francine: ubs beats expectations. facebook, shares surge in the social media giant after posting robust sales signaling they may be close to resolving a u.s. privacy investigation. executive ross mcewan resigns and barclays disappoints , telling us the letter had a challenging first quarter. thee face choppiness in investment banking, especially around capital markets and m&a around the world. ♪

francine: welcome to "bloomberg: surveillance." this is what the markets are doing. i am francine lacqua in london. the stocks here are down 0.3%. a lot of the focus is on the earnings, on banks reporting, but there is little bit uneasiness -- of uneasiness when it comes to world growth and central-bank action. bankard from the central say they will not hit the inflation target anytime soon. brent, a lot of volatility, currently at 75.23. the dollar index has been advancing quite significantly, that is the bloomberg u.s. dollar index. coming up, more from our day forws on this big banks in europe. but first, let's get first word news from new york city. a clear timetable for her

departure is the demand for lawmakers in theresa may's own party as brexit chaos continues. but this gives the prime minister a little breathing room . they shied away from changing party rules to make it easier to oust her, this coming as scotland's primus are called for a new independence vote. donald trump is shifting the u.s. stance on libya. in a phone call, he reportedly act an assault on the country's capital to depose the internationally backed government. the white house putting out a statement recognizing his significant role in fighting terrorism. sachs should plead guilty to crimes in order to settle its 1mdb probe, a recommendation from u.s. prosecutors. the firm blames rogue employees for wrongdoing and previously told prosecutors it was deceived.

still, malaysia also faulted the company. it says that goldman misled investors, knowing money would be misappropriated. a japanese court agreed to release carlos ghosn on bail for a second time. he was indicted for allegedly fall -- filing millions from the sun -- from nissan. the executive could be released as soon as today and prosecutors are appealing the ruling. and at amazon team ottoman alexa commands can access the home addresses of customers. the group analyzes voice recordings by can also access a host of user data. there is no indication amazon employees have tried to track down users, but team members have expressed their concerns to bloomberg. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. francine, back to you in london. francine: thank you so much. let's ticket off with banks. in switzerland, ubs is surging past expectations after money came in higher than estimated. march,second half of market conditions and investor sentiment changed for the good. both in absolute and relative to last year. we had a very strong finish of the quarter. it is now coming into april as well. so that has changed dramatically. francine:. the u.k., rbs chief executive ross mcewan announces resignation and then barclays earnings were mixed. we have been asked -- speaking exclusively to just staley -- jes staley. have experienced

choppiness in the markets and m&a around the world are we saw it -- around the world. we saw it might not in the u.s., but things like brexit have subdued major board room activity in the u.k. and across europe. despite that, i think we did quite well in our markets business. for the sixth consecutive quarter, we gained market share and the profitability of our market business, like last year, was double digits. nejra: how would you characterize your performance versus u.s. peers? you made reference to their performance. jes: particularly in the macro space, i.e. where we trade fixed income, we had a good first quarter. on u.s. dollar basis, down only 3%. that was at outperformance, so

it's good. six quarters in a row. importantly, we like the 9.6% return on tangible equity in the first quarter as we make our way to deliver through the year. one billion pounds of profitability, this time last year, we are a $2 billion check to the u.s. department of justice. we no longer have those issues. we have a profitable first quarter and deliver one billion pounds of profitability to shareholders. nejra: there was an investment -- and in a vessel first quarter. how will you meet the banking challenges differently when the market is not paying you for it? jes: you know, there were two main objectives behind the reorganization announced a couple weeks ago there first and

foremost, we want to put under a single lens our global franchise and payment franchise. given what technology is doing in finance, being laser focused on payment is important. so we put all of that business under a lot of money. in morewanted to bring direct contact with those running the corporate and investment bank. , theead of the corporate head of markets, and headed banking all report to me. we think that was the appropriate thing to do. those are the main reasons that led to the reorganization we talked about. francine: that was the chief executive of barclays jes staley speaking to bloomberg exclusively. for more from bloomberg intelligence is our analyst. i was going to call you bloomberg intelligence, you are

bloomberg banking intelligence. rbs is losing the chief executive but he will stay on until they find an executive. you have barclays, and talks of a collapse in talks between deutsche bank at commerzbank. what is most interesting? >> two things stand out to me. if this was a few quarters ago, you would expect them to be up 5%. credit suisse, opening up and closing flat. a lot of it has to do with the fact the banks have recovered and where the market is now. the outlook is difficult to tell . barclays is the most interesting because he is flagging the fact that trading is good, equity soft, fixed income better, he has also said i've given you this 13 point 9 billion pound cost target, but i prepared to go up below that is good he is doing that, particularly given the departure he is taken over the factering 9%, but

he feels the need to say it means he has little visibility. francine: that is true for everyone. johnathan: it is, but if you look at ubs, particularly the recurring fees they get, he is happy to say to qs will be good, you cannot say that from a trading perspective. francine: for the swiss banks, what are investors expecting? do they need to do more? is it cost cutter or what markets are doing -- cutting or what markets are doing? johnathan: it has to be cost-cutting. the gross margin pressure continues. money numbers, but if you look at the past quarters, they are quite volatile. there is a lot of competition, and if you look at what they are trading at, i think it is fair, but they are not expensive for a reason. markets are going the wrong way and your hostage to fortune. francine: on rbs, what kind of

executive to the need? -- do they need? johnathan: probably an internal one. he has done a great job, right to the ship, cut costs -- right ed the ship, cut costs. we know buybacks are going to come. but the problem is there is no topline growth, so they need someone who knows the bank into the u.k.. francine: according to a person familiar, deutsche bank at commerzbank talks are said to be near collapse. does this make sense? johnathan: it absolutely makes sense it does not go through. you can imagine the conversation. commerzbank is saying we will cut these jobs, you need to shrink. you have deutsche bank saying we cannot just shrink i.b. because the u.s. franchise is too costly

and we need to raise 10 billion euros. so there were too many hurdles. but give them credit, there is a need for m&a. you need the justification of domestic synergy. commerzbank, i suspect, will remain in play. and deutsche bank really does need to go away. whether it is more to do with asset management, it needs to cut forecasts, shrink the u.s. id, and get out of this whole. francine:-- get out of this hole. francine: do these banks need to become more like utilities? johnathan: i did say something like that the other day. youru are returning all of capital as dividend or buybacks, you are a regulated utility. these are yielding, on average, 6%, some yielding a lot more. until we can see some topline lamented, yes, they are cost-cutting regulated

utilities. francine: thank you very much. up next, king dollar takes backs it crown -- takes back its ground. what's next for the currency world? that's up shortly, this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." king dollar has reclaimed its crown once again. the bloomberg dollar spot index has climbed to its highest level this year, up more than .9%. data later this week is expected to show the world's largest

economy is humming along. this as others are looking gloomy. joining us is the head of fx strategy at radel bank -- rabobank. what is underlying this strength? jane: it is the best of a bad bunch. the u.k. economy is humming along, but we are looking at weakness elsewhere. i think this is important because it a large part of the basket. if you look at the german economy, it is so disappointing. last summer, they were saying it this be temporary, but temporary has extended and we are moving into april, may, and see week data earlier in the week, we had donald trump tweeting about, looking at tariffs, and i think the market is quite nervous will have the u.s. switch its focus to trade wars with the eu.

ecb the day before released a report suggesting it would be the u.s. economy that would be hit most, but i do not think the market believes that. they look at them as a vast, open economy and looks at the u.s. as a much closer economy. it is quite concerned about the impact on germany there. francine: you have a higher dollar, what does it mean for fed policy? jane: it will be quite interesting because we are moving into fed policy next week. perhaps a little relief on the part of the fed, but i do not think they are in a position to give us a fresh direction. it is our view we will still see a slower economy next year. the impact will take that amount of time to have an impact. relief, earnings indicating

the relief story, but we are still nervous about 2020. francine: you are not expecting a hawkish fed? jane: not at all, we think they are done. we do not think there will be anymore tightening cycle -- this cycle. i think they will sit on their hands a little longer and gauge with the economy is doing. francine: does the ecb have the tools to deal with this downturn? jane: that is the big question. something we have been debating for a while and we'll carry on ibating for a while there think a lot of it is about market confidence. , the look at the tltro's market does not necessarily want the extra liquidity. but the fact of the matter is as long as the ecb is there, it does have some positive market confidence. it does have an impact. with respect to the eurozone economy, certainly the weakness of the euro is another big part.

