good morning from bloomberg's european headquarters in the city of london. i am with manus cranny live from dubai. these are today's top stories. asian stocks slip again as washington lists new iran -- new tariffs against beijing. fed'sak with the new york john williams today. corporate conundrums. uber plunges again. tough days ahead. nissan is expected to report a plunge in operating profits this morning.

host 2: breaking news. it is a plunge in profitability. down by 29%. strategy up for question. profit plunges. what you are seeing here is the real questioning of the numbers. toond quarter net sales rise $6.4 billion. again, this brings us into huge questions. we demand from the auto industry. china sales are falling. we have seen these results in these numbers. he will have a lot to answer for. host 1: the first quarter operating profiteating the

highest estimate. first-quarter net income in at 1.9 7 billion euros. the estimate was 1.8 7 billion euros. net income. euros, theon estimate was 2.8 5 billion euros. a clear heat on the first quarter operating profit for allianz. and thenlookinat first-quter revenue, 40.3 billion euros. that is in line but the key line to look at is key operating profit. beating the highest estimate. we are going to be speaking to the finance chief. do not miss that interview after

7:00 london time. a lot to talk about. about inflows and outflows. we were talking in february about outflows from pimco. we also want to talk about some m&a. on the pharmaceutical side of the business in germany. a for them on earnings per share. them on earnings per share. merck with a small beat. guidance for the year the -- saying it is lighter than originally estimated. that was expected to weigh on the numbers. we have the cfo from germany's merck. he will join us on programming

just after 7:30 a.m. for a conversation about the numbers. you have a look at some of the assets on your side of the fence. host 1: these are not the ones i wanted to look at but we well. i wanted to look at dollar-yen. you are seeing a little bit of a retreat in the yen, the worst performing g10 currency against the dollar today. the safe haven is not bid in that session. u.s. equities dropped more than 2% yesterday. european equities dropping more than 1%. 10 year yield dropping more than seven basis points. asave as in p futures here well. i wanted to show the european ones as well. yesterday, there was a divergence in the future is. let us have a look at eurodollar futures. contract foranuary

next year, 2020. they are implying there will be a 25 basis points. -- some futures are rising higher. eurodollar structure for the ladder part of the auto which may bes three rate cuts on the cards. a great deal of differentiation. volatility in the oil market. you have geopolitics. that rocked the oil market yesterday. and you have the trade issue. the you're seeing here is fact that trade is a critical issue weighing on the market. out $600 billion of value yesterday and that was -- these me, that exceeded annual chinese imports into the

united states of america. some small reprieve. will it indoor -- endure? it all quiet you later around the u.s. readying itself for new tariffs. meanwhile, china hit back with its own duties on u.s. goods. byald trump responded warning china not to go to far. he said he is still optimistic about talks. we just got back from china. we will let you know in a few weeks whether or not it was successful. you never know. i have a feeling it will be successful. host 2: tom mackenzie is standing by. here -- he is our lead anchor in china. looking at the buffers in the tariff number, what else is on the agenda?

>> they said on june 1 they will that haveariffs already been imposed and raise the levels. it varies from 5% up to 25%. on one charge on 2500 items, to 25%.l raise the levy we are talking about agricultural products and energy products as well. that is the detail we got from chinese officials. what they have decided not to do, so far at least is reimpose tariffs on autos. they also have yet to cancel an order for u.s. soybeans. host 1: thank you for joining us. tom mackenzie. with julietten saly from singapore. some eye watering numbers.

japanese equities have reversed half of their gains for the year already. juliette: interesting late, today, the nikkei is doing better than it was on the open when it fell by about 2.1%. in late trade it is off 0.7%. this is not as dire as you saw on wall street. and even not as dire as we had earlier in the session. donald trump says he is confident these talks will come to her for wish and in the next few weeks. the biggest selling in hong kong. it was closed yesterday so playing catch-up. interesting, india's market is thel weaker because of trade for uncertainty adding to the election anxiety as well. let us take a look at how some of the individual stocks are faring. a flight to safety for the gold stocks in sydney doing very

well. the airline stocks in hong kong and mainland china are being hit because mainland -- because morgan stanley has weighed in on the trade wars. uber plunged nearly 20% in its first two trading days. this has a big stake in uber. we have seen a fall quite substantially in the last couple of sessions. host 1: juliette saly in singapore, thank you so much. staying with a trade story. joining us now is virginie maisonneuve from the spring investments singapore. tomeard the latest from mackenzie. more tension ahead. u.s. equities plunged more than 2% in yesterday's session. europe down as well. are you putting recession risk on your watch? virginie: i am not.

