nejra: good morning from bloomberg's headquarters in london. with manuscehic cranny. staying positive, asian stocks higher. meanwhile, democrats issue deutsche bank a subpoena amidst the trump probe. even these are all the rage as carmakers seek to reverse declining sales, but how is the china story treating them? president postpones a major speech as flames engulfed the notre-dame cathedral. he vows to rebuild it.

manus: warm welcome to the show. robert lighthizer engaging in new trade talks with japan. 10 year government bond yields. that speak on easy street -- fed street. easy mr. evans says that slight dip in yields. rate cuts may be needed. larry summers joins the easing bias camp. china securities rises for a third month. let's look at the rest of the risks in the world. you have the nikkei rallying this morning. the nikkei is up on a four-month

high. sellers of japanese equities, $22 billion. crude is up this morning. equitys not playing the bull game. you have to wait a second before i get to the aussie dollar. u.s. equities. you talk about the bull market, that record high remained elusive. we snapped three days of gains. the banks had a big part to play in that. recoupup did manage to its losses, but overall banking stocks weighing on u.s. equities overall. firmer on thele s&p 500. will we get to the record high

this week? the aussie is the worst-performing g10 currency, down 0.3%. a rate cut was discussed. emerging-market equities, i have been watching them for several days. 10 straight days of gains, going back and forth a little. lower yesterday, but a little higher today, which reflects polls we are seeing in asian equity markets. let's turn to juliette saly and get details on the trading in asia. if anyone gets upset over the aussie dollar, is me. we are seeing asian stocks higher in late trade. 0.2%.kkei up it has been fluctuating. particularly in the japanese session after goldman came through with numbers overnight.

chinese stocks looking pretty good, positive green and that chinese economy accelerating again. malaysia seems to be missing out on this rally across asian equities. we have also seen a little bit of a move in yields similar to what you saw in the u.s. session. we are watching tech players this is on increasing speculation there could be iphone upgrades. japanese telcos looking good after slashing prices on mobile phone data plans. expect others in japan to do the same. airways, weing jet have heard from the indian financial newspaper that there are four bidders.

hearing the ceo was eight minutes late on whether or not his bid will be accepted for the indebted their way. manus: it is one we are all waiting with bated breath on. the ceos of citigroup and goldman sachs got into defense mode yesterday, as beats on the bottom line from both groups failed to appease investors. coleman shares slumped -- .oldman shares slumped the firm has a sense of urgency, but needs to make sure a strategic review is handled properly. nejra: concerns about growth in citigroup's unit saw its shares fall before recovering ground. the ceo says strategy for the consumer unit was showing good early results. today, trading figures will be watched closely as bank of america reports before stanley

closes out the week. , cio, royal london asset management is with us. are you looking to add to your portfolio? piers: you could have put in the where investing is traveling and arriving, the shares have performed well. levels.mid q4 you have to compare q1 2018 versus q1 2019. a lot of issues in 2019 that drove the earnings profile, we have less of that. a drop in q4, and some recovery in q1. both companies reporting disappointing equities, and the flows have been nothing like as strong as market levels would suggest. this rally has not been

significant flow. it has been driven by macro correction around the fed positioning. when i look at these results today, the banks will be more disciplined. citi banging on about roe. goldman raising the dividend by 6% yesterday, saying we are happy with our business model. i am interested in goldman. it wants to make a push into the consumer space and be more like citi in terms of the classic investment bank, and now into retail banking. when you start to see ceos use words like disruption, that is a departure. about thend out ability of that project over time. if you look at goldman's numbers, this chart is the

personification, this is the it, the all ficc, isn't death of volatility? this has been the oppressive factor for many banks. yes, in conjunction with new issuance, and we have had a bull market of a decade, loss of equity retirements and that has helped drive this. you had a strong issuance market, and that fell off a cliff in q4 around fears of volatility. the one thing i would say this year that will be stronger for banks in the u.s., a lot have moved to using loans rather than fixed income bonds as part of their financing profile.

those have a shorter duration profile and were attractive to investors he will years ago because they immunized you against fed moves. it will be interesting to see where they are on loans, and the that may be an opportunity for banks to do more in that space this year. nejra: the earnings proposition for banks and the macro backdrop, there is an interesting piece on the bloomberg. look at the chart, extreme valuation gap is what is opening up. the banks discount bodes well for future earnings. standard deviation move and see where rates are at the moment. it would this be an argument to favor banks over utilities? i may be a broken record, utilities are more lended then people realize.

