nejra: good morning from bloomberg's european headquarters in the city of london. this is bloomberg daybreak: europe. these are today's top stories. hold the applause. some markets are underwhelmed despite china's gdp holding up in the first quarter. signs of tightening cash supply, another concern. netflix shares take a hit as price concerns offset record subscriber numbers. this after bank of america's strong profit is canceled out by slowing interest growth. apple and qualcomm and a bitter two-year legal battle over billions of dollars of licensing fees. shares jumped the most in 20 years. ♪

manus: a little bit of breaking news for you. these are for the first quarter numbers. 41.6% on the margins. the market penciled in 40.5%. was to weigh on the numbers. when it comes to the net sales, let me take you to the guidance for the net sales going forward. we will check in on the second quarter. 2.5 to 2.6. the market penciled in 2.5 gross margins going forward. that's a little bit of lightening up in the margins going into the second quarter. dissipation going into the second quarter. in terms of actual sales for this quarter, 2.23.

that's a beat on the estimate of 2.11. i'm looking here in terms of extreme ultralight lithography systems. when we get that number, we will bring it to you. they raised their guidance revenue at the end of last year, didn't they? a nice beat on q1. guidance to q2. right at the moment, seems to be a little bit above consensus. how are you doing? nejra: good morning. doing great. let's talk about ross. we have some numbers coming through. roche is raising its outlook for the full year. that's what it said so far. the outlook raised to mid single-digit sales growth. it is raising that 2019 sales growth guidance to mid single-digit percentages. that has just gone read on the bloomberg. let's take you through some of the other numbers.

going through some of the sales numbers, the first quarter has sales at 1.6 7 billion swiss francs. beating the estimate of 1.58. first-quarter sales overall come in at 14.8 billion swiss francs. a beat on the estimate of 14.2 4 billion. a beat on the first-quarter sales. raising its outlook and looking through in terms of the dividend. also it sees 2019 core eps growing broadly in line with sales. numbers a strong set of . raising the outlook as well. we speak to the ceo at 7:30 a.m. london time. manus: a little bit more clarity coming in on dam. it has had a very turbulent time. q1 investment management net output, 4 billion swiss francs. gamma reiterate the view that

the first half will be materially below that of 2018. of course, those outflows accelerated in the second half, parting ways with the ceo after all of the hubris around the front manager tim hague where -- hayward. that was a big issue for gam. they lost a third of their important assets. they are making good progress on liquidating their asset market. let's talk about these markets. you got u.s. futures. blackrock stormed it yesterday. however the s&p looking this morning? gam with --? the shares did drop at one point in the session. futures flat. we've had two days of a flat close for the s&p 500. the focus on the nasdaq which closed within 1/10 of 1% of a record high. apple and qualcomm dropping a litigation helped somewhat. qualcomm shares rising the most

since 1999. netflix not doing too well. nasdaq futures pointing higher. that's where the focus is. the 10 year yield, we touched to 60 earlier. it has erased all the effect from that dovish tilt in the march 20 fomc. that's something to keep in mind of verizon that we have seen in yields recently. the aussie dollar powering ahead in the g10 effects. what you do with monster data coming -- data, do you believe it? this is a market that is up 35% this year. the question you need to ask yourself, do you want to take more risk on board? you believe the industrial production numbers rising the fastest in four years? 2014 styleinisces of bubble? let me show you a couple of other asset classes. wti and the dollar.

the china data has bolstered risk sentiment around the world this morning. industrial production up. the beauty i is hitting a five-month hike. inventories drop. that's one of the stories that is driving the oil market. the dollar is slipping a little bit. very much on the china data versus those yields that you mentioned. levels that we haven't seen since the fomc. the dollar managed to rally on poor new. we will talk more about the pricing in just a moment with our guest. let's go through the asian session in hong kong. you mention about that data surprise out of china. that is listing most markets here in asia. it's a mixed picture. stocks are dragging the regional benchmark slower here. is the rebound strong enough? the pboc may refrain from additional stimulus. that's the question the market is asking once again.

is there a fundamental justification for stocks to head lower? still slightly elevated by one third of 1% here today. the cosby flat here. let's show you some of the market reaction to that data in particular. bonding the chinese market, specifically when it comes to chinese 10 year yields. that is picking up another two basis points. at 342,eeing your yield back to the november high for chinese tenure government paper. bank of america merrill lynch, upgrading their revisions for forecast rmb. they are seeing 6.6 now that we could hit for dollar china. , hovering dollar around $.72 at the moment. .et into the aussie ore, i want to focus on that.

