>> good morning. i am manus cranny. tech wreck. stocks shed $100 billion. markets across most of asia and europe are shut for the holiday. calling for a cut. push for trump will drastic action from the fed to boost the economy. up pressure to reach a trade deal. morning the white house is prepared to abandon

negotiations. a warm welcome to daybreak europe. it is made a. trades to be had. the new zealand dollar, employment numbers were disappointing. they have moved their prices, 56% possibility of a rate cut from 40%. you are seeing the new zealand dollar come down. later on its feet. 6.8 million barrels. the risk is this. stockpiles are increasing. global output is what they are trying to correct.

we will hear more from bob later. he basically says these markets are tight. whale is lighter. we are back to where we were. show you one of the most magnificent rallies in a while. apple. a bit of skepticism from the analysts. $75 billion buyback. you are buying iphones. you are buying ipads. lowest bullish call on the stock and two years. apple'snder pricing proclivity to rebound? low. up 44% since its let's talk about the president of the united states, mr. trump. he is pressuring the fed into drastic moves. he called for the central bank to enact cuts. well the fedna --

lifted rates despite low inflation. the president called for a steep cut in rates, saying it would help the u.s. economy take off like a rocket. the potential for the fed to sound even more dovish than they already have. good morning. point, there is a conundrum at the heart of their dovish tilt. they want higher inflation. to do that, lower rates. asset bubbles. stocks at all-time highs. cameost recent gdp number in beating expectations. will that make them more hawkish? that is unlikely. they see the fed as more concerned with inflation. not just in tweets but last week as well. fed's favorite measure of

inflation came in at 1.6%. they have even introduced the idea of a cut. low inflation would cause them to cut interest rates -- the answer has to bs. have beenemselves pricing in for the fed to cut later this year. what is the likely outcome for this meeting? bloomberg says it is likely to be a no drama nonevent. they want to distance themselves from the dovish u-turn they had earlier in the year and keep themselves away from the scrutiny of politicians. >> thank you very much. setting up the no drama fed today. he knows a thing or two about drama and markets. good to see you. you say it is going to be no drama, what language or tone

is powell going to affect? if you look at his impact, he doesn't exactly shed the upside. >> i don't expect any drama. there is a consensus the tone will be rather dovish. they are going to highlight there will be no action. where we might expect some action is in the interest rates, excess reserves. it is that two point 4%. when you look at the effective fed rate, it sneaks up to 245. there and might not be enough cash. enough cash.e a smaller banks do not have

sufficient access to cash. this is why we might have seen the stickup. .he fed might take action >> would that be a surprise? >> i don't think it is a surprise. >> let's go deeper into rates. 10 year paper versus two-year paper. is is this a trade -- bond traders jumping back in. bank says it is going to widen further. we inverted just a couple of months ago. do you think this is a vote of confidence in the fed? this re-steepening in the curve and our traders getting on board with this? the curve will

steepen and it did. where we are today, it is as steep as it will get. >> 50 basis points, do you think that is a stretch? a littleht steepen more. but i don't think so. duration,s of the there seems to be a reach for duration. is that coming through from the clients on your side? >> it is, absolutely. they are looking for more yield. it is natural to go for more duration. they are going for shorter maturities and south america. the short-term bond makes more sense. >> they are very natural. where are they funding the trades at the moment? can bee are some that put in today.

one of them is this one. >> in terms of the flow of money, we have seen this splendid first quarter. is there a little bit of hesitancy? did they believe the fed is going to be lower for longer? flow is a little bit of and terms of etf's. >> ems -- we should see some more flows coming into the region and more particularly in saudi arabia. we are seeing several of our clients look at new emerging markets. one of them is saudi arabia. we are seeing some healthy inflows. >> mr. trump's participation is never far from our mind. let's go back to this recent tweet. calling for 100 basis point cuts. our chief economist says the

u.s. economy might take off like a rocket. be building up to a crash landing if there was any sort of aggressive move like this. int do you say to yourself terms of these calls? for radical action, really. i think the u.s. economy is doing quite well. we got a scare earlier with consumer numbers. we have seen the latest number, which is very positive. in the rates, the chairman of the fed published an article on the modified rule. if you take that same formula, and you calculate it today, you would see the current rate is slightly restrictive.

it might need to be slightly lower. let's take this chart. that takes me forward, do you think we shall get another rate cut? we are pricing in the potential of another rate cut. >> let me tell you why. they can see at and play with the terminal. fed has chairman of the basically looked at expected inflation. shoulds you the fed rate be 8.3%. today.han what it is inflation is muted. air, can't do it live on

stay with me. the managing director and senior executive officer stays with the daybreak team. the white house warning the u.s. is ready to walk if no china deal is reached soon. his acting chief of staff says negotiations won't go on forever. this is a shift from recent optimistic messages. the u.s. trade team is in beijing. we are building. ken griffin is the chief executive of citadel. at theke to bloomberg conference. take a listen. big fan of free trade but it needs to be fair. the u.s. has to have terms of trade around the world.