it is one we all run away from. this cycle was characterized by a sharp cut in rates at the beginning of the financial crisis. business models have sustained for a long time. it is difficult to make money in banking. you had the major regulatory which at this point in the cycle would be big if money tickets for those entities. what will be interesting, does m&a pick up? if you are late in the cycle, and the fed potentially changes it stands, this economy will be anticipated. m&a picks up and there is a refinancing opportunity here. we are just starting to see m&a pick up again. the other thing is ipos. looking forty liquidity back in markets.

let's place some of these unicorns back into the marketplace. manus: great roundup on the banks. piers hillier, cio, royal london asset management stays with us for the rest of the hour. a devastating fire swept through notre dame in paris. the blaze raged for four hours. the cathedral spire collapsed. it is one of france's most iconic landmarks. president macron has vowed to rebuild notre dame. congressional democrats issued subpoenas to deutsche bank and other lenders. they want long-sought after documents that foreign nations tried to influence politics. this signals an escalation into their probe into trump's finances. deutsche bank is cooperating,

and the request is a friendly subpoena. the european central banks subzero rates policy is still a positive according to the governing council member who pressed for the measure. the government's echo that other ecb officials are surprising after the push to offset the impact of negative rates. a deal worth $1.4 billion, the streaming company links hulu with disney and comcast. now they have to proportion at&t's stake. they are not expected to turn a profit until 2023 or 2024. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. bloomberg. you.: thank

as we go to break, a reminder of the devastating pictures from paris, fire swept through the notre dame at the journal forcing the evacuation of visitors and the local residents, and causing president marcon to postpone a speech to the nation. the building was undergoing renovation at the time. the president says it will be rebuilt because that is what the french people want. mobilizedghters were to contain the fire. this is bloomberg. ♪

president trump: it was burning at a level you rarely see a fire burned. it is one of the great treasures

of the world. nejra: that was president trump speaking in the aftermath of the notre dame fire that swept through the cathedral, forcing the evacuation of thousands of visitors. it caused president macron to postpone a speech to the nation. these are images of the cathedral this morning. manus: a very tragic site. gets talk about markets and back into equity markets, slight gains this morning. we are waiting for the japanese-u.s. trade talks to begin. equity markets around the world stalling. aussie dollar is down. could they be talking about a currency war? a said let the currency do the hard lifting. , but you wantup to see conviction in the growth story before that moved fades. nejra: maybe more conviction in the growth story to give oil he left.

the pause in the rally today. also concerns over u.s. stockpiles as we look at that data. , we did jumpields significant a friday, and we have not moved down from those levels. ..s. futures a little firmer bank earnings and the reactions in goldman weighing on u.s. equities. go to the bloomberg business flash. annual order show -- auto show enters the first generation -- first recession in a generation. volkswagen says demand has started to pick up, and bmw says order growth will outpace the economy. we are pretty optimistic for

2019. this growth is on a strong line. charges that the bank allowed iranian customers to conduct transactions in violation of sanctions. the bank will pay $1.3 billion. its austrian unit will enter in a deferred prosecution agreement. elon musk arded contract to fly a spacex rocket into an asteroid. it is the first ever to deflect an object with a high-speed collision. it is targeted for a june 2021 launch. that is your bloomberg business flash. thank you very much. the fed may need to cut interest

rates. if u.s. inflation falls, according to the chicago fed president charles evans, who sees rates on hold until 2020. evans says if inflation fell to 1.5%, it would indicate a restrictive policy that would call for a lower rate. he does not expect this to be the case, and it is hypothetical. rosencrantz says despite some deceleration, the economy is not doing too bad. our economy is doing good by that criteria. if you look at core inflation which is taking out oil and food prices, and ask what is the underlying inflation rate, it is 1.8%. our goal is to pour cent. for economist, being -- our goal is 1.4%.

for economist, that is not too bad. manus: on the inflation story, , these are the break evens. it looks as if inflation will be the hardest thing to achieve. we are not at escape velocity on inflation in the u.s. to agree, i think the u.s. economy is stronger than thought. the move from the fed was aggressive last year, and their concern that the stimulus that the trump tax cuts could .timulate they tempered that measure with market volatility in december, and as we came into 2019, it is interesting looking at markets now having anticipated that we would top out in terms of curve

expectations. sharp correction and 10 year yields, we are starting to see it in the last two weeks. the kind offound level that reflects the underlying performance the u.s. economy has been better than anticipated. concerns around that volatility in december have had a knock on effect on the real economy, that has not manifested itself. a couple things to watch, wage inflation is running ahead, that is a real issue. your lead indicator, the question is can corporate's pass , that is good news for equities because you have pricing power that helps with the margin profile. or will you have to eat that?