bolle bringing news here. they could be resuming operations as swiftly as 72 hours. we see iron ore prices lower. the miners tumbling in australia today. manus: we will touch on those numbers with our guest. the very latest on the asian session. world'slowdown in the second-largest economy abates, let's take a look at the data we have been referencing in china. consumer inflation jumped in march. the biggest increase in more than a year. while the trade talks rumble on, exports jump 14.2% in march from a year earlier. falling imports. the trade surplus balloon from the previous month. strong credit numbers with aggregate financing exceeding alexa and its. a trio of strong data points today. much higher than forecast. retail sales, it .7%. 6.4% was the number that got stamped on the

bloomberg. joining us now to put it in context, our guest. chief portfolio manager of ark capital management in dubai. and a senior economist at anz. let me ticket to the economist first of all. good morning to you. you upgrade your growth target this morning on the back of this data. how much believed you put in the data that's in front of us? it's quite stupendous. >> right. ,n terms of the data today there are three takeaways from our side. the first is the 6.2% gdp growth for q1. it's in line with our expectations. we expect the growth to pick up from q2 onward. the second, if you look at the stronger factors -- sector rebounded manufacturing sectors, there's can -- continuous improvement. together with the fast expansion

in credit. others promised to upgrade our 2019 forecast to 6.4% from 6.3% previously. also in terms of policy implications, has given better than expected recovery momentum. pboc has turned more cautious when executing monetary policy right now. any the possibility of targeted measures has diminished in the near term. nejra: that's interesting in terms of policy implications going forward. we've seen the china overnight repo rate rising to the highest since april 2015. you can see it clearly on the chart. what implication does that have for stimulus going forward? [inaudible] think there is a squeeze for the pboc.

to step back from it and look at , we may have to see a few more points before we actually think that china has bottomed out. we have seen green shoots from china. i'm still pessimistic given the trade negotiations ongoing with the u.s.. currency,terms of the this is where we want to get to grips with it. we have stability in the yuan. the debate is whether we get more policy levers from the pboc. stability in the one that we have seen, do you think that endorse -- endures? we are breaking higher on cmy. does this continue or do we stabilize from here? what we are negotiating honestly, there's official action on both sides. obviously there's pressure to

actually see dollar china head lower. in the grand scheme of things, you have to look at chinese currency at this point in time. the current-account has been dropping consistently over the past three quarters. chinesease job in should see china had higher. in absence of external capital coming in to china as we saw a drop over the past few quarters, dollar china has a better path to the upside than the downside. you feel the pressure coming from the west. it will keep china lower. let's bring you back in in terms of the stimulus to come. your latest note this morning said that the pboc appears to be more cautious about further easing. bloomberg economics has been writing about the fact that it -- a turnaround in the private

sector is needed to drive self-sustaining growth. what more can we expect in order to drive the private sector? >> yes. one thing to clarify, although we think that automakers have turned more cautious in the near that it doesn't mean different paths are not needed for the rest of this year. measuresthink that will still be needed in the future for the sake of adjusting local liquidity whenever there's any. policy actions might be less likely than before. what kind of measures that we expect. in addition to monetary policy like the measures i mentioned, from the fifth cosine, the tax cuts we had ready earlier this took effectx cuts

on the first of april. in upcoming months, we will see the impact on the manufacturing sector. also in terms of investment and funding of support has already been intensively undergoing. all these kinds of measures will be seeping through into the economy. also we might expect some spillover affect into the private sectors. says, we arety going to see this momentum continue. goldman had a note out this morning. if you want to bet on a moderately flat-ish you want and a recovery, let's look at the board. you have aussie kiwi where you want to be relatively long. they say you want to play long card, all based around the strengthening of the chinese economy and the flattening out of the bandwidth maintaining on the yuan. would you agree with that?

you had aussie and kiwi battling against their possibility of rate hikes. >> you basically have new zealand coming with weaker numbers. that's probably the most contentious trade out there right now. aussie kiwi. everyone has that trade on. it makes sense in terms of the growth story and weaker new zealand economy. it has a bit more upside. it seems to be very contested. going back to your point about buying the commodity, i'm very pessimistic. we have a downgrading forecast again. cautiousto be very about making your stories at this point of time. we are happy whenever china has a few good numbers out there. overall, the rest of the world is not doing well. europe isn't doing well.

with the upcoming elections, we will struggle. the u.s. is still slowing down somewhat. not at the same pace. china is doing well. good numbers coming in. it's encouraging. we will still need to see a few more prince on the board. nejra: are there any downside risks tear outlook that china's growth is bottoming out? >> yes. i think basically there are two uncertainties. one from external, one from internal. externally, the putback of u.s. trade talks in the near term. the market is expecting some sort of deal to be done. we can't rule out any possibility of a meeting to longer-term assets between the two countries. we think it will pose downside risks to china's external sector. putback's, the reform

are how chinese policymakers would like to take out the reform plans after adjusting all of the downside risk in the economy. that's a big question in my mind. there are two sensitivities. nejra: great to have you with us. thank you so much for joining us. now today, we are asking the question on mliv related to the china data. will love this set of china data the most today? join the debate. now with l'oreal's asian sales overtake europe's for the first time last quarter. we hear from the ceo. don't miss that interview, first on bloomberg television. that's 9:30 a.m. london time. we speak to the ceo at

7:30 a.m. london time. this is bloomberg.

