>> money trail. congressional democrats issue subpoenas to deutsche bank and other lenders that they escalate the probe into president trump's finances. larry summers suggests the fed might be willing to cut rates, meanwhile, eric rosengren says he is ok with target inflations. french president emmanuel macron to rebuild the notre-dame cathedral after a massive fire ed the centuries-old building. we are live in paris. ♪ welcome to "surveillance ."

i am nejra cehic in london. let's get a check in on markets. we saw u.s. equities flat with financials weighing in on the main equity benchmark. goldman sachs group the worst performers on the dow after citigroup managed to read group some of its losses, but overall, financials waiting on the s&p 500. on a firmer are footing today, along with european equities. we open the flat but gains to the upside, so on track for five days of gains. the 10-year yield ticked higher. some tolerance for above target inflation perhaps is what we are getting, not only from rosengren but also charles evans of the chicago fed. we were seeing wti a little bit $63.42.to trade at

let's get back to news out of paris, and france's president emmanuel macron has vowed to rebuild one of the nation's most iconic landmarks after the notre dame cathedral had a fire that raged for hours. the spire was lost in the fire. let's get to greg in paris. thanks so much for joining us. give us some of the details. we had some experts going through the site from about 8:00 a.m. local time. greg: yeah. what they are trying to establish is the solidity of the subject. we came close to losing the entire building last night, oneuse that one -- at point, it was close. tower had come down, the entire structure would have been at risk, and we would have had a pile of rubble. the structure is safe.

that does not mean that it isn't perfect shape. you saw a big gaping hole in the middle of the roof, where the last night.sed they have to check the solidity of the structure. roof is gone, it is raining today. that is the main priority at this moment. greg, a number of leaders around the world showing their france,ty with president trump in u.s., angela merkel in germany, theresa may in germany. what if we heard from politicians in france? are united on this tragedy. everyone was taking to twitter, the airwaves, or the radio last night to save what a loss this is, culturally, for france. there has been no disagreement on that front. nejra: thank you so much, to our

paris.r greg viscusi in let's get to bloomberg's first word news with uma pemmaraju. --: deutsche bank and congress is contacting deutsche bank and other lenders. this move is putting more pressure on getting access to president trump's finances. the chairman of the panel saying deutsche bank is cooperating with the probe and that it is "a friendly subpoena." in other news, goldman sachs lower than expected earners. executives had to assure investors' concerns over progress, dragging down results. goldman sachs focusing more on an electronic treatment requires more capital. central-bank policies

are still a problem. his remarks echo the other ecb officials, but it is somewhat surprising after they pushed to offset some of the impacts of negative rates. bringing out nearly 10% stake in at&t, $1.4 billion. putting the company at $15 billion. they will have to decide how do portion the at&t's stake. the platform is expected to lose money. not expected to turn profit until 2023 or 2024. musk, agetting an on $15 million contract to fly spacex rockets into an asteroid, working to deflect the object with a high-speed collision. the target is for a june 2020

9ants i spacex falcon rocket. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am, r and this is bloomberg. pemmaraju, and this is bloomberg. thank you. goldman sachs missing estimates, sending shares lower in yesterday's session. citigroup also recouping most of the losses after it matched. joining us are a chief economist and a european equity strategist at goldman sachs. great to have you both with me this morning. thank you so much for joining. like we areels taking stop a lot in these equity markets. how do you take stock of the global economy right now? the global economy is that a bit of a turning point. we have seen a moderation in u.s. growth, but it has become

clear that u.s. growth is not going to fall to the lowest extent late. we have seen on industrial problem in east asia and europe, taking this problem down, not too far away. shortly now on horse separated,will get but we are now at the point where we can hope for things. nejra: what about in terms of what is driving european equities right now, sharon? was largely out of what we saw out of the bank earnings, but in the interim, the european equities are heading for five days of gains. with the agree previous comments, the growth at the probably in a bid moment, but actually economic growth looks like it will improve for the second half of the year.

i think it is the reason for the rally that we have seen. you are generally neutral slightly bearish on the prospects. is that i macro call or more to do with other things? market has already priced a lot of that, and if you look at valuations, having dipped a lot at the end of last year, the pickup will not be that strong as it comes, and for that reason, returns are not going to be that strong. the not think they will see negative, either. european companies have a lot of exposure to external markets as well. nejra: if we look at the globe, we look at the u.s., europe, china, holger. see the global growth fixer in terms of convergence, divergence, and what convergence up and what converges down? the u.s. going higher

and higher because of the tax, at the same time, the u.s. with the trade war threats, hoping to bring other economies down. hiring, the u.s. u.s. is getting back to normal. likely to return to normal growth rates. china has done something that is uncommon for china, they have a movingrun growth, and toward stimulus. supply and large, yes, it is a is still normal, which a fairly decent, i would say, from now on, average, moderate output. nejra: if we look at companies and how much they have been investing as well, sharon, one of the questions has been the support that equity markets have gotten from buyback and whether this comes at the expense of investing in growth. you have done some work on

goldman sachs. what have you decided? and this isave, mainly a u.s. issue, and we think a lot of people facilitate the task is that you saw in 2018 with a throwback to shareholders. we actually find that although buybacks are the record high, so our investment rose. and by investment growth, we mean and we mean research and development as well. if you put those two together, the technology companies and how ish they are spending, it not a smaller amount, it is bigger than the buyback. so yes, it is cash, and it actually makes sense to buy back shares. we do not see buybacks as a negative. in europe, we have not seen the same degrees buybacks. that is partly because the economy has been weaker, but also because the companies are a bit prescriptive as what they can do for buybacks. nejra: all right, thank you for

joining us. sharon bell of goldman sachs and greg revis -- and holger schmieding of berenberg stay with us. prompting the evacuation of thousands of visitors and residents and prompting president emmanuel macron to give a speech to the nation. the cathedral was undergoing renovation of the time. "itfrench president says will be rebuilt, because that is what the french people want." these are images of the cathedral. this is bloomberg. ♪ cathedral. this is bloomberg. ♪

economics, finance, politics, this is "bloomberg surveillance."

and london.ehic let's focus on the global car market. many people are expected to attend the shanghai auto show, china remaining the largest car market. this is being held against the backdrop of the first failed in years. country investors weigh in on the forecast. >> i am not too scared about that betweenhope the united states and china, the situation can change. the downturn in overall markets, we have to be 2019, so weor forecast growth between 5% and 10% in china. punk beimes it is a wrote, this time a little more than normally, but always see that it is working out, and especially we are going to see a slowdown. >> the stock levels are very low, and we have a lot of launches coming, so we could see growth for 2019 in china for our

company. >> china would represent a to thethat will move up podium position in a couple of years for us to request this year will be about the same volume again, 300 ours. we are a much stabilizing globally. >> and contrast to the auto market, the growth rate rivals at the moment. more with tomet mackenzie, at the shanghai auto show for us. we heard from some of the executives bear. what are you getting about the slowdown in the china auto market? the broad picture is one that is pretty grim. we have had 10 straight months now a decline here in china. thee is a concern about strength of the consumer, but executives are pretty keen to point out if you break up the market, there is a different

picture, so for example, electric vehicle sales are still ready strong -- pretty strong. as you heard from based on markets, there is still strengthen optimism as well. bmw,ard from the ceo's of also daimler, saying they are starting to see a nascent recovery, and that is part of the stimulus measures that have been outlined, and i think the question really is how sustainable that is. bmw, automakers like the they are betting very big on the chinese market. it is the world's largest market here, the auto sales, the auto sector makes up about 5% of china's gdp. if you look at bmw, they are expecting to churn out 22 electric vehicles by 2028. they expect half of those to come from china. there is an execution you a lotg clearing out of

of the startups that have bubbled up to the surface in china, sucking and about billions of dollars worth of funding. there will be a shakeout in that area as well. there are a lot of different topics at play here, a lot for investors to digest. but they are starting to see green shoots. tom mackenzierg's at the shanghai auto show. us, holgerith schmieding of berenberg and sharon bell of goldman sachs. look at what investors stay away from, or would you look at the electric vehicle at all? sharon: i mean come all of those things. reasons why it is the cheapest sector of all sectors in europe is because of the uncertainties of risk. but there are sales for european auto companies. if growth does improved in that, we see a pickup, and