and that should be very useful for german exporters, particularly if there are additional tariffs. if the currency were helped, it would offset that. that was extremely useful, but the market is quite short on the euro. i think the shortness of positions will limit that. francine: they are also ignoring the fact there is a new ecb president, or assuming it will be the same policy. are they right? jane: we do not know, it depends on who it is. if there is a german at the helm, maybe not. maybe we will get someone more hawkish. but the way the data is settling, weekly for germany, it is difficult for the market to say we will get a hawkish ecb chairman. from that point of view, it is a fair enough assumption to assume more of the same. but we will have to wait and see. janeine: thanks so much,

foley from rabobank stays with us. look at rbs, the chief executive saying he will resign, though it is not immediate. clientsaying wealthy added some $22 million in a surprise rebound. and then barclays down 1.6%. equity trading revenue declined at the bank. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." let's get straight to the bloomberg business flash. deutsche bank and commerzbank merger talks are reportedly on the brink of collapse. bloomberg learned the bank made the decision -- decided the risks are too big and may make the decision to call off talks as soon as today. first was better than anyone expected, warning of the worst first quarter is in recent history. but the swiss bank protected $22 billion in new money to its key wealth management division. they also say this quarter will resume share buybacks. >> our ambition is to reach up to one billion and we will implement and start to do the buybacks in the second quarter. but depending on market conditions and the business

outlook. >> that is the bloomberg business flash, francine. francine: thank you so much. the bank of japan says it will keep interest rates extremely low through spring, forecast it will not hit the 2% target for another three years. that would be nine years after the governor launched the radical stimulus program. foley fromus is jane rabobabk -- rabobank. is idea is that inflation nowhere near that target and it will take a long time to get back on track. jane: the fact is it did not surprise anyone. they said they would keep the policy until 2020, did anyone think they would? no they didn't. so they change the language, made it specific, but they did not really change any expectations. case, they in any

spend more time looking outside japan, it is a safe haven currency and can react to geopolitical impact more than it can domestic policy. but japan has got this consumption tax and that could be quite significant, another reason the market did not expect anything from monetary policy for quite a long time. markets: this is our like question, and i urge everyone to log on and check out our blog. the question is will dollar-yen 1.10 ort 1.111.14 -- at 1.14? jane: i am going to go with 1.10. difficultiese going to come over the next year. 1.10 is where i would put my money. francine: thanks so much. jane foley from rabobank stasy with us.

facebook beats expectations. we will bring you the details of jane forgo back to some cable calls. and news out of theresa may, people in her own party asking when she will step down. we look at that, look at brexit news next, and a little later on , we look specifically at what brexit means or some of the uk's banks. we found out earlier that rbs's top banker will leave within a year, an unexpected move that really paves the way for a senior female executive. so we will have a lot more on diversity in banking. this is bloomberg. ♪

economics, finance, politics. this is bloomberg surveillance. let's see what the markets are doing. dani burger has the movers.

dani: starting with deutsche bank, this is a story we have been monitoring all morning. albert confirming that deutsche bank and commerzbank on the brink of ending their merger talks. they said integration risks were too high and shareholders agree. for deutsche bank but commerzbank seems to be declining. nokia is the biggest loser of the day, shares down 10%. a surprise loss in the first quarter. that's even as rivals are gaining ground in the 5g competition. it will make it hard for nokia to meet the 2019 forecast. sainsbury formally rejecting a merger. jeffries cutting the price tag. the focus has to be a standalone company. francine: dani burger with all of the big moves we are watching out for today.

here is viviana hurtado. the royal bank of scotland says chief executive ross mcewen resigned. he has a 12 month notice period. allison rhodes is a potential replacement. she is a life or that runs british, commercial, and private banking. barclays traders outperforming rivals and a quarter that saw and firstll street quarter less than expected. our clays is one of the few banks to post again -- barclays is one of the few banks to post the gain. >> we face the choppiness around equity capital markets and m&a activity around the world. results is the

reason why number i is scrapping is scrappingmura for executives. income dropped 96%. the company posted a loss of ¥100 billion, the first loss since the global financial crisis a decade ago. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. francine: as brexit chaos continues, lawmakers are asking theresa may to provide a clear timetable for her departure. this gives the prime minister a little breathing room. this comes as nicola sturgeon calls for a new independent vote in the next two years. this is the real question.

i raised my hand for a long time saying that the market is not mispricing the opportunity -- possibility of a hard brexit. should we trust the markets more than politicians? >> i think that is one thing. the country is united in the split on if it is brexit. looking at sterling, it has been very binary. he deal with brexit would make a go up and without, it would go down. but it is a little more complicated than that down. supportur party has the , conservative parlay has support. you have these complications. there is the possibility that at some point we will get a new leader for the tory party. and you prime minister that will potentially be a brexiteer. -- that couldcate

complicate things going forward. and we have concerns that are coming in about the economy. really last year we had weak business investments. that is not good. they are stockpiling. what happens to employment and profitability of companies? what we can conclude is that political uncertainty is back for the economy. francine: but is there an ascension in the market that the longer you delay brexit, the more it gets watered down? >> i think that is true and people probably do think that. and that is negative. even though there would be

relief, certainly there would be relief if a deal was struck. the more damage it can do for the economy. theyine: don't forget that are mentally that some point and it is a bit like the ecb president. leave at some point and it is a bit like the ecb president. in the short term, there would not be that much difference. they would be presented with the same set of political issues. it would be difficult to know that without knowing who it could be. it willo know is that probably take a backseat. james, jumped in because we are getting breaking news deutsche bank and commerzbank. as was reported by bloomberg earlier.

deutsche bank and commerzbank announced they are ending merger talks. banking coverage for bloomberg intelligence, they are saying this is good news. but a lot of people were saying that this was more of an acquisition than a merger. have been big news for deutsche bank and commerzbank because they would have been able to cut costs. the big concern for deutsche bank is that they haven't been able to cut costs as they wanted to. this is partly due to what happens in germany with labor laws and unions. deutsche bank and commerzbank have decided to stop talks. i know we don't cover the banking sector. we hear mario draghi talking about negative rates. a lot of these banks are dealing with negative rates. is there a right way to do negative rates and does not put pressure on the banking giants? this is extremely

pertinent in europe right now. it has been more pertinent in japan for a longer time. some lessons. this is why a couple of years ago, the bank of japan bought a yield curve control component to their qe policy. in europe, no one really knows the answer to this. but it is something that they would have to watch closely. , it ise interest rates potentially damaging for the banks. when he began banks to keep on lending. newsine: getting breaking out of deutsche bank. they are also releasing their first quarter earnings. the first quarter net income is about 200 million euros. i don't know if we have the deutsche bank share price.

this would be the reaction overall that we have heard from these too bigting to fail banks. and it puts more pressure on the system. what is the german economy need right now from the banking sector? , the germany economy or any economy needs a well functioning bank. there was the potential advantage that they were going to bring costs down. i think the market would be hoping for structural reform the next few years. francine: when it comes to trade, we have been talking about this. there is actually weakness in the banking system. concern that donald trump if he does not deal of china and goes after german

are like we have seen in the past, it's a lot of talk but less bite? jane: there is a real concern that if something is not done with china, that they would be under pressure. i think we have seen that since the middle of last year, that we are not seeing the rebound that haveeconomists anticipated. we know that germany exports a huge amount of manufactured goods. we know exports are very large component of gdp compared to the u.s. which is much more closed. there is the threat that extra tariffs on autos can be .xtremely costly the ecb did publish a report earlier this week. research suggests that it would that would economy

be hit a lot more. but we have half -- also had reports that say the opposite. there would be a feeling that germany would be more vulnerable. because germany's vulnerable position right now. deutsche bank and commerzbank have stopped talking. the banks made the decision because of the integration risks . we understand. we thought they were too big. deutsche bank and commerzbank have been talking about this take over since mid-march. let's bring the anchor from berlin. this was largely expected. does this mean they will continue their strategy? how can they cut costs without merging?

it would've been very expensive to do the merger in the first place because the reality is it wouldn't have been a merger. it was an acquisition. they would've had to raise capital. number one, not by an commerzbank is a good way to save money. number two, they will probably be accelerating the cost-cutting plan. that is what plan b was looking like a week ago. they had been pushed to say that they were only -- not only going to not buy commerzbank but deliver earnings early. the market reacted positively to either one, the other, or both of those announcements. deutsche bank remains one of the most critical banks

in the world. do we know what german politicians want for deutsche bank? matt: i have to give a shout out to the berlin government reporters here. they wrote a fantastic story this 2,rlin's take on 3, 4 weeks ago saying everybody in the government was against the idea of deutsche bank buying commerzbank with the exception of olaf schulz. 40,000 job cuts would have been far too many to stomach, especially in this industry. and while seen as an important bank, they still have other options to deal with the huge balance sheet. they were trying to get answers out of sergio ermotti all morning.

the u.s. is interested in wrapping the wealth management unit into dws. it also did incredibly well in the first quarter, stopping the tide of outflows. it is a very interesting story and there are a lot of moving parts. there's a lot more that you can see happen. are bankszbank, there interested from italy, france, and ing. i know this is a most impossible to answer, but looking at the share price, why is deutsche bank up and commerzbank down? do we have any explanation gekko -- explanation? was going to be a takeover and this is what typically happens.

