francine: the wage debate, able job reports show a tight labor market. the race is on as elections approach, we talk to the competition commissioner margrethe vestager about the future of europe and her role. on the bottom line, shares jumping as the chief executive starts to address investor doubt while the finance chief says the outlook is good. >> our target certainly is to have positive growth throughout the year. if you strip out the one offs and revenue this quarter, underlying growth was broadly in line with cost growth. ♪

francine: good morning, everyone. this is "bloomberg: surveillance." these are your markets, a little bit of sideways trading for the stocks europe 600. we are also getting some figures out of this norwegian wealth fund, earning some $84 billion. the 10 year yield at 2.56 and a big week for crude oil at 61.55. coming up, we speak to the eu competition commissioner margaret mr. -- vestager. let's get straight to first word news. more has pulled out of the running for the

federal reserve board. trump says he has pulled himself out, but this is just hours after telling bloomberg he was all in an would only pull out if trump asked him to. >> i am not concerned. discussionteer the away from things i wrote 25 years ago and towards what i , iieve in and fed policy think we win a majority. >> it is too late to predict the outcome for 2019, according to socgen, as the outcome has fallen 26%. down bytrading was also 16%, but they say the equity business is showing resilient. >> at the end, we saw a slight rise in terms of client demand.

acquired inas been amazon as warren buffett says he has underestimated jeff bezos, saying he is a fan of the giants and an idiot for not buying in the past. they are also partners with j.p. morgan. wantd trump does not anyone to see his tax returns, but one group has already have a look. the bank has had access in 2012 before agreeing to lend money to the organization. this is part of a fresh start to the relationship. it soured after the financial crisis and turned into litigation. 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: thank you so much. the future of the eu could be on the ballot this month. the continent wide vote is shaping up to be something of a referendum on the eu experiment.

amongst the most vocal campaigners is margrethe vestager. been the euhe has competition commissioner, a role which has earned her a reputation as a tough regulator of big tech. we go to brussels, our maria tadeo is joined by the commissioner. over to you. maria: that's right, good morning i'm joined by the eu competition commissioner, good morning. margrethe: good morning! maria: you have said many times it would be nice to see a woman at the top of the commission, should that the you? be you? should that margrethe: we need a gender balanced commission. if you look at the portraits, it is obvious that it is about time. maria: and you would like to be that woman? margrethe: that is for after the

election. right now, we are deeply engaged in the debate over priorities. fighting climate change, making sure everyone feels safe, handle immigration. of course, to get the dynamic in the european economy to create jobs. so who is due in brussels, that remains to be seen. maria: weeks away from the election, how worried are you about the potential surgeon populism? because we have seen a real pushback. have you bridge that gap? margrethe: i do hope that a lot of people who say it is quite fine and probably be all right, i have other things to do so i will not go vote, that they will say it is my right to vote, i want to support, you know, centrist, calm, considered and pragmatic politicians in order to solve issues and find solutions. because i think it is very

worrying if we have a low turnout. that turnout tends to give us a parliament when many people have run not to make it work. maria: so you are saying the turnout is the key. have not votedho because they did not care to go out and vote this time? margrethe: i think that is part. there are people who have a life, have things to do, european democracy was never on their radar. for them to say it is also my democracy, i want someone i trust to represent me. when we asked people, and when i talk with people and citizen dialogues, they say we have things to do in common. it makes no sense for my country to fight climate change on her own. we need to do that together. when it comes to protecting refugees are fighting illegal immigration, we need to do that together. this is not something my country

can do by itself. that, ifa growing idea we want to solve things, there are a number of things we should do together. maria: let's look ahead to the future commission. at the start of the year, you made the decision to block a merger. some of your critics said this prevented the birth of a new european champion. do you worry the next commission may want to undo, if you will, some of your work? margrethe: and was a very specific merger. it was not only european champions, but global who wanted to merge. we blocked it for good reasons. that was the risk of loss of competition, higher prices and less innovation. signaling keeps our trains safe and in the very high-speed train segment. we need high-speed trains to have an alternative to traveling by plane.

the thing is, if you want to say we are finally the loss of competition, fine with higher prices, find less innovation, then you should also say who is going to pay. that is always a tricky point. if you lose competition, there is a bill to be paid. maria: and we do see those standards almost being brought down. what does that mean for the independents of european institutions? margrethe: the european union is built on the rule of law. we sometimes asked a -- af questions, it will loss of information is contained , everyone knows it is the same for their competitors. the same upstream for those who give input, the same downstream for those who brian -- who buy

their products. that is certainty, a treasure. it means you can predict what authorities will do. you can take analysis and advice. , thate business community kind of predict ability uncertainty is part of a good business environment. maria: another big area for you is tech. in terms of the investigations, are we done, or could you see more probes? , i hearerms of fines the argument that these companies have so much money they do not care. should you go into restricting access to the market as a way to make sure they behave accordingly? margrethe: to your first question, no, we are definitely not done yet. we have a probe into the amazon user data.

they both host and a lot of businesses and compete against those businesses themselves. we want to figure out if this is a fair use of data. we are still looking into the question of jobs within the google universe. we are looking to locals in the google universe. we still have investigations we are working on. of course, the follow-up on the three cases, the first amazon case on e-books is also still on our desk. that is the other side of the question. the decision is not just a fine, but also to say stop what you are doing, stop doing something that has the same effect, you have to change behavior. an example of that would be that google will introduce a choice screen on android phones in order to allow you, as a user to test out another browser, another search engine. that is a reaction to the decision for we found that google has been misusing their

position doing something illegal. maria: i want to ask you a brief, final question. very specific, but could be relevant. are you considering compensating investors and clients who lost money in banks that just went bankrupt. would you agree with that, is that something you would consider? margrethe: there are two separate situations. we have the rules for people who knowingly brought a product --'s a product. product. a and then there are people who have been mis-sold. people who thought they had a normal, protected savings account. but in reality, they had these products. if you are being mis-sold, this is fraud. we would want the banks themselves to compensate for this.

if the bank does not exist anymore, we find it is absolutely justified that the state steps in. scheme to enable automation for those who have or areybe not so much the most vulnerable of people. go in andwhere you sort of like arbitration. so the claim is being evaluated by an independent committee. the point is that these are social matters and these are people being exploited and mis-sold. of course, you have a situation where compensation is absolutely legitimate. maria: commissioner, thank you for your time. good luck in the election. margrethe: thank you. maria: that was the eu competition commissioner margrethe vestager. francine: thank you so much for a great interview with commissioner vestager.

up next, we talked jobs, the fed, treasuries and go back to the commission and the ecb. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." it is jobs day in the u.s. and the report is showing a tight labor market pressuring companies to keep boosting wages. on a point -- unemployment forecasts stay at 3.4%. joining us are our guests. thank you both for joining us. let me kick off with you, what are we actually expecting?

we know the numbers are strong, will looking for wage growth and inflation. >> right. the adp number we had earlier has bumped up some of those expectations. 1.9consensus has moved from 2.10. 1.9 to it is still well above the 100 k we need to keep unemployment rates steady. therefore, we are likely to feel a little dip in the great. -- in the rate. but it may be one of those months where you have a few data quirks. april 15 when the poll was taken was before the monthly payment following on a monday. some of the folks i follow tell me there were 22 working days in april, higher than normal which adjustments do not capture.

the broad picture is one of a tightening labor market. productivity numbers we have were encouraging if we had a continuing tightening, we probably be talking about margin pressures starting to emerge. this has folded into the new talk about ntt what exactly happened when central banks do not have enough tools. is monetary policy still the be all end all? luca: this has been my view for some time. there's too much emphasis on monetary policy. at the end of the day, monetary policy can help, but it is always reactive. do is look fed will at what we are looking at, wage growth. we know that employment growth will be solid. but wage growth is key, because this is an area where, to be honest, we have been surprised to see wage growth coming down.