will be a positive for them, regardless of the mix shift. i think you just need to see a little bit of growth come through. but just like european markets, they started to rally a little bit, reflecting the view that growth is starting to pick up in china. nejra: how much of that is a reflection of positivity about the outcome and trade talks as well, holger? the bigger picture here is they are assigned in china itself, that stimulus is starting to work. from the car industry perspective, this forecast and china can only be temporary, even if china does not do very well in growth, if they grow 5%, this is a huge market rolling 5% and probably significantly more than 5%, slightly above 6%. so the actual call in a market that is still growing is less than before, is unusual. likely that car companies, including the european car companies, which are white strong in china, will

shortly, say in a few months , they arear-over-year starting to rise again, and that will be part of the overall improvement in confidence and growth that we are looking for in global industry. a question, ask you holder, which touches on what you already said, but nonetheless, does the car market still have macro significance? and here we are talking globally, not just china. holger: yes, it has macro significance for a number of countries, about 5% of the economy related to cars. it is not everything, but if you break it down of the industry, which is that many places extreme percent to 20% of the overall, an industry, it is the is inactor, and industry the global cycle, so for the business cycle of the world, especially the advanced world, cars do matter. nejra: sharon, what are your

best picks for sectors that are exposed to china in terms of the best opportunities now for the next year or so? sharon: china is improving. there is a stimulus package, as we were discussing, and you see that come through the growth figures. there are three sectors that are very exposed. autos, as we just discussed, about 1/5 of their sales go to china and a lot of the growth comes from china, too. of their direct sales to china, but then there are a lot of chinese nationals that travel and also buy luxury goods when they travel. if you include those people, then it is 30% of chinese nationals directed to china, so that is huge for them, and this is a big sector in europe now. and of course commodities, mining companies, metals companies. these are large sectors in europe. nejra: sharon bell from goldman

sachs and holger schmieding from berenberg stays with us. coming up, charles evans says the usmc may need to cut rates if inflation falls. we will discuss that next. this is bloomberg. ♪ this is bloomberg. ♪

nejra: this is "bloomberg surveillance." i am nejra cehic in london. the fed may need to cut its raises the inflation falls, according to chicago fed chairs charles evan.

he added that -- chair charles evans. he added he does not expect that to be the case. we have with those holder shall meeting and sharon bell thread we saw that jump in the yield on friday. is the fed likely to be a cut? holger: probably not, no. this is a very hypothetical, and we take it at face value. we do not expect it to get that low, and we take it into discussion. it is likely to pick up some momentum later this year. the risk of it falling that much is not that high. when we talk about how to investigate the u.s. equity market, sharon, a lot of people say it has to do with pricing power, but this caught my attention, because it is the low labor costs market, that is outperforming the s&p 500. when youhat is great

have companies doing exactly what you want them to do, which is outperforming at a time when rates are going up. rates are rising at about 3% per annum at the moment. if the economy does turn and it expands, we would expect that to rise further, given the all-time highs for the u.s.. which have lower labor costs as a portion of their overall businesses, tech companies, in a wide range of things, with respect to go true groups of companies, these are the ones that do not depend on that. nejra: sharon bell from goldman sachs and holger schmieding from berenberg stay with us. a reminder of those devastating pictures from paris, with fire sweeping through the notre dame cathedral. this is bloomberg. ♪ this is bloomberg. ♪

economics, finance, and politics. this is bloomberg surveillance. in paris, authorities rss in the

stability of notre-dame cathedral after a fire ripped structure inconic central paris. today.s of notre dame interiorfrom the minister after he visited the iconic monument saying the fire risk is removed and is about to be building itself. of firefighters were mobilized last night to contain the fire. world.tures gripped the they were online and on news networks around the globe. meeting torts determine if the building structure is stable. the firemen are now working inside to cool the building. president emmanuel macron's speech has been postponed as a result. u.k. data coming out as a result

of the labor market. the u.k.oking at december to february basic wage from three .8% to 3.5%. if i'm looking at -- slows to 3.4% from 3.5%. is holgen schmieding and sharon bell. costsey control wage better rather than looking at pricing pressure only? at the labor market, what is your outlook for wage growth pressure in the u.k.? holger: which pressure is probably on the way up despite the correction today. one issue in this country is simply that the supply of qualified labor has been more

constrained since the decision .o leave the eu fewer qualified europeans are moving in. wages are going up and the bank -- once the politics ,llow it and there is certainty the central bank in the bank of england will probably have to raise rates. holger: -- nejra: what is the outlook in sectors, sharon? that hasne thing outperformed this year is u.k. domestic companies. the chance of no deal exit have diminished. sterling anded up domestic companies. -- pushed up sterling in domestic companies where in international companies, it can affect them. wage growth, higher

costs, that will hit a lot of them. again, i think that risk factor for them will be a negative. and estimates are still coming down. growth and higher costs. i don't see it as a place to strongly aggressively invest. u.k. domestic companies are probably fairly priced. nejra: just a segway. we were talking and looking at the outlook for europe. you were seeing the three main issues are brexit, italy, and china. the rest of the year. -- where are we for the rest of the year? holger: hardly anybody wants to exit. on china, the stimulus is coming through. italy is hanging in there.

there will probably be confrontation with the eu over their budget. but i think they probably don't .ant to crisis so on balance, i'm watching the risks. i'm hopeful they will not materialize. as a result, europe can pick up normal rate by midyear. does that mean for the prospect of european equities, sharon? a lot of the work you have been doing is on the dividend advantage particularly with bund yields as they are. but cannot change as the bund yields start to rise? sharon: they would have to start underperforming equities which is what we would expect over a time. of this probably not a huge expectation of those assets. -- there is probably not a huge expectation of those assets. it is not risk-free like a

european bond. but as growth starts to pick up, then i think you will see the gap narrow. nejra: and one thing that you point out is that companies are generating more cash for each unit of earnings as well. my immediate question was, if the capex requirements are falling, are they not investing enough for future growth? sharon: that is a fair question. even something the public debate is grappling with at the moment. is and say that accounting pleasure. it does not include things like the expenditure arm, research and development and technology where people are pumping money. that goes to the income statement or the cash flow statements. howink capex understates companies are investing in the

future. holger: i very much agree with that. you invest in much more than software. you invest in training and skills. companies that invest in research and development to keep the software up today, they are doing what they need to prepare for the future. nejra: a final question on dividend growth. the absolute level of dividends to remain, is that right? sharon: the dividend yield is 3.5% at the moment. , it israll cash yield probably around 4%. it will probably stay around that level. with economies picking up in the second half, it will be helpful. margins are already at peak levels. they will see profits from here, but that will have to drive dividends.

nejra: great to have you with us this morning, sharon bell and walter -- holger will stay with us. is what is happening. france continues to grieve over the devastating fire sweeping through historic notre dame in paris. the flames raged for four hours before the bell tower was contained. but the firefighters were unable to save the spire. president macron that out to rebuild and the mayoral office giving 50 million euros to help with reconstruction. eurosledged 100 million with others giving 200 million. a report expected to be released on thursday according to the u.s. justice department could be revelations damaging to the

president or could reinforce claims of his vindication. the democrats do mind william barr provide that -- demand that witham barr provide them the full report. goldman sachs closed with better-than-expected earnings. progress revamping to shoot aey agree digital bank effort, goldman wants to focus on electronic trading require less capital. the federal reserve looking to cut interest rates as inflation falls according to chicago fed president charles evans. inflation is obtained as unemployment is at the lowest levels in almost five decades. evans is a voting member of the fomc this year. hulu buying out at&t's 10% stake that values the

streaming company at $15 billion. will have to decide how to portion at&t's stake. hulu is not expected to turn a or 2024.til 2023 global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. back to you. nejra: is china's economy over the worst? we will analyze the data and look at tomorrow's gdp number. that is ahead. this is bloomberg. ♪