goodow this has been very for the country as a whole. it has devastated one town employers where the employer has shut down. we did not think enough about job reeducation or helping people move to other communities that were going to be adversely impacted. we did not focus on this enough. the key is how well we deploy our resources. some of theo with times people have been left behind. you try to bring cash incentives. that, are successful with that is a win. if you are not, you are going to have to encourage people to relocate elsewhere. u.s.mily moved across the

in pursuit of jobs. there is nothing wrong with having to make those changes. >> that is a harsh message for those people in western pennsylvania or indiana. parts of ohio, for example, >> it is a tough message. important we start to have an honest conversation within the halls of washington about what we need to do to improve our country. >> speaking to bloomberg at the milken institute conference. let's get the first word news's. >> thank you. eric schmidt stepping down from

all the boards board in june. the departure leaves the tech giant without one of the most recognizable advocates. firm from 2001 until 2011. the gamble to take control of venezuela appears to have flopped. commander stayed loyal to the president. the u.s. reiterated its support uido but it seemed to have little effect. in new emperor ascended the throne in japan. -- will involve visits from heads of state and governments around the world. global news, 24 hours a day. powered by journalists and analysts.

done in the early start. apple says demand for the iphone has stabilized. this is bloomberg. ♪

this is bloomberg daybreak: europe. let's get a business flash with olivia how. has added to the latest twist in the battle for anadarko. there are plans to inject $10 billion. the bombshell lands while the board decided whether to accept an unsolicited offer. ubs is telling executives to be

more selective when hiring. it is seeking to cut costs following a challenging first quarter. onlyintroduced a rule to -- greenlight capital, rebounding from the worst year on record in 2018. must year, losses and withdrawals caused assets to shrink by 60%. this prompted fewer, more concentrated that's. that is your business flash. round up.ou for that futures, on the rise. expectations -- demand to exceed expectations. the iphone experiencing a renaissance. however, $100 billion were wiped

off the market cap. followingfollowing -- 7%. there is a senior executive officer. , apple isat the tliv giving money back. raising the dividend. rewarding the shareholders. i look at google and alphabet numbers. revenue, 15%. 9% in the first quarter, low estimates. which story, i have asked my previous guest at this, which story is more important? is it alphabet missing versus an apple renaissance? >> apple. google has had several flocks.

apple has succeeded. the icloud. people paid for these things for storage. rest that market yet. apple, theseith services are recurring all the time. google versus apple. >> inherent was the buyback. they have a war chest of cash. play in does buyback the exposure to u.s. equities? >> it one of the top 10. supportsn action that stock prices. investors starting to take profits and observe.

of -- seeing a delusion deluge of ipo's. >> do think uber has learned -- in terms of what you pitched on the street? s. it got overambitious, ye the position, let's have a look. we are back in positive territory. this is only because people are neutral. i want to get a sense with your clients, there is a load of money, a lot of money given. money is up but it is getting people put back to work. it is that reflective in terms

of what you are seeing? >> the portfolios we are managing, we are taking a mutual stand with regard to u.s. equities. we are recommending 20% cash. it is trading at 20 times earnings. can it go further up? to, it can, but it is time lock in some profits. >> when you see statements, we away, sayingwalk trade talks will not go on forever. kill zone for china u.s. trade negotiations. i get the sense it is all in the price and terms of china equities. is that fair? are we priced to perfection

foray traded deal? >> there is an opinion a deal is happening. i would suspect it is a bit later than sooner. the deal will happen. it is when you say, i am not going to buy that thing, it is part of the game. >> in terms of the china aposure, we saw a bit of shakedown. is that revenue with your clients? did they have china risk? for the portfolios we are managing. the shanghai exchange was up 30% year to date. that is a very healthy correction.

anotherink we might see round of going up. china is stabilizing and we are seeing some improvement. >> but the cycles are getting shorter. >> absolutely, they are getting shorter. the gdp is based on sme's. they have a quicker cycle. if you look at the recent cmi's, they have been disappointing. very is one pmi i was happy about. it did go up, close to 50. i suspect by the next reading, it will be expansionary. >> let's say that gets up. have you pared back any of your estimates in terms of stimulus? more stimulus? is.hey will keep it as it is giving its effect. i don't think china wants to

overdo it. they have a different sense than trump. they have been very modest. sector,ying off in the constituting 60% of the gdp. >> thank you very much. a little bit more to explore this morning. mayday across most of europe. coming up on the show, we speak to bob raines -- lorraine bank's central governor. numbers,lso break the just what is the health of the u.k. market? joining the team right here in bloomberg.

