nejra: good morning from bloomberg's european headquarters in london, i am nejra cehic with manus cranny. this is bloomberg daybreak: europe and here are today's top story -- stories. gear, we speak to the ceos of credit suisse and novartis and the cfo of sap. stocks hit records aztec names twitter, ebay, and snap get numbers. highs.ls back from 2019 we care from the saudi energy minister this morning. one month to go. the frontrunner to be the

european commission's next president tells bloomberg that europe must defend its key industries. stage, europeal must define our key industries in future markets. we have to defend them and champions inlobal key industries. manus: warm welcome to novarti'' headquarters. daybreak goes on to numbers, looking pretty good. net sales of $11.11 billion. the market penciled in 10.8 billion. core earnings comes in at $1.21. novartis starts with strong sales in double digits.

double-digit core sales. the genericsed, drug business within the house of novartis. you are seeing a refresher in terms of the leadership on the -- generic side. core, 2019, so novartis still sees 2019. we put all of these questions to the ceo in over an hour's time. he has invited us into the house, and exclusive. he is just over a year in the seat. this is a man on the mission. another ceo with challenges -- credit suisse. nejra: certainly always on a mission. numbers. to the i will get to the red headlines. net revenue comes in at 5.30 9 billion swiss francs for credit

suisse. 5.4 billion was swiss francs. that is a beat on the first quarte that revenue. global market pretax, 282 million swiss francs. the estimate, 170 million. a beat on the global market pretax. the first quarter net income comes in at 749 million swiss francs. estimate, 717.2 million. a beat on the first quarter net income but let's take a look at some of the other numbers. pretax lossr i bcm comes in at 93 million swiss francs. the estimate was a loss of 10 million swiss francs. a worse loss than expected for ibcm unit.uarter in global markets, pretax at 282 million. that was a clear beach.

international wealth management pretax at 523 million swiss francs. that is a beat of 438 alien swiss francs. quite a few numbers coming in at a beach. -- all this on the tliv blog. we will also be watching for the assets under management, the expert tatian was a rebound with recovery in equity markets. the first take is positive on the tliv global market equity trading revenues up for percent and fixed income only down 2%. that is in the press release. presidentpeak to the of credit suisse at 7:00 a.m. london time. more breaking from micro. i'll get back to novartis in a second because they are upping the guidance. we've just seen samsung announced they will apply over $100 billion.

they are reporting in net revenue for the first quarter that missed the lowest of the analyst estimates. it comes in net income $178 million, the estimate of 180. 39.4% on thegin first quarter at gross margin. second-quarter net revenue, they see that rising by 2.4%, so that is the revenue guidance for the second quarter, plus or -350 basis points. they are guiding at the moment. novartis, strong sales and double-digit core operating growth. that is with their launch and the elcon spinoff. a raising of the guidance on the novartis numbers. you got asap on the tech side.

nejra: yes i do. its profiting outlook, raising its non-irf s forecast for 2019 and 2020. it aims for a 75% cloud growth margin in 2023. it is to detail new initiatives for operating growth at capital markets day on november 12. that is information getting -- we are getting. analysts were expecting a robust start to the year and said eyes will be on progress with the software company's restructuring as well as margins in the cloud business. that is what we are looking at in terms of margins. the mainline to take away is it

is raising its operating profit outlook for the year as it pushes through this major restructuring program. it reported a 20% increase in new cloud bookings for the fourth quarter. it is picking up speed compared to the october-december period at the metric, which is closely -- is closely watched by analysts. we will speak to the chief financial officer of sap after 7:30 a.m. london time. lots of breaking news, lots of corporate's. we are knee-deep in this earnings season. markets are certainly on watch for indicators. i want to show you the two-tens curve. are we in melt up face? recession watch or melt up? -- two's,sday and, tens, four consecutive weeks, the longest stretch of gains since november 2016. people are now talking about the

curve that could trade up to 25 and about. disingenuous not to mention this. back this is getting morning against the euro -- against this shift this morning but we are down 2.5% on the swissie against the euro and that will give the s&p a little reprieve. perhaps negativity on the global economy is overdone. they are saying that is why the selloff in the swiss. who is right, bankamerica merrill lynch said you will probably kiss 100 bucks. , have we seen so much angst over the iran waivers priced into the market or is bankamerica merrill lynch right? you could kiss $100 oil. nejra: who is right on the stock market? recovery weeks of

after 14 weeks of dropping and we are at over 100 on s&p and nasdaq. futures off by .1%. the bulls will say to you, valuations still aren't setting off alarm bells. the bears might turn around and say it has been led by big tech names, maybe valuations have gone too high for some of those tech names. on theount too much earnings. even though 80% of companies reported so far have managed to beat. it has been the best start to the year since 1987 for u.s. stocks. how much further can it continue and what will drive it? is the fed a wildcard? what if china doesn't put its foot on the pedal for stimulus? the 10 year yield on the 255 handle, down the basis point and dollar index, up .2%, a seven-week high on the dollar. what is underperforming in the g10 against the dollar, the