i have to manage that pressure that comes through. inflation has been above trend for over 18 months. that is where some of the , we willss last year have the benefit of tax cuts. youa: on the wage cost, bring me to my next chart showing the market liking company with low wage costs. the s&p 500 index versus goldman sachs low labor costs. you can see that outperforming. , youow you can allocate want companies with pricing power. if you cannot find companies with pricing power or you want to different approach, should you look for companies with low wage costs? a good question. i never thought of it that way, mainly because we work for

people, we are human beings first and foremost. working with your colleagues with aggressive wage cutting strategies tend not to work. classically, it is around innovation. technology is taking a lot of heavy lifting. one reason high labor companies have underperformed is they have been late to the party adding technology to improve efficiency. more and more human capital and has greater value. andyou see pricing pressure real wage inflation in our area as gaps as recruitment technology specialists, there is a shortage of people able to add that skill to improve even as and see. labor your point, high cap companies in the manufacturing space justify your chart, that the fight for capital is real today.

nejra: fair point. hit manus: maybe, you seem to , i am noth rosengren here to challenge that, i will use data. measure ofk production hit a three year low yesterday. we have not seen that, the second lowest reading, and larry summers says, i reckon the risk of recession is there. the economy is brittle, and the next recession could be deeper. how do you position for a non-recession event? you have to be careful with the data you pick, and so many caveats in the papers about volatility is serious, and that is one of the more volatile ones. one month it will look great,

and then it will look terrible. let's be careful about that. manus: it is on a trend, and that is down, three and a half year low. the long-term, it is not really negative. withu look at the backdrop the trade war with china, you would expect it to be substantially worse. the reality is the trump tax reforms had an immediate effect in the market last year. there is a secondary effect this year for consumers in terms of receipts and allowances. the u.s. consumer will be in a stronger financial position. the second is the trade war, if it resolves itself. piers hillier, cio, royal london asset management. there are almost 500 electoral vehicle market makers in china.

the shanghai auto show is next. this is bloomberg. ♪

>> list has been avoided, even if the battle hasn't been completely won. the next few hours will be difficult but due to their courage, the facade and two towers did not crumble. annmarie: that is the president of france. he were looking at pictures. this is the tragic sight of notre dame where a fire ripped through the iconic building. the two towers, 500 firefighters were mobilized. these are pictures from last night. put thefour hours to

south. the two belltower's and facade have been saved. the question now is about rebuilding this iconic site. rebuild notre dame because that is what the french people want. that is what our history deserves, because that is our destiny. it is truly one of those global icons. i don't know about you, but i have certainly been there and it is quite crushing to see those pictures. good day. nejra: good today. i certainly have been there. i took my mom to attend mass at the cathedral. a special icon for many people around the world. it is one of the most instagramed global sites, as well. a lot of people globally looking on yesterday with those fires ravaging more than 500 firefighters called to the site. something we will keep an eye on, especially with emmanuel macron's speech delayed today. now let's check in markets around the world. joining us in mumbai our

reporter and in london, dani burger. indian shares at all-time highs. you are also looking at bond markets and earning season is underway. >> all of that. betweenntrasting themes what equity markets are doing and bond markets in india. equity markets sliding today for now, trading and the eclipsing previous highs by a margin. still about a percent higher. money markets doing ok. the bigger news is what is happening with equity markets. is that the bond markets aren't doing as well. what equity markets are doing is late -- rates likely to be dovish is not putting out in the bond market because the bond market is spiking higher. higher than what the yields

were when the central bank got on the dovish side. quite a contrast between what is happening between the two sets of the markets we tend to watch but for today's session, the day belongs to the bulls. autos, banks. can the bulls in equity markets are having the last laugh for the moment. manus: let's get to dani. ly hade equities near a six-month high. what the bond market is doing along with the presumption of more stimulus to come. what are the biggest warning signs you see below the surface? market is an bond interesting one. some of the liquidity picture, assessing what yields are doing but i am also looking at the fact that the dispersion is still pretty wide in chinese stocks, especially if we look at the small-cap index which i have pulled up on my terminal. index, see the small-cap a formal doubletalk.

we typically see is prices decline below where the volley is. what is driving the negative declines? you have an earning season that doesn't look good. eps is forecast to decline 30% year-over-year. that will track down the greater index, even though the csi 300 is gaining. we are live at the shanghai auto show today. i would be remiss if i didn't set you up with a good chart on auto sales. we have seen auto sales decline for the first time in at least 20 years year-over-year. ae last reading we got was -17% decline for those sales. later,lk more about this varying, uneven recovery we have seen in china but for now, bulls holding out on diving in. yes, chinese equities gaining more than 1.5% today but how long can that last?