than --ressure on wages and then virgins would fall, margins would fall of it could be very dangerous -- margins would fall, it could be very dangerous. , in thests a short-term, some kind of weakness i find difficult to explain. francine: this is our mliv question. this is what we are all asking -- we are asking our participants. luca? if you look at what happened to the rate expectations in the last few days, there has been a clear reduction in terms of expectations. is important to look at this because we feel markets are very complacent. a lot of people are expecting some insurance cuts and waiting

to see any potential weakness in the report to do this move. it is likely the fed will move this year. with growth like this, i think they will not cut rates unless something really bad happens. it is striking that, on balance, the markets are still pricing in a reasonable odds of a cut this year and next year. certainly, our expectation is that we will have a flat rates this year and next year. the fed says it will hike next year, but i think there is a gap between what markets are pricing and what we expect. that is not jus. in the u.s. -- not just in the u.s., but in europe as well. there is a big gap between market pricing and our expectations. however, i do not think that is

substantial enough to generate lots of discount rates we saw last year. bothine: luca and maya stay with us. coming up, we speak to the chief executive of allianz. this is bloomberg. ♪

francine: the bundesbank president says rising incomes should help boost consumption. advising to push ahead from normal monetary policy if inflation allows. they say in the relief from interest rate tiering would ultimately be negligible. overall, is at the ecb said or central banks that have the most difficult time? if we take a step back, our expectations on your are slightly above consensus. expecting 1.4% against a consensus of 1.1. that is the story of domestic strength we have seen consistently through the last three years. dragxternal weakness is a

and the temporary factors have been a drag on europe are disappearing someone. creating aa drop -- backdrop where we are on the hawkish side. we do not buy into the modest cut being priced in. equally, negative interest rates do cause a real problem. francine: right. does it impact generally or is it more about domestic concerns? luca: i do not think the ecb is in an incredibly difficult position. they are not going to make a mistake because they know that hiking rates when inflation is so low is not going to happen. the luxury of being able to wait is pretty clear. i personally think the euro will surprise on the upside. some kind of rate hikes certainly have to be priced in. i really feel that we are too pessimistic on europe. will actually start

to become a little bit more confident, but not now. francine: we will have to see who is ecb president at the time. thank you both. up next, the south african president enters next week's elections as the front runner. but if he wins over the country, will he also be able to bring together his party? we discuss that next, we look at rand, and the challenges in south africa specifically. this is bloomberg. ♪ alright boys, time for bed.

listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi.

let's roll! now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. economics, finance, politics. i'm francine lacqua in london. getting new set of the u.k. shortly.

-china trade deal, it looks like they will find something something that would be quite comfortable. today, people are looking at the earnings that we've had the last few weeks. maybe a little bit of disappointment that we haven't trade deal yet. when it comes to the u.k. april services pmi rising to 50.4. yesterday we were tracking some of the data forecast in the u.k. that came in better than expected compared to the u.s. and compared to economic expectations globally. this goes on the back of what mark carney was playing -- saying yesterday. with a look at the movers come here is annmarie. is up nearly 7% this morning getting a boost from china.

the ceo spoke this morning and hopes rate -- europe will return to growth. -- upso spiking up over about 8% this morning. theets certainly like transaction deal. hsbc comfortably beat on profits as well as announcing that they will be doing some cost-cutting, francine. thank you so much. let's get straight to the bloomberg first word news here in london with sebastian. a storm has made landfall in india, the worst since 2014. wind speeds of 210 kilometers an hour. over one million people have been evacuated and the extreme weather has seen flights canceled and oil exports halted. theresa may is battling to convince security allies that the country can be trusted. a recently that

british staff are using huawei technology. this includes australia, new zealand, and the u.s. wantd trump does not anyone to see his tax returns, but deutsche bank has already seen it. they had a look before agreeing to lend money to the trump organization. litigation. into stakeay has agreed for a -- warren buffett said he's a fan of the online giant and was an idiot for not buying shares in the past. this solidifies the relationship between the two. banning controversial far right figures from facebook including alex jones and below yen opelousas -- and milo. the social network is taking a firmer hand in forms of service.

has been criticized in the past for failing to stop the spread of misinformation. 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. this is bloomberg. francine: mark carney has made the case for faster rate hikes if brexit is resolved. policymakers voted unanimously to keep them on hold for now. little keep seeing chance of the boe move this see her. local elections held yesterday with just under half of the council declared results, they lost 441 seats. the winners are smaller parties and the pro-european liberal democrats. our guests are here. let's kick off with what u.k. and bank of yesterday.

mark carney suggests that inflation will pick up and it mainly has to do with gasoline be domestically short inflation. don't think the bank of england will like that because gas prices went up. we are starting to see, obviously, consistent pressure moving up. this will be the case. resolved, the parliament will get stronger. and i think inflation area pressure will probably go down rather than up. way to it is a strange present the economy. i think the economy in the u.k. is more resilient that -- then people at expect. -- more resilient than people expect. tom: are you saying the fed should be less hawkish? >> even at 1.5%, it is an

appropriate level of interest rates. that i would not make all this dependent on gasoline prices are brexit because we have seen in the past that it was a mistake. i think that is why there will be no change of rates this year. do you agree? >> we expect an increase later this year followed by one next year. i think it was interesting from the bank of england that the model consistent with the forecast suggests it is 90 basis points of rate rises over the next three years. the markets are pricing in 30. don't think it will be gasoline prices that prompted that. but i point to the positive output. they were talking about services at some of the labor costs, right. and i wondered if that is why the markets don't believe them.

>> maybe. but the key message for me is that intent without urgency is what i took away from carney yesterday. those two phases that he sort of divided the bank of england's forecast, pre-brexit and post-brexit. there was skepticism around the pre-brexit phase. believe itet doesn't because if you have a fed that wants to do the office it -- the opposite, that is the reason why markets would be suspicious about all of this. francine: how do you look at the politics of what we heard in the general election yesterday? if you take a step back and look at conservatives and labor, does it just simply mean that they are more likely to find deals because they want to get brexit out-of-the-way? >> i'm not so sure about that. it is different from a general election. it is unlikely that there would

be some kind of a deal. irrespective of that. it we have a little bit more time. and i believe there will be a deal between labor and the government. think it will allow brexit to happen in a way that is probably acceptable to both sides. francine: do you see that happening? that medium-term, we are heading towards a softer brexit. but the path to that might be quite long and relatively volatile. far on our impact by portfolios is sterling. the biggest impact by far for us. reflect ontrying to the direction of travel in a softer brexit direction. -- we have got

quite a lot of sterling exposure today. a momento what i said ago, that our expectations are somewhat more hawkish. are pretty short of duration here. francine: thank you, maya and luca. both will stay with us. african country hits to the polls next week and will focus on south africa's elections. this is bloomberg. ♪

francine: this is bloomberg surveillance. i'm francine lacqua in london.

we focus on next week's election in south africa. citizens are urged to have patience and give the government time to do with endemic corruption. roleibing his predecessors as nine wasted years. polls suggest the anc that has 50%d for 25 years between and 60% of the vote. an independent political analyst joins us. we still have maya and luca. ralph, thank you and welcome to bloomberg surveillance. the latest polls in south africa suggest that anc electoral majority is under threat. how worried should the anc be? think they should be very much worried. if you take into consideration how they performed in the previous elections, the 2014 elections.

there was a range of 62%. and now there is a real situation where the party could be reduced under 60%. race relations are pulling the anc about 51%. polling the anc about 51%. so they will probably settle within the 50's. i don't see the anc getting to that 51 point. but on may 15, it is a possibility. people are if willing to forgive the anc. he has credibility challenges. i still think the anc will have to be reduced to below 60% because they have been dropping 3% of election on election.