nejra: this is bloomberg daybreak: europe. let's get your business flash now with my colleague debra mao in hong kong. itsntel is giving up on plan to break into the mobile market. apple is it's one significant customer. the iphone maker announced it will return to using qualcomm chips. intel will now exit the smartphone business. the company's ceo saying he sees

no clear path to profitability. intel will assess whether mouton's -- modems for pcs have a future. outflows slowed in the first quarter. the company is beginning to stabilize after a scandal rocked investor confidence. they pulled $2.5 billion from the fund in the first three-year -- three months of the year. that's lower than what they lost in the previous quarter. reported $140 billion. the chief financial officer of emirates nbd is leaving after nine years as a lender. in has already started the process of finding a successor. he is staying for now to secure an orderly handover. this comes as dubai's biggest banks hold a 50% rise in first-quarter profit. that your bloomberg business flash. nejra: thank you so much. it's a tough crowd out there as earning season gets into full swing.

bank of america with another financial heavyweight to beat the street. the market was once again underwhelmed. bank of america cfo said that without rate hikes with the other headwinds in the economy, net interest income should rise 3%. down from 6% last year. shares dipped before closing the session a little bit higher. improvedntiment hasn't for netflix. it disappointed, worrying investors that their price hikes are depressing the u.s. growth story. reassuring comments around growing competition from the ceo helped stabilize group shares after the initial slump after hours. nejra: the wider earning season gets into full flow today. the chief portfolio manager at our capital management dubai is still with us.

big run-upn a inequities in the first quarter and a little bit since as well. actually we've seen commodities more broadly underperform, thancularly returns rather stock prices. does that tell us something about the fact that the equity rally has gone too far too fast based on global economic fundamentals? >> there's definitely reassessment right now of where to put your actual investments. whether it's equities. of theknow, it's one most unloved rallies in recent history. it's because of the massive selloff. in relative terms when we look at this rally over the past three months, we are back where we were in q3, q4 of last year. where we madehing massively new highs. it's just a recovery from where we were. , thenk that growth story

slowdown in growth is still in the back minds of most asset managers. there will be rallies inequities to take profit. that's not to say that we have more upside. rates at historical low level still. they're still flowing into equities. i don't think it will be the same print -- pace that it was previously. manus: the one line that came through, the amount of work that is still sitting on the side. do you get a sense from clients that they are holding back in assets? well, the seat moves. a sense of the rally was missed by the vast majority of investors. buying at the highest right now for the last six months is pretty compelling for most investors. having said that, i think there's a lot more investors on the sidelines waiting for a correction.

basically feeding these rallies onwards. we had a nice recovery from december lows. i think we are still looking at the growth story from the imf every single time. every single quarter we had a revision lower in growth. that is weighing on most demand. nejra: have you learned anything significant from the earnings season so far that you are expressing through the fx market? honestlyket right now is in the sidelines. been hell. most investors, there isn't a massive impetus to move from the u.s. to europe to asia. primarily because they are so many balls in the are. brexit, china, growth slowdown. however, once we have some kind of resolution to the chinese affair, there will be a flow of funds moving. manus: we will talk about the

repression of volatility very quickly. our guest is with us. this is bloomberg. ♪

nejra: let's take a look at asian equities. the asia pacific index up .2%. a little muted reaction in some of the equity markets in terms of the reaction to this china data where we've certainly seen a strong reaction in the aussie, manus, going above its 200-day moving average. i suppose the market still working out when good news is good news when you look at the stimulus base thond day tafment manus: that's what -- it's a massive set of kata, that's what they've told us. they say the longest rate of all seems to be on aussie kiwi. if you narrow the debate what

happens next at the reserve bank of australia and new zealand. a little pressure on the kiwi this morning. the worst seems to be behind us, according to "the economist." nejra: we'll talk to david bloom of hsbc later. they're bearish on that currency. this is a big focus at the miami, has been of course in the u.s. section,,son coming through, first quarter net sales t $48 ppt 9 billion. $48.37 billion was an estimate. we have a little bit of a beat there the first quarter adjusted growth margin comes in at 38.5%. first quarter adjusted operating profit $5.1 billion swedish croner. the equipment market estimated to increase 3%. we do have a little bit of beat on the first quarter in terms of what analysts were expecting.

first quarter results were expected to be strong given this year's early 5g rollout and expecting,son to have reaped the benefits on cost --,son to have reaped the benefits -- ericsson to have reaped the benefits. manus: france and spain have signed a memorandum of understanding. we get a little more detail on this through the morning. they signed a memorandum of understanding to combine cassis with s3 group. credit agricole will hold. this is another step on the road of joint ventures, consolidation, trying to do teals that maybe bring value. as it breaks a little bit more

we'll dig deeper. let's check in on the marks now, danny is in london. good to see you. we've had monster data from china. yet there's a flip side. the repoe rate jumps to what 3%? is that tightness in the market or flagging a red flag to the markets? what's the opinion so far? >> on the surface it seems like a red flag. it does seem alarming. it may be more of a function of the type of buyers jumping into eequitiesful you have this base that uses borrowing and leverage. might be affecting the repoe rate more than just the liquidity pullback which manages that concern you were talking about. looking at my terminal here, we look at the one-day repoe rate. we get a huge jump in the blue. the china margin balance, buyers getting into chinese equities, using margin accounts, has also equally skyrocketed now at its highest since june that might be more of a factor.