>> the worst has been avoided even if the battle hasn't been completely one. the next hours will be difficult. but due to their courage, the two towers did not crumble. that was french president emmanuel macron visiting the cathedral after a massive fire ravaged the gothic monument. he said we will rebuild notre dame because that is what the french people want. flames were snaking up the spire before it collapsed. 's german unit has treated guilty -- pleaded guilty . they allowed customers to conduct transactions in violation of sanctions. it's aussie unit will enter into a deferred prosecution agreement. paymentslt on interest hnasee the beauty -- for

unit. facing jail time as part of a diesel rigging scandal. the volkswagen chief has been charged with serious fraud that contains a massive -- maximum prison sentence of 10 years. and that is a quick look at the bloomberg business flash. back to you. economy isa's showing further signs of recovery after months of slowdown. releasedes are tomorrow. as markets await the data, downward pressure still persists. dani: the earliest available indicators we have seen in china look promising. bloomberg economics aggregate

measure of indicators have it tipped into stronger territory. but the various measures that go into this are anything but uniform. stocks show the csi posting more than 30% this year. confidence also propping up the economic picture. month announced the biggest tax reduction on record. at the same time, we do have a grim outlook, and that is pointing to weakness. these things are not boding well. companies hadrial the worst start to the year since the financial crisis. be out growth will

tomorrow and we might see signals that momentum has yet to stabilize. nejra: let's keep the conversation on china. still with us is holger schmieding. out of all the various data points, what do you focus on as a signal of whether we are seeing improvement, slowdown, or whatever you want to call it. what we look at a lot is path for china. and countries close to china like taiwan and south korea that .eed into china by and large, the data were telling us that this is tough. but there are green shoots -- chutes. it will likely get better.

it is focused on a big infrastructure project that will focus on less raw materials. it may not cost as much as previous measures. evidenced large, the seems to add up that stimulus is coming and the second quarter will be better than the first quarter. so it is stimulus this time around. it is starting to work, but not as effective as previous rounds of stimulus? how much more could we get? "moreay we could get control of the money supply." the economy with basic liquidity. what more do you expect in terms of the amount and quality of the stimulus? holger: not much for the next few months. we have to see how it actually works. by midyear that this is really enough for china and more is not needed.

and then the chinese authorities, conscious of the risk of having too much liquidity or having too much credit growth may decide that that is fine. actually, and overdone chinese stimulus will have to be afraid that china will step on the without helping the global economy very much. talk about the risks of overdoing stimulus much. will the markets react positively if brakes are slowly put on stimulus and seeing it as good news? holger: as long as the good news keeps coming and we continue to see the evidence that what is already there in the pipeline is working. i think now a big extra credit stimulus program will probably set off fireworks. and it is really good in the

long run. it appears that china is doing enough. it is responding. why do more than that? nejra: thank you for joining us for the hour, holger. coming up, the u.s. congress information on the trump. that is next. this is bloomberg. ♪

economics, finance, and politics. this is bloomberg surveillance. let's see what happening in the markets with a look at the stock movers in europe. of thet is the year ipos. europe's biggest ipo had their trading debut today. you can see from the market reaction, not as much excitement as the company might've hoped for. shares falling 6%. the ceo saying not to judge the first day of trading. we will see how the shares should be priced. clocking in a first quarter

profit despite the fact that they had seen a loss coming from the company. prior to that, it was five quarters of decline. they are not only profitable but beating expectations at zalando. at 41.75. trading this will be a seven-month high for the company. unicredit shares getting to after pleaded2% guilty to violating u.s. iranian sanctions. the provision was higher than what they paid out, allowing shares to gain. nejra: congressional democrats are ramping up their investigation into president

trump's finances and any dealings with the russians. the issued subpoenas with deutsche bank and other financial institutions. haveessional committees been asked for trump related material since democrats took back theo back -- took house. deutsche bank is cooperating. what is the panel looking for? >> any indications that deutsche bank inappropriately helped donald trump out of financial difficulties before he became president. and anything that may lead to questionable behavior in the campaign of 2016. nejra: how will this play out politically in terms of 2020? -- >> eric trump blasted the committee for what he said was a political witch hunt. going to play is

out. the democrats have to make sure not to overplay their hand. they said they were going to investigate the president and his financial dealings. having the optics of not governing and only investigating. and that could help donald trump in 2020. marty, we are counting ahead to the publication of the redacted special counsel report. how could that have any bearing? >> it will be interesting to see if robert mueller had any information in his report. there was speculation he had those records already and if that connects to the findings. he did not find anything illegal. indictments, but it could still raise questions

about his relationship with deutsche bank in that report. nejra: great to have you with us, chief content officer in london. now a reminder of the devastating pictures from paris. fire swept through the notre-dame cathedral, forcing of evacuation of thousands visitors and local residents. it caused president macron to postpone a speech to the nation. the gothic building was undergoing renovation at the time. president macron says it will be rebuilt because that is what the french people want. you can see the cathedral this morning. french ministers are to meet to discuss notre dame at 11 a.m. .et that is in about five minutes time. thelready heard about deputy minister in leaders

around the world expressing solidarity. president donald trump in the u.s., prime minister theresa may in the u k, and germany's angela merkel. they are still working out the cause of the fire. more than 500 firefighters are working overnight to control -- were working overnight to control that blaze. we will bring you more updates and pictures. markets, a fifth day of gains and showing some movement to the upside. the euro slightly on the front with the 10 year yield ticking higher as well. this is bloomberg. ♪ so with xfinity mobile

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now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. and now get $100 back when you buy a new lg. click, call, or visit a store today. tom: this morning, a new quiet. a new piece in the earnings

season is upon us. there is no doubt that profit or profit growth stocks. all washington await a redacted mullah report. truth is in the details. -- mueller report. truth is in the details. good morning, everyone. this is bloomberg surveillance live from new york. guy johnson in for francine lacqua. weres not long ago that we on the river for mr. macron selection. -- mr. macron's election. this is an opportunity for president macron to bring the country together. divided nation. a crisis could be an opportunity for mr. macron. devastating the what happened tot night and a real blow paris and its prestige around

the world. on: we have been working this all night. we will go to paris in just a moment. here.nathan is joining us we have important the ew data -- zew data. guy: i'm more of a fan of the ephone number. this is an investor sentiment survey. the current situation 5.5 down from 11.1. week number and the expectation number stronger than expected. currently not very good, but in the future, investors could see things getting a little bit better from here. tom: very good. going on in things paris. and number of reporters looking at the morning-after. bea number of reporters will looking at the morning-after.

greg, thank you so much for your reporting. what was it like this morning as the sun rose? greg: i went out there early this morning and from some angles, you would not know anything happened. if you look at the cathedral straight on, the two towers are .here and there is no char on the side, you can see the damage. the roof is gone at the -- andding is torched the scaffolding is torched. we don't know how close we came to disaster last night. there was a moment faith up the towers were not going to make it. the massive bell's had fallen, it would've taken the whole structure. loss that we've had. but it could've been much worse. tom: one of the great medieval scholars of america is writing

in the washington post. this is just around the corner from notre dame. notre dame survived the reformation, the french revolution, and the not sees -- the nazis. it didt is surprising as not catch fire sooner. structures caught fire as a matter of course. cathedrals that. europe's landscape are mostly monte mr. resilience. what is the likelihood mr. monuments totly resilience. what is the likelihood of mr. macron puts more money towards this? going to be is not the problem. it will be the time and complication of the work that it takes. there are not many artisans that can do this.

they are not a dime a dozen. an interesting point that you were reading earlier, changes theremany have been over the years. this is a cathedral that was during theroyed revolution. it was used as a warehouse. they talked about tearing it down in the 19th century. , they have gone through war, they have gone through tragedy. and they have gone through renovations over the years. living monuments. there is something in notre dame about every single century. guy: this is a symbol of france, a france that is divided at the moment. is this an opportunity for mr. macron to bring this country back together? dignified and heding back tears -- greg:

was dignified and holding back tears. it is just an outpouring of support. the iranian foreign minister spoke about it this morning. there will be unity on the issue of notre dame. likeer it means people macron's tax policies, i would not go that far. but the european election campaign has been suspended. all the focus is on the cathedral. guy: we are now joined from the scene of last night's fire. when you arrived, what did you see? what do you see now? i literally just arrived on the scene and there are hundreds of people on this bridge that overlook notre dame.

