good morning from the city of london. i'm nejra cehic and live in zurich is manus cranny. european earnings season kicks off. these are today's top stories. wti leaps to a six-month high as saudi arabia vows to ensure adequate supplies are available. phones on hold, samsung display -- delays the launch of its folding smartphone unmade reports of failing screens. twitter kicks off earnings for tech giants. payouts plans to slash as the division underperforms. european banks report this week.

manus: welcome to the show. i am in eric and european earnings begin to get underway. i'll be speaking with the terry thursday, we sit down with sergio ermotti at ubs. the latest on oil is what has got the market beginning to twitch. crude extended gains after leaping to a six-month high yesterday. that as the u.s. said it will not extend any waivers for iranian supply beyond the may expiring.

in response, iran threatened to shut the key waterway for the middle east supply. saudi arabia says it will coordinate with other producers to ensure adequate supply and make sure the market does not get out of balance. let's speak to our managing editor for the middle east. some pretty big moves on the back of this. the threat from iran is to close the strait. but i want to focus on the saudi line a are ready to balance the market. announcement shows the move is coordinated with the u.s. because we saw in the announcement that they are confident the uae will offset the market. you will recall when we interviewed in october and he said the job was to make sure the markets have been starved of the iranian supplies that get

inoff, you know the interest saudi arabia geopolitically, there is a fierce rivalry with iran in the middle east and yemen and other parts that shows they are on board with the plan to squeeze the iranian economy. go question is, does it counter to their oil interests? so far, they are going on board and say we will make sure the markets remains applied -- remain supplied. isra: what we are hearing into re-, saudi arabia and the uae have more than enough supply to counter any loss of supply from iran. the question, whether they will act as quickly as they did last year? how critical is the threat to close the strait of vermouth? >> this is not the first time iran has threatened to close the strait of vermouth.

when it was first floated, the a rainy and president and other officials said if we are not able to export, no one else will. the market took the threat seriously last time around. this time around, less so. they say it is rhetoric, aggressive rhetoric trying to deter maybe or showed the stakes are high and iran is not going to act on that and that is the wide view. however, let's not forget that yes, a long time ago in the called -- had what we there was violence in the persian gulf, skirmishes between the navy's. -- navies. yes, it is unlikely but president trump is dealing a severe blow to the rainy in the economy -- iranian economy. let's see what they do. manus: great round up.

we had the atlantic council this morning saying this is america not providing an offramp of anything, potentially going to an escalation of angst. with the latest. we put oil in there. let's have a look at it. a rally of 3% yesterday. we are trading higher this morning. ubs said there will be a cautious response from opec. oil rising, brent rising to $78 by the second of the third quarter. you are right, it is about what saudi can do. they are the swing producer. let's look at the rest of the .est -- risk market in iron ore.rtant ratcheting higher this morning, stocks falling for the second week in a row.

steel production is at a record high and citigroup have visibility on a trade deal. canadian dollar, let me pop the scene. i am not sure what that is. -- pop this in. i'm not sure what this is. generic first. we will have to have a tricky word with someone on that. canadian dollar better bid. juliette saly? juliet: we are seeing upside in asian markets, although investors are waiting for the next impetus, looking to the u.s. earnings season, particularly with tech stocks. the aussie market is looking quite strong to start the week after the easter weekend, up .8%. and he flat on the nikkei and seeing flat movement on the csi 300 after it had the 2.3% fall yesterday.

beijing, indicating it is not willing to add further stimulus but more of a holding pattern. you have seen energy stocks do well with iron ore producers in australia today. let's look at stocks in detail. samsung is one we have been watching. the facts the foldable phone is on hold for now. , they clearlyg want to get it right before they send it to the market. a bit of weakness in samsung stocks today. in indiays doing well after falling to a 10-year low yesterday but we are hearing that all the suitors have backed out of the bidding process for the jet -- debt laden airway. looking at airlines and the hong kong session coming under pressure due to that rally you saw in crude oil. story of energy producers doing well and the airlines getting hit a little. nejra: juliette saly in singapore, thank you so much. let's get top -- back to the top

story, crude rallying this morning after the white house said it will scrap waivers allowing the purchase of iranian oil. joining us now is the head of investment strategy at everton. hope you had a good bank holiday. a range of views coming out very to saying the tighter iran oil sanction is to have a limited pricing. our place seeing upside risk to its forecast, citigroup saying oil is set to rise over $78 a barrel in the second and third quarter of this year. what is your outlook for where oil goes short-term versus long-term? and in thehort-term long-term, the oil prices probably well supported. you talked about some of the detail factors. there are other supply issues, as well. venezuelan supply to use to collapse. on balance, we would suggest the price of oil could be well supported. cyclical in the sense