-- of thet were shares, they were going to get something and now they are not. so you see the shares fall. did you see the takeover, the buyer rising after they announced they are not going to as neil pointed out to us earlier, even though executives love to do m&a, they typically don't benefit from the shares. there is a sigh of relief on the deutsche bank shareholders that did not want to go into this acquisition and commerzbank shareholders are wondering who is going to buy us now. will it be unicredit? that is why you see the shares drop. coming up, we will be talking about investment in qatar.

stay with us. this is bloomberg. ♪

this is bloomberg surveillance. i'm francine lacqua in london. in the last few minutes, deutsche bank and commerzbank have ended talks on the future of both lenders thrown in the question. let's bring in what we are looking at right now. deutsche bank actually gaining on the news and if you look at commerzbank, it is down 2% on the news. the agreement forces deutsche bank, it one of europe's dominant financial institutions to really come up with a new plan.

we call it plan b but it is the fifth turnaround plan because they want to try to allay investor concern. you see deutsche bank gaining 2.8%. this get straight to the bloomberg business flash in new york city. bank anddeutsche commerzbank as we have reported have formally ended merger talks. the banks have made a decision that risks are too big surrounding merging. there were opposition from labor unions and other key stakeholders. elon musk promised tesla would stop losing money and it turned out to be premature. posting a bigger than expected loss in the first quarter. tesla planning $2.5 billion in capital expenditures this year. that is more than the amount of cash on the balance sheet.

auditing alexa commands, you can access the home address of customers. it can also access a host of user data. there is no indication amazon employees try to track down individual users. but two members of the team are expressing their concerns to bloomberg. microsoft's cloud computing business failed profits this quarter. overall revenue rising 14% from a year earlier to more than $30 billion. but cloud services revenue growing by over 70%. the new clients include walgreens and exxon mobil. facebook reporting first-quarter earnings with revenue growth holding steady. the social media companies offers quarter revenue rise on strong advertising business. this book is also setting up $3 billion in the midst of an ongoing privacy investigation by

the u.s. federal trade commission that have not yet been resolved. >> to the ongoing settlement discussions, the matter is not resolved so the payment remains uncertain. we are estimating this range of loss to be $3 billion to $5 billion. we can't really comment further because this is an ongoing matter. we booked at the lower end of the range. >> and that is the bloomberg business flash. francine: in the last 10 to 12 minutes, it was big news on the markets. confirming that they stopped merger talks with deutsche bank. this throws the future of both lenders up in the air and into question. they expect deutsche bank to unveil a little bit more.

of --re trying to allay investor concerns. stock prices down 2%. plenty more on the banks next. this is bloomberg. -- we will have plenty more on the banks next. this is bloomberg. ♪

francine: we have breaking news in the last half an hour. both deutsche bank and commerzbank into question after deciding not to emerge. what will we hear as a plan b or in the case of deutsche bank, probably a plan f? how do they get shareholders back on track. >> this is the question, francine. we have gone through so many plans at deutsche bank. it hasn't really worked and we're going to have to wait and see what they come up with here. are scheduled to report their first-quarter earnings tomorrow.

we are hoping that we might hear a little bit more of that report in the morning. we have executives speaking that will have to answer to investors for what their plans are moving ahead. absorbing the news in the last half-hour that they are ending the talks. and there was huge opposition among labor leaders. it is certainly something that was a factor. we talk about all of the issues that they had to deal with if they had decided to move forward. francine: they cited restructuring costs. why did it take them so long to realize? thosewas one of situations, francine, where they were trying to make something come together. and ultimately, the numbers did not fit.

the banks and things have gone quite quiet. we'll see what the finance ministry has to say. angela merkel has been quiet on this front as well. in particular, the finance ministry, they're likely to have big all over their faces. they are pushing for the merger to move forward. chad leaves the germany coverage and we will have 20 more on the banks with tom keene who joins me from new york. we will be right back. ♪

francine: just breaking,

deutsche bank and, spain have ended merger talks, throwing the future of both lenders and the question. barclays earnings disappoint. the chief executive tells us that the lender had a challenging first quarter. >> we face the choppiness, particularly in investment banks and the line with m&a activity around the world. and re-friending facebook. shares surge of the social media giant after posting robust sales growth and signals it may be close to ending the u.s. privacy investigation. this is bloomberg surveillance. good afternoon if you are watching from asia. , i'm francineork out of london. we had rbs news. but the merger that was talked about the last couple of months will no longer happen. we are expecting or hoping to have a clearer picture on what the plan b is. remember, deutsche bank, this

was their fifth turnaround plan for 20 -- since 2015. was reallyerger under threat and as he said, francine, the other names scurrying around. what has changed is the weaker euro. the market backdrop just in the last 48 hours has changed dramatically. tom: i would point out -- francine: i would point out that the lenders said it would be too costly to execute. it can also impact the possibility of other mergers. here is viviana hurtado. viviana: we begin with breaking news on the talks of the tank merger ending without a deal. commerzbank and deutsche bank saying that it would not have created enough that if it's to .ffset the risks deutsche bank will review options to improve long-term

profitability and shareholder returns. -- since march mid-march, they have faced opposition from labor unions and key stakeholders that have been critical. lawmakers granting prime minister theresa may some breathing space. they urge her to provide a clear roadmap for quitting. but they backed off of changing rules to make it easier to oust her. she is trying to put together a compromise talks with the opposition labor party. the bank of japan is stepping up a pledge to keep interest rates ultralow into next year. the central bank projects it will not hit the 2% inflation target since march of 2022. that itunderscore and can move prices or cope with a severe downturn. a big lesser takeover in the u k collapsing. -- thefter british

combination would likely mean higher prices and less choice for consumers. global news 24 hours a day on-air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. huge news to the morning, but let's go through the data. futures are flat. who knows what that will mean? the euro is extraordinary. we have american oil, 66 a barrel. vix 1319, dollar large. where are we with the dollar? we see the weaker euro. i have put this on a little bit

of a great here to show the trend as well. the big dollar surge of 2014. here is the regression. and we come up on one standard deviation dollar strength. it is a big deal and we are away from real tension. i would suggest, francine, that we have reached a point of tension where you wonder if we get a presidential tweet. francine: i'm sure we will expect it in the next hour or so. the president was also tweeting about oil prices not that long ago. we actually showed you the price action when it comes to banks. deutsche bank and commerzbank ending talks. deutsche bank was up 2% and commerzbank was down 2%. we will have to look at the feelings about that. saying that both

a client and $22 billion to the wealth management in the surprise rebound. we had a warning from barclays. and the rbs chief executive saying that he would leave, but is not leaving before he finds someone else, tom. i asked jonathan tice what his most important story was, and he said barclays. tom: i absolutely agree. the qualifyingo guest, deutsche bank is trading at 41% of bnp paribas's book value. commerzbank is trading at a lofty 54% of the french banking giant. it is stunning how weak they are this morning. looking at the french banks that were considered the strongest just a few months ago.

joining us is bloomberg european finance managing editor. and bloomberg intelligence senior analyst. there is so much going on. what do we make of deutsche bank and commerzbank? what is plan b for these banks? for these banks is, what happens now? for the last six weeks, we have been riveted by the drama that we have been trying to figure out how the combination will happen. what the mechanics of the deal would be. and as the process went along, there were obstacles that came up. what is plan b? inis a little bit clearer terms of alternative bidders coming into the picture. they have been looking at commerzbank.

let's also get allison in. i have been looking at the share price. deutsche bank was up. down 2.5% on the same news. why? -- our view is that no deal is better than a bad deal. and if you look at any type of transaction, it really would have been even if it was some sort of merger, deutsche bank's sort of the acquirer. 's may explain why commerzbank stock is down even though there's a potential for another buyer to come in. for deutsche bank, the deal is not happening and does this force them to come up with a new plan to address what really are the core revenue issues for the bank? all i want you to talk with of your wonderful experience about the movable parts that are out there. dollar strength, euro weakness.