aussie is down 1% at one point. aussie markets have been rocked by the cpi miss and who better to take us through the details than juliette saly, in singapore standing by with your asia-pacific markets. juliet: we've got australian stocks at an 11-your high but the aussie dollar is getting whipsawed today and yields tumbling. australian bonds looking solid along with the big move you have seen in the us trillion and queen market, up .9%. level you havest seen the asx 200 that since december 2007. they are calling it an inflation shocker, cpi flat quarter on quarter for march and coming in at 1.3%. the rba does not want to step below the 2% ban. elsewhere, weakness coming through from other asian markets. the nikkei, off .4%, chinese stocks coming under pressure

today. we had the pboc announcing some long-termediated loans but we heard in the week they are not keen to pump more stimulus through. asian stocks look like they will close at a three-week low. in terms of stocks we are watching, samsung in focus. this $116 billion investment into chips. we heard that was probably already factored in. a are seeing weakness, disappointment over the delay of the foldable smartphone. withsplay coming through quarter numbers much wider than estimated in terms of weakness. with prices, shipments hurting lg display. in australia, the organic foods getting over 16% after regulatory approval from china. no doubt, that will increase the shipments of its organic foods and vitamins into the crucial chinese market. relieved to see

ozzy is back below 70. it will make the holidays cheaper for you. he leads the largest political group in the european parliament and has downplayed the implications of a populist surge in next month's election. he argues that they are two disparate to form a group. he spoke to maria tadeo in athens as he launched his campaign to be the next commission president. was facing the last 10 years a period of crisis. euro crisis, currency, migration problems four years ago, and now the brexit. we have to end years of crisis management and what we have to do, especially as a representative of a new generation, they have to open a new chapter of optimism, positive thinking for the future, getting a better understanding that we cannot

achieve -- we can achieve if we work closely together. in greece, that is my message, it is not about national background for problem -- program country or not. it is about being europeans. we together can achieve so much and that is a message of athens. maria: many european institutions will tell you the european commission is legislation to enforce the law, that every country does things according to standards but at the same time, the european commission needs to become much more aware of the political implications of decisions that get made in brussels. if you think the commission, if you become the head of the european commission, should be more in that way? manfred: absolutely. at the european level, it is deciding the real life of people through legislation. thousands of issues in the daily lives of the citizens of the

european union. there are more than 40 million europeans and people must get an opportunity to enter into the decision-making process. we have only to practice what we did in the past, to bridge between citizens and the political decision-makers and that means parliaments and democracies. that is why our party is the biggest in europe, with the biggest faction in parliament. we have to present a program at candidates like me as candidates for commission president and people can be choose -- can choose. people can choose. we are the party at the center of the landscape, of today's europe. we created today's europe and we have a plan for the future. thea: two questions on european election because many see this as almost the ultimate test between establishment and what you may call populist, but

they will call the results alternative politicians with a different plans. is this really that test or do you think ultimately, it is not a black and white situation? manfred: for me, it is a fundamental question about european unity, spirit, thinking and decision-making or nationalism. that is a question at the table. was being presented to people. party is in favor of vladimir putin. the other party is an enemy of vladimir putin. one party is asking for more economic solidarity like salvini, german taxpayers money for the rest of europe. incumbents have no programs. the only thing to have his nationalism. they cannot agree. that is why the voters of europe of today are focused on the election campaign and date to decide whether to keep the

spirit of compromise or live. that is a key question for me and i am the man of cop -- compromise. european spirit to defend our european way of life internally and externally. maria: i'm glad you mentioned asvini because many see him the face of this new populist wave. he says he has an alternative plan. if you look at opinion polls in italy, he is doing something right. i'm not sure if you agree with some methods or think she said, but is there any room for compromise between you, the epp and people like salvini? is there a way to approach this to get some kind of agreement and not confrontational? manfred: i am candidate of the epp for commission president and my partners are those who believe in a strong united and ambitious europe for the future. they are my partners and these

partners are across the political landscape. at the moment, i don't see salvini as a person who believes in society and he is not going -- doing a good job in italy. italy is extremely weak. nots a modern economy following the path of other countries in the european union on the reform agenda. that is a big problem in italy and you can blame brussels or berlin for a few months that you are not having an economic positive development but in the long run, they will ask him what are you doing now? france, germany, finland, the netherlands are doing well but not italy. take responsibility and do your job at home and we can work together on the european level. maria: do you worry about the economic situation in italy? you hear many political commentators and economists saying this is a weary -- very worrying political scenario but

the deficit will overshoot, it is a country that has not grown for nearly two years now. do you worry about it triggering the next crisis? manfred: it should concern all of us because the european union , the eurozone cannot have positive development when one big country like italy wants to cheat seven countries and lacking growth. that is what we are facing at the moment. side is that the national level must do its own work, social welfare system, judiciary -- necessary reforms but on the 's program, europe countries suffered a lot and also on the question. we are lacking the third pillar, the investment field. the question of public and private investment is key for my future commission.