that if the global economy is doing better, which we think it is, there is more demand out there and with some issues, questions about supply, the price should be well supported. manus: good to see you this morning. the consequences of this ratchet higher by 3%, reverberations, fairly muted in the equity market but look at the other inflationary -- metrics. five-year breakevens hit a one-month high yesterday, yet the market dropped. this could be one of those, that s the gene keady chart -- gtv chart showing you. this could be a market reinvigorating moment for inflation later. bill: yeah, possibly. on our end, there is a balancing act. on the one hand, oil -- rising oil prices are deflationary, the sense it takes spending away from other things and people having to spend more money on

fuel and other energy needs. we are some way off of that. oil prices going up but not a huge amount year on year. from the demand constrained point of view, it is not that. king terms of inflation, obviously oil feeds into the inflation picture but i think based on the other inflationary indicators, it is pretty muted. wagethere is a little inflation out there but possibly less than you would expect at this point in the cycle with unemployment so low across the developed world. it is a bit early to be talking about inflationary pressures building, certainly to the point we would think the market would be worried the fed and other central banks were behind the curve and there was an inflation problem. we are some ways away from that. nejra: your latest outlook, the oil price suggests the cycle has longer to run. longere a cycle that is to run, how does that factor

into your allocation? continues to be that. if you look at the profit cycle, there is that front and center this weekend next week, perhaps. the profit cycle, we are arguing whether u.s. profits are down year on year but in aggregate, profitability looks to be reasonably healthy. that is a good sign that suggests investment and m&a and hiring should be all right. oil does seem to have -- it is a good indicator. lot, itrice goes up a happen before the last few recessions in the u.s., it is a indicator things could be recessionary. that is not the case at the moment. at the moment, the cycle still has room to run. obviously, there are risks including at some point, if the oil price spikes or other commodities spike, but at the moment, i think this is quite encouraging. manus: you mentioned the commodities. citigroup had a note out this

morning saying we have more visibility on trade. i think this could be one of those things the iranian waivers could irk the chinese to the point it irks the trade discussions. let's part that for the moment. they've got a bullish no caps on commodities. they see a softer dollar. would you share that momentum for commodities 2019, they brought the bullish stroke? there is goodhink support for the commodity markets on the basis that the demand picture is quite healthy and it was noticeable during the fourth quarter that things like copper, iron ore, things like emerging-market equities as the world appeared to be falling apart and worrying about recession, a lot of those were actually rising. it was one of those things that made us more confident. that has continued in q1. the biggest single issue will be the dollar. the dollar trade weighted has been going sideways this year.

in an ideal world, you would probably want that to trend down a little bit. a weaker dollar tends to be stimulatory and is associated with rising commodity prices. if we can have that, yes, the commodity complex looks interesting. one thing we think about his relative prices. commodities relative to equities are at multi-decade lows so if nothing else, that might be interesting. nejra: when we talk commodities, it draws a line to china. another key moving markets in 24 hours have been poland bureau comments interpreted as -- polit bureau seen -- statements seen as chinese holding off on stimulus. do you see a little less stimulus or a different type coming from china which will affect your asset allocation? bill: i certainly think there has been evidence there was some stimulus being applied around the turn of the year and earlier this year. i've not got any great

visibility about what may be happening in the moving away from that. in broad terms, we would suggest prc has the, the flexibility to help the economy and to some extent, they've in doing that. i am skeptical about this idea of a big rolling over in china. going back to commodities, one reason markets have an well supported is demand has been there and a lot of that comes from china. we are probably ok at the moment. we've got a long way till the end of the year. thank you very much. bill dinning, head of investment strategy at waverton investment. stays with us as guest host. let's get the first word news with the team from hong kong. cutarclays is planning to bonuses to investment bankers according to the financial times. third-quartert

results may decline by double digits. the times says the move is part of efforts to oppose activist investor edward bramson ahead of the meeting. president trump has dropped the plan to put herman cain on the federal reserve board. this comes amid opposition from his own party. democrats are also urging republicans to block the president's other pick, stephen moore. the executive is bowing out of the race as his path to confirmation looks blocked. police say the death toll in sri lanka has risen to 310. this has the government blames a local jihadist group for one of asia's deadliest terrorist attack seniors. it hit churches and luxury hotels on easter sunday. officials say it was carried out by seven suicide bombers who targeted tourists and christians. this marks a shift from violence of the civil war.