and we have a reaffirmation of negative interest rates in germany in particular. what is a banker to do? what is the sweat level to get something done? >> to your point, this may be another reason why it is good for deutsche bank, it would be difficult to execute and take out cost. things is that the inironment is looking better general, just in terms of the fact that people are less worried about recession. is improved client reaction. today, thisrom ubs is in terms of improving momentum.

volatilityt of this -- we like good volatility, we like some volatility and we are getting some of that. that can be positive. tom: we are that they were going to come in guns blazing and compete in europe. the uc lessening of that? -- do you see lessening of that? they have been helped by the virtuous cycle. they improved their capital situation shooter -- sooner. they have been gaining shares, especially in the trading business. we do think that while this might continue, there is probably less opportunity ahead.

top five have gotten stronger but they're generally top 10. be a sizable what we saw this quarter was europeans outperforming. it is a very small business. barclays had and less muted declines. there was out performance in the quarter. some of the trends that we see are mixed. >> a lot of resilience took many by surprise. where does the bank will from here? -- go from here? jes staley, that is where he wants to make his mark. that is where he wants barclays to go strategically. competing with the likes of jpmorgan and other u.s. powerhouses.

going head-to-head with some of would mean.s. banks that it puts barclays in a tough because you have the one way that they can actually show some improving results is by cutting costs. and you cannot shrink yourself into a position of dominance. it is a very delicate balance. and this quarter can exemplify the precariousness of their situation. francine: yesterday, credit suisse beat estimates. ubs today is gaining 1%. what do investors want from these banks? is it possible to keep shareholders happy? backdrop to these banks has been extraordinarily difficult. whatever banks do in this

environment, they are likely to be overwhelmed by forces outside of their control. suisse,h ubs and credit you have seen a movement, a pivot away from volatile trading businesses. appears quarter it would that that move actually paid off for them. i would not call it full-blown victory at this point, but there is some encouragement that they have been able to move away from the volatile trading cycle. for thank you so much joining us on the historic day for european banking. we will see much more on that to the day as well. terrific news flow today. part of that in the technology space. .ake your victims they are always of interest. you can do that with facebook and tesla. tesla not all that data given the grimace yesterday.

microsoft. home run dita left field. amazon. -- home run, deep to left field. amazon. this is bloomberg. ♪

tom: bloomberg surveillance. we welcome you worldwide, with extraordinary banking news this morning. we will have that throughout the show today. season, andings also market moves. francine and i looking at dollar dynamics. francine looking at the bloomberg right now. sterling now 128.80 as well. fixed income strategist and geraldine from pimco with us as well. they have been patient. the dollar right now? is it too strong? is it at an

appropriate level? how youe: it depends on are looking at it, frankly. it is relatively strong compared to europe or japan and makes sense for the dollar to be stronger than it needs to be. it is same time, relatively unusual to see the dollar being so strong. so, you know, you can take it both ways. the dollar remains attractive. do: what do the correlations falling into the fixed income the way the: treasury market has been behaving is very typical of what you would expect. you see rallies when risk assets fall off. and that is not something we saw last year. remember last year, we had a breakdown in this correlation between treasury and risk assets.

this was kind of full swing back into that. this was the central bank policy mentioned earlier on the show, very benign and 2019 with the announcement of the bank of japan. where in an environment the bonds are backed by risky assets. and in the last couple of days, that is a good example of that. we have had a record high markets, we have had the dollar we were just discussing. thatard from mr. evans sliding u.s. inflation may provoke the need for a fed rate cut. scott: on balance, the u.s. economy is doing very well. you have inflation close to target. i think the fed is in a sweet spot right now in terms of policy. in the assetks markets. i don't think we are at that level. any patient policymaker is the way you would describe the fed

and the markets. francine: is it something the u.s. does well or is it just an ugly context? geraldine: we will see what first quarter gdp brings tomorrow but i think it is genuinely doing well. the first quarter is quite complicated around the world and the u.s. might be doing ok with that provision for that quarter. francine: can the dollar stay strong or will we see the president tweet? what does that mean for the earnings?? geraldine: the dollar naturally should be a little bit weaker and at the same time when you look at the major central banks, the first one likely to hike would be the fed. it also cuts both ways and should keep the dollar relatively supported. thank you both. a stay with us.

in the meantime, we had a lot of banking news across the board. we had ubs, we had barclays, we had rbs. deutsche bank and commerzbank no longer merging. 4%,sche bank inning commerzbank down 2%. ubs ag at a $22 billion in asset management. they added $22 billion and asset management. shares up on that news. this is bloomberg. ♪

bloomberg surveillance.

francine lacqua in london. i'm tom keene in london -- in new york. the ballet in washington, we will digress from eu banking and dollar dynamics to talk to stephanie baker once more about what is going on in washington. talk for an hour right now. let me cut to the chase on separation of powers. tosn't congress just go their normal process to push back against a president that says my way or the highway? >> absolutely. and you have an extraordinary situation where trump is challenging what is widely accepted as congresses constitutional right to subpoena hisrequest members of cabinet and executive to appear before congress as their oversight role. is likely to lose many of

those fights. but it will just drag things out potentially for weeks or months. this goes to what you are so good at. investigative reporting. you have a piece on a guy from georgia.and russia and he mated up in front of congress. to be clear, the white house can't control who goes before congress. it right? >> know, and you have congress pushing back. congressional democrats have to face this choice whether or not they pursue impeachment proceedings or they continue mueller's investigation to try to interrogate some of the .itnesses that he called this georgian american businessman appeared in the mullah report, a tantalizing

footnote dropped in their -- the mueller report, a tantalizing footnote dropped in there. about if there were tapes held about trump. texts between the businessman and michael cohen, trump's former lawyer that said he had stopped the flow of tapes from russia. now he is challenging that and asking for a retraction saying that it was taken out of context and he was conveying a rumor. francine: talk to me about joe biden, it is widely reported he would announce his presidential bid today. is he a front-runner automatically? there were questions about the allegations around him. >> he is a late comer but he is starting with a lead in the polls because it is such a crowded field. he has name recognition. he is late to the fundraising game.

and that could be his achilles heel. he is not known for being adept money throughll online donations. bernie sanders starts with a $26 million war chest. the way biden has announced his campaign is very telling. he will rely on big-ticket traditional donors. he is kicking off with a fundraiser in philadelphia at a comcast executive's home. tom: well said, stephanie baker. as well.usual cynicism howard dean will join us in the next hour. howard in on his 47 candidates. this is bloomberg. ♪

♪ this is blue "surveillance," tom and francine from london and new york. news out of the banking sector,

about an hour ago we heard deutsche bank in commerzbank were no longer talking about mergers citing cost and the difficulty in integrating the entities. we just heard from the deutsche bank chief executive saying that market conditions have improved. we were expecting deutsche bank figures tomorrow, but because they said they were no longer merging with commerzbank or taking over commerzbank, we are getting an update on trading in their plan b, basically their fifth restructuring plan since 2015. we had a lot of other banking earnings including ubs. we feelank overall, quite good about the first quarter. >> we are pleased with the results. >> like the other banks, we face the choppiness particularly

around economic capital markets and m&a. >> the second half of mark -- march, arkin conditions and investor sentiments changed for the good in absolute and relative to last year. we had a strong finish of the quarter, which is now coming a little bit into april as well. >> in the macro space where we trade, fixed income, currencies, and credits, we had a good first quarter. that was in outperformance versus the u.s. peers. china, look at asia and it is a clear sign that it is a correlation between the recovery of the equity market in the definitelyer, was head of the investment sentiment recovery. >> we talked about a progressive increase in our dividend as earnings grow and we will deal

with issues like buybacks at a later point. >> our mission is to reach up to a billion and we will implement and start to do the buyback in the second quarter. depending on market conditions and the business outlook. tom: i will cut to the chase. if you are part of global wall street, bronze and memorized that stream. a banker looking forward in a banker struggling for his life. -- and a banker struggling for his life. wall,e the vertical deutsche bank, commerzbank, and the rest with a percentage change down at the bottom. ,hat i noticed is the non-news ubs gets through the corridor and moves forward. others are not as well, credit suisse with a little bit of a lift in tone yesterday. the conversation

with scott thiel and geraldine sundstrom. right to a bloomberg chart, it is calculus time. you know that means the second derivative of inflation expectation five year five-year forward in europe is a disaster. give me a future view. if we break low the 2016 weakness, what does it mean for europe? scott: we take a slightly different view around the european economy and suggest it is doing a little better than analysts suggest. the pessimism is a little overdone. you have strong labor market and low inflation, and stimulus coming from the europeans more generally. that will lead to consumer spending and that is positive. we also have the e.u.-japan trade negotiation taking place, so there is a lot of pessimism

about europe. it is clear the ecb is on hold for a prolonged period of time. what do they do next if there is a further downturn? tom: exactly. scott: they have a lot of choices, but they are kind of dried already choices. are they willing to expand their toolkit from the cut rates further, which will have political ramifications, to drop some of the restrictions on bond do theys, and lastly, go into other asset classes like bonds or equities? that is the big question. tom: nicely said, and i want to thank both of you for being with us. from theepresentatives intellectual confines of him go and -- timco and blackrock. if we get expectations to come down, what does that mean for price and yield?