straightforward, you don't necessarily see the exact damage. there are hundreds of people here, locals and tourists taking pictures. it is such an icon for paris that has garnered global appeal. and this is just a bit of flavor. and notre dame is a disaster. tom: you just arrived from london but you say it is a tourist icon. there are other cathedrals as well. it points out the value of going . we have learned that this can

evaporate instantly. >> i was reading that so many wanted to rush in for a last glimpse. today is really about the after effect locally. there were 400 firefighters at least last night and today there is 100 on the scene. seeing if the building has cooled down enough. it could be years if not decades for the restructure of it. we have seen the wealthiest families donate. $200 million, $100 million -- there has been an outcry to set up a global donation system in order to rebuild. tom: and we see the two are going by.our boats

it is just another day. do we know the fate of the north side of the building, the lovely narrow street? do we know the fate of the iconic rose window? rose windowsthe was certainly damaged. another is part of the security perimeter. last night, you cannot get on the central island. this morning, they opened up the main thoroughfares. guy: we will be back. thank you both for joining us from paris and giving us the latest on the notre dame fire. youill continue to update throughout the morning. fascinating to see the artwork coming out of that building and the effort they made to preserve so much of it.

let's get a bloomberg first word news update. uma: charles evans may need to cut interest rates if inflation were to fall to 1.5%. that would be a sign that monetary policy is too restrictive. he does not see that happening, predicting that rates will be on hold until the fall of 2020. the democrats have issued subpoenas for deutsche bank and other financial institutions. congressional committees are fed up with trump delaying material since they took over in january. isth korea's kim jong-un getting ready for his first summit with vladimir putin. the south korean newspaper saying that the two will probably meet next week.

global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. back to you. ♪

tom: bloomberg surveillance. good morning everyone. guy johnson and for francine. next hour, jonathan will join us on paris and notre dame. i just have one screen with a oft on the markets -- lift the markets.

i know that you really focused on a lack of power in the market. quiet, quiet, quiet. guy: it is amazing, tom. the bloomberg shows a similar thing. performanceck shows , and slightly underperforming right now. we had some very strong u.k. data out but the pound is not really budging. you have the lowest level of u k sincent in the 1975. more people employed than ever before. and then you've got what is happening with minors hitting a record on friday. and we saw minutes from the last meeting at the central bank there. they talked about rate cuts. tom: good to see iron ore there as well. let's go to bloomberg -- to the bloomberg. the x average here over the

here -- the vix average over the years, do we stay in this rain? -- in this range? or do we go back to 2017? the jury is out on that call. guy: great minds, tom. i have the european equivalent. tom: do it. it is more recent. guy: this is the last five years. i can extended out further, but we are basically looking at european volatility trading near record lows. the market has basically gone to sleep in some respects. hadrgan's asset management of equity strategy, what do you make of that low vol? what does that tell you? >> you talked about the market going to sleep but i don't think

that i would characterize the markets as having gone to sleep exactly. i think the opportunities are if equity growth and earnings growth holds up. normally, you have a state of earnings downgrade. .nd that goes with the forecast it this year was no exception. the downgrades were up 2%. it was higher than expected. guy: is the european market going to outperform the u.s. market this year? stephen: i think so. you need to focus on what is going on in emerging markets rather than domestic markets. most european companies are aware of the fact that european growth is challenged. investmenthink about capital, they tend to invest in high-yield markets.

at the last years, emerging markets have not really helps them. -- but the last few years, emerging markets have not really helped them. the earnings number could be a real number. tom: it is a bit of the distance, but do you buy the idea that u.s. technology is overvalued? it is a really interesting question. not necessarily. in cabo andting there were people in america that are much cleverer than i am. there was not really a profit story there. now you are getting substantial earnings in the technology sector, and those earnings are continuing to grow. earnings are justified. but the other issue, there is a big setback in technology.

are very long-duration assets. when interest rates move up, you rebates the valuation. rebase devaluation -- the evaluation. baseou read base -- you re the valuation . tom: you have to participate in the markets. we are all under that pressure. there is a nuanced wall of worry. is it about revenue? is it about the income statements?is it about shocks? what is the character of the worry right now? stephen: there is a lot going on in the background politically. and where that manifests itself in the year now -- the pnl is trade.

the administration is trying to renegotiate their relationship with china. and there are measures that they have adopted, like the european not as industry. -- autos industry. there was confidence last year. i think that is an related to issues over trade. think are a company, you about the fact that trade between the two countries might be more difficult. and you will rethink about where you commit your capital. but you will wait for parity before you do that. guy: thank you for joining us, stephen. our next conversation is at 7:30 a.m. in new york, 12:30 p.m. in london. that is coming up. this is bloomberg. ♪

tom: bloomberg surveillance. guy johnson in for francine lacqua. i'm tom keene in new york. our reporter is at notre dame and will have reports across all of bloomberg. be author of france will here for the next hour. at your side of the pond, we have seen subpoenas come down for various banks. deutsche bank is the name that sticks out. lawmakers are subpoenaing

financial information related to story andbusiness whether or not actually this was stained in at was variety of ways that they wanted to investigate. marty, we have lawmakers subpoenaing records. what are they looking for? they want to see if there was any inappropriate relationship between deutsche bank which is donald trump's lender of last resort for decades. whether there was some untoward relationship. guy: what does that mean? is this russia related? is this how financial reporting works? marty: it could be any of those things. there are some suspicions that deutsche bank bent its own rules

to help donald trump with his real estate empire. and somehow they would be treated favorably under his presidency. he would presumably have access to this like donald trump's tax returns. it will be interesting to see. tom: i pulled the short straw and i'm allowed to ask the dumb question of the day. why is it deutsche bank? why not jpmorgan, chemical bank, or manufacturers hanover? as we and others have chronicled, donald trump wore out his welcome with traditional new york banks. he could not get any lending from those. deutsche bank did step up and help donald trump when he had

financial needs. tom: is this linked to tax returns? is this the same area of curiosity? are these two separate ideas? they are definitely related. that is what they want to get their hands on the tax returns to see if there was any relationship between donald trump and deutsche bank that relates to the records they are going to get from deutsche bank. tom: i know you have a team of 40 interns to dive in on the mullah report -- mueller report as well. marty: it is not just washington. newsrooms and publications throughout america will be tearing this up. headlines will fly. .eople will parse it out we just want to make sure that we stick to the facts of what is

in the report and not speculate about what certain facts mean. we will continue with jpmorgan asset management as well. it is always on science. and he is a legitimate first-class science. from m.i.t., the former u.s. energy secretary at the 12 noon hour. this is bloomberg. ♪ moving is hard.

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[ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. ♪ guy johnson in london, tom keene in new york. i want to show you the biggest ipo this year in europe.

this is a payment services company. it is out of its league. not doing well so far. the ceo as saying to look at the longer-term story. 6%, 6.5% at the moment. the european market for ipo's has not been going strongly. the pipeline is stronger in the states. tom not going to get you comment specifically on the trading performance, but why is europe so far behind? stephen: it is an important question. you have to look at a variety of things. the availability of private equity and venture capital. it bred ated states, race of uniforms that eventually came to the stock market --

unicorns that eventually came to the stock market. the tech sector in the stakes is highly developed and well-capitalized. the tech sector in europe is dominated by a few names, a lot of whom are not in the attractive fintech growth area. overalled states market trades at a higher level of valuation so broadly speaking, you can expect to get a higher level of valuation on your ipo and if you are a seller, that is what you are looking for. guy: stephen mackler smith staying with us. -- mnaa news, king spent a news -- these are flexible foam units. tom: let's get to our first word mous.

luxury goods -- uma: bowinggoods brands are to help rebuild notre dame. the family that controls lvmh is pledging 26 million dollars. atre dame was undergoing multimillion dollar renovation and the cause of the fire is under investigation. nicolas maduro may have found a way to get out of economic sanctions by selling $400 million in gold despite a growing international push to seize their aspect cash assets. -- assets. wilson willrussell reportedly become the highest paid player in the national football league, he and the seahawks agreeing on a four-year