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. nejra? nejra: annabelle droulers in hong kong, thank you. today we are asking on and live, what do stocks need from tech earnings? join the debate. plus tv .s ib heavyweights are reporting. >> coming up on the show, samsung delays the launch of a tech world first. it turns out a folding phone is a complicated -- as complicated as it sounds. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. i'm nejra cehic in london. manus: i'm manus cranny in zurich as european earnings season heats up. we have an agenda for you. we will have a conversation with the novartis ceo. ermotti, we sit with him to what is in regard going on at ubs has low volatility persists. let's take a quick dive into markets this morning. we are dealing with political risks, what will happen with the strait of hormuz close. then equities quite like price of oil. nymex crude up and 10 year yield, a little drop, some bond buying. the debate is whether all that comes out of the fed has the

impact it should on markets. we did see those five-year breakevens hit a one-month high but a muted reaction elsewhere in the markets from oil. outaw the s&p 500 eke again in the last trading day before the holiday even with low volume. we look ahead to a big week of earnings, particularly in tech. the yen, slightly bitter but nothing much to see. overall is fairly steady and so rpm fx, even though we saw big oil declining, feeding back to the oil story. we are keeping eye on iron ore, jumping about $90 amid concerns around tightened supply, even as reopens. mine now annabelle droulers with the business flash. annabelle: needing to raise over 180 million in its initial public offering. the maker of plant-based

substitutes has the backing of some of the biggest names of food and technology. the company plans to sell shares for $20 each. a listing at the top of that range would give the company of value of $1.2 billion. franklin plans to cut 5% of its workforce, to save at least $75 million. the fund manager faces net outflows in each fiscal year since 2014. the industry faces pressure from automation and client pressure to go -- lower fees. asset managers like blackrock and state street have unveiled plans for job cuts this year. that is your bloomberg business flash. manus: thank you very much for the roundup. annabelle droulers with the latest. it is a big week for tech earnings. we will get to snap and ebay today. later in the week, it is microsoft, facebook, and amazon. we've had news out of tesla, the ceo elon musk spoke to investors

in powell out of a, boasting of a self driving computer designed in-house called the homegrown chip, the best in the world by a long shot. on: that is objectively what has occurred. not by a small margin. best buy a huge margin. manus: it wouldn't be the first time an exuberant elon musk has perhaps overhyped something. some investors left the presentation "underwhelmed." for more, mackey blocks and. at wavertonng investment, still with us. matthew, on tesla, given the 'sluation we have seen on uber self driving unit, how significant could this be for tesla? is is good news? what is it doing? matthew: it is wonderful time.

there are still huge questions over tesla's future potential and of the results coming out this week, everyone is expecting them to post a loss and now they are diverting people to this future where self driving cars will be making huge amounts of money. it is a clever bit of diversionary tactics and we saw something like 6.5 times sales. get somely, it could people excited but short term, this is a company that faces difficulty selling cars and making a profit. nejra: as you say, making the prophet brings the cost in focus. let's talk about samsung. a lot of tech news. how much concern -- of a financial impact will this have? matthew: minimal. samsung makes most of its money from chips but the phone is kind of exciting and gets people the market has plateaued. these foldable phones would be

something they hoped would generate fresh volume gains but the first question you saw when you see the phones and also the likes of huawei, how will these phones last? one or two days, it looks like they are coming under stress. i've just upgraded to a new phone, so you go. difficult. i want to bring you into the conversation, bill. it is a big reporting week for tech. facebook, amazon, a number of softer tech rather than hard tech. you still have exposure to amazon. why is that your preferred exposure at the moment? bill: we just think the growth in the services business is still attractive and the devaluation of the company, taking into account the potential growth of that is still reasonable. a lot of people think about

amazon has this amazing growth stock that surely there must be limited in valuation constraint, but we think the growth story there is still with us. of the big names coming out this week, that is the woman got the most -- the one we've got the most exposure to. nejra: ahead of earnings season, so many names. matthew: facebook is in focus again. last quarter, they surprised people to the upside that they grew despite all of their privacy scandals. people will be looking to see if they consisting the momentum and lastly, they've been really looking at regulation of the internet to get them through these challenges. people are looking for 25% growth. twitter, another one struggling with atrophies in monetization so people have high expectations for resmed graph -- revenue growth. nejra: bill dinning stays with us and thank you to nejra:

nejra: --matthew bloxham of intelligence. earnings season kicks off this week. more to discussing equity markets and earnings. this is bloomberg. ♪

nejra: looking at the world map, the msci asia-pacific up 11%. a little more green on the screen and energy producers on the index, leading those gains. we are seeing oil holding gains from yesterday. we saw it adjust to a six-month high on the news about the waivers -- waves over iran. the big question is how much and when saudi arabia might step up. heard saudi arabia will court make with other crude producers in theory. could buy more than enough to offset losses from iran. manus: look, they can ramp up. it is how quickly they can.