geraldine: markets have already -- i agree with scott, targets -- markets and bonds tend to be skeptical about a recovery while in equity -- all the equity markets have voted for a recovery. this probably relies on the change of framework by the fed next year or something of the kind. i think a little bit of cushion on yield levels and looking for how good a recovery we might get in the second half, and i think the two markets might reconvert in the second part of the year. francine: where do you see the biggest price? i don't know if it is something -- if it is mispriced, you could see value. where is that? geraldine: the equity market has priced a recovery for the second half, which does not look much

like a stretch of the imagination when looking at the u.s.-china situation, earnings for the first quarter of companies, which are all looking relatively ok compared to the fears we had. on the othersue as we have no inflation, but in europe with the weakness of the euro and the relative strength of oil, china doing what it is doing, we are more likely to see a normalization that is probably good enough. cautious on yield level. francine: do you see any value in european fixed income? do we have too many concerns about the ecb not having enough tools? scott: the government bond affected byry much the extension of the forward guidance by the ecb, so i do not find much value.

bank bonds, particularly subordinated bank bonds have rallied but not to the extent that other asset classes have. they have equity-like characteristics. there is value for the european investor but in my mind, it is the yield, you want the income. the government bond market fulfills a different need. tom: scott thiel and geraldine sundstrom, really appreciate this. your first word news. viviana: we begin with the u.s. and japan looking for a speedy deal when they revisit trade talks in washington, focusing on cars and agriculture, the u.s. pushing to reduce its trade deficit with japan. tokyo wants a promise at will not be hit by u.s. tariffs. carlos ghosn is hoping to get out of jail a second time. his lawyer is posting a $4.5 billion bond.

he is fighting charges he funneled millions of dollars through an intermediary for his own purposes. prosecutors argue he should not be released. donald trump is digging in for a battle over congress' power to investigate, using a strategy that could tie up their probes in court. fighting all is the subpoenas because there is no "legitimate legislative purpose." 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. hurtado.ana this is bloomberg. francine: thank you so much. china's belt and road initiative is going green. 27 firms have signed on to green finance guidelines to incorporate low carbon and sustainable development into projects. they represent around 40% of the total land area and half of all

co2 emissions. standard chartered was the first to sign up. chair of mcguinness is the resource policy, one of the corporations that put this together. usnk you for joining this -- . what do you see in china? weakens -- we saw concern about how the economy was managing itself. has stimulus taken hold and are we seeing a stronger china? catherine: that i cannot comment on, but i am here to look at the belt and road initiative. attend the belt and road forum and there is great interest and activity and energy behind that initiative, from china itself and the many international participants who are here. francine: how will the u.k. take part in this belt and road initiative? there was a lot of slap back

from european countries that went at it alone. catherine: what belt and road involves is a number of infrastructure projects across a large part of the world. they have been badged belt and road by china but these are infrastructure projects that probably need to happen anyway. the u.k. financial services sector is well-placed to contribute to those projects, to provide advisory services, through financing through to the insurance. given the range of firms we have based in london, firms are already participating. there are vast business opportunities as china starts to open that and include a wider range of financing in its models. tom: one of the great ideas of brexit is to reaffirm britannica, that great global empire of trade from the 19th

century. how is it going? does beijing want to speak to a brexited united kingdom? catherine: brexit is an unnecessary distraction when it comes to participation in infrastructure projects. this is something that businesses in the u.k. are participating in already and will participate whatever happens with brexit. all i can say on that is that it is short-term uncertainty, but given the fundamentals and the strength we have to offer to infrastructure financing worldwide, brexit is irrelevant. tom: with your expertise in the city, we are seeing massive turmoil in e.u. banking today and even challenges that are clays -- at barclays. as a general question, how is the city doing? think, there is

uncertainty because of brexit and that is uncertainty we could do without. i cannot comment on market movements, particularly focusing on belt and road. i am confident in the long term fundamentals of what we have come at the innovation we are seeing with the tech sector. looking relatively strong for the long term, uncertainty for the short-term. tom: catherine mcguinness, thank you so much. coming up, he will comment on all going on in europe, the rise in dollar. the oecd secretary-general will join us. stay with us on e.u. banking, this is bloomberg. ♪

♪ "surveillance," francine lacqua in london, tom keene in new york. the former vice president of the united states may be will announce he will run for president, mr. biden of delaware. we have european banking and markets on the move. it is a good time to get a global synthesis with a gentleman from the oecd, angel gurria joining us from berlin, and he certainly needs no introduction. ocd -- in berlin for an oecd confab on employment. saving of deutsche bank is boxed in because he cannot cut jobs.

-- labor too rigid in europe is labor too rigid in europe? angel: the rational decision of jobs will happen. whether there is a merger of commerzbank and deutsche bank or isn't. i heard deutsche bank was working with ubs on dealing with their investment banking unit so the rationalization is happening and will continue to happen because in the end, it is about the likelihood of these institutions. if they do not rationalize and roll with the punches and apply the technology, they will not survive. tom: if you have a backdrop developed by your economist, the idea of a tepid europe with negative interest rates, can the financial system of europe survive that and indeed can they

prosper? is there any chance of e.u. banking getting things fixed and prospering in 2025? angel: this is in response to the slowdown of the world economy. that is, everybody was preparing to get back and normalize interest rates. what is happening now is that we see that the numbers would not support such a policy, that we have to wait a little longer, and therefore what the fed has done and what the european central bank has done and practically what the japanese central bank and all the others are doing, is to say it will take longer to normalize simply because it will take longer for the world economy to recover fully because of all these trade tensions we have in the world to be which continue unresolved. theefore, until we have

resolution of these trade tensions and the answer to many of these disruptors in the world economy, we will not have peace and normalization. francine: does germany need to launch a fiscal stimulus? is it urgent? would that help the banks? angel: it is not about helping the banks, it is about the economy. it is not just about one sector of the economy, it is about the whole economy. what is happening? those countries that have the one,l space meaning number they have a relatively modest or manageable level of debt, that is the case of germany. number two, but have a comfortable budgetary situation in terms of deficit, surplus, that is the case of germany. number three, that pay very low

interest rates. that is the case of germany. there is a margin for more expenditure, for more stimulus a be applied which will have solitary effect on the recovery of the german economy itself, which has slowed down with the rest of europe, and there is a spillover effect on the rest of europe and the rest of the world. francine: should the euro area worry less about debt and more about growth? angel: i think the question is number one, a balance between get countriesou that have 180%, 130% that to gdp have to be more careful. again theowering level of the interest rates and it helps everybody, but if you already have a hard level of debt your room for maneuver is

low. theye case of germany, have more room for maneuver and more room for stimulus to take place. francine: thank you so much, angel gurria, too short a time. coming up in the next hour, we speak to the ukrainian finance minister oksana markarova. we talk about the recent elections. this is bloomberg. ♪