, 100 $40 million contract including reportedly a $60 million signing bonus. 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. tom: thank you so much. "surveillance" will search high and low for somebody doing research around the world, that would be freya beamish, who is truly expert on the dynamics and the interior dynamics of china. she is the chief asia correspondent. if i look at china and the domestic picture, it has been out of sight, out of mind. in strong is president xi china if he effects a policy with president trump? freya: i think there has definitely been -- there is a consensus now but there has been

a serious economic downturn. my impression is that is ongoing and it impacts on the political environment. there is not an electorate the way there is in the u.s. or european countries, but it impacts on xi jinping's ability to control his own party. mindss definitely focus on the trade negotiations, and i think we have got some positive news coming out, whether it is on the fall strike -- tech mechanismthe two way china has been pushing for or opioids. issues withe some digital trade and renminbi stability, but the signs are good. economic weakness in china is an incentive for xi jinping to get something done. tom: if the goal is a bilateral

saving of face, what does president xi want to save? how does he position himself with a unique president of the united states so that president xi can save face? freya: it is partly about saving face. a deal could have been done much sooner if there hadn't been this negative equilibrium of escalation on both sides, but it probably goes farther than saving face to the extent that there are reforms the chinese bet to make, whether that their intention to draw capital into china or their intention to reduce import tariffs and make things easier for households in private consumption to lead growth. whether they are successful is a different story, but the reforms being talked about are going to

help in that direction. it is partly about saving face. there is enough common ground for them to produce something slightly more meaningful and just saving face, and certainly pull back from the precipice of stepping into an overt trade war. you, to whatk extent the china-u.s. talks are a benchmark for how the u.s.-european talks will go? freya: i think, to a certain extent we can say they are a benchmark in the sense that things have to get worse before they get better, which is not great news in the immediate future. there has been a pattern to these talks. there has been an escalation at a turning point that the political environment in the with thefeed into that

midterm elections in november fromhe government shutdown mr. trump's perspective, causing a greater incentive to try to carve out a political win. to a certain extent, it depends on the u.s. political schedule as to when mr. trump might and thelly need wins, e.u.-u.s. talks will progress in a similar fashion, and also with japan as well. freya says the u.s. is likely to go in hard. in much bad news as priced -- is priced into the european equity space because of these trade talks? stephen: auto sector got to its worse position nine to 12 months ago. they have really been hit hard over the last 12 to 15 months, wille fact that the u.s.

likely send sanctions to european autos is out there. sanctions, imposes it will go in hard and early and there will be an immediate reaction. the question is what the likely theome will be, which concerns of the administration can be met if autos and manufacturers in the states because that brings money to -- jobs to the u.s. economy. they already produce a lot of cars in the states. smithtephen mackler staying with us. freya beamish, thank you indeed. someone million people are expected to attend the shanghai auto show. china remains the world's largest car market but this happens against the first sales dip in more than 30 years. they weighed in with our

forecasts. >> we are not too scared of china. the situation can change rapidly. the overallterm of market, we are pretty optimistic for 2019. we forecast the growth between 5% and 10% in china. sometimes -- this time, a little more than normally, but i always see that it is working out. we do not see a slowdown. >> stock levels are very low. we have a lot of autos coming so we can see good growth in 2019 in china for our company. >> china will represent a market that will move to the polling position. >> it will be about the same volume again, about 300 cars. >> the contrast to the east auto , they are enjoying a

growth rate that is rivaled at the moment. ♪

♪ the worst has been avoided, even though the battle has not been completely won. the next hours will be difficult, but due to their courage, the two towers did not crumble. emmanuelch president macron visiting notre dame last night after the massive fire ravaged the 850-year-old gothic monument. he said "we will rebuild notre dame because that's what the french people want." flames and golfing the roof, they snaked up the ornate spire and it collapsed. what is critical is that the

belfry's have managed to be saved. they are still standing, incredibly fragile structures. one of the bells had become dislodged that intentionally could have been the end of the entire structure. much has been saved and many of the critical pieces of artwork, cetera,a were -- et where removed early on. saved but abeen fragile piece of architecture. today tore advantaged have only classics majors from oxford university, stephen mackler smith of j.p. morgan asset management. you studied the class it's -- dame.cs at notre when did you first visit? stephen: i cannot even remember.

i would have been 10 or 11. i am lucky enough to have family in paris and we used to go see them. it was such tough news to take. especiallyc to walk, live coverage of the spire falling. of architecture and treasure. you pointed out the concern over the rose window. it is remarkable, like a lightbox. tom: jonathan fenby with us in the next hour and annmarie hordern. no doubt, jamie dimon will be contributing, as we see others, to the rebuilding of notre dame and part of that is european equities. there has got to be an opportunity in the large financials of europe. where is that opportunity? stephen: the big question this year is whether the equity

markets and the fourth quarter got it wrong about the direction of growth, and there were suggestions in the credit market that the market is over discounted. we are still trying to diagnose the cause of the slowdown. earlier, we were talking about the likelihood that the tensions over trade played a part. if you look at the second derivative of the changing credit, that turned more positive in the fourth quarter of last year and the chinese pmi was not as much of a shock. the indication of that is through the fourth quarter and some of this quarter, you have a long-term dive in interest rates that were forecasting an imminent recession, but i think it could be -- strengthen a little bit. that would be a pain trade because the market is precisely not position for that to happen. guy: we have pmi data coming on

later from europe. a lot of people are trying to work out the lag factor between andchinese states improving the wheel turning again, and that starting to move into german then italian manufacturing. theleading -- stephen: leading case we think about, looking at the relationship between new orders and inventories and that has not suffered a turn yet. my bright colleague from emerging markets points to the swedish relationship. sweden is a heavily manufacturing-based economy so there are signs of life. you take all those things together and the fact that credit is turning up and you are starting to see some of the

leading indicators turn up and you should get acceleration in the next three to six months. is germany being held back by the auto sector? stephen: yes. guy: i want to segment reasons on that. the chinese auto market is relatively slow, but they are halfing to factor in the rearview mirror stuff, diesel powered trains designed 6, 7, 8 years ago, how long does that lag continue for? trying to segment out the chinese stuff and the auto stuff. four of you have ticked the boxes that are important. who knew that the water levels on the rhine could have such a major impact on the supply chain? you can track that on bloomberg and the level last year was extraordinarily low.

if we think about the behavior of the auto companies, having invested so much over the last 20 years, they are trying to make the most they can out of that investment before they switch to hyper powertrains or electric vehicles. pressure on autos will remain, but in the background, as long as consumer markets are holding up demand for autos should continue. this is a storm they can whether. -- weather. and it is earnings season, that begins with the banks. mix,lly interesting goldman sachs, j.p. morgan, and others. moynahan andss fortress fink will report to very different enemies. this is bloomberg. ♪

uma: this is bloomberg "surveillance." hulu has bought out at&t stake for $1.4 billion, valuing the company at $15 billion and leaving hulu with just a pair of owners, disney and comcast.

disney gaining majority control when it required acquired fox news assets. bob iger may be interested in acquiring the rest. a takeover offer and the insulation business, king span the price,buy -- $170 million. and --e facing king span in ireland. agreed toander has buy back 1.5 billion of its perpetual contingent convertible cocos.simply known as the expectation was they would be bought back by the issuer at the first opportunity. declining to redeem euro keepingd cocos while investors guessing for weeks. guy: let's pick up on that last

story we were hearing about, santander's decision to redeem dollar cocos. they caused consternation in the market when they did not call a euro denominated version. now, marcus ashworth. important to discover -- distinguish. marcus: santander is doing exactly what they say they will do. they have chose to call this dollar one is irrelevant in the sense that they look at it financially on economic logic, if they wanted to keep it they would have kept it. this will cost an extra 50 basis points probably to keep this. that is why they are calling it. in dollar and euro markets, there have been different conventions. that is irrelevant because santander does what it does

regardless of the market. did cause some consternation in the european market. marcus: it was communication, in the sense that it has always said it would do that. clearly, not having issued a dollar bond before that -- this came up with particular dollar one does not tell us anything different about the dollar market or the euro market. they are not reassuring investors but doing what they always do. they said earlier, they are soft almost. tom: are we anywhere near a point where deutsche bank stock becomes legally an option on its future? euros, eightwn 10 euros, seven euros, do you have a level where we click into the euro belief rather than the equity belief? marcus: we have been at that

stage. it does trade more like an option. we know that essentially the establishment in germany wants to smash it together with commerzbank. the unions do not want to. haserent parts of each bank reasons why it does not make sense. there is an overwhelming need to protect germany's champion. this has got so much momentum behind it, i still think that deal will go through. the share price is a reflection of that probability. tom: this has been wonderful, marcus ashworth, thank you so much, and a special thank you to stephen macklow-smith from j.p. morgan asset management. we will continue our coverage on notre dame. paris,e hordern is in giving us perspective on pairs trying to get back to business