we will get more clues as more economic data roles in. have you both with us this morning. thank you. skip the first word news with annabel in hong kong. a devastating site in notre dame. the flames raged four hours before the historic bell towers and facade were saved, but the cathedral's spier collapsed into the smoke. this is one of france's most iconic landmarks with extensive damage. president macron has vowed to rebuild notre dame. due to ber report is released thursday according to the u.s. justice department. revelationsvide new damaging to the president or reinforces claims of indication. democrats have demanded the attorney general provide the full report and all the evidence saysd it, but william barr he will redact some material

before it goes public. bothroup and goldman sachs reported better than estimated earnings but investors had -- executive had to ensure investors about driving results. has a digital bank effort and goldman promised to focus on electronic trades that require less capital. the federal reserve may need to cut interest rates if inflation falls. that is according to the chicago fed president, charles evans. he sees rates on hold until the fall of 2020. even if unemployment remains near the lowest level in almost five decades. evans is a voting member of the fomc this year. 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. thank you very much for that. let's focus on the global car market.

over the coming days, some one million people are expected to attend the 18th shanghai auto show but despite china's remain the world's largest car market, this year's that is being held against a backdrop of the first sales drop in the country in almost 30 years. we've got a great lineup of interviews from shanghai this week. the first up, we spoke to the ceo of lamborghini. tom mackenzie started by asking what proportion of sales would come from china this year. .> last year, a record year this year will be stronger. units andive to 8000 this is a great results. if you think where lamborghini was just four years ago. it is impressive. not only in terms of volume, but perfection of the brand. the brand is really good today,

mainly with the young generation. be in position the next couple of years. tom: 8000 units and in terms of the chinese market, are you expanding your footprint? stefano: in the next two years, inwill have 17 to 19 dealers china. in shanghai, we have two. we are getting stronger in terms of structure, confidence, level of service. lamborghini has gone a step forward and this is important. nejra: that was lamborghini ceo speaking to tom mackenzie. let's get more with tom at the shanghai auto show for us. great to see you and great work. the data has been showing a little slow down in terms of car sales in china but what do the execs say about the slowdown in china's auto market? they are trying to put a

brave face on things. we are seeing 10 straight months of falling sales here in china for the auto market. ceos ofspoke to the volkswagen and cfo of volkswagen, german companies think things are starting to bottom out now and they point to tax cuts that policymakers have pushed through and stimulus measures they say support the market. bmw saying he will probably get flat sales the overall market in 2019 buffer bmw, a more premium segment, they expect a pickup. listen to the cfo speaking to me earlier. >> despite the downturn of the overall market, we are pretty optimistic on 2019. of 5% to 10%rowth in china and inflows back on a strong lineup. a big focus for these

automakers, bmw and others, electrification. volkswagen's ceo in this first interview with him has told us they would be spending very heavily on electrification. a lot of that will come down to spending on china. delivert to be able to 22 million fully electric vehicles by 2028 and expect half to bese, at least, produced in china. back home, there are regulatory challenges around the admissions ons and restructuring to focus on ev's and automation. home to quite a few electric vehicle producers so the question comes. china likes to do things in size and scale. any sign of a bubble there? tom: there is. look, every executive we have spoken to about this question has said yes, things are starting to look frothy and they

do expect consolidation. i just came out of an interview with the founder of neo, a u.s. listed start up back by tencent and he said yes, there will be consolidation but for players like him, it will eliminate better position. there are about 500 electric vehicle startups in china. they have sucked in about $18 billion with the funding. it is a number that has tripled in two years in terms of the number of startups. many executives saying yes, there will be a clear out. a lot of investors will lose their money on this, but ultimately, they say, there will be a more rational space here and we spoke to other big players about electric vehicles. this is an area they see the future but clearly, the government has been rolling back subsidies that have been supportive for the space so the pain will be there in the short-term. nejra: thank you so much. tom mackenzie for us at the shanghai auto show. rate to catch up today. the cio at royal london asset management is still with us. listening to what tom was

saying, do you have any investments in the auto market at all, whether through electric vehicles, played in german carmakers, or even looking to china? >> we tend to be underweight the auto sector because there is excess supply relative to demand and for the first time, that the chart you had talked about a slowdown in china as first evidence. yourrightening stat correspondent highlighted about the amount of money chasing the electric vehicle opportunity. structurally, we agree in 10 years, most of us will be driving electric vehicles. there is a trend in that direction but classically, when you get an industry change like this, you get a lot of capital chasing new opportunities. that ising winners, what we get paid to do. find out the structural winners. bullcase for tesla, the