♪ this is bloomberg "surveillance," tom and francine from london and new york. we have plenty more on the stoxx we have been watching inditex we havespace -- stocks been watching in the technology space. facebook was up after posting better than expected figures. alex webb joins us with tech results. facebook beat estimates and they are about to put concerns on privacy to bed? alex: they beat estimates and we

had the warnings last year that profitability would decline. increased.ty and eps the one caveat to all of this, they might be putting some concerns to bed. the pace and appetite for regulation and antitrust is starting to increase, on this side of the pond and in the u.s. that is a threat to facebook's business and the way it makes money. that is a far bigger concern. francine: is there a general trend -- a lot of these companies, twitter, snap, all seem to be doing better than expected. alex: we are seeing huge declines in the television industry. they are suffering massively, because of brexit. companies are withholding their big advertising spends to go for more granular stuff, is

therefore online. microsoft cloud computing is the way of a company reducing costs and making stuff accessible on a global level. microsoft was able to exploit its existing relationships to push those into the cloud. microsoft pre-and during ballmer, and then after. tell me about the gentleman running microsoft. he has been doing well, hasn't he? ceo. he is not a bombastic he looked at the strength, made some savvy acquisition, and there are lessons that companies like facebook can tell from him in the way that he is navigated -- has navigated microsoft's relationship with regulators to make sure they are on a more

even course going forward. tom: microsoft has been an extreme -- a complete failure, up 22% for the last 10 years. on bloomberg opinion, writing it up in the heart of tax season. the banks' collapse we see in germany and politics, howard dean will join us on his thecratic party, on gentleman from delaware mr. biden will run for president. stay with us. this is bloomberg. ♪

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commerzbank agree to disagree. there were "constructive talks" but no mating. markets,r and oil awaiting presidential tweets to complain. level.ro approaches 110 the former vice president, the gentleman from delaware will run from president -- for president. this is bloomberg. from our world headquarters in new york and london, francine lacqua. is it eventful today. give me your perspective on barclays banking. it is not a european bank really , barclays and jes staley. francine: when we spoke to him out tice, i asked of all the banking stories -- and we had ubs with net new

money, barclays with the disappointing equity trading -- and he said barclays caught his attention. we have some political news in the u.s. gentleman from delaware, former vice president of the united states, joseph biden announced his bid for the 2020 presidential race. it is a most interesting time for the gentleman to run. we will do a must read later. widely anticipated, yet at the same time he is different from the many other candidates and no, it is not the age. mr. sanders from vermont is i believe a year older. it is about a centrist amid progressive democrats. joe biden will run for president as he did as far back as 1988. marty schenker will join us in a bit. first, your first word news.

viviana: germany's hopes of creating a banking powerhouse have been shot down. deutsche bank and commerzbank ended talks on what have had -- what would've been a historic combination. there worse -- there were concerns about restructuring costs and capital requirements. someing theresa may breathing space, they urged her to provide a background for quitting. she says she will leave when she gets her brexit deal through parliament and is trying to put together a compromise. the bank of japan is stepping up its pledge to keep interest rates ultralow into next year. they project they will not hit their 2% target until at least march 2022. the boj's position underscores its need to boost prices or cope

with a severe downturn. ubs reported net income that the estimates. there largest business, wealth management, attracted $22 billion in new money. the ceo was pleased after last month describing the first quarter as one of the worst in recent history. >> the second half of march, market conditions and investor sentiments changed for the good, both in absolute and relative to last year. we had a strong finish of the quarter, which is now coming a little bit into april as well. that has changed dramatically. barclaystraders at outperform their rivals in the first quarter but that was not enough to ease concerns over just sit -- jes staley's plans

to make the bank more profitable and says bankers may feel the pain in their paychecks. >> if they continue to be light, we will make adjustments to compensation cost so we can manage the profitability levels we have committed to our shareholders. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much. how about a data check as we look for the biden video? futures flat, curves steepen. the euro is weaker three days in a row. -- to aetting to ray 1.10 handle quickly. through 97. blows i put in randomly argentinian

peso, 43.94 at the cusp of record week this. youcine: first of all, do want to bring us in with the bloomberg because i'm looking at the banks. what are you seeing with your bloomberg? tom: instead of a chart, let me show the twitter feed with the vice president's video. this is the new way to announce campaigning, there it is, the new way, out on twitter and youtube. biden, america -- america is an idea. francine: deutsche bank and commerzbank ended their talks on this historic combination. doing,e share prices are deutsche bank on the news was higher, commerzbank lower.

barclays, a little bit of concern on some of the trading on the equity side, but the trading unit overall was better-than-expected. rbs chief executive saying he will retire and that was pretty much expected but he will stay on for another 12 months. joining us now on the banking stories is our banking analyst jonathan tice. about deutscheme bank and commerzbank is the share price reactions. deutsche bank is up, commerzbank is down. why? jonathan: you will get a little bit of relief in near-term. for commerzbank, there will be something from the left. that said, i don't said -- i don't think commerzbank is off the table. if you think about a combination

within the credit ing, credit commerzbank and commerzbank is really at one third book, it is an interesting deal because you can do a lot financially when you buy a bank at less than half its capital. francine: when you look at what they need to do to convince shareholders to stick with them, deutsche bank, five restructuring plans since 2015. what is their plan now? jonathan: they will have to shrink the u.s. investment bank further. they will have to do something with the well financial ubsgement, talking about and dws. aboutis value, think credit agricole, pioneer. there is quite a bit that they can continue to do. deutsche bank has got a lot it needs to do to get its r.o.e. near 5% anyway.

it does not need a big deal but it needs to be same -- the same. tom: not only for deutsche bank, but all of european banking, how constrained are they that they cannot eliminate employees? they simply cannot cut the jeanette labor costs. ?ow big a constraint is that jonathan: the domestic rates have been awful and the majority of continental europe for some time, and it is still hugely overbank. unlistedn enormous system, so germany has hundreds of banks that are not listed. it will be a long game, but that is one of the biggest drags on profitability. the banks have not shown enough willingness to address, but

hopefully at some point, the new , they cancquisition point out it has been three weeks before someone has walked into our branches and that will be difficult to defend not closing branches. tom: do government regulators understand the free pass they are giving american banking by constraining e.u. commercial banking? jonathan: i do not think they are constraining it. one of the concerns about the deutsche bank commerzbank deal was what happens, are commerzbank deposits put at risk? if i look at the bank systems and the capital the banks are allowed to get away with, you cannot say 11% to 12% for a massive european bank. unions more about labor and domestic gdp problems and the shift to the far right, all of the political issues.

probably unfair to blame the regulators. withjonathan tyce bloomberg intelligence, thank you. driving forward the conversation on american politics, joseph biden, one of the 18 youngest senators at 30, howard dean on vice president biden. this is bloomberg. ♪

♪ tom: bloomberg "surveillance," worldwide, francine lacqua in london, tom keene in new york. it is a global day. really has done

extraordinary in having the courage to be in the market. corrupter -- vishwanath tirupattur will be with us. we can speak about bonds. right now, we must digress for a moment with martin shanker running our washington shop. i have to go to the always wonderful gail collins who nails the perspective for our younger viewers worldwide. biden joins a really big crowd. see how many democratic presidential candidates you can name. five? that is pathetic. cory booker just promised to mate, woman for a running

interesting, but not as interesting as a woman picking cory booker for a running mate. marty: joe biden would be the .ldest president elected andas been long expected the narrative has been that the idea of joe biden as candidate is better than joe biden the candidate. he will have to sustain this momentum for quite a long time. 101, as you run to your party and bring it back in the center, which is something vice president biden is extremely comfortable doing, but is the landscape in place for him to run liberal and pull it back the middle to win? marty: he is probably going to have to do something exactly like that.

the way the convention rules on delegates is set up, it is almost assured that no one will be -- will have the nomination locked up. tom: smoke-filled rooms. marty: when you have a brokered convention and a number of candidates, it could turn ugly for the democrats. francine: joe biden is launching his third temp -- attempt. is it third time lucky? why would he have a better chance? marty: all the polling shows his name recognition is among the highest of all the democrats. the time to swing the pendulum back to normalcy, which tom alluded to, a lot of the polling shows that people want that and he fits in that narrative. a lot of good feeling towards obama, nostalgia. he thinks he can rise above the

rest. we shall see. it is a long time before the convention. francine: is he too centrist? will he have to adjust his policies? marty: that will be the most fascinating and going forward. the enthusiasm on the democratic side is farmout progressive ideas -- is for more progressive ideas than joe biden expressed. will he move his policies toward the elizabeth warren and bernie sanders camp, or pull that back under the mantle of pragmatism? tom: marty schenker, thank you. .e get fixed income perspective this is great because you and i remember being tangential to new hampshire and the political hysteria when we were in school. bates is in maine.