-- paris trying to get back to business as usual. notre dame, the morning after. fenby next hour, jonathan and matthew luzzetti will join us. matthewwork in luzzetti's work on economics along with global investors. we have brought bloomberg "surveillance," through the morning. volatility lower, the vix, stunning, 12.18. that we see this morning, it is a beautiful morning in new york. ♪

♪ tom: this morning, a new piece in the market. earnings season upon us.

profit and profit growth, stocks ascend to the sky. all of washington and the president await a redacted molar report. -- mueller report. in paris, a jewel of western civilization burns. it's fate unknown. this is bloomberg "surveillance," guy johnson in for francine lacqua. with the french elections and you on the river seine, it is a decidedly somber paris. guy: absolutely, still trying to understand what has and has not been saved. prosecutors are starting to ,igure out what happened starting to interview workers. such a fragile structure we are dealing with, in some ways remarkable that so much has been saved.

will this have an effect on french politics? we will see. let's go to annmarie hordern in paris with the structure behind her. walk me through what is going on right now. they are clearly trying to damp down the fire that was taking place last night. they are trying to figure out how to save the rest of it. annmarie: yes, that is exactly right. i am standing toward the back of the structure. you can see some of the scaffolding. wheres east of notre dame there is hundreds of locals and tourists coming in to take pictures, as well as international press. today is about taking stock of what happened last night. at one time i thought they could have lost the entire structure. as you said, so much was saved.

it could take decades to rebuild . about 400 firefighters on the team, waiting to see if the building has cooled down. there is a feeling of devastation in paris. this structure withstood world war i and world war ii, was where napoleon was crowned emperor, was where they'd celebrated the liberation of paris. 2019, a fire was what brought so much of it down. ashes.a was filled with the bureau chief said people were kneeling and singing early this morning. it is such an iconic monument, not just for paris but for the world. that is why so many people are gathering around to get a side of it. tom: the interior photographs, extraordinary.

we are beginning to see headlines, widely anticipated, on prosecutors zipping into the how did this happen. that will be front and center in the coming days. annmarie: exactly. people want to know answers, what happened, how did this happen? while it is a noncriminal investigation, something so big like this, they have to open an investigation. investigators are talking to workers to figure out what was going on inside. there were refurbishments going on and that is potentially where it happened. the structures are so old that anything could intentionally easily set it on fire. hordern with reports from paris and notre dame. we have to speak of frankfurt

and the european central banks, important headlines out of the ecb. i am looking at the bloomberg terminal as they are looking at .ate tearing -- tiering this is an important idea where ecb officials say they doubt rate tiering will happen. guy: it is difficult for european banks to make money. with negative rates, it is almost impossible. ,ther countries such as japan the swiss have tried as well, have tried tiering the negative rate structure. that would improve the ability of european banks to make money. i am looking at the european banking sector. if you want to find this on your bloomberg, it has started

dropping quite sharply on the back of this headline. european banks are reacting on the downside. there was a suggesting that if ing coming see tier through, we could see rate cuts from the ecb to help out the european economy. tom: the tools of negative interest rates and the euro at a 1.12, 1.13 handle. as i stood over notre dame, i said one guy, and that is jonathan fenby, is one volume on france, is absolutely extraordinary, is encouraged to drive into france. jonathan fenby, we are learning the history of notre dame and what you capture so well is the fractured france of the 19th century. exactly how medieval is notre dame? medieval in its

origins and its building, and at frequent reconstructions over the years. but above all, it is a symbol for the french and for many visitors to paris of the history of france. this is the essence of pairs. this is the -- paris. this is the essence of france and it plays a role larger than that of a historic building. guy: you would have thought this would have brought the french together. the french are fragmented. jonathan: they have been fragmented for a long time. guy: let's bring them together. jonathan: that is what emmanuel macron, the president, he went to notre dame last night. he canceled a speech that was meant to appeal to people to come together in the face of the demonstrations that have been

going on, and in his remarks at the cathedral, the accent was very much on, we must show resilience and courage, and we will rebuild this great monument. you could not help making a parallel with what he is hoping to do with france. kimmelman at the new york times, michael kimmelman getting just the right tone. louis the 14th destroyed much of the church's interior and swapped it out. hugo called it a vast symphony in stone and the giant kenneth clark asked, what is civilization? i don't know, i can't define it in fabric -- abstract terms yet. i think i can recognize it when i see it. is it even possible to rebuild

notre dame as they rebuilt chartre 100 years ago? jonathan: i think it is possible . some of the key elements in the building are still there. the towers, probably quite a lot of the stained glass. it can be reconstructed as it has in the past. that will no doubt be used by the president and his associates as a kind of symbol for how france can rebuild itself under their leadership. tom: one final question, and you caption this -- capture this, the ambivalence in the history of the french and the catholic church. dame inolic was notre 2019? jonathan: it was a center for the catholics, as you can see last night from the people praying in the street. remark an element of sympathy was to the catholics

, but it is much more than that. it is a national symbol that stretches across religions, including those who owe their authority to the state of france, not the catholic church. tom: in new york city, let's get to our first word news. uma: congressional democrats are ramping up their investigation of president trump's finances and dealings with the russians as they issued subpoenas to deutsche bank and other financial institutions. two congressional committees have been after trump related to uriel's. deutsche bank is cooperating. north korea's kim jong-un is getting ready to begin another summit with vladimir putin. a south korean newspaper says they will probably meet next week and are likely to discuss the nuclear disarmament talks

between north korea and the u.s. russia has repeatedly called for sanctions against north korea to be scaled back. calista madero may have found a way to get around economic sanctions. venezuela is selling about $400 million in gold, despite a growing national push freeze their assets. duringve been cut off maduro's regime, from the global financial system. 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. pemmaraju. this is bloomberg. ♪

♪ bloomberg's "surveillance," from london and new york this morning. a data check, not much going on.

the vix ever lower, getting down near and 11 handle. s&p futures up 10 points. the euro is weaker. guy: let's take a look at what we have happening in europe, the volatility level. the dax continues to outperform. the pound trading low. iron ore has been falling. apparently the aussie central bank is considering a rate cut. that was the story overnight from down under. tom: blackrock, not a too big to fail bank but well known to the bloomberg terminal users, blackrock with earnings and line. there is the number i was looking for, net inflows more billion downom $81 to $31 billion.

that shows the restructuring blackrock announced a number of days ago. nuven on to a more traditional bloomberg conversation, matthew luzzetti has been my worst nightmare, manufacturing 12 page reports and i get mad i have got to read this. worse.hajan is particularly on the united states market. let me start with mona. does our economics and the equity markets linked? mona: gdp growth is decelerating this year. 2.1% tofrom 2.9% to 2.2% this year. architect gone the other way. we were down 20% peak to trough last year and now we are up 23%

since december 24. part of that is driven by expectations that perhaps we will get reasons for optimism in the second half, not only a china recovery story, perhaps a u.s. earnings story and perhaps we climb these geopolitical walls of worry including trade. she goes macro: onus. where's the underlying business investment? where does that dynamic stand? matthew: the second derivative on growth is negative. we are coming from where the u.s. economy was growing 3%. x,large part of that was cape which was stronger than except -- expected. what has been priced into the equity and bond markets is worse than we are likely to get. we have this yield of the dutch

and version of the yield curve -- inversion of the yield curve. we are now more fairly priced for the economic market. stay short investors of volatility in the united states and europe? what would it take to get volatility rising? matthew: volatility has been incredibly low. a key fundamental has been what we are seeing from central banks and the dovish pivot across the board. moving to calendar based type guidance, the ecb has that, and the fed with their patients story has that as well -- patie nce story has not as well. unless they will be a source of volatility, i think you need inflation to pick up to see that and so far we do not see that. guy: our central banks going to

