth trajectory. is that a fair take of the data sentiment this morning? welcome. henrietta: good morning. thank you for having me. i think it's probably true. they have tried to facilitate credits at the moment under the transfer mechanism. it's done a degree of stimulus, but nothing like what they did post financial crisis or 2015-2016. it will be interesting to see how much it lasts and what impact it has on growth. but yes, the question is still out there. nejra: let's look at a chart

showing pboc support may state amid the upswing, at least the title on our chart. i don't know if you agree. do you? henrietta: i think they are going to try and support the economy and try to do what they can, but they do have this balanced strike. is amount of debt that outstanding in china is no longer what it used to be. so they have to take that into account. they can stimulate,. but not too much they're also further along in terms of infrastructure spend. there again, it's a different context they have to deal with. manus: the one thing that caught my eye over the last 24 hours is this dichotomy between the bond and the equity markets. the white line is your yield on 10 year government bond yields and china. this has got ramifications for the credit side. that's what i want to dig into. you are looking at this switch

into the equity and out of bonds again. what is that drop in yields say to you? what does that shift in yields say to you on chinese credit? henrietta: i think we're in this environment where the central banks have been trying to prolong the cycle, so they've been trying to ease the credit markets and they've been doing that successfully since the beginning of the year. they are trying to get market enthusiasm back for equity markets, if they've done so. it really is trying to get credit out to the system as much as they can. nejra: how does the china data and the china story, in terms of fundamentals, feed into your investment great strategy in europe right now? henrietta: china is an important component of the world economy and its particularly true in europe, and that's why we've seen the slowdown in the numbers in europe.

you have the slowdown on the chinese side. it's important for us to look at. we feel that yes, the stimulus is going to pay off and it is starting to pay off on the chinese side. it's going to take a while to filter through into the european markets, and that's what we're looking for, especially in a country like germany, for instance. manus: nejra and i will probably much more messy in regards to european traded -- trade data and japanese trade data, because we role of china. these are the next two big issues. japan-u.s. trade and in europe-u.s. trade. which should concern the market more? henrietta: i think, in terms of where we are at the moment, the one i'm particularly concerned about is the discussions that are going to happen between europe and the u.s.

one is a slightly becausene to crack and of the way the european union works and because of what the u.s. is going to try and do. there will be aspects of the auto trade. you've got a very keen germany to sort that one out. on the other side, the u.s. is also trying to open up the agricultural aspects in europe, and that's a trickier one, particularly for france. nejra: it's been an interesting few days in equity markets, 10 straight days of gains, a drop on thursday, and two days of gains since then. technicals may be pointing to bullish signals. what is your assessment of the credit space? henrietta: i'tt's had a very strong run. if you look at what happened last year, that was where the worst of the selloff happened in

the credit market. if you go back last year, you had a few idiosyncratic stories, argentinaey, be it rearing its head again. some of that is due. given the rally we've seen in spreads on the credit side so far this year, i think it's probably time to take stock, have a look at positioning. yeah, have some in your portfolio, absolutely, but if you were overweight, reassess that overweight given how far we've come. nejra: ok, henrietta from wells fargo asset management stays with us for the hour. let's get the bloomberg first word news with annabelle droulers in hong kong. the u.s. president says the stock market will be 5-10,000 points higher if you want for the actions of the federal reserve. this is trump's latest attack on

the central bank and comes after his two recent fix for the fed come under power -- under fire. herman cain may not be able to win confirmation in the senate. and tiger woods has pulled off one of the most remarkable turnarounds in sports history. titleon his 15th major more than a decade after his previous one. once claimed his fifth green masters jacket, coming back from scandal and industry. degenerated more than $20 million of exposure for responses during tv coverage in the final round according to market analysts. and which has come. the final season of "game of thrones" has returned to our screens. the story of dragons and noble houses has drawn fans across the world. the series 147 emmy awards, the most for any drama series and has overtaken the books its based on.

fans are awaiting the sixth and seventh novels in the series. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thank you very much for the roundup. britain's chancellor says prime minister theresa may has no intention of stepping down until of brexit deal is done. we spoke with francine lacqua at the annual spring meeting at the world bank and washington, d.c. she started by asking the chancellor, would they support a permanent customs union if that was required to clinch a deal with the labour party? we've gone into these talks on the principle that we agree with the labour party that we need to leave the european union. we agree would need to end freedom of movement. the on that, we haven't -- beyond that, we haven't set out red lines.