it is not the same as it used to be. does this presidential calculus fold into equity analysis or is this time different? kathleen: the big thing about politics this cycle is populism and what that might mean on a secular basis for the economy going forward. that is what people are looking at. who knew we would be talking about deficits being ok? theoryw modern monetary would be something people are talking about seriously? there is a lot of change afoot in what is being discussed. interesting on the equity market. how do you frame fixed income and length that into the economy as we go into this political derby? vishwanath: in terms of the politics, it is probably a bit early. it is quite a bit early in terms of how the policy dialogue will

turn into policy reality. the bigger concerns we have are more in terms of growth. think we are in a very late cycle and that concerns front and center on the thinking of how the macroeconomy goes forward. we expect that the rates, the path for rates is very benign. expectes strategist, we that the 10 year treasury will see by year-end, our production is 2.25%. lower by 25 basis points then today, sustainably lower rates. tom: let us come back. we have some good guests. kathleen fisher on what you need to do in the equity market. coming up, a democrat from philadelphia on biden.

this is bloomberg. ♪

♪ bloomberg "surveillance," common francine from london -- tom and francine from london and new york. investors are on the lookout for what the nation's policy will be for a campaign heavy on style, light on substance. oksana markarova joins us.

when we look at what we can expect from the president-elect, how will that change the issues still expected from the imf? oksana: ukraine had elections which showed the commitment to democratic values. 73% voted for antiestablishment candidates, his message is aligned with economic policies of our government. we are prettyt certain we will continue on the path of reforms. francine: does the presidential election open a window for bond issuance? oksana: the primary focus for us was to develop the local market, and we have been quietly successful, and also conventional lending. we are closely monitoring the

market and when the market conditions will be in order, we probably will go. it finance need as we see now is a bit smaller because we were successful with the develop an of the local market, and because we have good progress in talks with concessional lenders. tom: the present-day realities for ukraine, the russian response to the shift in power, shift in election. in eastern ukraine, allowing people to get russian passports quicker, sooner, in 90 days, how kievd he have respond -- respond? oksana: the minister of foreign affairs and the president issued statements. we obviously do not support this. it is ukrainian territory. with all of our

international partners, we will continue to respond from the coalition both crimea and temper laterally -- temporarily occupied areas of the den ask will be reporting just returned to ukraine. financet do you need as minister now, from the united states? actually, i, we think the reforms we have done during the past five years led ukraine to new independent institutions built and professional government in place. economic policies which the cabinet of ministers is in charge of, and monetary and fiscal policies, sound policies are in place. we are optimistic our policies will continue.

the budget we implemented ahead of schedule in our imf program and for the first time in ukraine, we will generate stability and predictability for ukrainian and international investors. markarovater oksana of ukraine with us today. oil,ger dollar, stronger on the equity and bond markets as well. hour, dr. mohammed al arian. please stay with us, oil elevated. european banking crisis. this is bloomberg. ♪

♪ francine: tom and francine from london and new york. a lot of banks reporting, a lot of breaking knows -- news on

mergers that will not happen in the rbs chief executive stepping down. deutsche bank commerzbank ending talks. rbs wealthy clients added --ubs the stock base deutsche bank gaining a little bit. commerzbank down. we spoke to the chief executives of ubs and barclays. >> for the bank overall, we feel quite good with the first quarter. >> we are pleased with the results. and thece choppiness feline around equity capital markets and m&a activity around the world. march,the second half of market conditions and investor sentiment changed for the good, both in the absolute and relative to last year, so we had

a strong finish of the quarter, which is now coming a little bit into april. in the macro space where we trade fixed income, securities, credit, we had a good first quarter. u.s. dollar base falling only 3%. >> if i look at asia and china, it is indeed a quite clear sign that the correlation between the recovery of the equity market in the first quarter was definitely head of the investor sentiment recovery. >> we talked about a progressive increase in our dividend as our earnings grow, and we will deal with issues like buybacks at a later point. >> our ambition is to reach up to a billion and we will implement buybacks in the second quarter and will face it on market conditions and the business -- base it on market

conditions and the business conditions. tirupattur ofh morgan stanley does not want to talk about you banking stain, but we can go to kathy fisher first to tell us of the value or value trap that is e.u. banking. they are trading at one third, one half book value. do you buy shares or not? kathleen: i will not comment specifically, but the problems in european banking are pretty well known and not easily fixed. it will take a lot of time. people are watching to see what kinds of policies and trends we might need to help the situation that has been a problem for a long time. the second derivative for inflation expectations in europe is stunning. what are the ramifications if a -- if we bring a new five-year, five-year forward low on

inflation? vishwanath: where we think the potential for the macro economic story to change in europe comes from -- there is an upside, downside scenario -- the upside comes from china. we think of the european economic story is a factor in china growth. china, we see growing evidence that growth has trough to end we will see upside. that should bode well for europe. on the other hand, the other side of the ledger has to come from potentially increased trade tensions in the context of auto tariffs. that will be a clear headwind for europe. we will see what happens. francine: give me a sense of how much these negative rates in europe could hurt the banks.

in japan, is there anything we learned to lessen the impact? vishwanath: talking specifically about banks is outside by limit as a fixed income guy. francine: negative rates is. vishwanath: it goes without saying that it continues to be a big challenge for's. -- for banks. it is no doubt it is a challenge. there is a lot to learn from what happened in japan. francine: what kind of banking system -- we are not really talking about banks -- but what kind of economy in europe do we need to help the banks, and well we get there? wehleen: one of the things are seeing is anything in china affects the globe. when you think the biggest issue for europe is trade, when you think of how the trade talks have caused a slowdown in global

trade, europe is one of the places that suffers the most. if you look at softening in german sentiment just yesterday, a lot of it is related to the export sector. we want to see a global improvement in trade to help europe and the rest of the world. tom: breaking news now, it has been a mixed earnings season. tesla and the tech stories. 3m is simply not getting it done. ,e have kathy fisher with us not to comment on 3m specifically, but to talk about how ceos today are slaves to organic revenue growth. they cut their forecasts. they are going to eliminate 2000 positions and go from five groups to four groups in two years. this is about all the ceos today, if they do not deliver

organic revenue growth they have to act now. kathleen: yes, and revenue growth is what always matters. you cannot drive earnings over time by cost-cutting. what has been got about the beenngs releases -- it has company by company as opposed to any kind of judgment on the economy or specific trend. having pepsi and coke good numbers, united technologies, twitter, all different kinds of companies showing they can prove their performance -- operating performance. tom: i want to give 3m some credit to their clarity. , but chinadown 1.1% was down mid-single digits. there is a china effect for american companies. kathleen: that is what the market was worried about during

the trade talks last spring. when the chinese numbers improve and people get optimistic, the markets react positively. global trade is a big deal and to not acknowledge that is shortsighted. francine: breaking news, microsoft getting some 4.8% to top $1 trillion in market value. they beat estimates adds did face -- as did facebook, twitter, and snap. back to china, are we finally seeing the stimulus take hold and will we see more, or is that it for the moment? kathleen: as you know, the stimulus this time is different. isis not a bazooka but it more toward tax rates, more of a modest nature. there are concerns that will be pulled back because the economy is doing well. the stimulus is something of a

to a hugeopposed push, but it is happening -- helping and as long as we have decent growth -- and the trade talks will play a huge role in how things unfold because we need to have trade growth for the whole globe, not just china and the u.s. tom: kathleen fisher and vishwanath tirupattur with us. let us listen to the former vice president. mr. biden: i believe history will look back on for years of this president and all he embraces, as an aberrant moment in time. if we gave donald trump eight years in the white house, he will forever and fundamentally alter the character of this nation, who we are, and i cannot stand by and watch that happen. tom: there is one person i want to talk to today about the long political career of the senator from delaware, and that would be

the lieutenant governor of vermont, howard dean, former dnc committee chair. thank you for being so patient with us as we look at the financial news. , at a day for joe biden gentleman of courage for all he went through early in his career, but he will need courage to run as a centrist. can he do that? howard: sure, he can. this business about the democratic party moving to the left is mostly hooey. three talented women are getting and thethink -- ink other 37 candidates came from texas, oklahoma. the party is plenty centrist. the party -- problem is age. our party is being taken over by people who are young, women, and people of color.