continue to repress volatility? mona: generally what we are seeing globally is central banks pulling back, getting more mode,s an easing node -- not just the u.s., but places like australia and india are doing surprise rate cuts. at that has done to rates and yields globally is it has brought yields down. andave seen equities rally parts of high-yield and fixed income rally. that depresses volatility. tom: is the world of mona completely a slave to what jerome powell does? many the people we see with rate rises up or rate cuts. matthew: we have the fed on hold. tom: is that good for mona? matthew: parts of the equally

dutch equity market will be good for her but the stoxx will not. it is more a sector story. we are pretty optimistic on growth. we have the economy staying around 2% over the next two years. tom: i am looking at blackrock and i understand it is a competitor, but it is amazing how it goes one way under 4% organic asset growth and 5% decrease in base fees. it shows the competitive nature for everyone with an asset management. it is inappropriate for matthew to comment on deutsche bank asset management, but the battle in your world is extraordinary, unprecedented. mona: the fee compression we see is unprecedented and what we are seeing now is active managers waking up to this. they have to find a way to compete and one thing we are seeing is incentive-based

products meaning if you provide the alpha you get charge the fee but if not, you get charged the beta fee. tom: i thought mona would skirt that answer. she is in trouble at allianz. guy: fees are going down, down. it is absolutely amazing to see what is happening, how the active guys make this work. matthew and mona will stay with us. up,her guest coming socgen's chairman and former ecb member, 7:30 a.m. in new york. this is bloomberg. ♪

♪ morning, everyone, bloomberg "surveillance." guy johnson in london, tom keene in new york. is at notredern dame for reports throughout the day. french authorities looking into how this occurred with 50 prosecutors assigned to the case. we are assigned to a good conversation with matthew luzzetti and mona mahajan. let's turn to the equity market. you loaded the boat december 26. it has been stunning. what is the now what into the summer? mona: that is the question, after a 23% run. we would love to see a

consolidation. it would be healthy to get pullback but well we get it? many managers right now are still underweight equities, so they have missed much of this rally. they are looking for a dip or a correction. what we are seeing an earnings, probably not the -4% that is consensus, probably closer to flat or slightly up. the insatiable urge to buy bonds, price up, yield down, does that carry over to the equity world where there is an insatiable urge to buy equities? mona: equities is a sector story. there are sectors if you are theing for growth, as technology sector, the discretionary sectors will hold up well. a lot of them have secular

themes behind them. as other and of the spectrum some of the sectors that have lagged, health care and staples, which are pretty defensive, do well in decelerating environments, and have some room for catch up. guy: i am just taking a look at -- that are working and not working. momentum stocks are big underperformers. can the market send at story around? is momentum a place to get back into? the tech names were big part of the momentum story last year. what happens this year? matthew: from our perspective, you have had this big rally in the question is about the next catalyst. the global growth story has to be the next catalyst, and you have seen some evidence of stabilization in the turnaround.

point, the china data onp, and the european pmi's thursday. if you continue to get evidence that there is a bottoming out in europe, you can see momentum picking up. tom: we will continue, matthew luzzetti and mona mahajan. it is a bank, blackrock is an asset management. decidedly aica is too big to fail giant. earnings will be out. a mixed picture so far. i will be looking at the equity results as well with mr. moynahan. this is bloomberg. ♪

♪ the worst has been avoided, even if the battle has not been completely one -- won.

the facade and the towers did not crumble. guy: that was the french president emmanuel macron at the scene of the fire last night at notre dame, the cathedral, the massive fire ravaging the 850-year-old gothic monument. he said "we will rebuild notre dame because that is what the french people want." the flames and golfing the roof, you can see the pictures -- and golfing roof, you canhe see the pictures, but the belfry's survived. tom: there has been any number of restorations. that spire is truly iconic as a lightning rod for the church. there was a real need for that was the great people of any structure.

the luxury goods giants of france have come up with pledges of hundreds of millions of euros , and christine lagarde tweeting out from the imf. from new york city with the first word news, here is uma pemmaraju. states, one of the most highly anticipated government reports to come out in years, robert mueller's report on russian campaign meddling. william barr's staff has been ,locking out grand jury classified information, and other delicate details. two of the parents indicted in the college admissions scam have been the first to challenge the government's case. they are arguing that prosecutors are overreaching. they are among 19 parents indicted.

bypassedparents have indictment by greeting -- agreeing to plead guilty. 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. i am uma pemmaraju. this is bloomberg. much.hank you very let's go to u.s. politics, congressional democrats up their investigation into president trump's finances and dealings with the russians. issuingittees subpoenas, deutsche bank the focus but other institutions as well. marty schenker is joining us now on set. what are they after? marty: details of the relationship between donald trump and his businesses and deutsche bank, and other banks for that matter. the other banks, there have not been any real revelations. guy: where does this go next? two committees issued subpoenas.

they are trying to find out financial details and trying to connect him to the russians. is u.s. financial system under investigation, how they used it to their advantage. marty: it is the duty of financial oversights to make sure they are not being misused purposes for political . there is a valid reason for them to ask for these, however yesterday eric trump tweeted a hostile comment. tom: he was quite visceral, saying it was in abuse of power. does young trump have a case? marty: it probably is not true that it is in abuse of power. congress has oversight over financial institutions and how

they are being regulated, so in that context, they do have a valid case for seeking those records. go into acan't do is fishing expectation -- expedition and open up of can of worms but does not relate to the election. mr. do we have any idea how mueller feels about the ballet over the mueller report? is he happy it will be redirected and released on thursday, or is he miserable? marty: that is the million-dollar question. no one has heard from mueller since he turned over the report. we will get a chance to hear from him. he will be subpoenaed by congress and he will appear. the question is -- how much can he really say? he reports to the attorney general who can instruct him to limit his comments to various areas and to say it is off

limits on others. i think we will get a chance to hear from mueller himself. guy: we will get more detail coming through. this is going to be hugely important in newsrooms around the country and around the world . my question is, will it be important on kitchen tables around america? will this have an impact on the 2020 election? marty: you constantly hear from politicians that when you get back home, people are not asking about russian collusion or donald trump, how he may use the presidency to his advantage. they are talking about red and butter issues like health care, the cost of education, wage growth. i do not think it will move the needle tremendously. a lot of people think at this moment in time, donald trump is the front runner to be reelected in 2020. tom: thank you so much.

we are going to come back on american economics, matthew luzzetti joins us from deutsche bank. annmarie hordern will join us. please stay with us. , and paris,ew york this is bloomberg. ♪

♪ this is bloomberg "surveillance." venture juliong has bought out at&t stake -- hulu has bought out at&t's stake. pairaves hulu with just a of owners, disney and comcast,

disney gaining majority control when it acquired fox's entertainment assets. bob iger may be interested in acquiring the rest. a takeover offer in the insulation business in europe. -- 790 million. shares of both countries -- companies are rising. has reassuredr investors about the riskiest type of bank debt. they are agreeing to buy back 1.5 billion of its perpetual contingent convertible notes, known as cocos. the expectation was that they would be brought back by the issuer at the first opportunity. santander keeping investors guessing for weeks. that is the bloomberg business flash. tom: we are awaiting bank of

america earnings, always nuanced. it will be interesting to see where they are in continuum from j.p. morgan and the perceived performance of wells fargo as well. matthew luzzetti of deutsche bank with us, he went calculus a while ago on the first derivative. we can do that away from the american market. this is the five-year, five-year forward in europe. view five out and the years forward from there, this is a long chart which is convexity extraordinaire. matthew: what you are seeing from central banks in europe and more so with the fed is a concern about inflation expectations becoming anchored at too low levels. we had charlie evans stating the fed needs to make sure inflation

expectations come anchored at 2%. the fed is undergoing a policy review with a conference in june and the results next year where they may think about changing from a 2% inflation target, with the key story getting inflation anchored at 2%. .om: there is no trying the system gets it to 2%, not men in suits and women engine now. how do weget to 2% overshoot market efforts to do that? matthew: evans yesterday said the old adage that inflation is a monetary phenomenon, we are facing the question that there are other factors besides central banks and monetary policy stimulus that are keeping inflation low. in the u.s., health care inflation has been low, medicare and medicaid.