mark from our enlive team says the repoe rate not the cleanest measure of the pboc's intention so we should take that 3% overnight borrowing level with a grain of salt. if that g.d.p. figure is sign they're getting better that should be good for risk appetite as a whole because we can see, i think this is really fascinating dimensions of china and slowdown in it.ies which is at the end of last year that drop in equities in large part had to do with fears over a slowdown in china. so if this g.d.p. figure can be taken forward, its slowdown fears have moved away, then risk assets may go higher from here even though today was mixed so far. manus, nejra. manus: great work there. more breaking news to bring you, this time on danum. won't sing the tune.

but it's down to water, are you ying everyian water, the company confirms growth acceleration in the second half, breaking down numbers. $6.14 billion above the market estimate. they are confirming guidance, all to do with the water rising. the baby food failed in china, there's been a slowdown in the baby food sales in china. that was flagged after growth had exceeded 50% for the market just last year. we had a baby boom in china. diapers, baby food what more do you want? a little lager, a little everyian. -- yogurt, a little everyian. manus: i have a favorite brand of water, i'm not going to fell

you, but i do have one. does that make me high maintenance at all? manus: you throwing out a question there? a little more on this this credit there nejra: i do. o give you more information, merge er and agricole to that. let's go to debra. >> emmanuel mack ron has urged haste in rebuilding notre dame, wanting it done in five years and promises it will be more beautiful than before. french political parties suspended their political campaigns, giving the president some respite from the volatile they that hit his government. fletflicks is predicting just five million new customers in the current quarter, making it

the worst three-mt. stretch in two years. is could in part be due to subscription costs going up in key marks like the u.s. executives dismissed it as a blip saying that netflix son course for its biggest year ever. the white house is talking to candidates to replace donald trump's pick for the federal reserve. larry cud he said herman cain should decide for himself if he wishes to withdraw. this fol follows some republican law mashes signaling his nomination wouldn't pass the senate. global news, 24 hours a day, on , r and at ticktock on twitter this is bloomberg. manus? manus: thank you very much for the roundup. ow this is what we've got. the white house is interviewing candidates to replace herman cain and stephen moore as the president's top picks for the

fed. larry kudlow says it's up to c ambings n himself if he wants to be part of the process. it comes as republican support for cain and moor has -- moore as faded in recent days. i take you to the recommendation letter and it was this one line, i think we have it as a graphic. we the undersigned support steve moore's nomination to the brd of governors of the federal reserve. they couldn't even muster, we strongly support. this is the level of disparaging tone which is being set for these recommendations. where are we on the complexion of the fed? >> i think the fed is having a problem especially with the overly boisterous comments from the president -- from president trump especially in regards to here the fed should act.

herman -- chairman powell is not an economist. the condition of fed is extremely intricate. in terms of putting in cain as a member, it's a bit of a political play rather than ta macro play. there's resistance to him coming in at this point in time. it if -- if it wasn't for trump pushing for that story i think it wouldn't be in discussion at this point in time. nejra: i talked at the top of the show about the fact that the 10-year yield has reversed all the downward moves we had since the march 20 echo m.c. meeting. in terms of where we go next, rate cut, rate hike, are you starting to feel, perhaps, you can take us back to what we felt in the march 20 decision, that a rate cut is looking less likely given the recent data we've had? >> the discussion of rate cut cents ongoing in the market is more along the thrivense guy on the sidelines trying to push through equity market rally.

in absence of rate cut discussions, equity marks would not be rallying as they are now. for me it's clear that we are actually in the neutral zone for the fed. this is what they wanted to achieve three or four year ago. this is where we are. every time we have a hiccup in equity markets, down 1% or 2% off whole crowd of individuals -- ng on saying rate cuts that isn't the game plan for the fed. the fed has a mandate and the past two years have been about normalization. now they're normalized. new they can see where it takes us. will it be pro growth or is it going to be a situation where they look at pullle -- pulling back their accommodation? i don't think they'll do anything in the next four or five months or possibly even eight months especially going into election season.

it's clear they're happy to let inflation run over the target. soing we'll need to see proof of inflation, 2% or above, to move at this point in time. manus: if you believe they are on an extended pause and though equity -- frightened equity traders, they're not like fx traders. let's look at the dollar. what i find intring is this. the cost of protecting yourself on the dollar is rising. highest since 2018. these are therieses. -- risks. the question to you is this. the trend is that if you have a softening in greth it's not about what the fed does. it's what the fed does -- what the presuppings of the fed does relative to other central banks that could cause the dollar to roll over. that's what one of my guests said this morning. that's what the riskies are suggesting, you should buy a little protection. they're getting -- potentially rising in price. would you be a buyer of that? >> i think the dollar has been in range for the past six

months. primarily post dollar heading 6 ppt 97. we've had dollar relatively stable. now it's hard for me to imagine the dollars against the euro, given where the ecb is. bank of england is probably on hold until we have a budgetary resolution. bank of canada is on hold until we have a situation where the growth is clearer. we're going to a more bearish world. i don't see a world where the fed is panicking about cutting rates or moving back, having said that, the fed still is one cycle ahead of everybody else it seems like. with the exception of northwest bank which is catching up to them i think the fed is way ahead. they have some space. that's causing a problem for the u.s. with the dollar strengthening, it causes problems from an export perspective.