argument is your innovative, first, leading the charge and therefore you succeed. the classic oems, the built in infrastructure and the ability to change production profiles. we looked at it that the price premium you pay for pure electric vehicles as opposed to the classic oems where they are clearly deploying huge amounts of capital to electrify vehicles is are you better off buying a company -- and cash has always been my profile -- at eight or nine times earnings with a big infrastructure that can allow it to electrify faster and built to capacity faster as opposed to a startup and they are putting down manufacturing capacity, not a quick exercise. manus: maybe that is where we need to look through dieselgate in german producers. today marks a day when japan and the u.s. will begin more substantial talks in regard to trade. back of my in the mind, i have robert lighthizer,

an architect in former agreements coming to their here. how much japan do you want in the portfolio? this is the msci relative to the apix, rebounding to four-month high. do we lighten up on japan or do intoait into japan -- wade japan? piers: i've been a stock picker all my life and while there are at royalo investors london, thing for us in japan today is looking at fundamentals. you got a huge swath of corporate and there. about very excited opportunities in japan as you moved away from excess capacity, very much dominated companies by either individuals or because of corporate structure and what we are now seeing is greater disciplines applied to those businesses and real opportunity

for great returns. ourad fantastic results, global funds, a big driver was stock selection in japan. from a macro perspective, for the u.s., having a close ally in japan with china wanting to evidence itself on the world stage in terms of the military projection and industrial projection, i still think the u.s. will want to maintain their relationship and desire to want to work together. i was in japan last week, not looking at companies per se but the message out of japanese investors is they feel the japanese economy is fine. the big structural changes of the last five years is the growth of domestication in terms of employment. ago, the vast majority of people wearing a dark suit for men. a number of my meetings last week were all female meetings.

there is a better diversification of the population and that is making entrepreneurial flair in japanese corporate's. the second thing is a lot of us are seeing attractions about overseas and an opportunity to redeploy into europe and the u.s. from an investment perspective. i was surprised because all the economic data suggests japanese economy is bobbing along him a flatlined -- along, flatlined. wage inflation is supported and the economy is doing strongly. manus: two big things that will be the things. piers hillier, our guest house remains. devastatingf the pictures from paris. a fire swept through notre dame, forcing evacuation of thousands of visitors and local residents forcing the president to postpone his speech to the

nation. this is from last night carried 850 years old, the building had been undergoing renovations at this time. the great and the good of france are stepping up to the plate and announcement of contributions to the refurbishment of notre dame. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." manus: let's get a little bit more on the auto story. some are quite optimistic about china in the second half despite the world's largest car market facing its first sales dip in nearly 20 years. he spoke to tom mackenzie at the shanghai auto show. we have seen two slowing quarters, but i am happy from

our viewpoint because we could year,e first quarter this and increased market share by 1% at this point. , but losinget share a little volume. we are not afraid about china and hope there is some advantage in the situation between the united states and china. also, a reduction of about 3% for cars should have an impact on the market. i am quite optimistic that the second half of the year will be a better half. tom: the news has broken in the last hour about your former ceo being charged in relation to the emissions scandal. when do you think vw is able to put this behind it? most of thehink

things we could settle already. doj, and germany as well. think we've made a lot of progress with our customers and we updated all the cars. we are gaining back momentum. we expect -- it is not yet over, but we are through the worst and we hope to make progress. tom: another question, given that you are being investigated, as well for your role in the scandal, if you were charged, what would that mean for the leadership? one last question on the u.s. market. what are you seeing in terms of the strength in the u.s. market? what are you seeing in terms of

unit sales and targets? china, weompared to are relatively small in the u.s., we have 4% market share imports. our operations for volkswagen are strengthening. the new cars are quite successful. us found itsnt for customers, we are gaining market share from a low level but the team is making a lot of progress there and we have a leadership togetherh put a plan and have made significant progress. i am very confident. ceo speakingagen the tom mackenzie at chinese auto show. it takes us to our mliv question of the day. aes the car market still have macro significance? thee reflect back, 2008,

auto market globally slowed. consumers were getting squeezed long before the fall of lehman brothers. this plays to my inner grinch. take me to the highlands of optimism. should i not care about global auto sales or chinese? we talked about supply and demand and there has been excess capacity in the auto industry for a period of time. it is not just the auto manufacturers themselves, but the supply chain the drives that. if you want to play to your inner grinch, if you believe in the digitization of transport and a move to driverless vehicles and driverless trucks, that kills the motel industry in the united states. you could paint a very bearish scenario if you wanted to. the reason it is important is the broader web it connects