it will not be surprising if they go below 60%. francine: it had been suggested that the hold on the south african national congress could be under threat if he gets a weak mandate. what is your view gekko -- your view? >> i find it a difficult analysis. we don't have a situation where the president of the anc has some sort -- some form of the toe. -- of veto. actually, if the anc gets a strong majority, the manner in which i see is that it will move. at the issue such as prescribed asset and without compensation. to it will be interpreted mean that the elections were a

referendum. and moderating within the anc, that would be difficult. they wield a strong majority such as 60%. and i think that would probably be manageable for their president. francine: do you see a rigged -- an aggressive reform agenda? -- anon't see in a opportunity for an aggressive reform agenda. there is no consensus as to which direction the agenda will be headed. ,f you talk about privatization there will be concerns. privatization is the way to go. means that anything you do, -- hell have to negotiate

will have to negotiate with his comrades. i don't see a path for an aggressive reform agenda. francine: do you see value in south africa? a: we built a position in south africa in the summer of last year. .e had that e.m. route and in south africa's case, we had that reform agenda that he brought with him. all the positive news was basically priced out. and instead, we have had a pretty punchy value. as a heard from your speaker, it is not clear that anc will win. there could be 58% for the party but 75% for him. our expectations would be that if he does win, we would get some important reforms.

win,lso that if he didn't you have the real risk of actions coming back in. i don't think it is quite important here what we get in the elections. but with valuations much tighter than they were and uncertainty surrounding these elections being relatively high, we do still have a smidgen of exposure. we are very optimistic on emerging market bonds. but i think the problem that we see in south africa is that i believe the reform agenda will be cemented. and our model is one of the most expensive currencies within e.m.. we have some exposure in mexico. in russia, we are ready. and the valuations are attractive. we still like emerging markets overall but there are probably

better paces -- places to invest then south africa. -- than south africa. francine: thank you all for staying with us. up next, microsoft has more subscribers than netflix, more cloud computing than google, and a trillion dollar market cap. but can the turnaround last? coming up next. this is bloomberg. ♪

francine: economics, finance, politics. milestone for microsoft as chief executive's put the company on a different path. the stories in the new issue of bloomberg businessweek, here is viviana hurtado. last week, microsoft again became the world's most valuable company. it hit the $1 trillion mark and it is a most certain no one mentioned it to ceo sought in the della. he said -- satya nadella. many are celebrating the turnaround. microsoft cut its dependence on

windows and built a $30 billion cloud computing services that is , in some areas, ahead of alibaba and google. cloud-based service with more than 155 million subscribers. microsoft has four major retailers. walmart, kroger, walgreens, and all britons. this is due to a culture change. francine: staying in the tech sector, warren buffett is telling people ahead of the berkshire hathaway annual meeting that buying amazon shares recently, he was an idiot for not doing so sooner. the announcement gave amazon shares an immediate bump in after-hours trade. our guests are still here. thank you both for sticking around.

we are almost getting to the end of the earnings season. i think the blowout figures were the banks. and then tech earnings came out with quite a lot of strength. does it make you worry that valuations overall for the sector are overstretched? i think especially for cyclical sectors, tech is part of that, i really believe tech remains to be very cyclical. expectation is very high. global growth is weakening. for thelly feel that tech sector, the numbers continue to be good. but there are risks. feel that we are a bit cautious on the sector and valuation is an issue. francine: do you see value in a sector anywhere? why are they overstretched? there is money out there that investors want to put to good use.

isa: the tech sector expensive, but it is not at levels we have seen in the past. i think the reason why we are cautious on tech is more on the expectation that a cycle will continue for a long time. and if the end of the day, the tech sector continues to be cyclical. i feel this is a sector where everybody wants to have expectations at a record high. we take a slightly different view. .ech remains a favorite sector premium growth, premium earnings. , something wee confirmed early in the trade season. and from our standpoint, i think the reasons for owning tech would be more long and

structural in nature. although we are mindful of the cyclical trends. it is not a cheap sector but one we are willing to pay for. francine: overall, what is your take on earnings season? it seems to be little visibility. does that go back to the economy or something else? if you look at the shares, we are between 70% and 80%. are in line with in the last few years. earnings are flat, but the expectation was for a decline. around 5%inue to be to 6%. that it isy believe the key risk for the u.s.. it is better than expected, but i think it is a good reason to be a bit concerned. how do you see the economy in the next few quarters? we came from where it was like

the end of the world to now seeing growth expectations picking up significantly. pickingowth earnings up. earnings expectations looking better. i think that when we look at equity markets, i am struck with how little earnings have had to do with what equity markets have done in the last x month. -- last six months. earnings might have weakened a tiny bit but it was a discount rate shock that delivered weaker markets. guidance has improved a little bit. and we had the big outsized gain in markets. i think this earnings season is worth reminding us that we are at different stages in different areas. i think this earnings season does provide an important litmus test to see if the optimism we have seen in markets has legs. , we areh more broadly

past peak growth. we are forecasting slower growth. u.s. midgen is led by the it is japan for this year and next year as well. we are not of the frame of mind where we think the recession risks are likely to occur, not least because these are the conditions that we need to have a recession. we don't have excessive private sector debt. francine: thank you both. sorry we are running out of time. this would be a five-hour show. thank you for being here. bloomberg surveillance continues with tom keene. ♪

francine: the wedge debate after

the recentdownplays inflation, low april show a tight labor market? and we hear from competition future ofer about the europe and her role as a tech regulator. bottomc beats on the line, shares jumping in hong kong. the chief executive starts to address investors doubt. the chief says outlook is good. havee target is to positive growth throughout the year. if you strip off the one offs and the revenue this quarter, underlying revenue growth was broadly in line with cost growth. francine: good morning, everyone. good afternoon if you are watching from asia. tom, a little bit of inflation in the euro area. what mario draghi will be looking at very closely. although there has been a little bit of change when it comes to

the holidays during that month. accelerated to 1.7%. a touch above estimates, something mario draghi will certainly welcome. core inflation is at a six-month high at 1.2%. better than economists were predicting. tom: it is worldwide. i like what you say about an economy doing better than all the worries about lower inflation. we heard that from stephen moore yesterday before he was fired by trump or stepped aside. i'm not sure which. but adamant that there are two economies. a pretty good u.s.-european economy. we talk about monetary policy and europe very different compared to the fed. we will talk a little bit about that, but let's get straight to the bloomberg first word news with sebastian.

sebastian: to pick up on that story, stephen moore has pulled out of the running for a seat on the board. this is hours after he was all in for the central bank. he said he would only pull out if trump asked him to. >> i'm not too concerned about this. discussionteer the away from things i wrote 25 years ago and more towards what i believe in terms of the tonomy and fed policy, how create growth in stable prices, i think i will win a big majority. >> facebook has banned a number far rightersial figures including alex jones. they violate the policy on hate speech and promoting violence. the social giant is taking a former hand enforcing the terms of service. facebook is criticized for failing to stop the spread of harmful feeds and misinformation. hit thet storm to country since 2014 has made

landfall in india, seeing wind speeds upwards of 210 kilometers an hour. one million people have been evacuated to safe areas. 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. this is bloomberg. tom: good to see you. let's do the data check right now. equity bonds, currencies, commodities. not all that much adjustment off of the fed meeting a few days ago. futures down one day, up again. up right now. the curve steepen's as well. europe a little bit weaker but not anywhere near recent support. the vix 19.8, comes back in. the bears watching the two year yield. that is one thing i will be watching at the jobs report. the green on the screen is a yield basis point.

it gets my attention near a 1269 handle. francine: i like your data feed. i see a little bit of uptick when it comes to european stocks. for the month of april, better than economists predicted. it is something that we should keep in mind because inflation is so difficult to take hold of in europe and elsewhere. this is what i'm looking at. the dollar ranging higher. there is a little bit of the china trade deal that will take place. tom: we will hold is down in omaha this weekend. moran buffett talked about amazon, how the young turks are buying amazon.