that is our core base and that is what america looks like, so joe's challenge is to reach that new generation. carewe learned that health , your health care resonated in the last election. how does vice president biden approach health care as a centrist against progressive democrats who want to blow up the medical system? howard: i don't think they have any interest in blowing out the medical system. medicare for all is an existing system and there are lots of ways of doing it. the program -- program that bernie is proposing is different from amy klobuchar's. probably between a quarter and one third of all income to hospitals and dollars -- doctors, and i do not know where joe will come in on that. francine: good morning from

london. will he stay centrist or will he have to change some of the policies to appeal to the more left-wing parts of the democrats? howard: the whole party, the whole country has become more interested in universal health care, partly because when barack obama installed that for whatever its faults are, it was very unpopular and when trump tried to take it away people realized how valuable it was. the country, not just the party, has embraced a kind of responsibility they have not embraced in the past. everybody has to be lifted by capitalism, not just some people. dreamill be a recurrent -- theme. no matter who the nominee is. francine: do we have any insight actuallyjoe biden will

attack president trump? will he attack president trump on the tax cuts and the fact that he is too close to wall street? howard: i don't think the winning hand is to attack president trump. trump speaks for himself. his approval rates are between 35% and 40%. my advice -- and i can remain neutral because i am helping run -- iemocratic data project will talk to any of the candidates who want to talk to me and my device -- advice is, do not make trump the issue. we have to come out with a positive program. what are we going to do about health care and the farmers who have been devastated? what are we going to do about public education? how are we going to make it at her? tom: what do you say about unions? doing the democratic dana --

data analysis of unions that are not the same as the other times joe biden ran, does he have the union vote? howard: the union vote is divided in two. the building unions endorsed trump and the newer unions that are still keeping up with the unionizinge seiu people who need help, the union system has become divided. i don't think joe has the automatic loyalty of organized labor at all. other people will cut into that. tom: are you going to run for president? everybody else is. howard: absolutely not. next see one of the candidates as president. tom: howard dean, national

committee chair. kathy fisher, thank you so much. it has been a wild morning. speaking of wild, that lou chip minnesota -- blue-chip minnesota manufacturing down 7%. francine: deutsche bank and commerzbank ended talks, throwing the future of the lenders into question. matt miller sat down with the chief executive officer. we articulated and are executing on plans to return shares. valuation will follow on that. we have been able to cut costs steadily over time with numbers we have released today. we demonstrated a year on year improvement in cost that is significant. the interest rate environment is something we contend with, and that seems to have extended in

terms of ecb policy, but that is something we deal with and work hard to offset in terms of revenue generation in our businesses. we are executing plans to do so and work hard on delivering that momentum. matt: what kind of bank do you want to be at the end of the day? , alobal investment bank european champion? you were thinking of focusing on the german market. what is deutsche bank? james: we have said pretty consistently, our roots are in serving the german and european economy globally. particularly, our home market is an export nation so we continue -- plan to continue doing so. our clients rely on us to provide products and services we do, to build on relationships around the world. there is true value in that for

stakeholders and shareholders, and that is something we will continue to execute on. matt: one of the issues in your discussion with commerzbank was your refusal to abandon the u.s. trading operation. why not get out of what is a risky, volatile, lossmaking operation? why not get out of the u.s. operations? comment onn't specific elements of the discussions we had with commerzbank. we worked together openly and transparency on the business case for the merger. the u.s. market is a core market and frankly the clients we serve. some sort of wholesale decision around the united states was never part of our considerations. matt: what about the jobs issue? verdi onsentative from

your supervisory board said the merger would result in 30,000 to 40,000 job cuts. now that you are looking at going it alone, will there be more job cuts than anticipated? james: we never gave any numbers of expected job cuts from the merger, but that was a consideration we took into account. in any merger such as this, you look at the interest of shareholders and other stakeholders. on a standalone basis, executing our existing plan, we continue to work to improve our cost structure with reductions in our full-time equivalent work horse. -- force. we have announced targets being under 90,000 at the end of the year in terms of our fte, and we will work on it in the years to come as well. needs totry as a whole

become more efficient to leverage technology and reap the benefits we have made in investments and control functions over the last several years. will you be bringing forward cost cut targets you had for next year, or looking to cut costs deeper now? cost targetved our at the time of our first-quarter earnings announcement on february 1. with this quarter's adjusted cost basis, we are well on track to that target. the environment we have seen in the first quarter, we will continue to turn over every rock and seek to improve on that. of course, we will be looking to drive the trajectory we have outlined to shareholders for 2020 and beyond. boss, the ceo said in

a memo today to the staff, with the pre-released first quarter numbers, at the broad picture is better than thought. market conditions improved toward the end of the quarter. we heard that from ubs and credit suisse. can you quantify and qualify that? james: you have seen that reasonably consistently and the public commentary of our peers. our public announcement is tomorrow and we will go into more detail, but yes, we had a similar experience to our ears in terms of -- our peers in terms of a week january and a market improvement in march. i will not quantify what that looks like for us, but it was a distinct improvement versus the conditions early in the quarter. matt: what are the up arrow

stories -- one of the up arrow stories for your business has been asset and achievement, but partuip owed dws you said of that was to take consolidation. could you consolidate that with ubs' wealth management business? speculate or not comment on speculation in the marketplace, but you are right that when we went ahead with the ipo and one of the rationale, strategic rationales to pursue inwas to participate industry consolidation we anticipated in asset management. we felt a public currency and independent legal entity structure would facilitate. asset management is a core part of our business. it is one way we see

diversification in our overall franchise, so we are pleased with our strategic positioning today. our strategic statements are unchanged versus the time of the ideal. tom: a timely conversation with the chief, -- chief financial officer of deutsche bank. with us at the desk, allison williams. bankt to go to 3m, not a but an institution in minnesota and across america. they are going to shrink from five to four divisions. cost analysis is about shrinkage of division. is that what we will see in you banking? alison: one thing we are seeing broadly, i am not familiar with 3m, but one thing broadly is the impact of tech knology. -- technology.

it is making things more efficient and is leading to a simplification across businesses. we are seeing that for the banks. tom: deutsche bank's employment down 32% in five years to 92,000. did they cut to the bone? do you look at deutsche bank as it has done all the easy cuts? alison: there are a couple things going on, the improving efficiency story. we have also's -- also had secular change in terms of expectations of revenue so the business is smaller. on the front end we have seen this at deutsche bank but globally, the front-end staffing coming down. francine: it seems there was a lot of buoyancy for these mergers to take place but the hurdles are so big. what will we see for cross-border mergers? alison: that is one of the

difficulties in europe and probably why we are less optimistic about consolidation then we are in the u.s. market, where the regulations are clearer and there is not such complexity across regions. one area we have seen increasing consolidation and think we will see more is asset management. certainly, a deal within that business makes a lot more sense than the deal that just was dismissed, in our opinion. francine: what do you think investors are expecting from some of the swiss banks? you were following the ubs earnings and you did so with credit suisse. the share price is not going anywhere. alison: credit suisse ended a little bit higher, but that is a good result considering the run that stock had in april. it was the best performing stock

in the sector. pastwe are seeing in the couple days is expectations. coming out, saying it was one of the worst first quarter's in history so we saw the numbers come down. then we heard from those banks exiting the quarter a little better, credit suisse coming out much stronger with a more constructive environment. that is similar to what we have heard from u.s. peers. it should be good for deutsche bank but we will see if it will be too big -- too little too late. tom: deutsche bank is at 41% of book of bnp paribas. of book ofnk at 54% bnp paribas. are these executives blocked by their government, their

regulators, and their national cultures? alison: to some extent, that is what we have seen in german retail banking. tom: good bank, bad bank? alison: they have done that, they have sort of paired off assets. the issue with deutsche bank and with all banks, bank stocks trade at a discount for a few reasons. there is a hole in the balance sheet and they need to raise capital. number two is that people do not believe the balance sheet and three is just they are not earning their cost of capital, which can erode value over time. the fact that these companies are not earning their cost of capital and there is not a line of sight during their cost of capital, we are starting to see that it credit suisse, but at deutsche bank we need to see a path. to comment onnt

oil or vice president biden or anything else? strong dollar, what catches your eye on this crazy morning? francine: the crazy morning is what catches my eye. we have a lot of earnings. i was surprised at how well the tech stocks did. microsoft was up some 4.5% pretrade. facebook also better than expected, so tech, banks, and oil. radar, at&t the really did not get it done yesterday. guestsou to our patient and our wonderful staff. this is bloomberg. ♪

7p5óóo ♪ alix: talks fail between

commerzbank and deutsche bank. not enough benefits outweigh the execution risks and capital requirements. deutsche bank moves to plan b. global bank earnings, the good, the bad, and the ugly. barclays says the market is challenging. nomura fights to survive. big profits. facebook delivers double-digit revenue growth. s&p numbers report today. david: welcome to "bloomberg daybreak." we have earnings out as fast as we can talk. bristol-myers is out now. they beat on both sales and earnings-per-share. they had first quarter sales revenue of $1.8 billion. adjusting earnings was $1.1 billion. they are up in the premarket about 2% now. alix: ups also out.