the swing producer in this whole story. it looks as they have an agreement. look at district --strait of hormuz. this is the geography. they are threatening they may where a hugef amount of the world oil travels. that is the potential flashpoint. terms of the output we are talking, 1.1 million barrels a day from iran, saudi and uae to lose out 1.5 million barrels a day. what does this mean for opec plus and discipline around output from other members if saudi arabia ramps up to balance the market? interesting to see the calls from different houses. goldman she's a limited price impact, barclays upside risk to the 2019 brent oil forecast. you have been looking at citigroup. manus: a bullish call on the commodity complex. we caught up with the atlantic

thisil and they said position from the united states of america doesn't leave much room for negotiation and the other thing, it doesn't leave an elegant off graham -- offramp. let's get into the markets and see the reverberations are from the geopolitical story and whether that is permeating across the map. dani burger is in london. we'll get to you first. you've got the vix in india surging to a near three-year high on the back of the reverberations from the oil prices. is that a fair take? >> yeah, manus. that and maybe the election uncertainty. you are absolutely right. happeningart, this is . yesterday was one key day where the markets moved up, and flows

trickled down through the last few weeks. flows have been pretty strong into india. other countries, too, in the region in yesterday's session maybe because of crude and volatility moving up. started in the green today but yesterday was a pretty bad day in terms of flows and volatility. i must add that while india, despite risk staying hiring moving up, oil -- other markets are seeing flows. that while indian markets are doing well today, can't say the same for sri lanka. markets haven't started off any good footing. we all know the reasons, but unfortunately, the market has started a couple percentage points lower. looking at the region and that india, a look at sri lankan

markets which haven't started well. nejra: thank you for that roundup. much appreciated. dani, the surging oil prices after the u.s. said it will no longer give any buyer of iranian crude a waiver from sanctions. hedge funds have been vindicated? dani: that's right. as you were saying, how long will this last? how long will the enthusiasm a last if we see saudi arabia stepped and pump up some of the oil supply? for now, it seems like the option markets are pricing tighter supply. here, i am looking at the one-month-six-month curve. one-month pricing is more expensive than six months out. this is what we would expect if we saw tighter supplies and the crude market but i will say there is skepticism here. compare it to the july backwardation. nowhere near those levels. still near those levels and the chart you mentioned is the positioning of hedge fund managers.

vindication. they have jumped to a couple months high. you can see him brent, 38,000 contract from oil speculators. according to a securities, there is room to add longs so expect more volatility to come. manus: we can see what opec and opec plus. do -- will do. rate roundup this tuesday morning. let's get your first word news with annabelle droulers and the team from hong kong. its chineseesla and competitor are looking into involving their vehicles. this is video of a car bursting into flames. a white sedan bearing the tesla logo was caught in knitting smoke before catching fire. a team from tesla has been sent to shanghai to look into the incident. house democrats have issued a subpoena to former white house

counsel don mcgann. he was a key witness in robert mueller's investigation. it is the biggest move by lawmakers to mine's findings for evidence of whether president donald trump was not to obstruct justice. this comes as democrats remain divided over the next steps. the death toll in sri lanka has risen to 310. this as the government blames a local jihadist group for one of asia's deadliest terrorist attacks in years. it hit churches and luxury hotels on easter sunday. officials say it was carried out by seven suicide bombers who targeted tourists and christians. this marks a shift from violence that fueled sri lanka's three decade civil war. 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. nejra? nejra: annabelle droulers in hong kong, thank you.

barclays is planning to cut investment banking bonuses as the division underperforms, financialto "the times." first quarter bonuses may decline by double digits from your earlier and be more tied to performance. this comes as the earnings season for european banks kicks off this week. credit suisse reports wednesday followed by ubs come of our ways, and swedbank thursday. results from deutsche bank thursday. for more, senior banking analyst at bloomberg intelligence joins us and bill dinning of waverton investment management is with us. jonathan, i want to pick up on the barclays story. of brought up the issue cost-cutting, something you are focused on going into this earnings season. what have you been looking at? equity trading will the be down probably more than the 21% they averaged.

fixed income will be down 15% to 20% in some cases. -- banks need to increase improve cost income ratios. if you have revenues of 20%, you have to and if you look at barclays, the way they report, they include part of the credit card in the investment banking division and last year's return on tangible capital is 7%. credit cards were very profitable. we knew they had to come off and we knew the trading wasn't going to be great. is out, taking personal responsibility. asall makes sense, but interesting as barclays is, the french banks, as well. they have been pretty shocking underperformers. equities used to be a strength of theirs. and that isinly is part of the reason we will catch up with sergio ermotti. jonathan, what is the potential story doing to the branson argument, the activist shareholder? he wants a seat on the board,

but does it validate his angst with jes staley? bill: it is no secret investment bank has been appalling. in the last response, they said it has been pretty poor. it has to be addressed. it doesn't change anything. last three or four quarters, barclays has outperformed european peers in equities trading. -- if they were reporting anything near a 20% drop, that is very poor. down, they are justified in the fact that they are holding their own with u.s. banks and it may sound like a small business, but it is a big difference. nejra: there is a lot of focus on this week and one of the things is deutsche bank earnings but also the merger talks tend to cloud everything. cds andchart shows the the difference between the banks

cds, which suggests investors it can benvinced treated as a single entity in terms of risk. is that how we should read this chart? investors don't see this merger as terribly likely? you put a 50% probability on it. >> what it tells you is deutsche bank's balance sheet is trading out to five times as big and putting two weak banks together -- deutsche bank is virtually the top. commerzbank goes up a bucket. if you had to raise the capital, deutsche wood and to do it properly that properly, 8 billion. greater balance sheet, greater think all that tells you is two weak banks, but one of them is a bigger week bank with more things to address. manus: bill, can we bring you to the conversation?