clearly, depending on how the go -- if youtions went full-blown on tariffs, you might have 0.3% impact on global growth. out of 3.3%, that could be meaningful. all that said, i think we are still early in the game. we have witnessed the game for a long time. but, we are in this new party if you want and to me, it is thinking about uncertainty versus risk. there is a lot of uncertainty now. the risk clearly hitting the global economy massively to viewe a recession, in my is still far-fetched. however, the uncertainty will impact the market. it is like a democratic voice of business. would be donald trump

quite reactive to that. good morning. good to see you. you say that the markets need to be cautious. i just wonder to what extension would you like to express that caution --do you share risk? do you think markets could drop by over 10%? is that how you might express that -- shaving back risk? i think it depends on which asset class you are talking about. in our fixed income portfolios because we have done so well your today, we have started to take some risk off. at this point, we are looking at how currencies are moving. in particular, asian currencies versus the dollar. that is one area. in our multi-asset portfolios, we still have some risk on but

we are looking particularly at another way to u.s. securities. we may see dislocation in emerging markets. we still like china despite what is going on depending on valuations. host 1: looking to add back potentially in parts of the emerging markets and china. does that include the u.s. because you mentioned the u.s. saying you were underweight -- virginie: we have been underweight europe and overweight u.s. host 1: you would be adding how? virginie: exactly. as i said, we are early in the game. , we are looking at the material laces -- materialization of risk. i would not precipitate into buying at this point in time.

i would just look at what is happening in the market. we know there is a g20 meeting coming up. we also know there is an enormous political underpinning of the whole discussion. therefore, the feedback that the market and the different bodies will give to both governments i think will be crucial in how this is resolved. host 2: it will be a fascinating g20. allwhether we do go to tariffs. breaking news. they re-rated their profit targets earlier in the year. this time, they are saying that operating profits are below the 200 billion yen range. this is a bit of breaking news. we are waiting for the numbers from nissan. they did rerate their profit outlook. says the operating profit

will be in the low 200 billion range. movement tog this the downside. let us talk about the markets. the yuan is on the move. it has clawed back some of its monday slump. the pboc financial news says the yuan will not be devalued. chinese currency is hovering around 6.9 to the dollar. when you read the blog this morning, it is about the spike in hibor and how you have a friend in the pboc. yuan come back from some of its losses. with the help, the yuan is likely to stay range bound. there is still so much uncertainty so the options market is pricing in even odds

that it will go to seven per dollar in the next quarter. i'm looking at the risk reversal curve which is now flat. the white here in the short term in blue, they have now converged. meaning expectations are even which is a rare event. last time this happened was in february 2018 when the yuan plunged to a three-year low. china is not a local actor. it is global. you have to look at the correlation risks. this is the correlation finder. the canadian dollar. the most vulnerable of the g10 currencies. it is actually even more vulnerable because the volatility market for the canadian dollar has not picked up with the yuan. you can see there has been a dearth of volatility especially since april when the yuan was

being sold off. not just because of that but volatility looks cheap. this is a cheap hedge to buy for any of the turmoil to come. host 1: very interesting. thank you, dani. and the euro has had a seven-day gain versus the yuan. >> thank you. lost a third trial regarding roundup causing cancer. it has been required to open it is challenging this one also. it says they are excessive and unjustifiable. escalation in the trade war take sinex tended downturn more

likely. according to mike wilson, morgan stanley's chief equity analyst. he is the strategists that most accurately predicted the stock drop. little progress in persuading america's european allies to take a high line towards iran. that is what mike pompeo says during his quick visit to brussels. they are standing by the nuclear accord abandoned by the u.s. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. thank you. coming up on the show, we are live in zurich speaking