into. on the positive note, if you think of what has led did in leading the way on the electrical side, it added innovation into vehicles so you see greater digitization. there is a bigger supply to manufacturing industry as steel has traditionally. there is an evolutionary change. nejra: last year, carmakers in europe were one of the laggards in the stoxx 600. this year, it was up 20% year to date on those carmakers. if you look at europe, what kind of stocks are you looking at in europe as we continue to talk about concerns in eurozone growth and inflation? --rs: yes, we do have generally, it has been about quality at a reasonable price. are cash generative

and tend to be more brand focused. it is one of europe's real strengths. you see affiliated sectors continue to perform because they had that pricing power and ability. accessis massive ss capacity exce across europe. 68% of french gdp is generated by the public sector. innovation is where we go in europe. we also find it in the scandinavian businesses. nejra: innovation. thank you for joining us this hour. piers hillier at royal london asset management. he will be continuing the discussion at 7:30 a.m. u.k. time cut ratesay need to if inflation falls. we will focus on the bed next. lots to talk about in the markets. we will come back to the bank earnings season. we saw the s&p 500 close flat

yesterday as financials underperformed. bloomberg users can interact with the charts. this is bloomberg. ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe" and these are today's top stories. despiteocks tick higher badly received results from goldman and citigroup. house democrats issue deutsche bank a subpoena amid the trump probe. electric ambitions. are all the rage as carmakers seek to reverse declining sales but how is the china story treating them? we are live at the shanghai auto show. the french poker -- president postpones a speech as flames engulf notre dame. he vows to rebuild it.

nejra: good morning and welcome to matt:. --"bloomberg daybreak: europe." in europe. trading yesterday, u.s. equities snapped three days of gains, closing flat. goldman, one of the worst performers on the dow, dropping more than 3%. thats the equity trading was the biggest fear. worst start since 2017. citigroup recouped some losses, but financials weighing on equities. today in europe. four gains on the stoxx 600, looking to green, ftse 100 futures up .2%. a couple of lines.

revenue, 4.8% higher than the first quarter of last year. it has provided a good start to 2019. this is the commentary from g4s , sales wins provided a good start to 2019 and they continue to make good progress with the 4sparation review and g believe there is opportunity to unlock value. manus: the bond markets are trying to make up their mind. let's look at the 10 year government bonds. you have u.s., italian, and german bunds. open interest in ten-year bund futures rose. this is the end of last week. suggesting clothes short positions. you have treasuries taking slightly higher. if we missed our

inflation target, if we don't get that, and you need to cut rates. story on the' bloomberg this morning suggesting a rate cut could be the next thing that comes to pass. the market is on easy street, but i love this chart. andas on twitter yesterday we didn't get to it that it is stunning. -- by awhat you know flick of the button, there you go. we've got a call from grace. this is -- greece. something is rotten here. greek's five your paper is below five-year u.s. treasury market. which market is right? let's get to juliette saly in singapore. we are seeing some good gains coming through in asian markets in late trade.

1.8 percent and a lot of foreigners exited the market toward the end of last week but we have seen green chutes. home prices in march accelerating and more buying coming through in the latter part of trade. higher by closed about .2%, holding onto four-month highs. we did see lenders under and goldmaner citi came through with numbers on wall street. australia, higher by one third of 1% and india's market looking solid. we are watching the indebted jet airways. let's look at currency moves. aussie has been the worst-performing g10 currencies today. the rba minutes flagging the board to discuss a rate cut. policyg to keep monetary on hold for now but the aussie under pressure today, off by nearly .4%. a little uptick in the japanese yen today. we heard from governor kuroda saying he thinks it is likely the expansion plan continues in

japan. we are closely watching what is happening in the indonesian rupiah. it is a little weaker now, though it has been holding near the six-week highs. have indonesians going to the polls tomorrow. manus: while you were running through the markets, breaking news from softbank. we have seen huge bond issuances around the world. softbank at half ¥1 trillion, around $4.5 billion. it was fully subscribed and it is day one. please got two weeks of sales to go through. they were pricing the maturity 2025 with a coupon of 1.64%. this was heavily look at. softbank's stock has risen 10% since they announced the bond sale april 1. we will keep an eye on that. let's talk about the fed. tone, thege, the

intonation are incredibly important for the bond markets and world markets. the fed may need to cut interest rates if u.s. inflation falls according to the chicago fed president charles evidence, who sees rates on hold until autumn 2020. falls tos if inflation 1.5%, it would indicate a restricted policy that would call for a lower funds rate. the chicago fed president added he doesn't expect this to be the case and it is all hypothetical. meanwhile, another says the economy is not doing badly and inflation is slightly below the fed's 2% target. our next guest is a member of the investment committee at comignac. dovish comments from evans. rosen says things aren't too bad. how do you interpret the latest set of fed speak in terms of the market? upthey are certainly backing