as you look at the landscape, you have some choices to make. america, europe, investment banking, retail oriented. it is european bank reporting season. have someubs challenges. how do you separate your thinking when you look at banks? bill: we've been pretty skeptical about european banks. globalcontext of a portfolio and you can buy anything, would you put european banks at the heart of it? i'm afraid you probably wouldn't. apart from the individual specific issues and the strategic question marks about all these banks having an investment bank. i was working for 120 years ago and they struggled to be competitive with u.s. banks. on top of that, this is a difficult operating environment or a bank. simple banking is a simple business and when you have negative interest rates and the rest of it, this is a tough environment. onepean banks, we own

european banking our global portfolio. the u.s. is different. there are one or two opportunities in the u.s. that would be where we are focusing. i'm afraid europe is a challenging environment from our point of view for the banking sector. nejra: are european or u.s. banks a more interesting proposition from a credit rather than equity perspective? bill: absolutely. on banksy dependent and financials and that is a different proposition. we certainly have a lot of exposure to the european financials and credit space. that is a very sensible way to play it, i think. manus: to what extent would you take cocos on board given the past couple of months in that particular product? bill: i think if you are willing to take equity risk, you should buy the equity. nejra: all right. manus: bill, thank you very

much. jonathan tyce, senior european banking analyst for bloomberg intelligence joining us, and bill dinning, head of investment strategy at waverton investment management. next, oil rallies as the u.s. says waivers for iranian imports will and early next month. we get the view next. this is bloomberg. ♪

bloombergs is daybreak: europe. i'm nejra cehic in london. manus: i'm in zurich. it is part of european earnings week. we will have conversations, an exclusive set up with the ceo of novartis tomorrow. join me for that. what is happening? what is an acquisition?

is it really up to $10 billion? sergio ermotti has to convince the market that in a low vol environment, he has a plan. that is thursday. we will start off the agenda. we get the first. today, we got earnings in the u.s. twitter, snap, ebay, coke cola, and verizon. tomorrow, credit suisse, akzonobel, novartis, and the u.s. earnings. facebook, boeing, microsoft. nejra: it is a tech heavy week and thursday, we have nintendo, then the banks ubs, barclays, and we get baer and amazon in the u.s.. to close out the week, rbs, deutsche bank come and daimler, santa fee, and total. that scratches the surface of earnings we will follow. let's get the business flash with annabelle droulers in hong kong. the chinese startup

looking to challenge starbucks has filed for u.s. ipo. they reportedly plan to raise $300 million. it is spending millions of dollars a year to unseat starbucks has china's top coffee company. hasbashan coffee company expanded to nearly 2500 stores in 28 cities. the seattle coffee giant has over 3700 outlets in the country. is bringing in a new chief executive officer to bring it out of a prolonged slump. the company bid to buy unilever fell apart years ago. it is having a longtime executive to replace the man who led kraft heinz its 2015. samsung is delaying the launch of the foldable smartphone after reports of screen failure among units.

samsung said it will thoroughly investigate and would like to avert a fiasco like the note 7, which worst into flames. that is your bloomberg business flash. manus: i'll pick it up from here. on the top story of the day. crude is extending gains after leaping to a six-month high yesterday. saudi arabia says it will coordinate with other producers to ensure the oil market does not go out of balance. the u.s. decided to end waivers for buyers of iranian crude. let's get more with the chief oil analyst and cofounder of energy outflows. good day to you. the market moved aggressively yesterday. said they will keep the marketing balance. translate that for me for the middle of the month. >> the saudi response was noncommittal, in contrast to

what the u.s. said, that they have received assurances from saudi arabia and uae about filling the gaps, which will be left with no waivers in iran. i think the biggest thing the market has to understand -- and yes, they said they will keep the market imbalance but what consultaid is, we will with producers and partners over the next several weeks. this is in complete contrast to last year. they are overcompensating for last year. this year, the market is tighter than it was in november of last year but they remember what happened when they preemptively increased production and what they are doing right now is taking it slowly. they want to see the actual impact on the market. how much will iranian exports fall? will china oblige with these sanctions waivers? there won't be any decision taken before the june opec meeting. saudi will raise production from 9.8 to 10.3. that is what they are allowed to

produce. they have been over complying but not expecting them to do anymore until june -- in june. nejra: that is interesting. i'm guessing that barclays might be inclined to agree with you. short-term upside due to a slower response by saudi arabia as compared to late last year. bearing that in mind, how much more upside is there for the oil price in the short-term? anna: -- amrita: there was a lot of upside risk to oil price even before yesterday. the market has been so strong across the world. the only reason we are not trading above $80 is what happened last year. there is a huge posttraumatic selloff disorder him if i may say that in the market. they are very scared about what saudi could do potentially. they were scared trump would renew the waivers as they are and that is why prices haven't reacted.