we had a big plunge in apparel prices so there are societal factors. can you get inflation expectations higher? central banks are facing issues doing so. guy: let me hold the conversation. j&j first-quarter earnings have hit the tape. in,t quarter eps coming beating on that metric. in terms of the guidance going forward from an eps point of view, the midpoint has been maintained. that is the guidance that is coming out of j&j. let me get you a market reaction to that. the stock looks like it is just picking up a little bit on the overnight come up around six times of 1%.

that's talk about the ecb -- 6/10 of 1%. let's talk about the ecb. that going to happen and if it doesn't, what is left in the toolbox? matthew: we do think you will see a rebound and you are seeing early evidence of that. we get the next data point on thursday with the pmi's, but outside of the german manufacturing sector, we are seeing evidence of bottoming out and an invention oh rebound, china being an important story globally to lift manufacturing. the data has been coming in ahead of expectations already, so you will see a bottoming out in a rebound. on the ecb, the most important news recently is opening up to further depot rate cuts. there was an assumption that qed

was the next port -- qed was the next port -- qe was the next port of call. tom: banc of america out with earnings, pretty much sender -- bank of america out with earnings, pretty much sender tendency. -- center tendency. bank of america a domestic effort versus the international flow of citigroup and j.p. morgan. guy: i want to see whether or not the net interest story will improve. might get a flat curve in america. that is something that will be more difficult. q1 equity trading revenue, that is just shy of expectations. investment banking revenue looks to be just shy as well. 1.26, on average equity, return on average assets 1.26%

as well. tom: guy johnson and the statement of mr. moynahan, we continue to share success, we will raise the minimum pay and our company to $20 over the next 24 months. that man a real splash within the psyche of an america, moynahan up to $20 over the next two years. i am seeing a lot of single digit this, pretax income at 4%. declined andxpense the efficiency ratio improved, but not as efficient as some other banks, a little lightness to the tape. -- in consumer banking, deposits up 3%.

tells mee digit nature the cfo will weigh in and say, we need expense control. tradingave seen the fic revenue coming through ahead of expectations. the stock is bouncing back a touch. they are down slightly. the big thing to my mind is a few weeks back we started to see the u.s. banks coming out of the warning that this quarter would be tough. the last few weeks have been interesting, the bond story bouncing around a little bit. guidance for these institutions is so hard if you are an analyst, to get right. things change in even the last few days before things come out, so it is hard to get a sense on what is going on, and the numbers are bouncing back. the stock did say negative and now it says up seven tents of

1%. -- 7/10 of 1%. how is bank of america different from citigroup and j.p. morgan? are they more a domestic, general bank? >> they are heavily focused on the consumer and given a lot of the weakness at the end of last year about investment banking at bank of america, the consumer story is important. if you look at our top live blog , loma conditions are climbing. we will want to see them improve those investment banking results even though they are focused on the consumer because more than 40% of their business is tied to the consumer. the recordand off conversation a while ago with

mr. moynahan in davos, and we were talking about digital banking, single digit and us in your world, and there is a way to move self up -- money by cell times since it launched in 2016. digital banking is their future, isn't it? sonali: there is an everyone else's. have j.p. morgan on the other hand opening physical branches across america. the question is at the end of the day, who will win? there is a lot of competition. analystseasy is it for to protect what is going on in these institutions? it was only a few weeks the banks were out and telling us this will be a tough quarter. they turned it around. how tough is it to predict what is going on?

volatility remains low but it seems as if things could turn on a dime. is, i: also, the reality have not seen bank of america's numbers on debt underwriting but it has been mixed across the board, and people are not borrowing. if loans are not growing at a healthy pace, there will be concerns about how much transactional activity will continue among corporate's and consumers. tom: joining us now, we are thrilled to bring you gerard cassidy of rbc capital markets. he has been following the banking valet for years and particularly, this too big to fail bank. how do the regional banks compete with the technology , the the tech -- lift

technology investment already seeing in these big banks? gerard: what you are going to see is of course, the giant universal banks like bank of america, j.p. morgan chase, wells fargo, are spending multiple billions of dollars on technology. as a percentage of assets, regional banks are spending equivalent amounts of money, though nominally not as much. think of personnel expenses. spends a lotca more in personnel. community banks, that is where the problem is. they cannot keep up. tom: they simply cannot keep up. i am going to say it with citigroup, i was thunderstruck at the share retirement at these banks. engineering oral

is that the right use of cash, to give it back to shareholders? gerard: we have been looking at banks and number of years and this is the first time in our careers that we have banks in the united states such as bank of america or citigroup, that are not permitted to by other depositories because they are too big. we have gone from 14,000 banks to 1500. this is -- 5700. this is the point and the cycle when you start buying smaller banks. if they can avoid a crisis during the next downturn, meeting cutting dividends and reducing stock value, these banks will get re-rated. guy: can i ask about the shape of the curve now? incredibly flat, the market basically pricing out fed rate hikes for a long time.

is that reflected in share prices? gerard: some of it is. we have to remember the fed will not stand still in definitely. 1995, chairman greenspan was raising rates and there was concerns of a recession. the real economy was growing at about 2.5%. ofraised rates in february 1995 and started to cut rates in july. he steepened the curve by doing it. we expect powell will follow that game plan. guy: let me get a sense of what is going on, the presentation is just being unveiled. cost-cutting seems to be a major factor. to these big banks continue grow by cost-cutting? can you cut your way to profitability? question,at is a good

and that was a question at goldman sachs and citigroup. everyone is pitching digital. cost-cutting for bank of america is something they have promised several quarters, so whether they can grow while keeping expenses down, people in techno we will want to keep x -- tech know we will want to keep expenses down. tom: switching over from banks to the financial system in crisis, and jim and bernanke has been definitive -- benjamin bernanke has been definitive. matthew luzzetti is with us from deutsche bank. say, it appears that benjamin bernanke was successful in clearing the markets and getting to a better american banking system. matthew: that is right.

from a resilience perspective, banks can absorb more shocks than previously. from the fed's perspective, that is a reason to think that this recovery can continue. i think of interest is the fed now has the macro prudential tools as well, the cyclical capital buffer. voted to raiserd that and others want to raise that as well. that will be an interesting question over the next year -- if our economy is continuing to grow over to percent and inflation is not coming through but equities are higher, is there risk where the fed wants to use these macro economic tools to raise the cyclical capital buffer? guy: within the numbers that we are starting to see the consumer wobbling. employment numbers in the u.s. -- the economy looks robust, but some elements within the credit

stories delivered by the banks because a little bit of concern. matthew: i think you get a bed of a sense of that, and you can see it in the macro data -- bit of a sense of that, and you can see it in the macro data. from a historic perspective, these are still low. if you look at financial obligation ratios for household, they are several -- at several decade lows. income growth, importantly, has remained strong, leading to a savings rate that is high. we see a robust outlook for the consumer despite these things having bottomed out. tom: matthew luzzetti with us. a correction from bloomberg. first quartera adjusted earnings per share, $.71 versus the estimate of

$.66, the stock fractionally below where it has been. we will see how that trades with a conference call. coming up later today, this is really the beginning of a non-bank earnings season. , their chiefnson financial officer on the extraordinary vision forward for american health care, a good time to speak. annmarie hordern is at notre dame in paris and will have reports throughout the day as the french wake up to the morning after a horrific fire. please stay with us through the day. this is bloomberg. ♪ xfinity watchathon week has sadly come to an end.

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thanks! just say "watchathon" into your x1 voice remote to upgrade and keep getting more of what you love. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ guy: --david: bank of america

post record profit on strength of consumer banking, and goldman disappoints. and grosslity low concerns hi, ken earnings provide some leadership? -- growth concerns high, ken earnings provide some leadership can earningsngs -- provide some leadership? >> what a day of earnings we have ahead of us. we did get the earnings from johnson & johnson. raise theiry full-year adjusted earnings-per-share estimates. in general, they are raising their view. you are seeing the shares pop by about 8%. the actual estimate for earnings-per-share, $2.10, came in higher than the estimate. revenue also