what has been a capitulation of the fed and a change of comments, and what have been since january. there is no diversion here. suggestion -- no gesturing of a change of rates up until next year. or even beyond. it is all going to be very data dependent, but if we look at the core inflation already and take away the housing component, we are already at 1.1. inflation in the u.s. has fallen just as it has elsewhere in the world and even at these levels of employment, we aren't seeing that feedthrough into companies. they are able to soak up some of the wage increases. nejra: do you see rates staying lower for longer and if so,

would you be inclined to take risks across the risk asset spectrum or be selective? i suppose valuations still come into play and the have been spoiled from the start of this year. valuations.evels of we do believe we are in a low growth, low interest rate scenario so we prefer still to assets ing core high-quality, high-growth. that's for sure, but in the last three months, we have added two cyclical investments in our modified duration in the view that inflation is missing in action and that we can see some flattening of the yield curve still in europe but a little steepening in the u.s..

that is our core position. are decreasing risk assets, including emerging markets. manus: so if inflation, as you have said, is missing in action, can i be the devil's advocate and say do we need a rate cut after pro-trump? apropos somere qe, of the other calls. do we need that? growth has gone from 3.2% down to 2% in the u.s. quite a sudden drop-off. it is clearly off the back of no further stimulus. we've already had a corporate rate cut. we were already at the end of the cycle. the fed perhaps didn't need that last rate cut. yes, there is potential -- rate hike, i'm sorry.

there is potential this year definitely for a rate cut. we will just have to see how the recovery turns out, how much confidence we get back into the u.s. economy after these trade talks and how strongly the manufacturing recovery is in play. areconsumer and services still pretty strong in the u.s., so we are not heading toward a recession. nejra: a big focus on bank earnings. we did see financials weigh on the index, the s&p posed flat. banks have been pointing to the discount toe banks utilities bodes well for future returns. bankamerica merrill lynch talking about the two standard deviation move from the historic level of evaluation gap. at this point -- and this is a macro call rather than an earnings call -- if rates go

high, they say favor banks over utilities because of the extreme valuation gap. given what you have said about the low rate environment and where you think we are in the cycle, would you potentially disagree with this? there are still quite a few problems for the banking industry in the u.s. at this stage of the cycle. the have seen their earnings potential, revenue potential drop-off because of the flat yield curve, their interest margins have been reduced. have we seen the steepness of the yield curve such there can be probability? we are also in part of the cycle where we see a loss of provisions and there is quite a deal of competition gathering at the moment. we aren't really in the sweet

spot as revenues for u.s. banking. herenk what we are seeing in the differentiation or dispersion between highly, cyclical stocks and more high-quality, more defensive stocks like utilities is that it is just that. there is a decent dispersion. it is, potentially for a three or four your period a good level for entry but don't lose sight of the fact we are in a low growth, low interest rate environment. we need a core part of the intfolio in high-quality that high-growth area. earnings growth is missing. manus: let's continue that thought because it plays into the tech chart. stocks, said buy bank but they look at it from growth stocks being the priciest

relative to value names since the dot com era. our growth stocks expensive -- expensive stocks and should you take a bit of risk or not in these technology stocks? there are some technology stocks that are very sensitive to the cycle. look at the semiconductors. this is not necessarily the area we wanted to invest over this period. it has been more in the communication services and also thecertainly some of e-commerce players. it is important to be in those companies because they are the ones that are seeing markets increase, are seeing monetization of pus -- customers, a broader continuation of their revenue potential in other countries. they are growing.

company thatrom a is benefiting from the growth of others. this is a nice sweet spot between steady growth and being able to expand into new markets, particularly on e-commerce. of carmignac crowl gestion stays with us this morning. utted byme has been g fire. firefighters saved the two bell towers but not the spire. president macron vowed to rebuild the monument. >> the worst has been avoided, even if the battle hasn't been completely won. the next hours will be difficult but due to their courage, the facade and two towers did not crumble. sandra: let's get the latest with our paris bureau chief.