what we must do is activate the private money, and there is a lot of private money inside the market, to activate the private and public money together for more investments in infrastructure and research in the future of the european union. nejra: that was manfred weber speaking exclusively with maria tadeo, who joins us from athens. great to have you with us and great interview. can he actually become commission president? how tight is this race? maria: good morning. it is very tight and if you think about this, nobody used to care about the european elections. five years ago, manfred: --manfred weber who is very close to angela merkel, would not have been in athens to promote his ideas. that would not have been the case that now, he feels he needs to prop up support. face too present a nice

european countries which took a hit in the financial crisis. you have to look in the context of a big european rebound. by the end of the year coming european central banks, the commission, the council, all these jobs will be up for grabs and a lot will depend on not just the result of the election but the balance of power between germany and france. emmanuel macron wants to get in there. thegermans want to get into ecb and a european commission so debate be a political between two the countries and the germans and french want to get -- it is not clear manfred weber will become the next commission president by any means. manus: maria, this is what i find fascinating. the political divorce from perhaps the electorate. he downplayed the implications of the populist surge. how proven wrong have politicians been in italy, and

the united kingdom, in france, all over europe? do you think he has a point or what is it he believes gives them such a surety there won't be a populist surge? maria: right. he's probably just looking at thes, which do show socialist and center-right winning the election. you're right. every opinion poll out there assured populists make gains -- he is trying to say these are different people that have nothing in common. what the commission hopes, and this is their best hope, that when they do get down to business, they won't be able to agree on any kind of legislation but still, it is a big headache. everyone here agrees on that. behind the scenes, there is a very real concern. they do think if anything, this is the ultimate test to european policies, integration, and there is a lot at stake but if

anything, they do you think the center will hold. they will lose seats, the difficult tod it get anything approved once they get the government. you see tensions play out and that is what they hope will be the case when we do get that new commission, which will have to deal with many issues. they will have to deal with the trade situation, the trump, of the fallout of brexit which could see the u.k. running in those elections and having a say in who becomes the next commission president. nejra: bloomberg's maria tadeo in athens. great to have you with us. breaking news coming through from volvo. first quarter adjusted operating profit, the red headline, comes in at 12.7 billion swedish krona. the estimate was 10.40 8 billion swedish krona. adjustedeat on the operating profit but analysts were looking for the truck orders. first quarter truck order intake is down 6%.

that is -- 36%. first-quarter net sales come in at a beat. chairman ofhe volvo. don't miss that after 9:30 a.m. london time. this is bloomberg. ♪ ♪

nejra: let's get an update on tech. xham is with us on set. are we at an inflection point for the stocks? matt: it is a little too early to comment on an inflection point but there have been small gains and atrophies that we have seen strong growth in revenue, which is more about monetization. improving product, keeping customers longer, so an encouraging sign assets are paying off. there is work to be done in the coming quarters.

it is in line with analyst expectations so it is not like they have push things significantly from where people are. manus: one of those short, sweet ones. we will have a conversation with ran stead next.

nejra: most of these markets in the red but one of the net isn't is australia, equities have been gaining as the aussie dollar and gilts have been following following the cpi miss that has been boosting rate cut bets for australia. those are asian equity markets after u.s. markets hit a record yesterday. steam to recruitment. dstad has reported 5.70 2 billion euros, slightly ahead of estimates. joins us on the phone

for his first interview of the day. great have you with us. and you for joining us to talk through your earnings. thehave talked about margin, saying the second-quarter growth margin is to be slightly higher sequentially. talk us through how you will achieve that. that is a little bit of a nonevent because there is a seasonality in our business. the good news in this quarter is the growth margin has increased compared to last year in the first quarter. that is quite an achievement. that is a very deliberate strategy on our part and it suit -- good candidates and we have been made aware people are willing to pay for that. that is good news. manus: good morning. how do you see the landscape of europe? trip andn a geography how miserable it might be or

not, as the case in germany, italy, and france. in that order, sir. miserablet is not as as maybe it felt like or expectations were at the end of 2018. we signaled on the back of q4, a stabilization coming down in europe and that stable picture throughout europe is what we are seeing. not yet in germany. germany is quite heavily hit by automotive. 10% less growth compared to last year. 70% related to automotive, so that is still something that is out there though we are happy with our performance, which is better than the german market even. france is positive. we jumped up from -4% last italy, to growth and minus one in q4 of last year and now 1% growth. it seems to be stabilizing in europe.