extrapolate out the two decade regression. when mr. buffett is 108 years old, he will celebrate, francine. amazon will be $78,000 a share. this is what i'm looking at. an inflation target for the boe. we went to the press conference of mr. mark carney yesterday. it was at around 1.9% and that changed yesterday. we will have more on brexit and what that means for the u.k. shortly. companies.ssuring global investors and chief executive officer will stay with

us for the hour to talk about financial repressions. what are we seeing in the u.s.? do we trust the fed with a say inflation is there and will pick up again? >> i'm not sure. i have always felt for the last 20 years that inflation numbers do not look -- do not reflect real inflation. i'm not sure measuring asset price inflation is right. therefore, real inflation is probably higher than headline inflation suggest. i'm not too concerned about the inflation rate but that is probably an academic debate that will take too long for today. unemployment is very tight and it doesn't take much in the jobs thert to maintain unemployment rate at 3.8%. it might even drop a little bit further.

that would be if it stays, probably ending up with 185 or 200. the wedge pressure is likely to increase and we have to be supportive of inflation as we know it. francine: we heard from jay powell this week, that it can go either way. >> interest rates will continue to be lower for longer. what we saw in terms of tightening and forward guidance, cycleis concern that the that is now very long in the tooth is petering out. thought that. positions can't afford that. we need growth. everything will be done to maintain a very accommodative monetary policy and environment. that is probably good for asset prices. let's go to the internal

team surveillance. andreas, i want to congratulate you on this absolutely phenomenal headline which is the heart of the matter for every single viewer and every single listener of this program. inflation, hunt for income. it is brilliant. to completelyve reset how we deal with equities and the stock market. search foright and income in this time of low inflation? >> you are right. it is not rocket science. it has been the mantra for 10 years. companies that have an ability to deliver dividend growth.

the reason they have done so well in recent years is precisely that. focus on increasing the dividend. the focus needs to be on beating inflation and that needs to have real returns. quite a lot of people, in addition to looking for the , that when everybody sold emerging markets, it was time to go in. investors are waiting for that. and i think we are seeing nonpublic market activity by investors. annual investing, early stage, private equity, trying to beat over the longer term. there is a financial repressions scenario we have been in. today with the bank of england meeting, the jobs, the

fed meeting, the things we talk about each and every day -- do we have a risk of a combination that if we are so desperate for income, will we enter an era -- whereything merges everything merges into a oligopolistic structure? >> there is that risk. but in terms of stock market activity and class asset activity, we see correlations that point toward the same direction. massive yield and discretion everywhere. long data assets. you thely paying premium, the liquidity that you need. we see, asely, as you mentioned quite rightly, a enormous concentration of industries including my own. tom: decision of concentration is something with the s&p 500 up

today. there is a lot to talk about across surveillance today. coming up, this is always an interesting interview but today, even more so. a conversation with lawrence kudlow, national economic director. and no doubt, the name stephen moore will come up. stay with us. this is bloomberg. ♪

>> i'm not so sure i agree with the white house that we should cut rates by a entire percentage point. i just don't see the case for that right now. i'm not too concerned about this. i actually think if we can steer the discussion away from things

a row 25 years ago and more towards what i believe in terms of the economy and fed policy, and stablete growth prices, i think i will win a big majority. were listening yesterday and in the interview, mr. mohr xfone was literally ringing onset. moore's phone was literally ringing onset. maybe it was stephanie, reporting from london. upt a story, writing this after his print interview in washington and his conversation with vonnie quinn in new york. i want to get right to the important matter, the future for the president and the fed. what did the president learn from this debacle with mr. kane and mr. moore -- sister c -- mr. caine and mr. moore. flow these candidates

without even doing the most perfunctory checks on the background and having it backfire in their face. whether he learned to do some vetting is unclear because he has done it repeatedly. more -- moore's background, it was unexpected that he would get through the republican-controlled senate given his comments about women. his failure to pay child support. many recent comments that people felt were racist. i think it was inevitable that he would pull out. tom: we are trying to be as balanced on this as we can. he is writing this morning after the events of yesterday in the journal. been called an adulterer, misogynist, tax cheat, deadbeat had, and mentally unfit. im and as outspoken as paper trail two miles long is

down to be a target in today's political environment. i should have warned the president about skeletons in my closet. have skeletonsnd in his closet as well, but they were theoretical and not macroeconomics. are we looking for a perfect fed governor? with the be the same next democratic president? >> trump has tried to pick loyalists to staff the fed because of his concerns that the economy will slow down ahead of the 2020 election. can callloyalists he on to cut interest rates and stoke the economy to keep it coming in the run-up to his reelection campaign in 2020. it looks like he will have to revert to a more conventional to get through the republican-controlled senate.

you can argue that this is terrible because this is president trump monkeying about with the fed. institutions are working and they are protecting the appointments on the fed. correctlast point is a one. institutions are working. -- we come from a time, most people don't remember, of hyperinflation and stacked inflation in the 70's. we had a change in monetary policy globally, at least by the most important central banks. they moved toward independence 20 years ago. the united kingdom was one of the last central banks to move towards independence politically

. a more insulated model. it seems to be weakening and we are seeing it everywhere. that is a concern. tom: let's leave it there. thank you so much, andreas. have eightaker, i more questions but no time. truly an expert on some of the investigations and analysis of the present administration. coming up, investigation and analysis of the cleveland fed. seriousmester's has mathematical chops. this is a timely discussion out of the hoover institute. this is bloomberg. good morning. ♪ s bloomberg. good morning. ♪

>> this is bloomberg surveillance. let's get the bloomberg business flash. a block asked her first day of trading -- a blockbuster first day of trading. it is the best opening day for a u.s. ipo this year. it is also the best for a company raising $200 million since the financial crisis. the on meat has high-profile backers like bill gates and leonardo dicaprio. >> we want to be generating so quickly that if you try to copy what we are doing, they will be chasing a ghost because we have moved on to the next platform and the next product. it is michael to have a new product on the market every year. whether or not we will see that on a year in year -- a year on year basis, we will see. but that is what we look to maintain to deliver this promise.

>> of berkshire hathaway acquired a stake in amazon. warren buffett underestimated jeff bezos and says he is an idiot for not buying shares in the past. jpmorgan also partners and a health venture. -- with jpmorgan in a health venture. andrea's, we were talking a bit about how jay powell's message was received overall. are we looking at what central banks can and should do worldwide? >> i'm not sure where we are at the moment. att for example, the episode the end of q4 when markets were expecting further tightening in 2019 across the board, changing those expectations had a very significant impact on financial assets. anything, require really. it did not require monetary policy action. expectations have

worked reasonably well. forward guidance and all that. it seems to be keeping everything on track. francine: let me bring you to a quote from ray dalio who spoke to us this week at milken institute. he says, to produce economic well-being for most people, monetary policy does not work. he basically argues that over wealtht four decades, and income inequality have surged. so the most engineering puzzle policy is how to solve that while getting the economic machine back on track. is that mean we need to radically rethink monetary policy? >> i have not seen the post so i can't comment in depth on the post. but i think it is obvious that there is a strong linkage between monetary and fiscal policy and growth. acknowledged.

in order to keep the global economy on track, the policy has gone to quantitative easing. and that was obvious from the word get go, really. that is a different story. i think different economies will require a different policy mix. if there is an implication that the u.s. could prime the deficit , yes, that is an option for the u.s. dollar is the u.s. the reserve currency of the is the lenderu.s. of last resort, that is possible. and argentina can't do that. they have no credibility in the markets to do that. if they went down that path

aggressively, they would go bust even faster. -- even if're on a you are a small economy dependent on exports, that would be a different. you can generalize and whether or not it is a good thing to prime the deficit. we will have a strong debate about that. i think one does borrow from future generations. i don't think that is something we should do. stay with us. coming up next, we will hear from the eu competition commissioner. she had a conversation today where they talk about the commission presidency. this is bloomberg. ♪