nejra: earlier you were pointing to the death of volatility in the fx market. you've got more and more people coming out, calling for the fact that it's coming, they can't say when but it's coming. how would you prepare far spike? >> i've heard this for a while. we've gone through periods where it has been compressed quite some time given that we've had some events playing out. i think what you want to do rimarily is own risk off primarily in the mmbing classes and volume primarily. i think yen, aussie yen, if you're looking if straddles or strangles on that space on the one month or two-month space.

even sterling right now is cheaper than it was two weeks ago. two weeks ago, one month, strerling was 14 or 16. 6.25, six so ng the volatility over the next month is pretty cheap. i don't think that if we -- if you lose much by henling those bets. if we see an equity market selloff in the near future. >> interesting detail. thank you so much. chief portfolio manager at art capital management in dubai, great to have you with us. it's a tough period for kenya. the prolonged dry spell left more than a million people in need of aid. the situation comes amid concern over the nation's currency. it from . reclassified floating to other managed arrangement. this is due to its limited

movement due to central bank ntervention. our reporter spoke with an analyst who says he disagrees. >> we do not agree with the i.m.f.'s assessment. we have been explicit with that. we believe that there were mistakes in their calculation. the shilling is valued fairly, we do not prop it up. as a matter of fact, our exchange rate policy is simple. we have a flexible exchange rate. we do not target a rate or direction. but the only thing we do is to reduce roll volatility. so that is something that is standard in terms of intervening to reduce volatility. the point that the fx market has been very balanced as a matter of fact, the current account over the last four years in 2014

it was around 10.4%. that has come down last year. we had a current account deficit of 4.7%. we expect this year, 2019, a current account deficit of about 4.9%. which is where we expect it to be over the medium term. you can see that has led to significant balance in the fx market which is why the shilling has remained quite stable. even though ourselves we don't have a view about where the hilling should be. manus: that was the kenyan bank president speaking with bonnie quinn from new york. we have the conversation with the c.e.o. at 8:30 a.m. london time. this is bloomberg. ♪

nejra: this is bloomberg "daybreak europe." >> let's get you a bloomberg business watch, debra is with us in hong kong. >> intel giving up on its failed quest to break into the mobile market. apple is its one significant customer but the iphone maker announced it will return to using qualcomm chips. the company's c.e.o. says he sees no clear path to profitability and intel will assess whether modems for p.c. have a future. it's beginning to stabilize

after a scan call rocked confidence. they pulled about $2 billion from the swiss firm's funds in the first third of the year, more than the $ billion they lost in the previous quarter. they have assets under management of just under $140 billion. he chief financial operator of emirates d.b. is leaving. he's staying for now to ensure an orderly handover. this as they post a 15% rise in first quarter profits. that's your business class. nejra: let's focus on commodities. brazil will restart operations at a major mine in the next 24 hours. issues retreated in singapore on the prospect of the swift restart of the mine. the market for ore has been

buffetted by a series of hits to supply helping lift prices to he highest in years. olivia is ginning us of the black mining trust. what do we need to see prices to sustain the level we've had recently? >> we've had a fantastic run in the iron ore price. we're probably in the eye of the storm right now. we've had basically about 90 million tons of impacted production this year. more than 5% of the market. to see the iron ore move further than here either we need to see more supply exit the market which doesn't appear to be the case following news out of parasil overnight. but i think it's when we start to see steel in china begin to ramp up post chinese new year. one thing that's interesting is the chinese steel mills are holding quite low levels of iron ore because they failed to restock when the price spiked at

the end of january and they're being forced to retest the market. manus: a very good day to you, it's manus in dubai. we have a bloomberg opinion piece this commodity rally overall has legs. banks look at cement prices as being a precurseor to other commodities. how emboldened should we be with the data this morning? or is there a hint of skepticism n your analysis? >> if we think about chinese metal demand it's about credit availability in china. we've had very strong credit impulse in china in q is. the q 1 number is 40% higher than it was last year. this morning we've had a very strong g.d.p. print, 6.4% ahead of expectations. i think what we're seeing now is that the credit availability in china has limited the downside metals price this is year. i think what we need to watch

closely is how the authorities respond as we move into the second half of the year. what's really encouraging to me is a lot of this credibility is going into the old economy. so we're seeing good tchand coming through from infrastructure. we're seeing also a pickup in the property market in china. both of these are very important for metals demand. we're encouraged overall. nejra: we just showed a chart showing the pickup in financing. i showed a chart earlier as well that showed that commodities in terms of returns, bloomberg commodity index, have lagged how far equities have risen this year. we see something like a 7% rise in bloomberg commodity index this year. which metals do you think will jut perform more going forward ased on the outlook for china? >> part of it is going to be people's view in terms of global economic growth. the metal that's most sensitive to that is going to be copper. we've had a strong rally today.