nejra: that sounds like good news. certainly, you saw positive growth in france and overall, you are seeing stabilization. what about the outlook? do you expect to see continuing stability or growth in these regions? jacques: let's settle for continuing stability. our revenue declining in europe somewhere in the second half of q2. may and june. we don't have any insight in those numbers yet. april looks like comparable to q1 and let's take it from there. it is a volatile market, tough to call. we are looking at it week by week now. jacques: i think i've turned this into a religion. i ask every time how tight is the american market for wages. here we go. how tight is the wage market in

america, jacques van den broek, randstad ceo? jacques: it is tight in certain regions and their is wage inflation of roughly 3%. good news for us is we have increased access to data so we can really work with our clients on what is still out there. profiles which are still out there, train more, look for younger people, part-timers, which you need to be creative to staff your business these days and we can help. know you have, i said you have had stabilization in the market but one of the questions out there in the market is whether randstad will be able to offset any market weakness we have seen or might see in future through ongoing cost control. i know we already talked about your first-quarter growth margin and you said that was positive. how much of that was down to cost control and how much cost control will you be implementing

for the rest of the year? control is what we have been doing for 59 years. fortunately, all our costs are flexible. staying close to the ball in these times mean staying close to cost control. , due toecond quarter seasonality, we will have more revenue so costs will go up slightly. very much in line with what we are seeing in the market, so confident there and the result improvement in q1 is driven by the margin increase and cost controls. we are confident we can keep that up. manus: when you look at the monster deal that tech site you have added and the business, he mentioned data. where are you with developing monster profitability, and integrating data at a high-margin product? jacques: not as a high-margin --

high-margin product but increasingly, it can show market. in combination, we can show a you are looking for a welder or financial controller or whatever you want us to have come how much of a possibility there is to get that profile. next to that, most of our consultants in the markets were monster is a player have direct access to the data. they are searching both open waters in our american business in the i.t. space directly into the monster database. it is gaining traction. manus: thank you so much for being with us this morning. shake they, we won't questions up too much next quarter. jacques van den broek, bring the good news on the wages from the united states. randstad ceo. we have another conversation, the chief executive of the

french technology company next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus: i'm manus cranny with an exclusive conversation with the ceo of novartis. let's get your first word news with debra mao in hong kong. morgan stanley shaking up leadership of its wealth management unit. shelley o'connor will run two regulated bank entities the companies looking to expand. she co-led the wealth management division with andy saperstein. debate at who would ascend to the top job after the chief executive james gorman.

the u.s. trade team is set to return to beijing tuesday. this at the world's two biggest economies are pushing to reach a draft agreement in may. the white house says talks will cover issues including intellectual property, fourth technology transfer, and enforcement. chinese officials, led by the vice premier will head to washington then for more talks may 8. u.k. has given the green light thehuawei to build parts of country's five g networks according to "the telegraph," as agencies from western countries are set to join u.k. for a cybersecurity summit. the nations are mulling a total or partial ban of huawei equipment for national security concerns. the frontrunner to be the next european commission president says the blocc's populists don't have the answers. manfred weber launches his campaign one month ahead of parliament elections. europe faces challenges from populism and economic slowdown

and global trade. he says the eu may have to update regulations to allow it to compete globally with the likes of china and the u.s. >> on the global stage, europe asked define our key industries, what we see as our future markets, and we have to defend them and create also global champions in key industries. voters have's sweeping changes for the constitution which includes allowing the president to remain in power until 2030. it has drawn condemnation from rights groups about figures. it won via landslide but less than half of eligible voters took part. 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: debra mao in hong kong, thank you so much. difference technology company dassault systemes with second

non-ifrs and -- proposing a 12% dividend increase to 65 euros. is some of the numbers we have had out this morning and joining us now for his first interview of the day is jacques van den broek -- .ernard i had to you because bloomberg has been reporting that dassault systemes is looking for acquisitions and considering targets including metadata solutions. are you looking at metadata as a potential acquisition target? think it is appropriate to comment on any of those. last year, we did several acquisitions in different sectors.

manufacturing for mainstream market. aligned with our strategy and are providing a very strong quarter so we continued to look at many opportunities but no surprise, it should be aligned with the strategy we have announced. -- thereee what we do are many opportunities in the sectors we serve and it is up to us to arbitrate properly. no comments specifically on that case. manus: look, we will dig deeper into the strategy in a moment. welcome to the show. good to see you. you see the world from a different perspective to the rest of us. we are trying to debate whether china is stabilizing. what you see as a result of the stimulus measures? have a float through into your customers in china? how would you describe business there at the moment? bernard: the business in china is very strong.