on a fundamental basis, we should be about $80 right now. manus: look, this is where it gets really interesting. we should, in theory, have a more aggressive spike in the price. what do you make of the iranian threat about the strait of hormuz. our editor was with us and said we have had historical spat, but how big a risk is that to the market? amrita: i don't think they will go down that route. the threats are there. in the past, when they would even mention strait of hormuz, prices would fluctuate five dollars. now, there is little risk appetite from hedge funds because they were badly burned last year. i don't think iran will go down that route, however in the region, are you going to see more proxy wars? yes. we still have to see what the response has been. they have appointed a new head of the registry who is a

hardliner. we really need to watch iran's response in this. that will be critical. , how concerned will saudi arabia be in thinking about boosting output in terms of how this might affect the rest of opec plus and compliance with extending any output cuts later in the year? amrita: that's exactly what i was saying. saudi is not going to increase production beyond 10.3 million barrels a day, that is their quota level. at june in the opec meeting, they will talk to producers -- this is about consensus. they are really trying to get consensus and that is what they will try for a cross producers in opec plus and only then will they decide on the course of action for the second half of the year. they are not going to do this unilaterally. what ishat's exactly excellently said to me last week in a bugatti.

-- abu dabi. we want to see what happens with these waivers if they are not extended. the chinese are the largest buyer of iranian crude. do you think china is going to actually stop buying? they say the u.s. has overreached, gone beyond their jurisdiction. or ration with iran is open, transparent, reasonable, and legitimate, and that does not sound like a country that is ready to go zero. amrita: i would agree with your assessment on this that on our numbers, we expecting iranian exports to go to 600,000 barrels a day from the current 1.3, and effectively saying china continues to buy and there will be some amount of cheating. having said that, is the situation today different from the obama administration? because the u.s. is a big exporter, yes.

chinese companies do lift u.s. crude and you will see some issues with regard to -- this is a cautiousness around these companies if they are to lift both but generally speaking as of right now, we are not expecting china to fully comply the sanctions. having said that, it opens some difficult diplomatic questions. will the u.s. sanction china? we don't know the answer to that but for now, we are assuming china continues to buy. nejra: so a lot of open questions on that front. and also on the supply from elsewhere. venezuela, nigeria, libya squeezing supplies. how does the demand side of things look to you right now? amrita: i think demand has been one of the reasons why oil prices haven't gone up. that is why oil prices have been range bound, because there has been so much concern about the global economy, the chinese economy. we put out -- we put out a note we arebout demand and

starting to see demand pick up everywhere in the world, particularly in china, except for europe. east,america, middle everything is coming in stronger than expected and given all the supply means you just mentioned, libya is not even a risk that is priced into the market right now. there's a lot of upside to oil prices as long as demand story remains stable and is not deteriorating. nejra: amrita sen, chief analyst at energy. thank you for being on the show as we analyze the oil markets with oil holding gains from yesterday. we saw a jump of some 3% in wti yesterday on these concerns around iranian supply. theng up, we speak to leader of greece's opposition party, new democracy. interview, live from athens at 8:30 a.m. london time. manus: a reminder to our bloomberg users. interact with charts in the library, gtd go.

-- gtv go. catch up on the analysis. save them and use them in your own special way. hedge funds are there, it is all there with you -- for you. this is bloomberg. ♪

manus: good morning from zurich. this is "bloomberg daybreak: europe." crude climbs. wti leaps to a six-month high as the u.s. scraps waivers on iranian oil. saudi arabia vows to ensure adequate supplies are available. delays the launch of its revolutionary folding smartphone amid reports of failing screens. barclays cuts bonuses. the lender plans to slash investment banker payouts as the

division underperforms according to the financial times. german banks report this week. warm welcome to daybreak europe. banks are a bit of a theme back home in my own market. dubai islamic bank studying the possible acquisition. now taking the position of a buyer, not to be preyed upon. onai islamic bank reported the possibility of an accusation -- acquisition within three weeks. in the gulf.e beat it is all about consolidation. you are wondering why i am in zurich. i am onto her.

on tour.her -- we also sit down on thursday with sergio ermotti. in regards toon one of the worst quarters in recent history? good morning from the tour. nejra: let's get to these equity markets. yesterday, we did see the s&p 500 eat out a 0.1% gain -- eat a 0.1% gain.t defending gains after the u.s. saying it's going to end waivers for iranian crude. we have seen an impact on the oil market. goldman saying the tighter iran oil sanction is to have unlimited price impact. $78 per barrel in the third quarter. arclays sees upside risks to