part of that is supply driven. from here, the upside is likely to be in the base metals. copper, like iron ore is a commodity that the supply side is tight. we're seeing destructions much higher than normal. we've got very little new projects hitting the market following this year. and all of the early indicators on demand are trending positive. that's how we're most positive. manus: the other point you make, olivia, i was looking at some of the dividend yields on the likes of rio, this has been post real capital discipline. these are generators of cash. you'd say the balance sheets are strong from the equity side do you still favor some of those bigger names on buyback and dividends, propensity of prospect? >> i think if you look at a number of big companies in the sector, they've done a fantastic job over the last few years in terms of capital allocation. the free cash flow generation at

record levels. so that's all translating into dividend returns for shareholders. i think particularly with the run we've had in iron ore this year and the margins the companies are creating, they're et set up again for 2019 to deliver really stellar result on dividends. manus: let's see if they continue to pay, looking at the iron ore contract this morning that's going to be where the real focus is, coming back online pushes -- puts pressure this morning. thank you for being with us this morning. ok, more news and interviews to come. we've got l'oreal asian sales overtaking europe for the first time. that's an interview that you don't want to miss, that's at :30 a.m. this morning. nejra: we show lots of chart

pick ur and viewers can those up. more china data, more markets next. this is bloomberg. ♪

manus: good morning from dubai. i am minute us. and nejra is with us. top stories. hold the applause. markets are underwhelmed despite china's g.d.p. unexpectedly holding up in the first quarter. other signs of tightening of e cash supply, is it another concern? tough crowd. netflix. slowing interest rate growth. and apple, qualcomm and a bitter two-year legal battle over billions of dollars of licensing fees, shares in the

chipmaker jumped the most in to years. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org nejra: good morning everyone, just under an hour from cash equity trading in europe. european car sales, data colorado coming through. care sales dropping in march for a seventh straight match. the stock 6 hick has been up for five straight days. it looks like we could see a pause today, maybe a touch of the up side. tse ftse futures up. you are seeing more interception. -- spfspf closing flat.

the share reaction has been disappoint,. nasdaq futures on the front foot. that is where we stanton in terms of equities futures. what wa about bonds? manus: you have to say on this yield now, the yield in the u.s. treasury bond is back to where we were. 2.895% give or take a tick. l of this angst has been undone. domestic economic data hasn't deteriorated enough to warrant a preemptive fed cut. that is our question to our guess. burns or 30 ticks. monster data from china. does that mean the worst is behind us from a global growth perspective? two questions for david. those are your bond markets. let's roll it along and get to the asian market wrap. our man is with us from hong kong.

>> we are still dealing with that data surprise coming out of china here. you mentioned how equities are a bit underwhelmed. we are slightly higher for both asian markets, malaysia the exception. they are not joining in on this global rally. australia as well. china turning a little more positive toward the end of the situation. the ott performer is the aussie dollar. we see strengthening. let's zoom out and focus more in terms of commodities as well. we have been focusing on-iron other did. orr. but with this data, aluminum, palm oil and crude is higher. -iron orr is still higher. it looks like they could be resuming that major dam -- mine soon here in the next 72 hours already. we are seeing the likes of iron ore prices changing.

we are seeing kick backs here. china's 10-year yield back to highs. >> thank you. she was talking about the china data hasn't -- has the slow wn in world second largest economy abated. consumer protection jumped to 2.3% in march. chinese exports jumped 14.2% in march from a year earlier. fall imports saw china's trade surplus balloon from the previous march. and credit measures are strong. trio of data points, factory outpit jumped more than expect the. retail sales expected 8.7%, ahead of estimates. and overall g.d.p. beat forecasts, coming in at 6.4% growth. come in is david bloom. great to have you this morning. good morning.

>> thank you. >> the aussie dollar outperforming the g-10. the tug of war is the ex-term factor with china data. we saw aussie drop yesterday. which wins out for you, the china impact or the internal factors? >> i think the internal factors. we have seen the housing market slow. g.d.p. is going through a bit of a down turn. we will talk about it later, but the dollar is still strong despite everyone getting it wrong for over a year. they are sticking with strong dollar -- we sticking with our strong dollar, and other people aren't. i think the china story, i wouldn't say that is new news. i don't think many people doubted that once we didn't go to the tariffs, once there was a negotiation on trade, we got the risk rally earlier in the year. i think people thought that china would pick up. so there is no thunder this

morning about with a stronger than expected number. obviously all prices are up which we heard. china has seen better. the tug of war there with the saucy. >> david, good morning to you. it is man us. we will take the aussie conversation further forward. good morning. almost the aussie whiffed at the start of the currency war. they are prepared to let the currency do the heavy lifting. that is not very g-20 is it is this >> it is f.c.c.ing hero g-20. what is going on with trade negotiations and talking about other countries keeping their currencies stable. that is a move away from the g-to. new zealand and australia also wanted a weaker currency. when your party is drawn, you cannot do more interest rates or do more qe. we are talking about sweden or

europe. then you need a walker currency. i think they have gone down the right track. as you know, if you want it hit, hit early and hit viciously. i think aussie and kiwi today are driving their currencies lower. and the central bank's lower currency, who is david bloom to argue with central banks of australia and new zealand? nejra: how far can the aussie potentially fronts-run any rate cuts? how low can we go? >> we think we could go down to about 66. we are about 70 or 71 at the moment. that is a reasonable little move. that could still happen. we are looking for aussie weakness. it is the right way to think about it. manus: and david, obviously we have had what some would say is the data this morning, which assures us that maybe the worst is behind us. goldman going slidely head to