rates to have you with us. from the deputy interior minister that experts were supposed to be meeting at 8:00 local time, 15 minutes ago. what is the latest and status of notre dame this morning? it is still standing this morning. i spent an hour there to see it this morning. firemen are hosing the south which is notire, totally extinguished and as you aretly said, the experts currently roaming the place trying to access the structure of the building, which is intact and the structure is strong enough and stable. the idea is for firemen to work inside the building now. this is where we left it. as we speak, they are in it. we will move soon enough because it looks like the authorities

are keen on pressing this forward. the french president said we will rebuild it and already people are asking where they can donate the money. manus: yes, and one of the donations that has been flagged is from pinot, pledging 100 million euros according to afp. how serious is this for france? embattled macron, delaying a speech, this is a psychological blow to a nation, isn't it? geraldine: you are so right. it is very striking. hows very striking everything ground to a halt last night and everyone was praying. i spent most of the nightmare and was absent -- night there and was astounded to see the

fervor of the people here. it is a defining moment. plaguess known a lot of in the past few years, defining moments. this time, it is the heart of paris. if you look at notre dame, it has been there for more than 800 years. it has been there before us, it will be thereafter. this is where all the roads in france start from. the ground zero for the french network, to tell you how central this is. the fact that french president postponed a very much awaited address to the nation because of that fire is actually telling. remember, this address to the nation that macron was expected to use to address parts of the demand from the yellow vests sts -- we don't know as of now when the french president intends to do it. thee is a press conference

president was supposed to hold tomorrow and we don't know if he is going to do it. if everything is going to be postponed. it is likely. nejra: heart-wrenching pictures. i was just there in january, myself. our parish euro -- bureau chief geraldine --geraldine amiel. mayla merkel and theresa and president donald trump have expressed solidarity. is china's economy over the worst? we analyze the data and look ahead to tomorrow's gdp number, next. this is bloomberg. ♪

nejra: 7:21 in london. 40 minutes from the equity market open in europe and this is "bloomberg daybreak: europe. i'm nejra cehic in london. manus: i'm manus cranny in dubai.

the chinese economy is important, showing further signs of recovery after months of meltdown -- slowdown, i should say. a bit of context. better than expected credit data. home prices, gdp figures are due tomorrow and the markets await that key data. downward pressure persists. with a deep dive, dani burger has the latest. dani: the earliest indicators we have seen look promising. the bloomberg economics aggregate indicators, the top strongericked into territory. the measures, some of which i have that going to this reading are anything but uniform. first, major stocks. strong sentiment leading the pack. the csi 300 seeing a 32% in 2019, recovering for the first year that worst year for equities 2008. small business confidence picking up in the economic picture.

the government has been directing credit toward sme's and announced the biggest tax deduction on record -- reduction on record. at the same time, global commerce points to weakness. copper prices and factory inflation don't bode well for upstream manufacturers. the profit of chinese industrials had the worst start to a year since the global andncial crack -- crisis first-quarter gdp tomorrow will show slowing growth, some say. this shows momentum has yet to stabilize in china. nejra: bloomberg's dani burger. let's stay on this topic with sandra crowl, member of the committee at carmignac gestion. you said stay invested in risk asset. in emerging markets, what is your view on china even the csi 300 is up 20% in 2019. sandra: we had such a strong move. -- we also had the

news of the increase component in the msci. there has been some reason why the market has been euphoric this year and also catching up from the market last year. going forward, the economic origins is only at its because we are seeing in the construction sector in china recovering. that is coming from the fiscal spending that has been mainly on infrastructure and mainly on railways. what is different this time around is what we just heard. the fiscal stimulus is also concentrated much more on households, more on small businesses. what we don't know with this type of infrastructure, which is

getting up to around the same ofe as the fiscal spending 2015 is how individuals in china -- we know it is strong, will they take these gains and spend or will they pocket it and pay down some of the increased debt levels the chinese households have and pay down that debt? the is the multiplier from chinese fiscal stimulus. that is the question. we don't think it is as strong as the previous stimulus but acknowledge that there is some grassroots to the recovery and we should feel that in europe in the second half of this year. manus: how do you want to take advantage of that? do you want to pick up european exposure to china but -- or on land? stingould be perhaps the in the china tale, couldn't it?

which way do you play it? sandra: very specifically in companies that have good, strong growth paths. they may be in china more oriented toward e-commerce and internet users, more toward a engagement from , frequent daily users. that is the type of investment. we are certainly not invested in the commodity oriented old economy out of china. very much on the new economy. i think that is the most appropriate at this part of the cycle in china. manus: thank you so much. now we know how to play the exposure to china in the recovery story. sandra crowl, member of the investment committee at carmignac gestion. we will leave you with a live

shot of notre dame. 100 million has been donated to the paris region. 10 million euros in emergency aid to notre dame.

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matt: welcome to "bloomberg markets: the european open." i'm matt miller in berlin. the markets say stay positive. asia stocks tick higher despite badly received results from goldman sachs and citigroup. european futures point higher. the cash trade is less than 30 minutes away. a friendly subpoena. u.s.