2019 brent oil forecast. a tighter market in the short term. see the market open in just under an hour's time. seven straight days of gains for european equities. it looks like it will continue for the ftse 100. dax futures up 0.1 percent. cac 40 futures struggling for direction. a huge week for earnings. a ton of tech earnings. european bank earnings over here in europe. manus: we get gdp in the united states. backward-looking data, but something to hang our hats on. that ramp up by 3% in the oil ironically saw, five year breakevens at a one month high. check in on u.s. bond futures and you are seeing a shift up. the five-year yields higher. moments market at this

in time with an issue in play did get a little bit lower. the question is whether we are in meltdown mode for markets on the equity side, and why are they not more perturbed by this rise in the price of oil? -- they collectively correctly pricing geopolitical risk? juliette saly will give us the singapore flavor of political risk this morning in markets. good day. i am starting in sri lanka. we have seen the index open for the first time since those easter blast. it is down by 2.7%, the biggest drop in four years, making it the world's worst performing market. it is tracking at a seven year low. elsewhere, things are ok. we have seen a huge rally coming through in energy players in australia, which closed higher by almost 1% after the easter

break. good moves in ems today. india looking quite good. korea tracking higher despite that weakness in samsung after it delayed the foldable phone. china's market turning around after that 2.3% drop yesterday. be holdinging it may back somewhat on the stimulus. generally, things in asia looking ok, better than the start of trade. in terms of other aspects we have been watching, we are watching the japanese yen closely and that is moving higher ahead of golden week positioning next week. the rupee has fallen along with indian bonds on the strength you have seen in the oil price. australian bonds are rallying quite high. yields lower by five basis points. inflation data out of singapore today. hong kong later in the weekend australia as well. inflation data starting to suggest we will not see rate cuts from the rba.

that is pushing bonds higher. breaking hear from crossing the bloomberg. underlying 2019 operating margins slightly lower than 2018. that is the red headline. unions are hearing local have tentatively reached a contract. toal unions have agreed tentative terms. strike.he seeing first quarter financial results are unaffected. -- a 90 to $110 million impact. are hearing after this tentative contract deal from the union. on theat red headline

numbers for the underlying operating margin. let's get into this week. for ainvestors get ready deluge of earnings. crude expanded gains after leaving a six-month high yesterday. the u.s. says it will not extend waivers for buying iranian oil. what i want to get a sense from you, volatility is cascading downward. it is crashing. at the same time, we have this equity market. from the models you run, are we on the cusp of a further move higher, or are we looking at a cause for thought?

volatility, it's very difficult to see markets being derailed by earnings. we had the ecb. introducing more monetary easing. i think this is what is driving the markets of the moment. you seeing this play out with investors you work with in terms of the most popular way they are actually instigating this move, this hunt for yield the echo -- for yield?

clicks it is a variety of things. we are not selective because we have very bullish signals. you seen guild situations in emerging markets, you see , you see rates carry the yield all across the board. screenrs are trying to all yields they can get for markets. that yield seeing is compression. this is where you have imbalances that can be created that can lead to some sort of unstable situation. we are not there yet.

manus: we are constantly looking at the triple d world. there is a lot of discussion about the bond market -- the credit markets not being priced efficiently. how concerned are you about the world and thebb risks associated? >> one of the things that could , thel the price recovery u.s. index has never been so high. is more worrying. you can be in a world where you have rates downgraded. it will create all sorts of problems.

isink part of thing u.s. some sort of buybacks typically. the wrong time, usually. nejra: you are concerned about corporate leverage in the u.s.. you said this aggressive hunt for yield could cause imbalances we are not seeing yet. nonetheless the question arises, how do you hedge at the moment? how are you seeing investors hedge? onwe get a lot of requests how to design a consistent hedging policy. what we have seen last year is interesting. one bear market by volatility.

you had the long-lasting bear market in december with no hike. you need to have strategies of hedging that can help you out. combining all of those solutions , one hedge we like is the idea you can construct strong balance sheets of short coverage. there are solutions for hedging. you need to be precise about it and you need to be very careful.

nejra: thank you. societe generale head of quantitative research stays with us. we have a lot more to discuss around factor investing. for now, let's get the bloomberg first word news. >> barclays is planning to cut bonuses to investment bankers. that's according to the financial time. -- financial times. the move is part of efforts to oppose edward bramson ahead of his upcoming annual meeting. house democrats have issued a subpoena to don mcgann. he was a key witness in robert mueller's investigation. it is the biggest move yet.