head. they are saying basically better options, you are going to have the stability in the yuan, so there is relative stability in the yuan and a growth story in china. these are the trades you want to have. the aussie and new zealand dollar, they are on the board. they like cac and south african rand as being propositions on a growth story in china or a stabilization in china. do you buy that? >> no. if you think china is going to grow, buy china. this is the age old trick. australia is saying i think ron ore prices are going to be higher. if you think it is higher, buy iron ore. if you think that, give me a break. what are you smoking? nejra: tell us what you are smoking. manus: i can't really answer that. nejra: tell us what you are

smoking with the kiwi? i want to dig deeper. we have had data today, inflation slowing more than forecast. we have seen a reaction in the kiwi? have you changed your call? >> we haven't change our currency call. we changed our interest rate call last night. we were hanging there for a drive, and the labor mark et cetera. but i think the central bank is clear that the propensity to cut is greater. now that one of the first to pivot from neutral to cutting. so they are ahead of the game there, and their currency should fall commensurately. we are looking for two rate cuts, and we could get 62, which is a low. it is controversial the we get lots of e-mail and traffic where people don't agree with that. if you don't agree, i can understand that. but they are still under pressure, the domestic story. and we are talking about china stabilization. who wasn't ever talking about china stabilization.

i don't know why that is new. everyone has these forecasts of six and a half or so. that is what is going to happen, and that is all going ok in china. but that is not good enough for aussie and kiwi with have domestic issues. manus: i have a new title for you. i am going to promote you. you are telling me to buy chinese stocks and iron ore. now you are the head of commodities and equities. they had better watch out over there. you a665 is perhaps attainable in the near term. we had a big parole-over today in the medium lending mls, and they only rolled over $200 million, which suggests that there is more triple ore cuts to come. are there, and would that put let's say a lid on the yuan rally? >> well, the lid on the yuan rally is that there is very

little volatility. we saw the big move at the beginning of year. it was approaching seven, and people were getting nervous. there was talk of travis going higher. that just didn't happen. the negotiations. and then people looked for a stagization in growth. then it moved from seven so where it is today. it is all priced in. the snores we are getting today, it is not like -- as you said in your own. sting, nothing is really happening until we get stronger chinese numbers. we knew that, and we priced that in, in january and february. we had a beautiful risk rally associated with both the negotiations with the u.s. and with china's stabilization. i think that is baked in the cake, baby. manus: i don't sting. i don't sting, david bloom. i am a pussycat on this show. david bloom stays with you. the glol global head of currency strategy. debra has more to wrap up in

hong kong. debra: man us, price hawkeyes at netflix are clouding the giant's outlook. they are predicting just five million new customers in the quarter. that would make it the worst three month stretch in two years. that could be due to some subscription costs going up like the u.s. market. they said it is a blip. they said netflix is still on course for its biggest year ever. oppo and equal calm have afreed to end therapy two year legal battle. they will make a one-time payment. pple had originally sued sighing qualcomm had exerted too much power over industry. intel is giving up on its fail quest to make into the mobile market. apple is its one significant

khmer, but the i phone maker exit the 5 g ll phone business. he sees no clear path to profitability, and intel will assess whether mode ups with pc's have a future. the chief financial officer of emreduce mbd is leaving. he is staying for now to secure an orderly hand-over. this comes as dubai's biggest bank posts a 15% rise in first quarter profits. that is your bloomberg business news. nejra: european equities nay be near seven-month highs, but hedge funds aren't biting. that is according to a hedge fund survey where short europe is the voted the most crowded trade. >> what is happening here is investors positioning for low growth and low rates. so that means shorting european

equities. not only is this the second month in a row where it was voted the most crowded position, but the conviction that it was crowded even increase the. so this is something managers are looking out for. but digging into the regions in europe, the u.k., that is what managers really dislike. according to the fund manager survey, it is the least loved region. their holdings are lower by one standard deviation. if you look at the beta of edge funds, this is the h.f.r. index, you can see their exposure right now is just about at a one-year low, and it is decreasing here even as we get that extension of article 50. even though that is occurring, all of the various political outcomes and risks are keeping investors away. but barclays says that even though there is a lot of uncertainty. domestic uniformity stocks may actually outperform. it is partially a factor of how under owned they are, but it

may catch up to europe. this is the domestic stocks versus the foots foots -- the ftse 100. usually these are highly core laid, but check out what has happened of late. the domestic stocks start to outperform and catch up. according to barclays that gap will soon close because just the risk of a no-deal brexit has been taken off the table, meaning these u.k. stock are a buy. manus: great analysis there. david bloom is our death host morning. he is the global head of currency strategy at hsbc. can we circle back to brexit? you krzyzewskied your analysis to deal or no deal, to deal, or no deal or brexit. what is the percentage risk of no deal -- of no brexit at all? >> well, we have put 1/3, 1/3