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manus: this is bloomberg daybreak: europe. maness cranny. markets around the world, the team in london. emery harder and -- it is said they and good to see you this morning. the market, what are we setting up for on a powerful day? is a powell put day? >> the fed as well as venezuela, when you talk about the fed, i am interested in the job market. been live blog has questioning. this chart is something the hawks will use when they want to talk about maintaining their argument to a bias toward

interest rates. in the white is the differential between those who say jobs are plentiful while others say jobs are hard to get. it is clear americans think jobs are abundant. is shown against the inverse of the u.s. unemployment rate at 3.9%. all of this is showing a rosy picture of the u.s. job markets. our markets overpricing the chance of markets easing and you look at unemployment? that is what the team is questioned today. you know i love oil. venezuela is a very fluid situation, but the opposition leader saying protest will continue today though so flopped.gamble has while we have seen exports in freefall, the fact of the matter is they still are exporting some you know they have more

reserved in saudi arabia. china and india have taken the bulk of the venezuelan oil, especially when the u.s. stopped importing it. the key for china and india is they are buyers of a rainy and crude and that will end tomorrow. manus: that is the due date for getting to zero. thank you very much for rounding up venezuela in context. let's get a first word newsflash with olivia hows in london. >> president trump says the economy could soar like a rocket the federal reserve cuts rates by a full point, double the reduction his economic advisor is calling for. this comes as more senators expressed doubts about the president's trophy the fed board. stephen moore's chances are looking uncertain. griffin says raising taxes on wealthy isn't the solution to inequality. the billionaire founder of citadel hit out at socialism, saying it has a track record of failure. he says a generation of students are disillusioned.

subsidies to student loans he says create profound economic distortion. >> i really think fixing education -- education is broken in america -- has got to be a key area of focus and reform for our country. we have to equalize the opportunity for all americans to have a chance to have a for filling life and a fulfilling career. isvia: the white house warning the u.s. is ready to walk if no china trade deal is reached sin. the acting chief of staff says negotiations will go on forever. this is a shift from optimistic messages about the outlook of a deal. the u.s. team is in beijing this week, followed by a meeting to the u.s. next week. 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. ♪ manus: thank you very much for the roundup. oils get the latest on the

markets. the ceo of bp says the crude market will be tight in 2019. in an exclusive interview, bob dudley also shared his thoughts on where prices are heading. >> you can't always get it right. we try to do it on the fundamentals, long-term reactions to things. fundamentally, the markets are tight this year. you look at what is unfolding, defying gravity, and libya, these things approach the fundamentals. if you look at the production growth on the crimean, but it is still bottlenecked. biggest worryr about oil prices through the rest of 2019? >> for us, we plan the company on $55 a barrel for bp. about it longer-term,

not short-term, longer-term is we feel a spike or drop and that is not good for the world or planning but right now, we will 75 for fair way of 60 to 2019. >> talk about the integration of the bhp assets. what are you learning about the u.s. shale market? is rate assets, great people. we only took over after the closing in march so we are early into it. we have synergies that will happen very fast. we like the assets a lot. we are part of that check for boarding you have seen, the old historical reason why leases are shaped like a checkerboard. have people in between us. down the road, there will be consolidation or swapping to but that more efficient we've got a great team that has been working on natural gas in the u.s. and now they can look at outlook.

>> does the consolidation come sooner rather than later. is that something in the near term? >> there is no need to rush it. it is one of those things that when you look at that big piece --geography out there >> it will be competitive as you try to figure out who gets the upper hand? >> you could have the industrial logic of companies rationalizing, you could do swaps. company see a lot of value in that but for us, it is also what other with bhp, with some assets right next to where we were already producing gas. it is an extra piece of business will see usou divesting some assets to return to shareholders some of the money. >> you anticipated my next money. how is that going? is it the pace you want? what happens next? >> no rush, data rooms open this

year for a number of months now and i can say i am very surprised at the number of companies and the interests going through kicking the tires and looking at the data. it bodes well for whenever we decide. manus: bob dudley telling it like it is. kicking the tires, doing deals. our exclusive interview with him yesterday. let's get more on the story, crude is retreating as signs of a sharp increase in u.s. inventories and concerns of a demand way on the market. the opposition leader has proclaimed the end of a socialist president nicolas regime, warning of a military uprising. let's bring in the team. our resident oil reporter and expert, my guest report from 80 yes investment solutions. >> when you listen to bob, it is

a relation, the price of oil. he seems to be moving slightly to the upper band. what did you make his comments on the bottleneck in the. -- permian. out in of the oil coming droves is blocked in by pipelines. on, the morecomes pipelines they need to move it to the coast, get it on tankers, but we are fee -- seeing forecasts of export something like 5 million barrels a day, a huge increase on what they are doing. more ofhe u.s. becoming a player in the international market. maybe his price estimates are inching up a little bit, but you heard him talk about their acquisition in the permian in shale. we have more of a bidding war for anadarko. there is a lot of interest in the oil passion.