>> i think the most important point is to say, we need a gender balanced commission and if you look at all the commission presidents, it is

obvious that it is about time that you have a woman heading the commission. it is very worrying if we have a lieutenant -- turnout and low turnout tends to make it not work. we have a probe into amazon user data because they host a lot of businesses and compete against their businesses themselves. we want to figure out is it a fair use of data? we are looking into the question of jobs within the google universe, looking to locals within the google universe. we still have some investigation we are working on. francine: that was the e.u. competition commissioner, being touted as possible commission president and she told maria antitrustbig tech and probes are not over yet. we will have more on what the

commission plans to do on it. first, the bloomberg first word news. sebastian: theresa may is battling to convince their security allies the country can be tested -- trusted. of the fiveembers intelligence lines have clamped down on huawei. donald trump does not want anyone to see his tax returns although one group has had a look through, a team from deutsche bank. reviewed it and 2012. it descended into litigation. in a relief for euro region banks from interest rates hearing would be negative according to a governing council member. lenders'exempt some excess reserves from negative deposit rates, and the german

persistent is more than they thought. 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 sebastian salek and this is bloomberg. francine: u.k. voters appear to have turned their backs on the local parties in the elections yesterday. the winners are smaller parties and pro-european liberal democrats. this is a question that i asked in radio and you eloquently answered as always. if you have two main parties doing worse in local elections because the voter is set up with the fact they do not get along and cannot agree on brexit, how much is it for the labour party and conservative party to come together with an agreement? partyt is one the labour

in particular is grappling with. the conservatives, everyone expected to do badly, and they have done. up manyhould be picking more than they are. they have lost 79 council seats. they are trying to work out what to do next. they are in cross party talks with theresa may's government and there is no agreement from labour and the tories. the shadow chancellor is saying that labour and the government need to sort brexit, but he has come from a lot of criticism from people who do not want labour to do a deal to help theresa may, and support a general election. it is a difficult question to address and it is not clear which way jeremy corbyn will

come down. francine: if the u.k. continues with the european elections, if ,hey get on with it, how badly do we know, with the main parties do? a fortake of what those parties will be doing in today's results. saw aexit party pro-european political party, those are not standing in the elections today but will be standing in the european elections later this month. you can see quite clearly already that the smaller parties expect, academics expect that the brexit party and the change u.k. pro e.u. party

will do really well in the european elections if they are ofd may 23, at the expense the two big parties. by if i goascinated to spain there is no liberal democrat. if i go to the united states of america, there is no liberal democratic party. would you explain to me and all of our audience exactly what is a liberal democrat? tim: what is a liberal democrat? we all thought it was a dying breed until today. they entered government with david cameron and a coalition between 2010 and 2015. it was a terrible decision strategically because they were wiped out in the next general election pretty much and only had a hand of their own left. since that 2015 election which

hurt the liberal democrats, which has been this halfway house, middle of the ground party, they have struggled until today. tom: i do not mean to cut you off, but just because of time, is not the way it works out? gets together with change u.k. and bring in tony blair, and we have a new middleground in the united kingdom to make brexit go away? tim: if you can persuade three politicians from different parties to sign up together, i think you are doing pretty well. the truth is these guys are reluctant to work together and that damaged the pro-european cause of the u.k. recently. ross.ne: tim a reminder to our global viewers that serve vince cable has leader so weit as

are looking for a new successor for global democrats. andreas utermann is still with us. all of this brexit model and the fact that they cannot get along and you do not know how this will lend is also in the face of better-than-expected economic forecasts. how do you match them up? andreas: it is an interesting question, surprising the u.k. economy is holding up so well given the damage by the uncertainty caused by the brexit process. the economy would have done so much better, presumably. difficult to match up. i guess it has to do with continued immigration, long leads and lags if you look at the construction activity in london, that has been started pretty much before brexit so there is some going on but it is surprising. difficult to reconcile. francine: we are getting some

news out of jeremy corbyn saying it is important, the faith of these elections, for labour to they wantedty and to do better. what does it mean for u.k. investments? andreas: the uk's stock market is quite cheap. the ftse 100 has barely had any return of the last 20, 21 years and recovered a bit from the 20 year lows at the end of q4, but it is pretty cheap. considering that a lot of earnings on the ftse are overseas, they are less related to brexit. probably u.k. equities are quite value. the image of quite everyone leaving london and going to elian's in munich -- nz in munich. alia

the summer, the kids go back to school in fall, what is your image of where the city will be in 18 months? andreas: the city is pretty resilient, certainly for the time being. much depends on the ultimate outcome of brexit. i would like to remind ourselves that three years after the referendum, it was politically very incorrect to even talk about a second referendum. fast-forward three years. we have not brexited. and thean extension prime minister saying if we do not get the deal through, that would lead to the possibility of a second referendum so the dynamic has changed. conservativer and

agree a deal, it is not certain it will pass parliament and the odds of a second referendum rise significantly. once you get to the halloween deadline, it will be very tricky to ask for another extension other than to have a second referendum. francine: thank you so much. about european holidays, i think you have donated me your holidays the rest of the year. we have it on video. tom: we will drive forward the conversation with andreas utermann. alan ruskin will be with us in the next hour. 9:00 a.m., lawrence kudlow and rick rieder. holdinge mr. ferro court in the 9:00 a.m. our.

-- our bank -- hour. ♪

♪ sebastian: this is surveillance." john flynn looks to be making headway to bring costs under quarteras hsbc first results beat estimates. that trend is referred to as positive jaws. it failed to deliver on that metric last year. >> our target is to have positive jaws throughout the year. ,f you swap out the revenue revenue growth was broadly in line with costs growth and we believe we will be able to

achieve positive jaws for the rest of the year. sebastian: it is too early to predict the trading outcome for 2019 according to societe generale's ceo. 15%, butng was down the equity business is showing resilience. >> the situation on the first quarter in terms of client demand was at the beginning of the quarter, the same as last year with low demand. rise in terms of high-end demand. sebastian: that is the bloomberg business flash. tom: that is called managing the message, that is what bank ceos do, more cynical about the is elisa messaging martinuzzi.

you mentioned to me that actually investment banking for european banks has been what, ok? better than moldy? how would you frame, not outperformance, but this surprise? elisa: what you would use takes off of the fact that we have not seen a continuation or reiteration of the erosion of market share, that is what is appearing. a strong quarter in fixed income and overall, trading revenues declined, but not as much as the u.s. peers, so one can draw the conclusion that we may have seen a plateauing of that market share ocean. tom: help me with the calendar. america, theyd start their business planning. what goes on at these banks in the next 90 days in terms of

strategic management? elisa: you are seeing the pressure on cost remaining. if you look at the french banks in particular, they are pushing through aggressive cost savings because what they recognize is the trading edge -- engine, investment banking engine will not be growing as much as they hoped and at home, these businesses remain under pressure as low interest rates increase margins. we saw a reiteration in the first quarter. francine: you were talking about consolidation six or seven years ago, and the fact that the catalyst could be deutsche bank commerce bank. what will be the consolidation -- catalyst? elisa: you will hear from investors and analysts, the the regulatory hurdles remain unchanged. while it may be a good idea in

theory for bnp to buy insuredank, without an deposit scheme that likely will not happen. --hink on the cost cross-border level, we are where we were. excitement led to speculation about unicredit or ig looking at commerzbank. francine: if you talk about a catalyst that could be on share prices for a lot of these banks, or consolidation, we are talking about sharing now -- tearing -- tiering. andreas: we have already seen the damage quantitative easing has done and for banks to be enabling earnings growth, i am not sure that a sensible. it is a combination of things, better than expected european results could help.