it was strong for the past years. there are so many things going on in china, infrastructure, construction, cities, as well as new types of mobility. you look at the shanghai auto show. i think there were 60 new ev models presented. so many new startups. most of them are clients. they innovate, create new technology and solutions from their. i am confident for the short and long-term growth in china. china.confident on how is the demand generally for customers at the moment globally? last we spoke, it was fairly robust. it is that holding up and is the outlook for demand holding up? bernard: it is. dassault systemes is providing solutions for innovations. own portfolio for the future. i notice all industries are

going through a major redefinition of their ecosystem. not the supply chain, the ecosystem. , butportation, mobility construction also. life science is also going through this incredible evolution because we are not in a product economy anymore. we are in an experience economy. you need new solutions. is at the corees of it. i am confident that just that very reason of portfolio for the future is going to continue to ensure double-digit growth we are seeing up until now. manus: and that double-digit growth includes boeing. this is one of the big topics. you talk about the 3-d experience platform, one of the experiences that extended your

relationship with boeing. they have cut production by 19% of the 737. has or will this have an impact that we need to reconsider as we look at your exposure to boeing, bernard? debra: -- bernard: not at all. as relationship with boeing a way to use our software and our life cycle of this huge plane. it is a multiyear contract, as we announced. the visibility stayed the same and we are going to continue to work with them to even provide new types of solutions because all industries with groans and new equipment, including autonomous vehicles, are facing an incredible challenge which is the management of complexity for system management. what we call electronics mechanical software.

you need to integrate that in a safe way. boeing isonship with stable, robust, with no change. nejra: can i go back to m&a please? you didn't want to comment directly on metadata but more detail on your m&a strategy from here. will you be looking at bolt on acquisitions? what areas, geographies? when the metadata record came out, the focus was on the fact you were looking for u.s. acquisitions and to bolster the life science unit. even if it is not metadata, are you looking at the u.s.? are you looking to bolster the life science unit? bernard: the acquisition policy for the system has never been geographically sick -- driven. it is sector driven, industry driven. it is about technology of talent, which we know is a critical aspect of it. it has to be aligned with the strategy we want to proceed on

offering new kinds of highly innovative solutions to clients. the geo factor is a marginal one. almost no effect. basically for the past 20 years. we have been successful in the way we have done that because we want capabilities, portfolio, serving the best clients in the world. in the 11 sectors we serve. manus: bernard? sectors, our last conversation with randstad was about the health and the economy in europe. you are well played -- well-placed. we had a downgrade in growth from germany from 2% a year ago. what is going on at the heart of the european economy? are we stabilizing, deteriorating? is you seeing a trough or tech in splendid isolation to the rest of the slowdown?

bernard: the european economy, when it comes to industry, is going through a significant transformational aspect. diddle is ace in -- on theization, volume global market, the volume for our clients, production volume, but i believe the number of new projects to create new kinds of solutions for the market is going up. look at germany, all the auto players there working on new portfolio for electric vehicles. i've never seen as many projects as the number of projects we have across europe now. of course, they don't generate immediate revenue. this is to build up the future portfolio but this is where we are. this is our business. i think europe has something to play to transform its solutions to sell more to the world. there is a policy that needs --

manus: indeed, that relationship with the rest of the world is going to drive the economic story. jacques van den broek -- bernard charles, time has run against us. thank you for the conversation. the ceo of dassault systemes, joining us. from london to saudi arabia, hosting the financial sector conference, the biggest financial gathering since the death of journalists jamal khashoggi. our middle east anchor and my cohost yousef gamal el-din is there this morning with a special guest. yousef: good morning. the leading voices of wall street making a comeback to after the months widely acknowledged mishandling of the government of the government critic jamal khashoggi and the murder that followed. in terms of the state of lay, let's get additional context.

thank you for your time. is this a clear signal to the world that saudi arabia has turned a new page? >> i think what has been the case in a significant way for a while. i don't think the global investor community has ever shunned saudi arabia and that was withstanding noise in the media about a massive exodus from the country and a lot of parties aroundd the globe to stay away from saudi arabia. that was not true and i think what we see by way of the appetite investors have shown in recent issuances by saudi arabia like the aramco bond here and transactions for and in saudi arabia over the last few months,

they all indicate an unwavering ammitment to the country, and very enduring appetite for saudi arabia and the risk profile that saudi arabia offers. event is a clear indication of that. with that, i concur. yousef: what are you seeing in or in the more longer-term? jamal: we at deutsche bank anticipate significant flows, passive and active as a result of the inclusion in the ftse index. total ofstimates, a about $45 billion of inflows. it would take a bit of time to phase that in, but we are very