there is a lot of oil coming out of the united states. over the meteor to longer-term, that will loosen the market and give it more flexibility. gives us adudley fairly wide price target. where do you reckon we go on the price of oil? there is a number of hurdles to get over. >> late 60's. manus: ok, and the you think trying to get around zero, in terms of the waivers, no extension of the waivers, how much of that is already in tuned in the price of where we are with the political side of the story. >> that is already priced in. the big question is what will be the response of iran. what if something militarily, geopolitical happens? nt of iran said they had six ways of exporting oil.

i don't know what those are, so we are understanding where it is? manus: they have to try to circumvent this administration, what are you hearing? >> they will try to do it like they have under past regimes where they turn off the satellite signals on their tankers. they will try to move the tankers in the dark and get those going. insurance has been removed from many of the investment -- vessels dealing with iranian oil so traditional buyers aren't able to send their own ships. iran has been moving that oil on their own tankers. themwill try to disguise as crude from neighboring countries were fuel from neighboring countries and they will have put some oil into storage in certain places they can sell into markets. they will try to get around there. there will some be leakage unless you put a naval blockade in there. you can't stop those ships from moving, so it depends on u.s. willingness to put sanctions on people who buy or deal with those ships.

if iran is moving that oil on its own ships, they are already under sanctions. manus: is this what gives risk to hire geopolitical sanction? highly is it? pete is a serious concern because iran is in a tough position. the economy is struggling seriously. this would be a huge blow to the iranian economy. suggest it will take place with regard to the oil exports or on the ground exports, and i would -- i am afraid of actions of some sort where the tankers would be stopped. china did express its unhappiness with the waivers being removed, but i'm not sure to what extent china wants to be upset with the u.s. today given the trade talks. manus: it could well be it is one of those.

saudi arabia is the swing and with the waivers going to zero, the last thing opec wants to do is turn on these aggressively because they get a rerun of 2018. what did you make of the comments? anthony: we see that the market is not that concerned because we did see the prices go up the beginning of last week. waivers were removed, and we saw more heat in the oil price when he came out and wasn't that ready to open the taps. he has been more cautious because they don't want a repeat where they put oil on the market and it backs up. increase in some data for oil stockpiles in the united states and that is one thing they are watching. we've talked about the venezuelan production.

millione up at 1.5 before, production has come down to below one million. saudi arabia has roughly half-million barrels they can play with that they are already producing below their opec order. they can come up a little bit and compensate for that. the oil market is always watching ahead of it right now so they are watching venezuela and iran. if saudi arabia has to increase, maybe the oil market will get concerned about spare capacity, how much more spare oil they could put in the market. there is a lot the market will russia will want to handle at the meeting. ryan: to the increasing production, my concern is expenditures. goes to replacement and we haven't seen much of that. inther concern is the news

the indian times whereby china and india are planning to form a demand cartel. manus: have you got that story? anthony: this is something they are always talking to us about that they want the demand court mated and we did see the increases by saudi arabia in the third quarter of last year were caused because they spoke to india and china, trump gave a bit of a tweet. there is that in formal demand response already out there and that pull from the buyers already. manus: thank you very much for joining us. anthony dipaola, our oil reporter in dubai. ryan lemand is the senior executive officer at ads investment solutions. you stay with me. coming up on "bloomberg daybreak: europe." ceo. o'byrne is the we will focus on what you should be watching for the retail's earnings.

as the deal unfolds. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe. i'm in dubai. today, we are asking the fed rate -- due to the strong market? let's get a business flash with olivia hows. areia: apple shares rallying on signs iphone demand has stabilized. projects quarterly sales that beat analyst estimates and reported services revenue grew 16%. apple shares have surged more than 40% from a 20 month low in january after lackluster iphone

sales cut the forecast. uber's stock debut is oversubscribed. this at the company meets investors ahead of the ipo. demand for the share sale is focused on the low end of the price range. the company is looking to raise as much as $9 billion next week, the biggest listing of the year so far. elon musk got off easy in his revised settlement with the sec. that is the opinion of a top regulating officials. it fails toon says punish musk for not adhering to regulations. company wasn't affected. warren buffett added the latest twist in a takeover battle for anadarko. berkshire hathaway will invest $10 million into occidental to fund its bid. the board is deciding whether to accept occidental's unsolicited officer -- offer. surgedght capital has

19% this year, rebounding from 2018. the hedge fund is up 6% in april. last year, losses and withdrawals caused assets to shrink 16%. this prompted fewer, more concentrated bets. that is your bloomberg business/. rounduphe get a few thoughts from ryan lemand of ads investment solutions. the one thing that caught my eye this morning is, we played catch up with european data. there was a remarkable stoicism in the number we had yesterday. this morning, we are seeing the ecb gets a reprieve. were you surprised by the resilience in the numbers? ryan: absolutely. that was a big surprise for us. we are very surprised how france, italy, and spain are behaving. despite its high

unemployment rate, can be a positive. and if it is performing this way with 14% unemployment, imagine how it would perform with 10% or 5% unemployment. yes, it is a big positive. france might be the outlier because france's economy is well diversified. it is linked to china, and it is leveraged on global growth. manus: under love and underground -- under owned is a moniker for european equities. has there been a shift and do you expect a further shift as a result of maybe this data having based out? ryan: absolutely. we and clients are observing it but the finger is on the trigger and we are ready. europe is back on the menu. manus: does it give mario draghi breathing room? i don't mean panic's tim you list, but maybe having to do the quantum of targeted lending that the market is assuming?

ryan: we were talking about it and laughing about it last night because it is saved by the bell. it is an amazing turn of events that will give him a good reprieve. he doesn't have to do quantitative easing or any action. he just has to observe how the situation will evolve. the rest of the european countries are doing well, very low unemployment in austria and others. manus: thank you for sharing your thoughts. ryan lemand, managing director and senior executive officer at ads investment solutions. let's focus on retail in the united kingdom. sainsbury's was the only one of the big four british supermarkets to show declining sales in the latest quarter, according to the data. the u.k. number two player is set to report later. i will break the numbers in eight minutes as regulators rejected its plan to buy walmart -- charles allen, good to see you

this morning. what are the expectations for sainsbury's? are we low in our level of expectation? charles: as you just mentioned, we are because the outside providers, nielsen, are saying sainsbury's declined and anecdotally, we all feel it has not been firing on as many cylinders as it should have been. there is a technical factor in of newat there a lot implants going into sainsbury's stores and the general merchandise sales are shifting to those. has a technical factor that means sales are likely to be better than what we are seeing in the nielsen data. manus: that is the huge integration plan. what is the plan b? it seems no one is going to be

able to do a deal in british retail if we read the handing down of this verdict. it was always going to be a stretch to do a four into as theyal in any area have been stretched on sticking to four but since sainsbury's had home a lot on getting the needthrough and yes, they a plan b because the fear is they are going to have to invest the cost of a price cut they mentioned. they mentioned the billion if they merged but if you assume half of that is sainsbury's on its own and that would make a significant dent in their profitability unless they can come up with some alternative plan that enables them to reduce prices and maintain margins. manus: i read -- we wrote a story on sainsbury's. short capital, inferior store

standards, variable availability patchy checkout experiences, each of which can reasonably expected to annoy sainsbury's shoppers. that is a scathing analyst report if i have ever read one, isn't it? charles: it is and many of us look at the sector and have similar feelings. we should say management strenuously deny these all the time. they were asked this specifically at the last call and they said their availability was as good as it has ever been. i agree, anecdotally come you can go into sainsbury's stores and feel there isn't as much there or in some areas, anything at all. focused ontoget the day job and make sure they are serving customers properly. next --urround off with

to round off with me, is always a catalyst in the coal mine. one thing is, we have to remember it is against relatively easy comparison in some ways. last year was the beast from the east, a cold spell at the end of march that dented sales badly. this year, the weather has been more benign so we should see a relatively good sales performance but next -- talking naries, we are likely to see online sales good and store sales probably down again, even in the benign atmosphere. with: charles, we will see the numbers are in minutes. charles allen, senior allen west for bloomberg intelligence -- st for bloomberg

intelligence. what is the plan b for sainsbury's as its deal fell apart? we are at spec -- expecting a profit number. kevin has the answer. this is bloomberg. ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe. these are your top stories. stocks shed $100 billion but the upbeat forecast lists -- lifts apple in late trade. markets across asia and europe are shut for mayday holiday. calling for a cut, president trump once again pushes for drastic action from the fed to boost to the economy ahead of the fomc. ready to walk. the u.s. ramps up pressure to reach a trade deal in the next two weeks. warning the white house is prepared to abandon

negotiations. were welcome to "bloomberg daybreak: europe." innsbury's delivers a beat the pretax profit, 635 million pounds. markets penciled in 626 million pounds. the key news around sainsbury's is the death of the deal. what is the plan b? consumer outlook continues to be uncertain. that is partially brexit. well-placed to navigate the external environment. fell 32 .4 billion pounds. comparable sales dropped 0.2%. beat in terms of their numbers. i want to switch across -- we will speak to the ceo kevin o'byrne shortly. what are the options on the

table? theor closes down opportunity to do a deal. how vulnerable is sainsbury's? kevin o'byrne has the answers. pounds, just gone red. that is pretax profit, retail sales beat estimates from next but the stock is up 18%. we've had better weather and that is helping the clothing line. first-quarter retail sales dropped 3.6%. the estimate was for a demolition over 6%. online sales, a bit of slippage, 11.8%. the market had penciled in 12.8%. i want to flip to sainsbury's before the rest of the markets. some important lines coming through from sainsbury's in terms of strategy for the market. over 400 to approve

supermarkets this year. they will cut the deck by 600 million pounds over the next three years. everybody is asking what are the next steps? these are the foothills of strategy from sainsbury's. do we need to hear more? we will talk to cfo. it is mayday, asia is closed. most of europe is on vacation. ftse futures, let's see the reaction next and to sainsbury's into the open. london up .4%. records in the united states doing well. s&p up another .3%. do you believe more in the momentum of apple come up 5% after the bell, because they are giving dividends and buybacks or do you look at the google numbers, which are flashing a warning sign in corporate spending? despiteup another .7% fines, theyok at got demolished by $100 billion.

the majority came through in the alphabet trade. it has been more discerning. i want to show the bond markets because the steep and or is out. 10 year government bonds, flat. asia is closed, everyone on holiday for golden week but to an extent if you look at the differential between 10 year and three month paper, if you look at two's, tens you see pretty big calls from the likes of pimco. this curve steepening could really reinvigorate and get to 50 basis points. let's take all of that plus the earning season. has it been a mixed bag? how do you look at the earnings thus far? we've had text, health care, banks. let's get the latest take with my guest host. in geneva, it is our guest,

cohead of swiss global equities. welcome to the show. you can make more sense of the earning season than i can of your destination. from where i sit, and i have asked my guest yesterday, it wasn't as bad as everyone thought it was going to be, is it? >> absolutely. quitee have seen is reassuring numbers coming out of the more cyclical effect -- sectors. bad to me talk. banks showing momentum came back in their operational results during march and april and that allowed them to print some better results and some wealth managers in switzerland surprised positively. also with more positive outlook statement and we were expecting going later into the year. some tech stocks have been reassuring in switzerland with the ams results. apple and in from a statement for the rest of the year, higher then what the

market was expecting. relatively more positive than we were expecting. we entered 2019 in a particularly pessimistic frame of mind so it is easier to surprise on the upside than it has been in previous seasons. manus: the top line of your notes this morning talks about a market that has pretty much done everything you thought it would do for 2019. we are double what you expected in 2019 in eps per arms and dividend growth. -- performance and dividend growth. do you take risk off the american equity trade or do you believe the fed will be lower for longer period of time? i've got the fear of missing out. correct you ift you allow me. it is not the eps growth which has been doubled what we expected, but the market performance double what we expected for 2019. 2019, whatntering

struck us was we would be in an environment where the earning growth was going to be considerably lower than 2018 and that is one of the explanations why the end of 2018 was so weak. not soorward, we are keen on shaving economies which are performing better than other economies. clearly, we see continued positive momentum coming out of the united states as we saw from a better gdp read on their last gdp read and what was expected by the market. we are more concerned with pathgence from the growth in the macro economic numbers which are not being reflected in terms of the market for orman's. markse some question regarding europe at the moment but we are also pleased with some of the numbers that came out yesterday which suggest if we are not permit -- turning positive in economic data in the european areas, we are

nevertheless seeing some flattening near the bottom and not a worsening situation currently. we would be a little more selective about what geographies haveoose and certainly, we a bias towards choosing more high-quality markets which lead us to have a decent waiting in the united states and in switzerland. manus: what does it taking europe? you talked about the data yesterday, the quarterly growth number, .4%. what do you need to see in europe before you might read engage more actively? all, europe isof dependent on the rest of the world so it is encouraging to see growth coming back or remaining in the united states and a positive momentum in china at the moment, which is important for high-quality markets in europe and the exporting markets in europe and within that context, it is a geographically positioned in europe to switzerland, which is heavily dependent on being able

to export across the world. secondly for the euro zone, which is more of a domestic market, it becomes more is in at the consumer healthy situation and that is where i was reassured by some of the data that cannot yesterday. in, out, ae u.k. source of uncertainty but we need clarity on where the u.k. will be, politically speaking, in a few months to reinsurer consumers who may be shaken by the situation in the u.k. and the eurozone. manus: you got a number love -- of calls you quite like. i want to focus on louis vuitton. i quite like the top line of mh on saying we buy lv brand, heat, and china.

are those resonant themes for you and part of the driving force behind the call on louis vuitton? eleanor: louis vuitton has been a long-term call for us. we look at cash flow return on investment as a justification for investing in a company and louis vuitton has maintained stable cash flow return on investment for a long time and as much a poster child in the luxury sector. enthusiasticre not about across the board at the moment because we have come off the boom of luxury spending from the chinese consumer. chinese consumer who is discerning about what they buy and are prepared to be curious about new ground. perhaps less loyal than some of the big luxury spenders of yesteryear. i'm thinking of japan in the 1980's, for example. louis vuitton has managed to innovate, to invest behind their brand and that certainly is one of the features which will help them maintain the high and stable cash flow return on investment. another one, excellent

geographic position which is well balanced across all geographies. for us, the more attractive play or the only play for us currently in the luxury sector and a long-term core holding for portfolios. manus: thank you for sharing your thoughts with us. cohead taylor jolidon, of swiss and global equities at union mancaire privee. thank you for being with us. themes, buthed on apple second-quarter results came out late last night and not as ugly as expected. rallying in stock after-hours as iphone sales recovered and the ipad enjoyed a renaissance. good news for shareholders as increases share buyback program and raising its quarterly dividend. let's bring in our tech editor, he joins us in the studio. was it the renaissance on the

ipad or the stock buyback that grabbed the market's attention? mystery possibly the third option which is the fact that iphone sales are picking up. a lot of apple's strategy to mostase demand of its profitable and most important product has really reassured people. one thing apple has done is increased the trade-in value of older models and has even been moving into discounts in certain regions and that has had an important and notable impact on its ability to sell these, and canre investors it sell these of high margins. manus: that was the third leg of the stew. is there any concern about the discounts of the iphones in terms of maybe, as well as harm to apple's large hardware margins? nate: it is definitely a risk.

the big difference we are seeing now is apple is pushing more and more into services. reported a 16% year on year increase in revenue from services and that is ahead of the launch of an important couple of products for it which is video games, streaming -- subscription, and its own streaming service that many see as a competitor to netflix. they haven't even launched yet and already services revenue is up. that is giving people confidence that even if it is learned that learning less from the margin side of the iphone, that can make it up in services and it has a billion users to sell that to. that is also why the change in dividends and payouts, because there is a lot of confidence there and making more money on things like apple music. manus: thank you for being with us and running through the numbers. our tech editor nate lanxon with the latest on apple. coming up, as the u.k.'s

second-biggest supermarket group reports earnings, we speak to the ceo -- cfo of sainsbury's. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." has reported full-year adjusted pretax profit ahead of estimates. they saw comparable sales drop .2%. regulators rejecting its plan to subsidiary.walmart kevin, good to see you this morning. he will get to the deal a moment. profite a beat on pretax but the numbers are down .2%. tell us how the business is doing now? kevin: as you can see from the results this morning it has been

a good financial performance. underlying profits up 8%, free cash flow up 7%, we've increased the dividend 8% -- 3% and over 200ur net debt by million and committed to reducing a further 600 million in the next three years. good, robust performance from a financial point of view in a challenging market. duringocery sales grow the year and general merchandise sales flat and clothing sales down a little. comment on the sales figures, all sales aren't made equal, all sales aren't as profitable. in closing, for example. we grew full price sales in the margin, sales in clothes were down and food sales, and undervalue ranges grew both volume and value and we are under a bit of pressure on commodity and have plans to deal

with that. manus: i must say, i miss my local sainsbury's, if it is of any value at all. knowhole world wants to what his plan b? as the deal has fallen apart, you are telling the market i will revamp 400 stores and cut debt. are these the foothills of plan b? is this what you want to say to the market today as the deal fell apart? kevin: if we stand back, we had a clear plan laid out. probably back in 2015, where we were focused on changing consumer habits. more online,ng more conveniently, smaller baskets less often, going more digital. in that time, we have moved from sales that started online in the low single digit percentage to maybe 16, press 17% now, we are growing our convenience business now.

the deal as a means to accelerate that strategy and now that it isn't happening, it is a lot about executing this tragedy and evolving as -- this strategy as customers change. manus: can i push you a little bit because you both and evangelized about meeting this deal, he will be transformational and change things. it will mean price cuts for all customers. that is now not happening so the market needs to believe it can't be just back to normal. it can't be back to executing the original strategy. that is a bit disingenuous to the shareholder, isn't it? kevin: you are right. we thought it would be a very good deal and were disappointed with the outcome of the process but the main premise of the deal was that we could invest more in price and as you know, we committed to invest one billion pounds in price across those businesses. we will need to continue to invest in price and the core

business. we need to work with suppliers to reduce prices without taking costs out of the supply chain. we will need -- manus: do you think you can still get -- commit to a number in terms of price cuts to the market? as part of the deal proposition, we have to lay that down clearly for the cma. we will invest in price cuts for customers as we go through the coming years and as i mentioned, that is one area we are focused on, our commodity entry price point product and we continue to focus on that. clearly with less scale, that becomes more challenging and there is no doubt. that is something to deal with. that said, we are the second largest retailer and have large scale already. we could have done more for customers faster. it will just take longer now. manus: i'm going to read a piece from the short capital report. it doesn't make for great reading.

you have inferior store standards, variable availability, untidy, patchy checkout. all of this is a irksome for the shopper. that is a pretty damning report. what do you have to say to that? kevin: what is behind that report and over the summer period, we have changed all of the contracts for our 730,000 colleagues -- some 30,000 colleagues in stores. we wanted them more flexible to work in different parts of the store because shopping habits were changing. two, we wanted more flexibility to raise salaries. we now pay $9.20 an hour, a market-leading rate. in making those changes, we saw disruption to service in our store. we saw disruption to availability and service. we measure things every minute of every day and we get customer feedback directly on this through our apps.

what we are seeing now is that has improved consistently since that period to christmas and i'm delighted we just traded our -- the highest sales ever over the easter period with very strong availability and strong customer service. we are very pleased by that. if any retail chain where you have 1200 stores come you'll always have a bottom caller that you are moving up to improve. we are pleased with the progress we have made and the focus the business is getting right now. manus: andrew ruling against you on the deal. what does that do for the indscape of dealmaking groceries in the u.k.? is that door closed or is the u.k. more vulnerable to global bids? are you vulnerable to a global bid as a result of the closure of the asda deal. kevin: guess to both of those.

if you look at the overall conclusion and cma concluded a combination of things would ,aise prices, reduce service reduce the quality of products. in what is probably the second most competitive grocery market in the world and that is not recognized. the idea we could do that to customers and they would not groceries is not something we would agree with. we move on and run our business but in reaching that conclusion, cma has closed the door on any other amalgamations of any scale in the u.k. market which is a consolidating market. your overall conclusion is correct. manus: kevin, thank you very much. it is always a tough one to come out and defend big deals that have been individuals -- evangelized. kevin o'byrne of sainsbury's,

thank you for being with us. let's get final thoughts with my guest. at unionaylor jolidon mancaire privee in geneva. when you listen to the cfo talking about deals, the challenges in the u.k. and the consumers, your interpretation -- i know you like louis vuitton on the upscale side. is there anywhere in europe or the u.k. that you take exposure to the retail story? eleanor: currently, we have very little exposure to the u.k. per se and i must say retail and notably food retail has not been chosen area of investment for us. i come back to cash flow return on investment with louis vuitton. when we look at the challenges in retail -- and not just the , as, but across the world

they face disruptions coming from online providers, we don't find we are going to be able to find the kind of high, stable cash flow return on investment profile we would choose to invest behind, let alone a growing profile today. it wouldn't be an area we would be looking at closely, no. manus: thank you so much. that is eleanor taylor jolidon, cohead of swiss and global equities at union mancaire privee. thank you for being with me this morning. cubic stocks are going to be in focus on this mayday. cuttingainsbury's, debt, revamping the stores, and the second one will be next. very much a retail centric day for the u.k. one of the few markets running. market sentiment from apple, bounded by 5% after the close last night, taking that market higher. kevin o'byrne joined me and you will catch that on liv go or lumber.com. that is it for the "bloomberg daybreak: europe" team.

"bloomberg markets: the european open" is next. we are live on your mobile device and the a.b. digital in the london area. this is bloomberg. ♪

anna: welcome to "bloomberg markets: the european open." we are live from the city of london. i am anna edwards. the cash rate is less than 30 minutes away. up like a rocket. president trump urges federal thes to cut to servo charge economy. economists expect a hold at the meeting. capital -- apple shares bounce