returns on equity are expected to be 8% next year. if we get that surprise on the upside, confirmation the cycle will be a little longer. are baking in some maturation of microeconomic policy, which will not help for banks. dividends, obviously, 5.5% dividend yield for the sector, not bad. 4% real yield. it is not expensive, but it is making desh baking in uncertainty we know about. -- baking in uncertainty we know about. tom: give us a barclays update forward. elisa: i think he will be relieved, although there was a surprise the activist did not get a board seat, he will get to take the light of the business that everyone has been focused branson andks to

his push to shrink the investment bank. you get back to what he should be doing, running the company. tom: lots to talk about on banking. we will see elisa martinuzzi many times into may. we will continue this jobs day. there was a point early where can len go talks about his first -- ken langone talks about his first job. a special podcast with ken langone with an important book. this is bloomberg. ♪

♪ "surveillance," it is not a happy friday, it is monday, we like happy -- jobs day. we like happy monday. we have to get up-to-date with andres do bert -- andreas utermann on how the biocide feels. feels.- buy side

it is another single digit year, s&p up 16%, amazon up 21%. side do tohe buy catch up? andreas: that is a tough one and a spot on question. in q4, there was a bloodbath. risk assets had a tough time. in q1, asset management companies and banks announced significant rounds of job cuts. they were in the middle of executing those and markets have bounced back significantly, the time you ought to be hiring, so they are in a bind. it is tricky for the industry, coupled with a continued pressure on margins. margins for active managers might drop as much as 50% in the

next five years, so expect further consolidation and job cuts. tom: well said. the solution for active management is to go -- get away squared to a ftse or whatever, and find something unique and original that can add value. elian'sthat thing for question -- allianz? andreas: uncorrelated returns are the key for the biocide -- have been investing heavily in the nonpublic market side of the capital markets. to some degree, focusing too parton alpha generation as of the problem with the active management industry. asset management errors -- managers will want to have -- go

further into the value chains in terms of a device and being part of the value chain of suppliers. that is the key, and being a product developer at the same time as an advisor, at the same time as someone who has done the work for the end client. francine: is that changing? andreas: that is changing for our firm and i see that for those who want to continue to be committed in the active space, thinking about the active value proposition in a broader space. francine: how much more consolidation will we get over the next 12 months? is it longer-term or will it happen quickly? andreas: it will happen quickly and will go on a long time. there has not been that much consolidation, but the proportion of assets of earnings that are being controlled by the 50/30 asset managers, i

cannot see this trend stopping for some time. tom: andreas utermann, thank you for getting my early morning friday started. coming up, we will drive forward the conversation on this complex day, jobs day. in of deutsche bank someone good to speak to. stephen moore mentioning dollar stability, price stability. that is an idea. alan ruskin as fed governor? that is an interesting idea. this is bloomberg. ♪

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some reports that america is fully employed. moore gone. who will the president pick next to be nominated to the fed. britain asks what is a liberal democrat? not a conservative or a labourite. mr. buffett will talk bezos. good morning, everyone, this is bloomberg "surveillance," live on jobs day. tom, francine lacqua from london. how do they drive forward the brexit conversation? francine: gives an indication of what the citizens of the u.k. are looking at, whether they are mad at brexit and what party they want to vote for. it may focus the lines of the labour party and conservative

party. both did badly on elections, but in terms of the market, euro area inflation accelerated after a string of upbeat data, so watch for impact on future expectations for the ecb. tom: we will have the data through the day and into the weekend. here is sebastian salek. sebastian: it is about time a woman led the european commission. that is the opinion of one of the candidates for the top job, and she expressed concern over letter turnouts at the election. it often leads to members who do not want to make it work. >> the most important point is to say we need a gender balanced commission and if you look at all of the commission presidents, it is about the time you had a woman heading the commission. the euro: inflation in

area accelerated more than expected, capping off a week of encouraging data. consumer prices came in stronger since november, after a report showed the euro area activity has doubled. norway's trillion dollars sovereign wealth fund has gained $84 billion, taking advantage of the selloff to build its portfolio. they hold around 1.4% global stocks. this is the best quarterly return ever. 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 sebastian salek and this is bloomberg. tom: thank you so much. let me get to the data quickly on a job stay. equities give me a bounce up. maybe that is mr. buffett and

amazon. futures up 49. euro a bit weaker, 1.11. , back above 14, 14.04 on the vix. -- up over than -- over -- 1271. francine: better than expected inflation data, mario draghi will welcome it with open arms. are focusing on what happens with jobs in the u.s. and the fed, and the u.s.-china trade deal. u.k. gilt and german bund, down a little bit. tom: it is a good time to get a complete picture. you can do that with a gentleman that yes, he does

foreign-exchange but much more at deutsche bank, the chief international strategist. it is a breath of relief to get the holistic picture. dumbe start with a question but important one. how do you correlate the equity market melt up to the deeper market of fixed income and foreign-exchange? alan: the melt up has been helped by the melt up in bond prices. the fact that the 10 year has been hovering close to 2.5% has been helpful for the equity markets. fed fundind, when the is roughly around zero, the average 10 year yield was 2.5%. we have a lot of effective backend monetary easing. n and stephen moore are gone from the fed.

let's go off friedrich hayek. you have to clear markets. it we in this jam, whether is greater e.u. banking, the unfolding of italy and greece and the big picture, because we are afraid to solve things and move on? alan: you are heading on a very sensitive point, which is that central banks have been babysitting markets for a long time. tom: thank you. can we that quote? babysitting, go. alan: we have been afraid of any cleansing as it relates to growth slowdown, hence we have had things like the greenspan put come of the yellen put, and -- greenspan put, the yellen put, and the powell put.

the chinese are underwriting growth effectively to keep growth around 6%. you are seeing distortions all over the place, things we could never have imagined where central banks are buying assets and distorting credit and equity . yes, i you think -- i think you are right that cleansing would not be a bad thing. given we are out, 10 years into recovery, a recovery that has gone extremely well. francine: are you telling us it needs to be rethought? central banks have wanted to hike but inflation has not been there. alan: central banks are targeting something they do not control easily. that is a huge problem and why you see the markets trying to interpret chairman powell, what he says a couple days ago.

this fear that if the central banks were to say, inflation is 1.5% and we are hell-bent in getting it up in a symmetric way to 2.5%, guess what type of interest rate that might involve the fed targeting? have done,ons we certainly a negative interest rate in the united states. the inflation targeting obsession is part of the problem. central banks have to take a holistic view of a variety of different variables when deciding policy, and that is not an easy message. it is easier to tell the public we are targeting one variable, inflation. tom: alan ruskin with us, thrilled to have him with us on the job stay. we are going to try to take a bigger, broader view. will be hour, mr. ferro

talking to mr. kudlow, esther ferro trying to extend that into a 45 minute conversation. this is bloomberg. ♪

♪ >> i am not so sure i agree with the white house that we should cut rates and entire percentage point. i do not see the case for that. i am not too concerned about those. i think we can steer the discussion away from things i wrote 20, 25 years ago, and more on what i believe on and the economy and the policy and how to create stable prices. i think i will win a big

majority. tom: stephen moore yesterday with guy johnson and vonnie quinn. with kevin cirilli, we are going and molar free. free.a -- mueller bring up the president next as the governor of the fed? kevin: the names well materialize in the next few days. some of the names circulating will resurface. the president, with herman cain and stephen moore, advocated for a more personality driven economy to go to the fed, with the traditional experience in the sense that many in the financial community are used to. tom: let us look to counselor who will be with us in

about 35 minutes. mr. moore has some unique views on policy. by a basket of goods and services and those are the prices the fed should watch. it seems reasonable to suspect that he is advocating for easier monetary policy now as opposed to end 2015, because he believes it will help the republican president's reelection chances. does the house push back? kevin: yes, and i think you saw that. one republican leadership comes out and says that stephen moore does not have the votes, that was a stark illustration of where things were and how uncomfortable republicans were with the political artist -- politicized figure at the

central bank. joni ernst came out and forcefully said she would oppose his nomination . republicans were one by one suggesting they would not be able to get behind someone who was that political. i want to quickly note that the politicization of the fed has predated the trump administration. president trump has taken it one step further. there is a portion of americans in the electorate want to see more transparency at the central bank and a more libertarian streak in republican ideology, which the road -- the president has tapped into with his attacks. francine: how does that change the political thinking of president trump and who he appoints next? do they need to change the way they look at this? kevin: it is more to do with the kind of caricature they will be nominating.