>> carried out by seven suicide bombers who targeted tourists and christians. this marks a shift from violence

that fueled sri lanka's three decade civil war. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. manus: what do stocks need from the tech earnings this week. you have amazon, twitter, hitting the tapes. you can join the debate, mliv plus tv on your bloomberg. street's l goes are in -- the rest of the market marches higher. that story next. ♪

nejra: 7:18 a.m. in london. this is bloomberg daybreak: europe. it is a big week for earnings. that's part of the reason why i'm here in zurich. -- the man in charge of novartis, it we are going to have that conversation tomorrow morning. sergio ermotti we have. we will have a chat with him after a shocker about six weeks ago. what is the plan at ubs? we have acute week of earnings. any -- this isn what you have to keep an eye out for. verizon. and tomorrow in europe we have credit suisse. and novartis.

boeing, andcebook, microsoft. it's busy. i'm breathless. nejra: hold your breath, i will take it from here. on thursday in asia we have nintendo, then ubs, barclays, and amazon. to close at the week, rbs, daimler, total. it is enough to make your head spin. let's get the bloomberg business flash. >> samsung is delaying the launch of its first foldable smartphone after reports of screen failures among review units. smartphone giant says it will thoroughly investigate the issue. samsung will be aiming to avert a fiasco like the introduction of the note seven. it led to a global recall after devices started bursting into flames. over 180o raise million. the maker of vegan plant-based

substitutes has some of the biggest names in food and technology. the company plans to sell shares for $21 each. the listing at the top of that range will give the company a market value of $1.2 billion. appointed its new global chief executive. he was previously head of the brokerages america's business. he replaces jonathan sloan who resigned this year. several top managers follow the former chief executive out the door. this amid mounting tensions between the firm's old guard and its chinese owner. barclays is planning to cut bonuses to investment bankers. that's according to the financial times. it reports first-quarter rewards may decline by double digits and will be closely tied to performance. the times says the move is part of efforts to oppose activist investor edward bramson, head of the banks upcoming annual meeting. that is your bloomberg business flash. manus: thank you very much.

global equities may be flirting with multi-month highs, but under the surface, wall street's -- are in crisis mode. investing styles which should fare best in a steady to bullish market are suffering more. it is our very own resident reporter dani burger. what is the story? , twolue and momentum widely followed factors, are in freefall. it has been suffering now, trading at its lowest level since 2011. we tend to see value struggle in later stages of the full market. -- of bull market. its worstck for performance in about two years. we have seen little bit of rotation. investors seeking a more profitable shares. that's causing momentum to struggle. this is bad news for managers.

these two usually offset each other. because they are falling together, we are seeing strategies tougher. yellow is the general market neutral risk premium hedge fund strategies. look at the bottom here. more than 5% over this year to date figure. look how it compares to the s&p 500. the last time people started to use the word is when managers have to sell a bunch of their positions because of this poor performance. that continues to drop. the last time that phrase was used was right for the financial crisis. it seems like we are heading for not necessarily a markets wide crisis, but at least a crisis of confidence. nejra: thank you so much. great work. the head of cross asset quantitative research at socgen is still with us. can we get your insight? we have seen this sort of trend

which is putting strategies under pressure. >> it is true that equity factors are under strain at the moment. even more so when you are a u.s.-based equity factors. value and momentum in the u.s. is a problem. lots of investors are suffering from the. -- from that. overcrowding, the usual criticism.the first reason is that there are two forces that act on equity factors. one is risk-on risk-off. the other is the dependency on interest rates. the risk-on risk-off means in a risk-on environment, they should perform well. the fundamental forces at play now is the dependency of those factors to interest rates. as it stands, value will tend to

underperform in a world where yields are going down. they tend to over perform in a world where yields are going up. what we are seeing at the moment is really linked back to central banks and monetary policies. thing we are seeing is that we are at a late cycle environment. the late cycle environment, this is where growth stocks will over perform. growth stocks are taking over value stocks in the late cycle. some ofan we talk about the strategies at play in late cycle? one thing neera and i have touched on, hsbc were so vocal about it. he wants out of dmn he wants to load up on e.m..

within that context, what can you tell you about the carry trade? what is the star carry trade for you? >> we have discussed equity factors. much broader than equities in the u.s. rate -- u.s. performance is there to stay. the strategy we are seeing at the moment is things like rates carry strategy, duration where you can monetize the yield differential between the u.s. and europe. you also have the rate carry strategy in commodities. manus: unfortunately, time has run against us, but we are going to pick up these themes as you say in the u.s., europe, and the commodities center. come back and join us.

of crossenerale, head asset quantitative research. come join us again. a quick recap. you broke the story at the top of the hour. this is important to european sentiment. ahold operating margin lower than 2018. good morning. nejra: the stop & shop management of local unions have agreed to tentative terms. that's another bit of news flow. the european market open is next. ♪

anna: good morning, welcome to "bloomberg markets: european open." i'm anna edwards alongside matt miller in berlin. matt: the markets say, can anything stop this rally? the stoxx 600 up 16% year-to-date, nine points away from an all-time high. can european bank earnings do anything to hold equity indexes back? the castrated less than 30 the cashway area -- trade is less than 30 minutes away.