exclusively to john williams. we will be asking him about his concerns are around trade and what is the potential really for rate cuts this year. do not miss it. this is bloomberg. ♪

nejra: this is bloomberg daybreak. manus: i am manus cranny in dubai. the reality of the auto industry. 5% at dropping by nearly one juncture in this session. the biggest one-day drop since the 28th of december 2012. the nneka i a report, low 200's for the current year. impaired to the average protection of 453. that is why it is taking such a wipeout. twiceg its profit targets

in the prior fiscal year. the arrest of carlos ghosn. a lot of pressure on nissan. what do they do to repair it? that is the question. markets, the broader we are still seeing a selloff in equities. moderation because investors betting ultimately there will be a deal between the u.s. and china. more tariffs mentioned but donald trump and the chinese leader may be meeting again in june. six days of losses. the yen retreating against the dollar is well. manus: oil takes its cue from the trade tensions in the gulf. nobody named who sabotaged the uae ships. more than the amount of china imports. euro-dollar up this morning.

that is the latest on the currencies. we still have worries over this u.s.-china trade issue. and concern about a rate cut coming this year and some betting more. the euro dollar options have a cracking that. suggesting as many as three quarter-point cuts could calm in the market. on the issue of trade wars, that is affecting growth. he is keeping an eye and open mind on the policy review saying it is premature to speak about an outlook at this stage. thought for one moment that there may have been the voice of god. good morning. rosencrantz says it is too early. trade out there

for three cuts. inflation?s raise that is an interesting question because clearly a cut in rates would have to come with a much weaker economy growth. at this point, we are in a world the world ofy, not confirmed risk. in terms of inflation, we know tariffs would have inflationary pressure but number one, it would be one off. number two, you still have inflationary pressures coming from the wider use of technology. at this point, it is premature to think we will have a rate cut. i personally think that if the trade situation is resolved, we will be on hold for the rest of the year. nejra: that makes sense because in a sense it seems premature to think about a rate hike. inflationary pressures.

you perhaps think the markets may have gone too far in the pricing of a fed rate cut. what does that mean and how you invest in fixed income in the u.s.? virginie: it is the perceived value of the currency. it would be too early in my view for a rate increase even if you had a little bit of inflationary pressure given the global slowdown we are seeing. not a recession but a global slowdown. in the situation today is different than it was in the fourth quarter, 2018. we have china with a fiscal package. on a slowrope recovery path. positive movement there. and the u.s. is holding. the environment is extremely

different. at this point, the policy that makes most sense in my view is a hold. just looking at the financial conditions in the u.s., i would not say they are aggressively tightening but they are tightening nonetheless. does that come onto your radar briefly? a little toois early to tell but of course we have to look at that. maisonneuve will stay with us. for more on the fed, stay tuned, we will speak exclusively to john williams. coming up, welcoming the kingdom's 30 equities. a move that could draw billions of dollars of inflow. we get into that story next. a lot more to come on the market. this is bloomberg. ♪

nejra: let's get a look at the world map and the picture of equities in asia. losseseen in china, but on the msci asia-pacific overall. perhaps moderation as investors starting to think there might be resolution eventually to this trade spat. well u.s. equities dropped more than 2% in yesterday's session, we have seen curves steepening. investors seeking the safe haven more in the two-year than the 10 year. pboc, you have a friend in the pboc. they have hiked by over 50 bits.

one of the biggest moves in hibor since the end of 2018. weaponizing the yuan for the moment does not seem to be the response mechanism. in terms of response from china, maybe it is a bit of a positive signal from china that they have not allowed new tariffs, just increasing the amount on existing goods at the moment. -- you a little bit of a know, putting their hand forward and saying we are not increasing tariffs as much as the u.s.? perhaps that is one of the positive things to take away. manus: we are going to debate this every day between now and the g20. let's check on the markets. the team standing by. in mumbai, niraj shah. our colleague annmarie hordern is in london. , and that rebound

could accelerate after the world's biggest election concludes this month. how does that mix with the trade tensions? >> good morning to you. it is interesting we are seeing trade in the green, may be due to the conversation you are having that there might be a resolution. indices trading flat, marginally in the green, but yes, for the last few days, almost everybody in india seems to believe we are falling because of not what is happening around the world, but because of our elections. that is what led to outflows as well. nearly had outflows of 8200. crash,he u.s. markets because of the stability in the asian region, it is flat.

if that were to worsen, we might have one thing weighing on everything else and that is volatility. that would really -- with the markets. in is having enough of volatility. what we do not need is volatility. nejra: we have talked about equities. we have talked about bonds. we have to discuss commodities as well. are you looking at the reaction in commodities? >> i am looking at commodities overall this morning. they really are caught in the crossfire between the u.s. and china. look at what i am looking at in metals. you have gold really pushing higher. this is acting as a safe haven demand. we have seen hedge funds

boosting bullish bets on gold the past two weeks. at the same time, what is happening to gold having the complete opposite to copper. a different effect. demand worries are dragging copper down. this says a lot about sentiment, of course. gold acting as a safe haven while copper is a key industrial input. we have seen the yuan lower. that erodes purchasing power for china. that brings me to my next. i am interested in cotton because you can see overnight yesterday when it was trading, futures plunged by the exchange limit. it is going to be hard to see how cotton makes its way back here, especially as we have looming tariffs. china's textile industry is vulnerable to the u.s.. they are a huge exporter to the united states. cotton is going to be interesting because things like children's clothing are on this new list president trump may end

up using. nejra: thank you so much. pick up on some of these themes. earlier you were saying you might see opportunities in emerging markets. if you look at emerging-market equities on a second day of decline, nothing too dramatic at the moment, but would you prefer them based on valuation or could you see corporate earnings holding up better than in the u.s. if the trade war escalates? >> you have to think about what is the underpinning of emerging markets. with the current environment, if you had indiscriminate selling, what i would be interested in is looking at areas where you have rising domestic demand. this is why if chinese equities were falling too much, china has the tools to really bump up demand. it has fiscal tools.

it has a lot of other projects it could put in place. other areas, such as indonesia as well as perhaps india, so you have to look at it stock by stock. what i would do is focus on domestic demand. the picture is a bit clearer on trade. hold those thoughts. we want to shift the agenda a little bit more on emerging-market stories. we have 30 equities from saudi arabia set to join the emerging-market stock benchmarks. this could draw billions of dollars of investor inflow into the kingdom. 5,t was anticipated, between 7, 12, depends who you talk to. global investors, we talked a lot about this inclusion story. what are we going to find when they get their? challenges? liquidity? what is on offer? >> there is a lot of menu when

you look at the saudi market. if we look at what is going on this week, they will find geopolitical tension, geopolitical concern. this is a market we have seen before reacting to major headlines. october last year, the jamal khashoggi case jew a lot of attention for national -- international investors. now there is an increase in attention. sessiony was the worst since october 2018. if we look at the market as a whole it is a big market. over $500 billion in market capitalization. 191 members out of which 30 of them will be part of this msci benchmark. it is important to remember it is the market that has been trading very high valuations because this inclusion has been anticipated for many investors

in the region and different parts of the globe. it is also a good chance for you to bet on the banking sector, which is one of those that most analysts we talked to around bestmentioned as being the position on the fundamental side and also on the technical side. >> you mentioned the banking sector. we have just shown a graphic showing there will be 30 stocks included. talk to us about the specific names that much -- might get the most inflows. >> there is a sector everyone talks about around here. when they mentioned the inclusion in the macroeconomic scenario in saudi arabia. one of the biggest lenders in the country is expected to receive more than $900 billion worth its full msci inclusion happens. ftse startedmember

an upgrade earlier this year for the saudi market as well. national commercial bank, another big lender in riyadh. that is a stock that has been climbing strongly in the past year and a half. mostly on top of the index trade. the sector as a whole, we have 12 different banking stocks trading in riyadh right now. all of them have been performing better within emerging markets. it is a sector that has been chosen and selected as the main bet for the industry. thank you so much. don't miss our interview with the chairman and ceo of msci. we will speak to henry fernandez on tomorrow's show just after 6:30 a.m.. fromve just been hearing felipe about this inclusion. what is your appetite like for

saudi equities? >> when we look at emerging markets, we talk bottom up. it is higher than thailand and malaysia for that index that includes mid-cap. it is a diversifier because of material and financial versus the rest of the index. slightly higher yields if you look at it on an historical basis. the yield of that benchmark and a little bit hedge in currency into the u.s. dollar. it is always a very good thing. we covered quite extensively the aramco bond placing, which was phenomenal bid to cover ratio in terms of the paper. to what extent did that moment in markets shift global

investors and allocators like you? >> i think it has always been part of the universe. you are absolutely right. it has focused some of the attention. the reality is it is part of the world that i would say is underpenetrated in terms of exposure from any portfolios. the geopolitical angle is quite interesting. howhave to wonder pre-election year and how volatility plays into the hands of president trump. the middle east has always been an area of a volatility. over the next six to 12 months, we need to be very mindful of that. as we are in a pivotal part of markets, we like to ask, what are the top down investors

may be missing at the moment? bighe risk when you have news like yesterday and today is panic moves. sometimes that early panic is positive in the end if the event turns to a risk. often what you have is that initial reaction is indiscriminate selling and when you can pick up some interesting stocks for the longer-term is the bottom up. you, you stay with us. coming up next on the show as 1 wall st analyst warns, fast approaching white knuckle territory. what next to? this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." manus: let's get a quick business flash. >> oil consumers can press ahead , accusing apple of artificially inflating profits. it could add pressure to the company to cut its 30% commission on apps sales. confident it is

will prevail. t-mobile and sprint are continuing -- considering concessions to salvage their merger. among the options reportedly being discussed is the potential the two have argued that together they can better challenge the likes of at&t. volkswagen is revising plans for a partial share sale of its trucks division just two months after shelving it citing poor market conditions. to german carmaker hopes this time next year in august. the roller coaster ride continues. uber stocks dropped yesterday on another rocky day of trade for the ride-hailing giants. the blame game now shifts to

morgan stanley, the key underwriter as questions are asked over and valuation. joining us to discuss from tokyo technologyerg reporter. some saying the real concern is if we get to $35, what can uber that tippingre point? been aipo story has story of lowered expectations for months leading up to this. we went from a $120 billion valuation to a pricing below the previous round. now uber is down 20% from the ipo price. it is hard to separate the overall tough market environment , but there is clearly questions about this company's ability not only to come to profitability, but to come to profitability as some sort of a meaningful time horizon. if it is any indication the ceo

of the company has sent out a letter to employees saying there are months of tough markets ahead, which will take it beyond the big macro things that are riling the equity market. you.: good morning to facebook,cally saying amazon, the ipo's were incredibly difficult. sentiment does not change overnight. what is it that is going to rerate the uber story for the investment market? >> it is interesting. out amazon has built on the books into other segments. the problem with uber is the core operations on which it wants to add other services, there is no clear road to profitability.

softbank reporter, softbank found autonomy as a solution to a lot of uber's tricky economics , but that is not a technology that is -- that is a technology that is perennially on the horizon. investors will be in the dark as to what will make it profitable in a reasonable timeline. does thist questions raise about wework? a lack ofainly shows appetite in the markets for companies that have until now prioritized scale over profitability and have not told a compelling story about how they will get there. is a big shareholder in wework. perhaps the jitters are reflecting in their own shares.

it certainly has taken a bruising along with uber. now, how should organizations maximize their investment returns? says cognitive diversity is key, making sure people with different perspectives and skills are included in the decision-making. he says diversity along with technology are vital disruptors in the hunt for higher returns. that man is the ceo of the cfa, , virginie.us diversity. is it embraced? what is it? and is it embraced? >> i do not think it is embraced

as much as it should be. isshould be a principal that based in common sense, but the number of different perspectives you have on anyone problem is like lead to produce -- likely to produce a better result than one person thinking. you can have one person in the room who is a genius and who can solve all the worlds problems, but teams are more effective. if you think about a sports team , it has big people, has small diversehas all sorts of aspects to it. that is what should happen in investment management. includeoes that artificial intelligence? that is a different perspective. >> artificial intelligence is obviously a game changer. remember it is

artificial intelligence plus human intelligence that is likely to win out. what we bring to the party? experience, intuition, judgment, all of those skills. intelligence will take us so far, but the human element is important. i look at the stat that -- let's just touch on this. holders, 19% of chart holders globally are women. it is enough being done to entice women to take this qualification, to be part of the cfa? you work all over europe. given your global perspective. >> my global perspective is i have done a lot of work with gender diversity, but also the cfa and the future financing institute.

i think diversity is essential. we need to do much more about it. we feel strongly that going spring, per the principal will become more important in how we manage assets. crucial notrsity is , butto improve performance also to make sure we have as governance. we still need to work very hard at it. it is much better than it was years ago. what are chart holders telling you about the rolet it will play in the future? >> -- the role it will play in the future? generationillennial

comes forward, that is extremely important. the other thing that is happening is well over half the world's assets are transitioning into the ownership of women. that is a real challenge for an industry that is male-dominated. u.k.f all positions in the are held by men. how are they going to face off to a millennial client base that is female? that is an and norma's challenge for our industry. how do i get the job done? how do i attract more assets? it would make you think you have to change your way of doing things. do you think the element of the millennial consumer, naturally there will be age profiles. a sea changeng at in terms of the people advising the millennial?

are we there yet in terms of a breath of fresh air, so to speak ? paul: i do not think so. we are still quite an aged industry. i do not think there are enough young advisors. like any profession, part of the skill is experienced and having been around the block a few times. that is a challenge. rginiek up on something vi says, when you look at what is important to the millennial generation, it is people who can empathize with the environmental goals, governance issues that are going to be the advisors, whether they are my age or thater, who relate with client base. if you do not have principles, you are unlikely to succeed with that client base area nejra: great to have you with us, paul smith and virginie maisonnueve,

thank you for joining us. coming up we speak to the finance chief of alley on -- allianz. ♪

manus: this is "bloomberg daybreak: europe," and these are today's top stories. futures point to a stabilization after washington releases a new list of tariffs on beijing. next says he will meet xi month. fed'sak to the new york john williams today. profits set to fall more than expected according to the nikkei . in europe, alley on's -- allianz reaches a record as clients add $20 billion. we speak to the cfo next.

a very warm welcome to daybreak. this is what we have. harmonized cpi in germany comes in at 1%, in line with what the market anticipated. likewise on cpi itself. month on month, 1%. year on year, 2%. .e are waiting for the zew cpi,n terms of the final 1%. that is all pretty much in line with estimates. you have a little bit of breaking news. nejra: i am still look vodafone.

in the meantime, let me bring you numbers from to keita. -- takeda. it sees operating loss at ¥193 billion. operatingsurprise loss for to keita. .- takeda it sees its full-year dividend at ¥180. before i get back to you let me take a look at equity futures. i am still waiting for numbers from vodafone. i will bring you those as they come through. futures on the front foot after equities declined. what is interesting as we saw diversions between u.s. and european futures. will this be a clear indicator of what actually happened in the session? u.s. equities drop more than 2% yesterday, but futures bouncing

back. investors trying -- starting to get more optimistic we will see a deal eventually. we could see talks with xi jinping is what president trump has said. he seems to be optimistic about those. let's look at the bond markets. we broke the 240 level on the government bonds. rate cut bynts of a the beginning of january next year. there has been trade out there for more than three rate cuts. the question is, are we hitting stabilization in equities? a drawdown in the bond markets? it is certainly a big debate. we have a pretty interesting interview coming up. forhe u.k., higher sales 2019 for greggs. allianz. allianz's investment business saw record growth in

the first quarter, reversing outflows at the end of last year. insurer hasgest been seeking to -- it is also pushing into growth markets in asia where it trailed many of its european rivals. joining us to discuss the allianz's cfo. thank you for joining myself and manus this morning. let me start on the inflows. when we last spoke, it looked painful, but you were quite positive about january. what is your outlook for inflows versus outflows for pimco? >> good morning. as you said at the beginning of the year, we were positive on the outflow for flows. you saw pimco we had over 20 billion of inflows in the first quarter. we are seeing now as we go into the second quarter it is also positive development.

we had in the last six weeks about 10 billion of additional inflows. for the time being, we remain positive on the developments. thecore asset is really strength of the performance that pimco is bringing. as long as the performance is so strong, we are counting that inflows are going to remain strong. manus: if we are looking for -- good morning. one of the items on the insurance side is in relation to boeing. you put a number out thereof 100 billion in regard to some of the disasters. how much is attributable to the billing risk at the moment -- but we -- boeing risk at the moment? large losses,

clearly boeing had a significant impact. i will tell you about half is tragedy inthe ethiopia and the other half is related to other large losses. let me ask you about potential m&a. there has been quite a bit of speculation in the markets. allianz being linked to dws, but also bbva's insurance unit. can you confirm or deny m&a for any of those names? aboutusual, i cannot talk m&a moving forward. i can tell you about what we did as you might have seen in the first quarter at the end of last year. of acquisitions are flowing into our numbers in the

first quarter. ae was the acquisition of bond asset manager in the u.s.. a very nices addition to our portfolio. we bought 51% of a joint venture with an automobile club in germany. it is adding to our portfolio. these are the things we have been focusing on. moving forward, we are going to continue to look at incremental deals which might add to our franchise. i am not going to comment on specific targets. at least give it a small go. in terms of geography, where would you like to beef up? is that a fair phrase to use? from a geographical point of

view i would say we are open. in europe we have the possibility to create -- then we can also go to other regions where we want to expand, if you want, our footprint. from a geographical point of we do not take necessarily a restriction that we want to be active judging one region over another region. >> you also recently said you are looking at the possibility to diversify into new strategies. in terms of acquisitions and the type you might look at, would they be asset management, insurance businesses, or something completely different? >> when we speak about

strategies, clearly we are thinking about new strategies in asset management. the acquisition i was mentioning before is one of these strategies we are looking at. outsidee, i will say insurance investment management in the state, we are deploying about one billion of investments into if you want to call it fintech opportunities. clearly, the need to fit with our insurance business, but this might be an area of development which i'm not necessarily 100% insurance related. this is also a focus for us the next 2, 3 years. manus: when we look at markets, there is huge duplication on the equity side. bond markets are seeing money flow into them.

are you seeing any risks on the investment side in terms of your market assumptions, given the trade angst we are seeing at the moment? >> we see some volatility in the last days. the fourth quarter was challenging. from that point of view, this kind of volatility if you ask me is kind of normal. trade discussion around china, eventually this discussion might go in the right direction and we might seen stability. the economy fundamentally is doing fine. we are not getting nervous because of the volatility we might see on a quarterly basis. even more fundamental is every time we set our strategic asset allocation, we do this based on our balance sheet, our

calculations. it plays on our ability when we have a crisis. when we are speaking of crisis, we are speaking of more volatility we are seeing right now. nejra: what impact are you seeing or are you expecting to see on your business from an escalating trade war? >> when we look at what a trade conflict might do to the economy, we estimate the impact on the gross domestic product globally might be from zero in -- two about two percentage points. we might see a significant impact on the global economy and at that time we need to consider that interest rates are going to

stay below where they are right now. volatility is going to be more pronounced. one of our viewers sent this, you deployed the acronym led, reach for yield. volatility, is that playing into any of the thoughts at all? not searching for yield in a way that we are increasing the risk in our portfolio. yield strategy, we are looking at the liquidity spectrum because clearly we do not have liquidity needs. that is the way we try to make

yield investment as opposed to go down. manus: thank you so much for sharing your thoughts. at allianz. thank you for being with nejra and myself. we want to understand the repercussions of an msci re-rating. one of our biggest stocks in the uae down by 10%. the reason being the msci decided not to change the foreign inclusion factor. that is seen as disappointing. are saying this is the disappointing factor. we thought it was going to go to the msci basket. it did not. you have a big line on vodafone. nejra: yes i do. the red headline, cutting its dividend to nine euro cents from

1507 euro cents. a pre-spectrum of at least 5.4 billion euros. those read headlines coming from vodafone. for your adjusted ebit a slight -- full-year adjusted ebit a slight mix. miss.light we are watching shares of bayer called lower on trade. bayer lost its third trial on claims roundup weedkiller causes cancer. manus: certainly going to be a host of names to deal with as we go to the cash opening. back to the top story, it is all about trade. trump says he will meet with xi jinping at the g20 summit. with all of that in mind, let us talk about the repercussions for markets.

we trade talks themselves, do not exactly know when the next round will take place, but the representatives released a list of $300 billion worth of products. geneva.t to thank you so much for being with us. we just heard from the cfo of allianz and i want to get your take. he says this is normal. to go throughot this level of volatility. how do you look at the level of volatility we have? morning. this higher level of volatility will put at risk the global growth because as you mentioned, we have raised the level of uncertainty. at the same point of time, we

are now in the less comfortable situation than we were last year when this trade war has begun. last year, for instance, trade was going up by 4%. now in the first quarter we have worldhe trade -- the trade has protracted by more than 1%. we say risk and uncertainties create a very difficult for world growth, even in the u.s., because we are now at a turning point. the effects of the fiscal reform mr. trump launched last year has begun to fade. turning point for the investment. firms have to

visibility related to trade, the risk is to delay or postpone further any decision related to investment and to have negative effects in the u.s.. i am not really comfortable that this situation, happy to see that negotiations are going on with a date of the end of june. the official meeting between mr. trump and mr. xi, we will probably have some agreement. not comfortable in the short-term, but the medium-term. nejra: good morning and great to speak to you. how comfortable, uncomfortable are you with the prospect we could get an increase in inflation from tariffs? what it just be a transitory increase? patrice: probably. in chinese goods that should be concern by the the in u.s. tariffs, now

up to 20% andis with the new list the u.s. the -- untilently, 40%. we could have an impact. in the manufacturing center we have seen several sectors saying they have some trouble with rising tariffs. this is related with what is put in place. overall we will see a rise in prices that could be transmitted to the consumer prices. , thiss point of time should be half a point, which is not great impact. is it will be spread differently regarding the chain of supply.

,e would have a negative effect some residual effect on consumer prices. working at the overall impact on cpi. thank you so much. you stay with us. we have a lot more to discuss, so don't go anywhere. we are asking the question on mliv, our markets too quick to bid on fed cuts amid the trade war? reach out to us and the mliv team, ib+tv on your bloomberg. rate cuts fully priced in for 2019, saw options pointing to three cuts. up, speaking exclusively to john williams, the fed president at the bank of new york. what are the real probabilities for a rate cut this year? don't miss the conversation. ♪

nejra: this is "bloomberg daybreak: europe." be as much asould three rate cuts on the table if you go by the markets. big activity in the euro zone options trade. they suggest there is appetite for bets on even more dovish fed moves. traders are pricing that -- not

pricing that at the moment, i should say. one core structure has emerged. 75 basis points of reduction by the middle of october. 325 is the equivalent of basis point moves by the fed. let's get to geneva. --patrice, that is one big call out there. what is it that could vault the fed into a rate cut before the end of the year? risk.e: this is the justified with the rising level of risks. in foreign rates it is included in china activity, the brexit situation, ending trade. at this point, uncertainty

related to trade could justify the fed to a lower rate cut. the fed today is reluctant to enter a new easing cycle. why? the situation is balanced. the u.s. growth is ok. at the same time, we have still upward pressures remaining on prices related to a tight labor market. the fedwhy within comfortableome are and the others are more comfortable to have a rate cut. what we need at this point of time is another whatever it takes. if it is coming from the fed or situation,the fiscal

we need to restore visibility and fix the economic cycle. your view, is the next move from the fed a cut, hike, or prolonged hold? patrice: prolonged hold, definitely. there are too many risks. if we have the state meeting with mr. trump and mr. xi, we see trade and visibility. much, thank you so patrice gautry, great to have you as our guest host. that is it for "bloomberg markets they break europe." we are seeing a bounceback in futures. this: it comes down to from trump. he feels good about this meeting. have we settled in? over 600 billion dollars was

wiped off the value of u.s. equities yesterday. three big stocks to keep an eye on, we have allianz, vodafone, those stocks are going to move on the open. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond.

nejra: good morning. we are live from our european headquarters. today, the markets say we have got a good feeling about this. a brutal session on wall street shows signs of a turnaround today after president trump said he felt trade talks could be very successful. the cash trade is less than 30 minutes away. anna: par