we are as to the numbers expecting and we have begun to see the forefront of that process actually materializing, and we are seeing the flows. yousef: give me a bit of a sense of what the role of the middle east is in deutsche bank's broader general strategy. jamal: the middle east and africa, for that matter, constitute a key part of our emerging-market strategy on a global basis. emerging market strategy for deutsche bank is key to our global and universal objectives. within that, the middle east plays a key part. africa is emerging, as we discussed before we began this discussion -- that africa is also emerging as a key market for our self. but the middle east since at the very core of our emerging-market

strategy at deutsche bank. that has been the case for a while and is expected to continue to be the case for some time to come. of course, the bank cares about a lot of markets globally. our marketing europe, north and theyasia pacific, all attract a great deal of attention and focus but the middle east and especially within the middle east, the gcc market, saudi arabia, uae our key markets for us. yousef: what is the market looking like for him and a and potential ipos -- m&a and potential ipos? jamal: the market is quite vibrant at the moment. both on the equity side as well as the debt side. on thect more activity desk capital market side than we expect on the equity capital market side. there was a lot of activity underway at the moment in m&a

ecm and egm. the financial industry is witnessing consolidation in the region. we think that is healthy him a good. -- healthy and good. corporate financial institutions cap in the market for debt. ng the market for debt. we see institutions fortifying, tapping the ecm markets. yousef: $75 a barrel for brent, is that sustainable? jamal: i hope it is. the fact is, i do anticipate a bit of softening in that. some one-off factors are at play here, but the premium will likely dissipate or narrow in the months to come.

yousef: jamal al kishi, a pleasure. the ceo of deutsche bank mena. nejra: thank you. its with ceo.

manus: good morning. i am manus cranny with nejra cehic in london. these are today's top stories. credit suisse's main trading business swings back to profit after two quarters of losses. ceo tidjane thiam signs a positive note. theane: we are pleased with portfolio and pleased with our people, particularly in global markets where there is intense criticism and pressure. manus: how high is high? u.s. stocks hit record as tech names ebay gains.

we have the numbers from facebook and microsoft data today. back in a rally, oil from 2019 highs as u.s. inventories rise. go to front runner for the european commission's next president tells bloomberg exclusively that europe must defend its key industries. on the global stage, europe must define our key industries, what we see as our future markets, and we have to defend of them and create global championing as such. nejra: good morning, welcome to "bloomberg daybreak: europe."

credit suisse main trading is this profit after two quarters of losses after the lender emerged unscathed from what rival ubs calls one of the worst environments in recent history. tidjane thiam spoke to bloomberg's francine lacqua. tidjane: it is market dependent. if there is pressure, with less capital in a market like this is a satisfactory performance. this is why we did hard work. is give them a chance. three years of deep cuts, it is important to be stable. restructuringh there may be upsides for us to take market share and equities is strategically important for our business.

francine: take market share from who? tidjane: we do not mind. available. we are strong in the americas, we are gaining market share in q4 2018. my heads of equities tell me do not be too/. -- too bullish. results does not mean we have solved every problem. we have revenue and leverages up 31%. we have optimized our collateral management and consumption to make sure the business stands on its own. cash, we are investing, with recruitment.

our joint venture up 23%. revenues, what they do a structured products for our ultrahigh net worth. services, it has worked really well. we are repeating that in asia. person,n by the same who will do the same thing for our asian client. overall, a good start to the year. francine: are you confident you will hit your equity targets? tidjane: the restructured bank with flat revenues could hit 10%. it tells you the quality we have. with flat revenues, we would

have 10.9. the reason we are at eight is market conditions. market conditions were mitigated by savings. this quarter revenue is down 4%. we have had positive leverage for 10 quarters successively. francine: how do you see markets developing? tidjane: march was very strong, the second-highest month in revenue in 39 months. exceptionally strong. april, we see some of the same trends continuing. america is still very strong, the economy is positive, low unemployment, low inflation, high consumer confidence. there is a slight slowdown, but it is still positive for strong growth. we have dovish statements from the fed and have created a

positive environment, and we will take advantage of that. asia is doing better, china is doing better. we see that in our numbers. q2 2018 was strong, we are below that. europe is always a pressure zone. francine: interest rates? germany struggling, which drives the whole economy to a difficult place. we have the good fortune of being a swiss bank. in switzerland everything is good and we are doing well. that is the difference i think which will play in our favor over time. people will realize switzerland is in europe, it does share some of the challenges. banks taking u.s.