and 1/3 because we are not political commentators at the end of the day. we put an equal probable. if i would say 17.23, i would go why, and i would go i don't know. let's take a range that there is a 1/3 possibility. well, it is a third probability that sterling goes back to 1.55 and case would con sell. there is the possibility that sterling going to 1.45 if there is a deal. and there is a probability that sterling goes to 1.10 if we walk away without a deal. you combine those and you get our forecast of 1.37. wur bullish on sterling. nejra: the equal ratings prisons of no deal and no brecksut. david stays with us. lots more to discuss. let's talk to gam. it says outflow slowed in the first quarter. the company has gun to

stabilize after a scandal that rocked confidence. let's speak to our forecaster. patrick, talk us through the numbers. we have had some more come through today. >> if you look at gam, this is a company which has been in crisis for the last eight months or so since they had to suspend one of their star bonds managers. at the end of the day, the company is still losing assets. they said they lost about $4 billion in the last three months. that is not good. it is better than the roughly $8 billion they lost in the fourth quarter. at the end of the day, people are looking for a performance which is slightly better than this. so still some concerns that they can't quite stem the outflows, but it is going in the right direction. manus: it is going in the right direction. patrick, thank you very much. they have been in the rough of tumble of markets. patrick with the latest on gam

in our zurich bureau. rush raised its gross forecast guidance. we speak to the correia. what is driving the upbeat message? you don't want to miss this other conversation. the c.e.o. at a pivotal moment for the business. asia eyes europe for the first time. this is bloomberg.

nejra: it's 7:21 a.m. in london. we are 30 minutes away from the european equity market open. this is black drake. i am in london. manus: and i am mannus in dubai. the white house is interviewing candidates to potentially

replace herman cane and moore as president trump's for the fed. it is up to kaine himself if he wants to stay part of this process. it comes as the republicans report. david bloom is the current head of global strategy at hsbc. the debate about who next of the fed will rumble on. one line of support from a series of people that we didn't recognize about the fed. can i ask you about the dollar? i have read a couple of opinion pieces this year. a tiny drop on the back of the data from china. but others would say the data in the united states has just not got bad enough to warrant all the discussion that we have had about a rift to come. you are still bullish on the dollar. why? >> let me explain to you. it will take a few seconds so you need to concentrate. last year i bought the dollar because i like the it. they were raising rates.

the economy was doing well. this year i am in the dollar because i hate everything else. let me explain what it is like. it is like staying in a horrible hotel. you don't like it, you don't like the management. you don't like the food. you don't like the service. you don't like the cracks in the wall. and you pack your bag to leave every day, and every day as you walk out the front door, you realize there is nowhere to go, and you walk back into the hotel and you still there. and you are stuck in a place you don't necessarily want. so when people give me criticisms about the u.s. and the economy and all sorts of things. i agree with them. but it is worse elsewhere. the dollar is the best of the bad bunch, and you get paid to stay in the hotel. it is beautiful. nejra: when you talked about the dollar before, you mentioned the juicy front end rates. at one time-year yields in the u.s. at the moment, if you look over five years, it certainly is elevated, but we have come down from those money.

>> one-year money. i am an fx guy. one year is maximum. i could change my mind in the next 10 seconds. i don't hatch duration risk. i don't have to wait for 21 coupon payments over a decade. it is liquid, it is beautiful, and you get paid to own dollars. this is the reserve currency of the world. the world's superpower is paying me most to own it. you are not going to see it often. appreciate it while it is there. manus: there you go. you don't float the dollar any harder if you tried. it is at a one orr high against the yen. i am looking for the chart so foregive me here. we can pop it up in a moment. it doesn't matter which you look at in the effect the space, the swiss has collapsed, the yen vol has collapsed. so if the dollar is your bed

partner, your bed fellow, where do you protect yourself for a spike in vol if and when, sir, it comes? swiss orien, would you be tempted by either of these currencies? >> yes, i would be much more tempted with i think swiss and the s and b intervention historically and the amount of overseas reserve i have relative to g.d.p. are out of play. it remains a strong currency. but i think its ability to appreciate aggressively is just not there. but i think the yen does. the dollar yen would come lower with the spike. the greatest carry trade in the world, euro-dollar. you put it in at 2.5 and get 3% with no vol. why do i have to go into the emerging markets that i don't understand? the euro-dollar is the greatest carry trade there is. >> that dollar drop is

stunning. the bloomberg dollar itself. it hasn't done that much. it is pretty much flat. is it going to become more sensitive to u.s. data from here? >> that is an excellent question actually. it should be, but it hasn't. we are quite puzzled. the fed has gone from being predetermined to data determined. if they are data determined, that should create volatility. we wrote a piece on it. so far it didn't become correct. it doesn't matter what the number is, the central bank has a part. now if the central bank is watching the data, it should change. we have 20,000 on the payrolls, nobody cared. we have 3,000 on payrolls. the marked said if you at 160 and that is the average. when did that start happening? nejra: we all have to become adults like you. a real pleasure to have you this morning. that is it for day break europe. the european open is up next.

mannus and i will be up tomorrow.

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org >> good morning, welcome to bloomberg market. this is the european open. i am matt miller here in berlin. today the market say hold applause. market are underwhelmed despite a solid china g.d.p. rating. futures are in the red. it starts in 30 minutes time. ♪ anus: a spoonful of sugar. roch