andle like herman cain stephen moore are controversial to say the least. what you saw with the demise of herman cain and stephen moore was a backlash from republicans who are arguing they would like to see a more traditional, serious toned voice that is more accepted within the eco-community, that would be able to get smooth sailing access. tom: kevin cirilli, chief washington correspondent. rochester,ersity of the economist lakota. looking for price stability and rates to stay where they are, and even move lower. we are nuance sing big news by the president, he wants a huge 100 basis points cut. what is the harm of a 25 basis point cut now? alan: i think the danger is you

do not have the framework. how do you justify that? .t is the context equities are close to record highs, unemployment record lows. in the old world, you would be hiking interest rates. now you think in terms of cutting interest rates because you may be focusing more on one part of your mandate, inflation. the market can get confused swinging from one framework to another. tom: what is the urgency to get back to the old world? alan: i think we need to be thinking and rethinking things. the idea of a symmetric inflation target is interesting. i do not think we will be able to get to doctrine on that. when the central bank reviews the policies to follow a symmetric inflation target, they will have problems because they are reliant on their own credibility when inflation over

shoots. it is certainly worth putting out there. francine: overall, if you look at some of the things that the fed is probably looking at but does not talk about, how do they view dollar dynamics and strength? alan: this is what my daytime job is, and i don't think they care that much. we have had relative dollar stability, vols incredibly low. they have been able to keep their eyes on more interesting things. once the dollar starts pulling 10%, 20% on a trade-weighted basis, that is meaningful in terms of feedthrough to things we care about, inflation targeting. the dollar is somewhat elevated but not massively overvalued when you look at the external accounts. the dollar is relatively off the

radar. francine: when you look at currencies across the world, what looks hot now? is there something that is unloved that will see a bounce back in the next few quarters? alan: you are looking at the dollar looking most loved, and there are some things that have had a rougher time of it. youhis world of low vol, can look at the turkish lira as unloved and low volatility. we have had a large enough external balance improvement in a place like turkey that even turkey will have a stay in the sun in the not-too-distant future. francine: coming up, loretta mester, reserve bank of cleveland president. will talk about inflation targeting and the dot plot. this is bloomberg.

♪

♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. inflation in the euro area accelerating more than expected with consumer prices better than expected since november. wideman hasaker said any relief from tiering would be negligible.

that is a strategy they are considering. let's get back to alan ruskin, deutsche bank chief international strategist. when you look at the concerns that the ecb had which was purely inflation, are we seeing stronger data and will that cement into longer, stronger inflation? to focus toositant much on one months worth of data. we have to see a string of strong numbers to see that general -- inflation is genuinely accelerating. maybe the central banks can be more responsive to this data. they are caught in a world where growth looks on the weak side where the of extreme weakness, notably in german manufacturing, and that is the greater concern rather than concerns about

inflation accelerating in a meaningful way. francine: is there anything you point twoptimism -- optimism in europe? alan: the weakness can sometimes be exaggerated. above 1%,rowth is not that is what we need to accept as being acceptable. there are countries growing stronger than that. i mentioned german weakness. spain generally has tended to recover quite nicely. we have pockets of strength we would not have expected. pmi ofhad the strongest all the global countries yesterday, in the manufacturing sector. tom: how did that happen? alan: times change, germany on the one side, germany on the bottom and grease on the top.

top.e on the tom: how did this happen? and: we go through cycles guys at the top will not stay at the top forever. tom: is germany not at the top because they are addicted to the euro? been juror -- the euro has helpful from a competitive standpoint. the auto sector is dominating german weakness. on the greek side, we have had a decade or longer of weakness so this is about a rebound from a low base. tom: i would suggest greek pmi is up because they are having a wedding in a number of weeks for team "surveillance." it is single-handedly moving the needle on greek gdp. francine: sometimes romance does

blossom on "surveillance." when you look at the concern that the u.s. would put tariffs on german carmakers, is that priced in or are the markets ignoring that? ian: it is not priced in and do not think the markets what ignore it, so it is a big story. some people are looking at it and saying this is one of the reasons the euro has been weaker of late. i would put more emphasis on ratioslike carry to vol slowly driving the euro in a sledge like form downwards. tom: alan ruskin, thank you. there is a set of headlines coming out from the united kingdom on the bbc, vince cable talking up the liberal democrats. he said there election results

show their recovery. prime minister may's people say she will make speeches in scotland and wales to drive the story forward. francine: what is going on is came out the big winners in yesterday's elections so that could be preempting the general elections. tom: the story continuing in the united kingdom. we will drive forward the story of the american society. no better -- no one better to do that with than jeffrey sachs. this is bloomberg. ♪

♪ tom: good morning, everyone. francine lacqua in london, tom keene in new york. doesn'tn: donald trump

want anyone to see his tax return but deutsche bank has had 2012 beforegh in agreeing to lend money. this is part of a fresh start on their banking relationship after it soured and descended into litigation. a block west or first-day trading for -- blockbuster first-day trading for beyond meet, the best opening for an ipo this year and the best for a company raising more than $200 million since the financial crisis. they have high-profile backers and are planning their next move. >> if you are trying to copy whiche are doing dutch -- some are trying to do, you will be chasing a ghost because we have moved on. it is my goal to have a new

product on the market every year. pace ofthe frantic innovation we need to maintain. sebastian: facebook banned a number of controversial far right figures. the company says they violated its policy on hate speech and promoting violence. social giant is taking a further -- and and forcing its forcing its policies. 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 sebastian salek and this is bloomberg. tom: thank you so much. alan ruskin with us, carl riccadonna. we have a two hour conversation. bring up a chart. buffett is out in omaha, decades of experience. let's go to eisenhower and what is so unusual about the jobs

unemployment rate is how unusual sub for percent unemployment rate is. that the unusualness of number is high because in the past, we have had such a degree of tightness in the labor market , you saw a lot more wage pleasure -- pressure and inflation. tom: straightened me out. what matters? carl: transitory served up three different ways. that word from wednesday at the fed meeting is not done. we will be looking for the jobs report to answer that question three different ways. transitory consumer spending, business investment, and inflation. if aggregate income growth is solid, dipping consumer spending was transitory. the pace of hiring alone often coincides with the pace of

capital investment, so assuming we see a sturdy 200,000 plus payroll gain, business investment is coming back in the current quarter as well. average hourly earnings will be the primary focus. if we are seeing more wage pressures in the economy, that is telling you consumer inflation is coming along. you highlighted, if you are looking for inflation, hunt for the income trend. in sumer inflation should follow suit. -- consumer inflation should follow suit. francine: how will the fed look at this? carl: they will be focused on the employment and wage pressure trend. they are trying to figure out if the phillips curve is alive and well. it was too early to test that this cycle. we have gone through the neutral

employment rate so this will be the year where we have vindication. francine: given what we heard from the fed chairman earlier this week, how important is this jobs report? there are a couple of holidays. is it a normal time-lapse? carl: far be it for me to say this is an unimportant jobs report. if the fed is patient, they will need to see several more data points before they are willing to change their assessment. up: alan ruskin, ring merriam-webster -- bring up marion webster and go to the word "transitory." "evanescent." about thisnescent linkage of fed policy in the jobs review? think he hit a nerve for

good reason and so much as core inflation does look like it has been distorted. our guys were pointing out the financial services piece he emphasized again and again. when you are looking at core inflation, core pce is 1.6 and you add on .25 for the financial services side. can we really distinguish between 1.85 and 2%? tom: every viewer and listener who is saying rick a donna and cc --l are correct -- rixx riccadonna are correct. carl: any time the fed's backing away from the main measures of