the europeans lunch? can you take on u.s. banks? we are the first to announce european banks, so i cannot talk about the others much. we are pleased with the performance and pleased with our people, particularly in global markets. we are under intense criticism and pressure, i'm sure we will have different cultures, that happens. we want to ensure people it is a viable business. by workingelivering more closely with wealth management, which is what we always wanted. up 11%. it is becoming material. francine: in europe there is so much m&a speculation. is there any part of your bank would benefit from m&a? tidjane: we are focusing growth in m&a.

strategy.ying on our m&a is not something we find attractive at this point in time. we have high hurdles. we find in most situations the risk and returns are not appropriate. , when wean grow at 4% do 35 billion of assets in a quarter, you have to weigh any acquisition versus that. very few acquisitions would have given us more than that. in an environment of compliance, it is so important, you have to make sure you know what you buy. it is one of the things that makes me wary of m&a. it is difficult to deal with the

legacy. manus: great conversation there, francine and tidjane thiam, ceo, credit suisse. great interview. it looks like the market is lapping up the words of the strong performance. stocks up 2%. what was your take on the conversation? francine: we are only one hour away, the takeaway is he is pleased with mobile markets. this was the main focus that investors said was a worry in the previous quarters. he says there is something to smile about on equities and global market. one thing people will focus on is the return on equity. he says these results will prove his strategy works. his strategy is resilient, he was optimistic about having turned a corner but remains cautious because markets could could hurt, and

trading in the future. i asked him about clients, he was optimistic, they are feeling better now than in january, but still investment in cash. nejra: great to speak to you. some clients do not have the stomach to come back to the market. up inpointed to the stock premarket trading, and it is outperforming the stoxx 600 rank index. it sounds like good news today, but how much is priced in by the market? everything will depend on how the market will perform. a lot of investors want to know if he can hit the r.o.e. target. and m&a, if you look at the wave of potential m&a and rumors of m&a in the banking sector, the deutsche bank and commerzbank and asset management with a tie up with asset management unit.

that is speculation. tidjane thiam was saying he needs to be careful dealing with m&a, but there is no thing he is looking at at the moment because he wants work organically. as the bank grows or rivals grow, make sure they can keep up. nejra: bloomberg's francine lacqua in zurich, thank you for being with us. rate interview. let's turn to equity futures. 2.3%t suisse shares rising premarket after the first quarter earnings. overall, futures in europe after eight days of straight gains, the u.s. stock markets hit records. the question is, where do we go from here? it looks like it could be a lower day for europe. u.s. equity futures slightly on the back foot, down by 0.1%.

the bulls would say it is a low conviction rally and evaluations are not concerning at the moment, but people might point out that a lot of it has been led by big tech names. how are bonds looking? manus: the bond market is trying to make sense of the equity markets. one point in regards to u.s. whatury curve, what -- does it tell you? it is rising progressively. we have written the curve for four weeks. we have not seen that since 2016. the optimists are probably in charge at the moment if that curve continues to steepen. up, an exclusive conversation with the ceo of novartis. he has just up his guidance. dr. vasant narasimhan joins me

shortly with his ambitions for the company, and a transformation story. this is bloomberg. ♪

nejra: 7:16 in london, 43 minutes away from cash equity trading. this is "bloomberg daybreak: europe." i am nejra cehic. manus: i am manus cranny. we have the numbers, 21 for the quarter, upping the guidance for novartis. it is the ceo, he has invited us in. dr. vas narasimhan, thank you for joining us. the guidance. we love superlatives. how would you describe this quarter? hasnarasimhan: this quarter

been about transformation, it is transformational because we were able to refashion the company and focus is a medicines company . we were able to transform in terms of building momentum in our core medicines is nice. you saw 18% income growth, 7% sales growth. our key innovation drivers are firing. potentialeline of blockbusters. this is a moment of transformation. what does it do for you as the ceo, does it empower you to create? dr. narasimhan: we are in a world where companies focus their mental energies and capital are the ones that will win. in an innovative environment like we are in, you have to focus. andng out of devices focusing on our core innovation engine, i think it will be powerful for novartis. billion of

acquisition in core medicines last year. this will enable us to focus capital in that core we generate the most value for shareholders and society. manus: that will bring to the argument, markets will say what will you do? it does not fit with the profile. it does not hit the margin buttons you want. does it fit in the family long-term? dr. narasimhan: when i think where i want to position novartis, you have diversified health-care giants, highly focused for massoud go companies, we want to be a diversified medicines company across the reputed areas, across small molecules, gene therapies, diversified in terms of being a leading player. our focus is to build a leading company, that is the focus. if we can do that, it puts us in a better position. manus: are you building it to sell? dr. narasimhan: our focus is to

build a leading generics company. manus: you talked about gene therapy, that was a deal that came to pass last year. the world is trying to understand how you will price this. you said you will develop that. do i get a mortgage if i need gene therapy? how innovative do you want to be in the gene therapy space? to narasimhan: we have remind everyone these are remarkable therapies, curative therapies. kids dying from a disease to what her percent surviving in our clinical trial from a single infusion. from a cost-effectiveness standpoint, you can justify high prices. with cut offs you can get into multimillion dollar ranges. our focus will be to provide all

options including payment over time. pay over five years, pay-for-performance. if the medicine does not work, we will look at rebating back, which we do not expect to happen. ann you look at it on annualized basis, it is a great value for the health care system. even a great value for a one time payment. we understand health care systems need to plan for these therapies. i think this will be important for the whole industry, not just us. we will have 25 to 30 gene therapies coming. back to the pricing, and i want to push you a little bit, it is a one-shot and transformational. you are saving lives. do we need to think differently about how we pay for drugs? dold you envisage where you the financing side as an

innovative part of the business? dr. narasimhan: we are looking at innovative models. payers are most interested in payments over time, or rebates for performance. the big shift we need the world to make is going from where we are used to getting pills over 40 years that have a small incremental effect, to a single infusion that has a transformational effect. we made that shift, the payment models have to shift. we are innovating and talking to a broad range of partners. manus: my print colleagues will not let me out of the building if i do not ask, you up the guidance with operating income.

your target mid-30's by 2022. with this guidance, can i push you for a reflection? would you upgrade that? dr. narasimhan: we are sticking to mid 30's and 2022. we did get to 33.3 in the first quarter. one of the drivers is great live performance, all of the sales drivers doing well. also new launches starting to kick in. the other i am happy about is our productivity initiative taking hold. we are working on a massive transformation, one of the most the industry. also a complete transformation of our services. we announced a goal of $2 million -- $2 billion of savings. that is starting to kick in. manus: you mentioned the blockbusters to come, and that with a great deal of fervor. if we look at what might roll off the block, $6.5 billion of revenue. to the other side, you have multiple sclerosis and other drugs, are you confident that your new drugs will get you

dollar for dollar replacement? dr. narasimhan: we feel confident we can grow top and bottom line. we have 26 blockbusters in late stage development. as you focus of the medicines company, your innovation power, your replacement power is strong enough you can replace your patent. that is a bet we make as a company, and we believe we have that power. this year we will have three major launches. then we have five to six major readouts coming out this year. take that together, it puts us in a good place. manus: to america, you did not get it price rise. bernie sanders is back on the medicare for all, one buyer system. your job, you will be here hopefully for five years, your job is to risk prevent. can you envisage what risk management you will have to get involved in if he or some other

person comes into power and goes down this road. dr. narasimhan: the first thing i would say is we have low exposure in general to the u.s. heyer markets, one of the lowest exposed. it is important to investors to remind themselves there is a range of exposure. we are number one outside of the united states as a pharmaceutical company. we know how to navigate a range of markets whether single-payer, mixed, or the swiss market which is privatized that operates in an appropriate way. we feel like we know how to navigate these waters. overall, in the united states, we have to fix some of the broken parts of the system, whether in our world, part b rebates, and rate take away the waste in the system. manus: focusing on the u.s., and one-story recently, you are up

your stand in terms of lobbying. that is a ceos who is being judicious and making sure you have good contact with all government. is that what i should take away? look at thean: you lobbying span across the anustry, there has been increase. that is normal where there is policy focus. if you look at the congressional hearings, the focus on u.s. health care enjoyed pricing, there are a lot of stakeholders we need to reach. we feel we need to shape that environment to make sure we have an environment that enables innovation to happen in the country, and that is what we will keep doing. manus: let's close off with potential deals. to $10u are spending up opposed toe you transformational pharmaceuticals? do not believe in it as strategy? dr. narasimhan: as somebody who

has looked at these deals in the past, i believe big m&a has a tough time to return value because of the disruption in your corporate. we have a full r&d pipeline that we do not want to disrupt. and the execution or risk to ahieve it, i believe you need consistent m&a strategy. if you look at great companies and any industry, m&a's around 5% of the market cap. that is what we want to do. much. thank you so it is a great opportunity to have this conversation. that is dr. vas narasimhan, ceo, novartis transforming the global business. nejra: we are in sync, because what i took away was that transformation. seenransformation we have

in u.s. equity markets since the fourth quarter of 2018, closing at a record yesterday. futures and europe on the back foot. we will be hearing from the saudi minister live. that conversation next. ♪ so with xfinity mobile

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"bloomberg markets: european open." i am and edwards alongside matt miller in berlin. matt: u.s. stocks hit a fresh record as earnings pile in from , andiggest names in tech european banking. european stocks still point lower. cash trade starts in 30 minutes.