we know this is one of their public demands, customs union. it's not what we set out to deliver, but we're prepared to discuss things with them. it,oesn't mean we'll accept but we are prepared to talk about it. francine: would you accept it? >> i'm a member of the government. we're prepared to talk about it. francine: a lot of markets are wondering if theresa may will go, what kind of way. is it better to have theresa may the stays beyond the extension now that you have beyond october 31? >> the prime minister has said that she will leave once she has done the deal and taken us out of the european union, but as far as i know she doesn't have any intention of leaving until the deal is done. she's a person with us on -- strong sense -- a strong sense of duty and she's got an obligation to deliver brexit and she wants to make good. francine: but her damaging

within the conservative party be, even after october 31? >> we've already got people jockeying for position to succeed her. but that's just one of those things. in both major parties, we've got ambitious people who are looking at their relative position. that's life in politics. francine: would you serve under the board of jonathan? >> i would not speculate who i will or wouldn't serve under. what i do believe very strongly is that starting the leadership we've resolved the brexit question would not be helpful. it would look self-indulgent. the public expects us to be focused 100% on delivering brexit. doncine: how many questions you have to field from g20

central bankers and finance ministers on brexit? do they believe an extension means brexit gets watered down? >> i think most people think, and i agree with them, that the process we've gone through the last few months has made the likelihood of ultimately a no deal brexit much smaller, and i think we've seen that markets have been pricing on the assumption that a no deal brexit has become a very small risk now. i think that's positive because i've always believed we need to leave the european union with a usl, with a plan that allows to protect our economy, protect british jobs. so, i think the way things have evolved is positive for us. but we've got to get us over the line because the downside of the extension is that we've created a longer period of potential uncertainty, and it's absolutely

clear the only way we can get our economy towering forward is to put this behind us, get the deal done, and unconfident we'll unleash a wall of money into the u.k. nejra: that was britain's chancellor philip hammond speaking with francine lacqua at the imf meetings in washington. coming up, jpmorgan tictoc earnings season with a bang. but can the rest of -- can the rest of washington -- manus: if you are traveling to work, bloomberg radio on your mobile, dab digital radio. join us there. they're hard at work. this is bloomberg. ♪

manus: this is daybreak europe. i'm manus cranny in dubai.

nejra: i'm nejra cehic in london. let's go to the banking consolidation story. german finance minister olaf shorts says the bank minister should be seen and a wider context. he says it's a big mistake to reduce the situation to one country. he spoke with francine lacqua at the spring meeting at the imf in washington. >> we were very successful in europe to change the scenario. we built a common vision for all the relevant banks. we built the financial funds, which is able to work with big banks all over europe. and this is the situation that has changed. my view is that we should much more look to europe as the european economy, and this is also due to the banking system in the financial industry. it is a big mistake just to reduce the banks and the situations to one country. francine: can you assure the

markets you will do everything in your power to make sure everything is stable in the banking sector? >> the most important question we are working on since the last economic crisis in europe is to build a stable banking sector. we've made a lot of process -- progress and we will do the next steps. and we will have to do some this year. manus: that was the german finance minister law schulz speaking with -- olaf schulz speaking with francine lacqua. it was a busy time for news. quarter results season in the united states, jpmorgan kicked off the earnings friday with a clean beat on most metrics. shares rallied 5% and the s&p 500 to a six-month high. but will other banks be able to follow suit? latestrger has the very on the earnings outlook.

good morning. dani: good morning. no pressure at all. up arofit beat set surprisingly strong quarter for u.s. banks. jamie dimon credited a robust consumer spending. the firm also stood by interest income forecast despite fears that the metric had peaked. but shares dropped after the bank lowered interest forecast and that's the biggest source of revenue. which way will the rest of wall street go? expectations seem to be to the upside but we will know more later today when goldman sachs reports. bloomberg intelligence expects the top line to decline from a year earlier but analysts say relative strength against the global revenue trend is more important for judging their results. also closely watched, any key updates and capital return

plans. tuesday, we'll get bank of america. and the trading numbers may hurt revenue picture. loan growth in the first quarter could be a positive for the group, but commercial and industrial lending is outpacing other categories. manus, nejra? nejra: thank you so much, dani burger. and henrietta is still with us. a little bit of a blowout quarter for j.p. morgan on many levels. is this as good as it gets for the u.s. bank earnings season? henrietta: we'll have to see. i think the bar for surprises is probably lower than it has been, so from my perspective, there is the possibility, as we saw the reaction with j.p. morgan friday, you have that positive surprise. clearly, it's a more difficult environment in trading, and seems to have picked up to the latter end of the quarter.

clearly, rates have come down and the curve has flattened. not great for the banking system. but one thing i would highlight is that balance sheets are strong on the u.s. side. it's one of the areas in the credit markets we like. the u.s. banks are in a better position from a competitive perspective than european banks. yes, you have the european side, but the u.s. banks are in a better position. it'll be interesting to see, but from my perspective, there is the possibility of an upside. manus: you mentioned that relationship the two in the yield curve and the kbw's. we compared it to the six-month, five-year spread. and there is this almost religious syncopation between the two. as we go cause mode at the fed -- pause mode at the fed, do the

credit spreads, the credit side of the equation, also compress? or does it widen slightly? of creditsin terms on the bank or credits on the market in general? manus: on the banks. henrietta: i think the credit side, you're looking at not only the earnings perspective and so on, but also the state of the balance sheet, and from that perspective, as i touched on, that is looking good. in terms of earnings, it will impact the equity markets more. but we see that as a stable environment from a fed perspective. at the moment, still the economy in the u.s. is looking good. yes, it's slowing, but it is going. -- growing. manus: stay with us. much more to discuss. credit investment grade

at wells fargo asset management. coming up on the show, fed bashing. some criticize the central bank for stunting u.s. economic growth. fact or fiction? ♪

manus: two dominant things driving the world mad. welcome back. a sea of green out there, rather substantial landmass. good morning. of course, what we have is the export rebound in china. the rest of the -- the veracity of that is what we need to question. not skeptical, but cautionary. he says we have a short-term stabilization on the data front, but there is yet to be a convincing long-term case for higher growth or for less uncertain road for the global economy. that's just a little bit of healthy skepticism, isn't it?

good morning. how are you? nejra: good morning. i'm great. talking of healthy skepticism, as the data was breaking, the trade data on china, he has skepticism because of what we saw on import data not as good as expected. you started to question the rebalancing of the economy. and in terms of consumer demand, dig into the s&p 500, and we did see it move toward 1%, within 1% of its record on friday. they broke through that 2900 level. if you dig into industry groups, it was commodity that did well. oil did well the past few weeks. manus: i have a chart, doing daybreak middle east, and the view from them was there are going to be more rrr cuts because this is where the mechanism is more effective into the real economy, as opposed to capital getting stuck in the state owned enterprises.

more rrr's to come. we don't seem to be done just yet on the stimulus front. nejra: and you certainly saw equity markets seething on any good news. we did get good news out of jpmorgan in terms of the banking sector. we saw that rally taking a pause, which brings us to the market. joining us from bloomberg in mumbai is near roger shaw -- niraj shah and annmarie hordern. indian shares rallying for a third day. what is driving the markets today? visit indian data? -- is it indian data? niraj: good morning. you could argue if indian markets were doing well, we could. but i think earnings, by and large, have been ok. the inflation data that came out

friday would lead people to believe it would continue to be more dovish as opposed to hawkish. that's why you have the banks rallying strongly today. in the morning, i was talking about how they have not put up good numbers but everything else consultancy -- data consultancy services and if you look at the nifty right now, it's going gung ho so banks and i.t. supporting about 45% of the weightage in india. if that is doing well, markets have no choice but to do well. let's wait and see if that continues. they haven't reacted too much. back to you. manus: thank you very much. that is the global perspective. annmarie hordern is in london. we've gone for a breather.

mostly on wti. this goes back to the baker hughes data. we seem to be breaking trend on the oil market. annmarie: that's right. oil and tesla are the two things i'm watching, a bit softer on brent and very much so on wti. i like how you mentioned the rigs count, the baker hughes data. this is what i'm looking at. this is why we have the soft it did in oil prices -- soft dip in oil prices. six weeks of declines. you can see that's why. we have a softer oil price. yet, quickly, i want to show you, there's not many willing to short oil. these are the short positions on brent and white and wti in blue. you can see here they plunged 80% on brent and cpi, 17%. it seems the market is long. there are bullish wages, six-month high. the second thing i'm watching is

tesla. i should say elon musk's twitter handle. he is at it again, posting another tesla production forecast, reminiscent to the one that landed him before a federal judge earlier this month. there it is on the screen. tesla will make more than 500,000 cars in the next 12 months. then he's talking about the industry and supply and demand. this is similar to the tweet he sent two months ago, when he said the company would build 500,000 in 2019, and that led the s&p to argue the content of the settlement. keeping an eye on his twitter handle this morning. nejra: annmarie keeping an eye on the twitter handle. thank you, niraj and annmarie hordern in london. let's get bloomberg first word news with annabelle droulers in hong kong. annabelle? annabelle: thanks, nejra.

they worked to a way to end months of deadlock over brexit. some senior conservatives called on the prime minister to take britain out of the eu without delay and then resign. chancellor philip hammond reiterates the prime minister doesn't plan to stand aside until she's delivered brexit. >> as far as i know, she doesn't have any intention of leaving until that deal is done. she's a person with a strong sense of duty. she feels she's got an obligation to the british people to deliver brexit, and she will certainly want to make good on that obligation. annabelle: president donald trump enjoys a narrow advantage heading into the 2020 election. that's according to a report by goldman sachs. the incoming president carries a 6% percentage point edge. the forecast leans in favor of the president. and the european union has reportedly taken a closer look

at google's operations in ireland. onomberg is one of the focus how they reduced tax in the block. they understand investigation isn't imminent. google and the european commission both declined to comment. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. president trump has attacked the fed once again. the line, is claiming the stock market would've been 5000-10,000 points higher if not for the actions of the central bank. in a tweet, trump added the fed should have eased instead of tightened. mario draghi is worried about the independence of the fed. the ecb chief ads central banking independence is very important and the credibility of

monetary policy hinges on it. henrietta, head of investment grade credit for europe at wells fargo asset management, she is our guest host this morning. if we just go back to the trump tweet, it's fascinating. he called for more qe last week, but here we are. if it wasn't for the fed actions, we'd be 5000 points fire and the you -- higher and the u.s. would grow 4%. is that fictional or does that have any veracity at all? beenetta: well, trump has trying to stimulate the economy as much as he can. the first action was on the tax cuts, for instance. i think it's a continuation of that. he wants an easy monetary environment to favor growth. i think the issue is that's not just their mandate. they're looking a little further ahead than trump is. it's not just about stimulating

now. it's about getting an environment where growth can be carried on over the long-term. yes, trump wants a quick win. nejra: and we sit here wondering every day how much further the equity rally has to go. i have a chart showing s&p trading at a discount, or it was, at least, just a couple days ago. it's now gone just above it. phil orlando expecting starts to rise a lot more, 50%. he says people who worry about valuations are ignoring an important variable, low inflation and low bond yields mean multiples can keep expanding. can the credit markets also keep expanding in tandem with equity markets because of low bond yields and other factors? henrietta: it's a combination of things. it's a level, but also the reduction in volatility we've seen in terms of what we see in

terms of government yield. yes, levels come down and volatility has come down. not necessarily on friday. it will be interesting to see how they behave over the course of the day. but investors are looking for lower yields, lower volatility on the yield side. for the equity markets to continue and for credit spreads to continue to tighten at this point, you need to see a bit more from the economy. you need a bit more information as to where we're going next in terms of growth. because we've come a long way. and it we are towards the tail end of the cycle. in the back of investor's minds, you keep having that. it is the end of the cycle. what's going to happen next? it's interesting to see what's happening on certain companies from a credit side. you have got a change of tack in certain sectors, where they're

trying to defend their balance sheets a little more. an example of that would be the telecom industry in the u.s. you've got larger players there looking to deliver. that's positive for the credit markets. manus: do you think that story transfers in itself, henrietta, across the globe? or is it just an american phenomenon in terms of the littering? -- delivering? henrietta: i think the u.s. needed to do it more than elsewhere, right? if you look at the growth of the credit markets in europe, the drivers there have been a little different from what we've seen in the u.s. there, we've seen mediation. that's a big cause of the growth in the credit market. and of the companies didn't quite get to the same point as what we saw in the u.s. in terms of m&a, in terms of shareholder from the behavior. i think that sort of situation there is a little different. so we needed to see that on the

u.s. market we are seeing it at the moment. nejra: are you still searching for quality, both in the u.s. and europe? or are you paid well enough to take a little more risk right now? henrietta: i think given where we are, we're still looking for quality. and i think that's going to be the next little while. i think it's partly valuation driven now, but also, you've got certain sectors, still having a difficult time. the auto sector, for instance. manus: can we circle back to volatility? because we've used this chart several times. it's in the gtd library again. it's got softball. that's what i want to take it back to, the bond market volatility, which is obviously crumbling with the rest of the market. what does it take, and probably let's circle this into the u.s.

credit conversation, what does it take to jolt the u.s. credit market? is it the process -- prospect of a recession? what is it that jewels fall into the from slumber -- jolts volatility into the slumber? henrietta: i think the low volatility environment. if you get confirmation the growth has got a little more to go and you get color on the direction of where europe is going, that's from growth at aective, i think we're low level in terms of government yields. that could push government yields higher. that would be a way of breaking out. the other way of breaking out is if you got on a country of disappointment. we were talking about china and how that can carry forward in terms of growth. then i think it will be the spreads that look more vulnerable at these levels. those were the two ways i see

them. nejra: a couple of people have been mentioning the negative correlation. how is liquidity looking and credit markets at the moment? henrietta: we've seen a taste of what it can look like. liquidity is a hot target -- hot tar -- hot topic. you can trade, but it's not what it was historically and i think investors need to be conscious of that and you need to position ahead of what's coming. you won't be able to move so much once the news hits. nejra: great to have you with us this morning. thanks for joining us. coming up, could 2019 be the year of the activist investor? we'll discuss the prospects for more activist action in europe. that's next. manus: and if you're traveling to work, tune into bloomberg radio on your mobile device or

dab digital radio in the london area. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe.; i'm nejra cehic in london. manus: i'm manus cranny in our dubai studio. let's get our business flash for you. annabelle droulers is with us in hong kong. annabelle: thanks. jack ma has encouraged ted workers to embrace the industry 's extreme overtime culture. this amid the social media backlash over alibaba's comments. he spoke in favor of the 12 hours a day, six days a week routine. it sparked fierce debate over programmers and founders dying from unrelenting stress. elon musk has posted another tesla production forecast, reminiscent of the one that

landed him before a federal judge earlier this month. the chief executive wrote test level make 500,000 cars in the next 12 months. this comes as lawyers are negotiating with the sec over an agreement that was controls over the billionaire's tweeting. and the publicist will pay nearly $4.5 million for the marketing unit, as the french advertising group seeks expertise and to expand in the u.s. the takeover is the biggest ever. they are focusing more on analytics, as consumer giants rely less on tv commercials and billboards. and that your bloomberg business flash. nejra: annabelle droulers in hong kong, thank you so much. some lines that we've been keeping an eye on this morning. just crossing, we've got basically the third-quarter revenue coming in at 3.4 6 billion euros, beating the

estimates. the we are also keeping an eye on the investor angle to the story. manus: yes. there's two facets. you've got a problem with investors. possibly pushing back on buybacks. that's interesting given the next conversation we're going to have. taylor swift, lady gaga, or you to. i won't -- u2. i won't ask which one you prefer. they could cash in $15 billion. i don't know which i've got you down for. taylor swift, lady gaga, or u2. i'll go with lady gaga. nejra: let me put it this way. i would've been insulted if you had gone for one of those, but i will tell you off air what my actual preference is. manus: activism, nejra. year ofould this be the

activism? barclays heading back -- hitting back. 2019 has seen a big move in activist reports. is setreholder activism to become increasingly prevalent across the region. forecasts across the u.k., germany, and france are the top targets. joining us is malcolm mckenzie from alvarez and marshall. great to have you with us. let's focus on one of the topline findings in the report, which you are expecting more interest in the continental europe. why is that? malcolm: we're predicting germany will be out 33% in terms of activist interest, and france about 17%. i think the reason activists are attracted to them is because the market is less efficient than the u.k. the u.k. is a still important,

about a third of the company's we believe will be targeted. but it's a mature market. in germany and france, lots of opportunities and activist drags their. manus: interesting how this morning, they are going to have to go head-to-head with activist investors regarding the share buyback problem. that's a european example of what we are talking about. it's a good example of what could be the roadmap for activism challenging big shareholders and family shareholders, at that. malcolm: yes, i think it is very interesting. and then arica is one we predicted a lot of the activist situations that have occurred, but it is not one we predicted because we assumed the tide family ownership and high proportion of voting shares would stop activist striking.

it has. you seen the state with campbell's, the soup company, high family ownership, but again you have activist striking their. just because there's a strong family ownership, it doesn't mean an activist won't be attracted to it. you see this in italy, as well. lots of traditional companies with traditional family ownerships. activists have been very active. nejra: interesting. time to rethink the relationship between the effectiveness of an activist investor and how high the family ownership stake is? malcolm: well, yes. i think we'll see more of those companies being attractive. the doesn't mean another company, we predicted last time, is a bt situation. you still get more traditional companies. buyer or act the, all companies we predicted six months ago, those big sort of come, -- conglomerate heavyweights in

focus, as well. manus: nejra and i are going to speak to a couple bank ceo's in the next few days. what is the worst-case scenario? should he let bramson into the boardroom or keep the door firmly closed? malcolm: yeah, that's very good question. i was involved in his very first case a dozen years ago in a telecoms company. is a cool operator, i must say. i think the key decision is, if thatike, his hypothesis they shouldn't be investing so much in the investment bank side of it. it's fair to say he does because it's been part of his strategy. he believes in the investment bank side of it and apply more capital. it's difficult to see how bramson is going to have that discussion. maybe shareholders take a different view, and they find it

difficult to get a return from an investment bank. nejra: how is m&a becoming an increasingly common feature? it is one of the things that comes up in your report. yes, so we've noticed over the last six months, the move has been let's change the chairman, the ceo, the board, the presenting type of claim or request from the activists. now there's much more about selling off underperforming divisions. what we notice is if there's a big disparity in performance of the worst-performing division, your higher performing divisions, the greater the disparity, the more activists will be attracted. you're seeing that in a number of cases. if you like activists becoming more granular in what you're looking at for that. that's a big trend. manus: can i ask about the shift in the u.k.? we touched about this a couple times.

big focus on the u.k., perhaps because of the currency underperforming as the land of plenty for activism. you say the percentages dropping, but still one of the richest and most fertile hunting grounds. malcolm: indeed, indeed. about a third of the cases we're predicting across europe are u.k. cases. you've obviously got, as i've mentioned before, barclays, which are very big. but interesting, the technology is coming more to the fore. the e-commerce delivery business or the case on allied minds would be another one. technology incubator. you're seeing the technology sector come to the fore, and in technology, if activists succeed because of the pe multiples are much higher, the return to them is good. manus: malcolm, we need to leave it there.

great insight. alvarez and marcil. this is an interview you want to stay tuned for, the shanghai auto show. it's this man. ♪ xfinity watchathon week has sadly come to an end.

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matt: --manus: good morning from dubai. this is "bloomberg daybreak: europe." strong start. nation shares rally on data out of china. beijing and washington appear to be making progress towards a trade deal. trumpa tax the central bank attacks themp central bank again. mario draghi expresses concern about fed independence. jp morgan shares jumped the most since 2016. earnings top estimates. wells fargo tumbles after lowering its interest income forecast.

goldman sachs and citigroup today. nejra: good morning, everyone. we are just under an hour from the start of cash equity trading in europe. on friday, banks were some of the best-performing industry groups in terms of the stoxx 600. it was some of the commodity companies and oil and gas companies that really give a lift to that s&p 500. oil had a good run. the s&p 500 broke through that 2900 level for the first time in six months. we are within 1% of a record high. how much further can it go? we are steady on futures and that is how we are set up in europe as well. slightly more positive. by 0.20 futures higher

percent. cac 40 futures edging into the green. a little bit of risk on in today's markets. of course, we saw that reflected in the 10 year treasury yield on friday. how are we set up today? matt: --manus: citigroup with a big note out saying you have the highs, take your money and run in terms of yields. why? let's have a look at the bond board. when the fed goes, you see yields dropped by 100 basis points. movement is on the italian government bonds. italy's bonds lower investors -- fiveky marriage of your paper in italy is five times more attractive than portuguese bonds. don't worry about eu elections. do you want to put your money into italian government bonds? 10 year yields in germany. we are going to see what happens

next in terms of the mood music from mario draghi. this was my fact of the day. i love to grab a fact. seven basis points. a slumber party in bonds. at the average weekly movement fed0, 7 basis points, this pause could be interrupted. how are your markets? looking pretty good. the best day for u.s. equities in a month. you can see china's market up by 0.4%. we have strong export data coming through at the end of last week. very strong china credit data over the weekend as well. more signs of stability coming through for the chinese economy as we kickstart the second quarter. also last week we saw foreign investors really pull a lot of money out of the chinese stock market. it was the worst week so far this year. the start of this week looking pretty confident.

japanese stocks ending of high. the nikkei up by 1.4%. weakness in australia. indian stocks looking good. having a look at some of the other moves in the region, the yuan is reading -- leading currency gains today at a three week high. really showing you this risk on move. improving 0.6% against the dollar. we have seen australian yields track what you saw in the u.s.. the aussie holding at a three week gain ahead of rba meeting minutes. sold bonds today, this is china's most indebted developer. it has overtaken tencent as asia's biggest dollar bond issuer. it sold about $6.7 billion worth of bonds so far this year. doings what ever grand is in the hong kong session in

terms of equities. nejra: thank you so much. let's stay with markets. the latest on trade. stocks rallying in asia as the u.s. treasury secretary says talks with china are getting close to the final round. in a sign the two sides are edging closer to a deal, steve mnuchin says the u.s. is open to facing repercussions if it does not live up to its commitments. meanwhile, data released after trading ended for the week showed credit growth in china exceeded all estimates last month. atning us now is laura frost mng. great to have you with us. as we try to assess where we are in the cycle, we did see u.s. equities react positively to china data on friday. we are seeing asia pick up that baton. what is your assessment of china? the impact of the stimulus and how positive you are on growth at the moment? driving is obviously and has driven really risk assets over the last quarter.

risk assets have done very well. macroappened in a fundamental world, what has changed between january and now? well, not an awful lot apart from you have better trade relations. obviously we still don't see the end of the road there. china is still doing well. therefore growing. they are growing. it is not enough to send the globe down the risk off path. manus: there was one note i saw this morning. i went off and had a look at what is pollyanna. the stock market, the world is going full pollyanna according to robert. all credit to robert. have a look because this is the definition. stock investors are forgetting part about being cautious,

setting themselves up for a big disappointment if things do not break just right. that is not what i wanted at all, but we will go with that. the definition of pollyanna is of course hope for the best and expect the worst. there seems to be this real optimism which has been added to by the china data. do you think we have gone full pollyanna blindly? question, and thanks for the definition. as i said, risk assets have done very well. have they still got legs? what has changed? macro fundamentals are still pretty much as they were. at the beginning of the year. we've got a more dovish fed and we've got slightly better trade relations in china. chinese data is looking good. yes, it could be the catalyst for a continuation of this cycle.

thet going to reignite global economy? possibly not. volatility, look at we have had this period of volatility across asset. a number, a number -- of people have been talking about this, saying low liquidity and market complacency are big reasons low volatility is not going to last. said you needuest to start positioning for tighter liquidity. are you doing that in your portfolios as well because you are concerned we could get a spike of volatility? is very low, absolutely. you have to be concerned about liquidity. on the tripleus be part of the market, which is very large. it is the growing part of the credit market as well.

,iquidity is hugely important but sometimes that liquidity premium gives you some opportunity as well. it is kind of a balance. you have to be concerned, but you are looking at that risk reward on top of that. citigroup have a note out . they say this run-up in yields we have had will retrace back to 2.3%. this is the 10 year government bond yield. they say nearly all will see treasuries fall by around 100 basis points. you couldaying certainly reengage with 2.3, 2.35%. would you agree with them given that lack of robustness in the u.s. data? it is rather hit and miss, isn't it? >> i certainly do not disagree. the focus has up obviously been

on the yield curve. usually we would not target a number in terms of that 10 year, certainly you would expect to see full. don't forget growth is still chugging along. it has not stopped. risk assets are not behaving in a recessionary manner either. there are still legs. we just have to be worried about the amount of leverage in the economy. having said that, there is still a lot of opportunity out there within the credit market. maybe less so in the rates market. manus: thank you. we have a little more to get from you this morning. fund managers are continuing to pile into italian debt despite a technical recession and the

government projecting this year's fiscal deficit through a level -- last year. francine lacqua spoke with italy's central bank governor. he says prudence and an ample degree of accommodation is required. expected moderation in growth. the risks still are pointing .own probably there are conflicting figures. at least in europe. still, i think we have to be

inflationnt because is not where we would like it to be. >> how much do you worry about inflation? is it going to be very difficult? >> there is no loss control. policy -- atary the same time, we have to admit far from closeis to 2%. , don't take into

account the increases in energy, the growth we are seeing is far from 2%. this is why we need to have monetary accommodation. >> to what extent does inflation actually help? inflation reflects an interest rate. worry about europe becoming more like japan? >> no, i think we have some things in common. aging population demographics, yes. we have learned a lot from japan. nonstandard policy having cleared the objective of -- but

at the same time, obviously every indicator is different and we have new technology. we have demographics being visible. we have governments which are a different kind. nejra: that was francine lacqua speaking with italy's central bank governor at the imf and world bank meeting in washington. laura frost still with us. just wanted to ask you quickly about italian debt. you bought some last week. was it because of the 10 year bund yields? >> absolutely. we look at triple be credit. it was in that bucket. .t is the relative spread it is still reasonably attractive compared to other triple b credit. citigroup have another

view. they said resist the temp tatian. --resist to the temp tatian temptation. laura frost stays with us. let's get your first word news. minister'se continuing talks with the opposition labour party as they work toward an end to months of deadlock over brexit. conservatives have called on the prime minister to take brexit out of the european union without delay. chancellor philip hammond reiterates the prime minister does not plan to stand aside until she has delivered brexit. >> she does not have any intention of leaving until that deal is done. she is a person with a strong sense of duty. she feels she has got an obligation to the british people to deliver brexit. she would certainly want to make good on that.

has pulled off one of the most remarkable turnarounds in sports his. he has won his 15th major title more than a decade after his previous one. woods claimed his green jacket coming back from scandal and injury. he generated more than $20 million of exposure for his sponsors during tv coverage of the final round according to marketing analysts. and winter has come. the final season of game of thrones has returned to our screens. the story of dragons and noble houses has drawn fans from across the world. the series has won 47 emmy awards, the most for any drama series. it premiered in 2011 and has overtaken the books it is based on. still waiting for the sixth and seventh novels in the series. 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: thank you very much. up next, bashing the fed. president trump says the u.s. central bank is something -- is stunting economic growth. nejra: when you are traveling to work, tune into bloomberg radio live on your mobile device or on dab digital radio in the london area. this is bloomberg. ♪

nejra: 7:20 a.m. in london. this is bloomberg daybreak europe. let's have a quick look -- before we do that, a couple of lines we have from the possibility of a trump-kim jong-un summit. trump said a three-way summit is possible according to south

korea's moon jae-in. trump said that is a possibility, so maybe we should ready ourselves for that kind of development. back to the markets, because that would be one of those geopolitical moments that could shake markets. european futures higher. you did see money flow out of european equity markets through the end of the 10th of april. of redemption out of the past 57. equity futures out of that recent high. jp morgan -- 10 year government bond yields. citigroup says it's going to reach 2.3%. nejra: i'm having a look at the euro. and had a good day at 0.4% and it is holding those gains. copper on a second day of gains. not far off a nine-month time. sticking with commodities, oil has had a great young -- run. 0.5% on wti after we

got working rigs rising for the second straight week according to that data in the u.s.. let's get the bloomberg business flash now. ma hasionaire jack encouraged tech workers to embrace the industry's extreme overtime culture. this defies a growing backlash over the alibaba co-founder's,. he spoke in favor of the infamous 12 hours a day routine. it's sparked debate among tech walkers -- tech workers dying from unrelenting stress. buy allianceto data's marketing unit as the french advertising group seeks to deepen its digital expertise and expand in the u.s.. the takeover is the biggest ever . the company is focusing more on data analytics as consumer giants rely less on commercials

and billboards. iskswagen's chief executive plotting a china push. the company is expanding its role. as a production hub the world's biggest carmaker will allocate more research and development to the nation. china accounts for 40% of vw global deliveries and a large chunk of its profits. that is your bloomberg business flash. manus: thank you very much for that. president trump has attacked the fed again. this time he is claiming the stock market will be 10,000 points higher if not for the actions of the central bank. trump added the fed should have used instead of tightening. -- eased instead of tightening. jp morgan kicks off with a clean be on every metric. shares rally by 5%. laura frost is the investment director of fixed income at m&g.

she is still with us. these stocks are on a tear. this reporting season defines where we go. with that in mind, how much additional u.s. bonds do you want to have as perhaps a hedge or a counter to the equity rally. what is it that drives your bond tail? >> obviously banking results are important. you've got leverage under control in that area of the market as compared to other areas, where regulation does not tell you that is the case. i think it comes down to trading income and interest income. we've got an incredibly flat yield curve in the u.s., which is not doing the banks any favors. i think if we look at the next fromf data that comes up

banks, you will probably see some kind of tail also, is this the last in the strength of the financials? if we look at financials, really the areas that we like are in european financials. i have obviously done very well year to date. however, they are still relatively cheap compared to the u.s. counterparts. that's where the opportunity lies, away from that u.s. financials arena. nejra: i understand you think you are being overcompensated for short periods of time. in other areas you think you are being well compensated is the longer end of the curve in the bottom sector of ig credit. explain your thinking. laura: for us it is about triple bees. the biggest part of the credit market in the u.s.. there are sectors which have you under m&a activity if

look at media, if you look at telcos. they were offering significant uplift versus other triple bees. there is good dispersion there. investors are scared of triple bees at the moment because they are close to high yields. if you look at the credit rating -- there are compelling opportunities at the moment. your fear of the fallen angel theory is not as high as other people. you think you are being compensated. great to have you with us this hour. coming up ahead of the shanghai auto show, how is the ceo of the world's biggest carmaker preparing for the future? do not miss our interview later today on bloomberg. that is it for daybreak europe. manus and i will join you tomorrow.

"the european open" is next. ♪

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matt: looking to "bloomberg markets." this is "the european open." say, what tokets tiger woods and the s&p 500 have in common? both are nearly back to their pushas bank earnings stocks toward recovery. the cap trade is less than 30 minutes away. -- the cash trade is less than 30 minutes away. not high enough. president trump says stocks could be 5000 to 10,000 points