,nflation, pce, pce deflator and they are grasping at straws looking at the dallas mean and the cleveland fed and trying to get the story right, the story is the story. when we look at the measures of wage pressures, average hourly employment and wage pressures are at a high. it is the same as it has been over the past years when we failed to see inflation pressures materializing, it is a different story. the number one input cost is labor. labor costs are finally rising and that will pass to consumers. francine: breaking news out of fiat chrysler, the first quarter adjusted. -- ebita and adjusted

they in terms of how much are doing, 1.0 7 billion euros, below estimates because we were expecting half a billion more. chryslersler -- fiat reaffirming its forecast. some of the differences when it comes to foreign exchange and the difference this could have. overall when you look at currency swings, will we see much more in the next six to seven months? a volatile semester? alan: i hope so. hope springs eternal. we will see a modest uptick in currency vol, is my prognosis. a few things are in the works. commodities vol is driving volatility and the bond market

and that translates into the currency world. the dollar is looking a little bit more perky. it certainly looks like it is moving just about enough to evoke a degree of volatility. vol and once currency starts moving, investors move in and you get more volatility. tom: jobs day at 8:30. i will have a conversation -- jobs day at 8:30. i will have a conversation with kenneth langone. we touch on a storage life. life.s -- storied ♪

♪ "surveillance," on the uproar of the day. on the uproar of the day over stephen moore stepping aside or by the white house. he went on to minneapolis where he was the president of a federal reserve district and is now mckenzie professor at the university of rochester. thank you for joining us. what kind of nominee should the president nominate next after the failure of cain and moore? nomineesk the previous that the president brought to ,he board, richard clarida randal quarles, these are fine

nominees. i think there is a history of this white house bringing forward solid nominees. people are of these fine nominees. profits history of working within this white house -- process working within this white house and i would encourage them to go back to that. tom: the rate cut game got a lot of cover yesterday, but with stephen moore we talked about the twin deficits. who really president enjoys boosting deficits. for the next fed governor and chairman powell, will be rehabbing a twin deficit discussion -- will we be having

a twin deficit discussion because of president trump's policies? narayana: for the fed, its main indicators employment and inflation, deficit spending is positive on the employment front. my concern is that you will start to see pressures on wages on a very tight labor market, and that is when the fed will raise rates. i can imagine the president will be unhappy, that is why you have an independence of -- central bank. francine: is the fed 100% independent? the consummate attacks from the president, does it change the way the fed thinks at the margins? carl: i think the fed is independent, and i would use the number 100%. attacks,he president's

because they are so public and overt have insulated the fed to a certain extent. i think the president's nominees, there is willing to be suspicious if they would be carrying out his bidding. people were suspicious primarily because how open the president has been attacking the fed. francine: well that change, or is not the way it goes? we need to worry about central-bank independence across the western world as we had ray dalio saying mmt is closer than you might think. then we will have something new emerging. carl: i think in the u.s., we are a long ways from that. -- there is an idea out there that i hope would by spending onps

infrastructure you could boost productivity, so you could have low inflation growth. of. we should be in favor as the fed in danger of not being independent? no. what happened with warren kane is very positive. tom: let's do the math and walk into the swamp, stephen moore calling your fed a swamp. theory, jon ferro will hear from lawrence kudlow, you can grow your way out of deficits. help us at the university of rochester. can you teach that to freshmen undergraduates? narayana: it is more sophisticated than what we teach in the first year at rochester. obama,under president

professors delong and summers offered an argument along that line, but the premise is there is slack in the labor market. you will get agreement from a wide swath of macroeconomists that it might be possible to grow your way out of deficit spending if there is a lot of slack. how much slack do we have where unemployment is well under 4%? we are starting to see wage growth. , it isirical question not a theoretical issue, and i'm skeptical that we can grow our way out of the deficit within this kind of slack in the labor market. tom: professor, thank you so much for writing for bloomberg opinion and being with us. alan ruskin and a single best chart now, over to black. seventh word every

was slack. there is no slack. i get the battle over the quality of wages and jobs, but advance what he said, are we slack free? alan: we were saying we are slack free at 6% unemployment and 5.5%. we have probably hit our lower limit so it feels more or less slack free. tom: the kudlow theory does not work, the idea that you can grow your way out of deficits and spending, would you suggest does not work? alan: it is doubtful. when you look at the overall measuredst cyclically -- around 5% gdp, about as high as you get at this point late in

the cycle. typically, that will deteriorate significantly into actual budget deficit so you are looking at large budget deficits when you will likely need genuine for skilled -- fiscal stimulus at a later stage. fiscal policy that we have seen in the last years will place an additional burden on monetary policy going forward. francine: what is your take on monetary theory? critics have slammed it saying it is a misguided policy and at the end of the day could end in an inflationary spiral. alan: i think there is a great area. -- gray area. mmt's.e had de facto a lot of what we saw on the fiscal side in japan gets monetized by the boj.

the big difference is you do not have the federal reserve and treasury knocking on each other's doors saying, we will spend more and you will monetize. when you get into that game, it is dangerous. tom: you wonder where we will be in 12 months. that always means good conversation. we will do what we do best at bloomberg, drive forward your friday conversation on economics , finance, and investment. there is no one better to link the state of wall street than mr.warsh. ♪

♪ sebastian:sebastian: this is bloomberg "surveillance." was a milestone for microsoft and the chief executive who put the company on a different path. here is viviana hurtado. became week, microsoft the most valuable company,

hitting the trillion mark. ceo tells bloomberg he would be disgusted if anyone celebrated the market cap, but many are celebrating the turnaround. microsoft dramatically cut its dependence on windows and built a $30 billion cloud computing service that is ahead of alibaba and google. microsoft used to be a one-off purchase and now ed is a cloud-based service with 155 million subscribers. walgreens, and, albertsons, this is due to way culture change, going from a fixed to a growth mindset. sebastian: you can read the entire story in a new issue of "bloomberg businessweek." francine: warren buffett is no longer just a fan of amazon, he

is a shareholder. shares are rising after the billionaire investor built a stake in the company and admits he was an idiot for not buying into amazon sooner. he is the fact that always talking in this plane speak english, i should've bought this before. what does that mean? you can understand why the share price has gone up hugely. you can understand why he missed it, because he is a value focused investor. amazon has a history of reinvesting every dollar made back into the business to expand the scope of operations. he focuses on business he understands and amazon has diversified so much perhaps he could not get his head around where the company will get its money from. francine: why didn't he

understand it before? otherthere was clearly investment opportunities that were more compelling that he could understand more easily. they were never screened on valuation. it just never got behind -- beyond his initial screaming. -- screening. looking like a more investable business. tom: i have eight questions and a time of one. ,he whole ballet of mr. bezos is it scalable to india, china, and other nations? indiai think definitely and china is tricky because there are so many well-established competitors so it could be difficult for them to break into. it is a gold mine of options for everybody. much, mattyou so

bloomberg.loxin of thank you to any and all helping us forward. it is jobs day. on two other important conversations, thrilled kevin us later as well as mr. kudlow. looking at data, the data turning into the jobs with an up up green feel. you have to wonder, did mr. buffett lift the market? this is bloomberg. ♪

provide a slewld

of fatah speakers. breathing room for mario draghi. they backed up better growth in the region. a tale of two european banks, baby deliveries. welcome to bloomberg daybreak on this friday. it is jobs day. we have some earnings it just came out. fiat chrysler just came out. we are going to do great for the rest of the year. the stock is up. alix: they are really confident. david: their sales are down. it they are having trouble in china. they say it's going to be a great year. alix: i wonder what they see. david: they say their cars are really going to click in. we will see. alix: