Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20180117

Future anding at the the longterm. Manus welcome to bloomberg daybreak europe. 2. 5e is a Share Buyback of from. Uros come in at 48 . ,bsolutely beating on margins Share Buyback for the shareholders. Net sales, 2. 2 billion. Net salesst quarter up 2. 2 billion. That is the guidance for this year. On the shares flow buyback. Of course it is about demand. Se they sink syncopated eing syncopated growth . Cfo on the board of management. , 9 billion insml net sales. Gross margin at 48 . We will have a conversation with the cfo at 7 00 a. M. That it looks like a strong story. Anna we will catch up with the cfo onthe thinking the thinking and the buyback. 0. O the asian session, down 3 on the msci asiapacific. A little bit of that confidence is taken away. Falling s p following. The u. S. Dollar did not like the way that it was sold off much on Martin Luther king day and came back with a vengeance. Is down after six days of gains. The giroux down a little bit the euro down a bit and todays session in todays session. As we focus on the potential for a shutdown on friday, we noticed indexeslbacks on these yesterday. Animalthey might see the spirits, but in terms of what the market expected, the market in just a little bit less. Can they deliver . One chart which is causing some angst is this one. They are racing to catch up. Nice range yesterday on the markets. There was a 400 point range. We have analysts raising their estimates on stocks at a rate that we have not seen in nearly six years. The expectation is for profits to rise by 3. 5 . That is the fastest pace going back to 2012. Than 40 of the companies on the benchmark traded at a 65 high. 9090 1990, the next three months you see a rally. One lady that can always get you up to speed is Juliette Saly with your first word news. Juilette the u. S. Secretary of state has offered a sobering assessment about the possibility of war with north korea. Rex tillerson called the situation quote, very tenuous. He spoke in columbia where nations gathered. North koreans know that our channels are open and they note where to find us they know where to find us. It is a necessary indicator of whether the regime is truly ready to pursue a peaceful, diplomatic solution to the threat that it has created. Stephen bannon has been subpoenaed by Robert Mueller to testify before a grand jury. Ewat is according to the n york times. A second subpoena for benin to testify came from the house testifyy bannon to can yesterday. Johnsons comments came after eu ders floated the idea of the uks plan to leave the bloc. A Landing Strip could be built. Alsoes busiest hub proposed the opening of new terminals. Consultationof a aimed at reducing the expense of the project to a level where it could be funded without a significant hike. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. The equity rally here in asia is stalling somewhat, as we saw that weakness coming through from wall street. Closing down by 0. 10 . You are seeing the Australian Market closing down by about 0. 5 . We saw quite a bit of a weakness coming through in the Energy Players today. Downgrade to the stock, saying that they see less upside. They issued 1 billion worth of new shares. Take a look at this medical company in sydney, up the most since june, 2015. It is the medical company that does treatment of liver cancer. Mostly we are seeing weakness across the board in asia. Anna Juliette Saly with your update on the markets. Republican lawmakers are pushing for another shortterm funding measure to avoid a u. S. Government shutdown. Today we assess the president s accomplishments and shortfalls in global trade. Lets bring in jamie schneider, who has been tracking the presidency. Lets start with the impending shutdown. Lets get the news out of the way and then we can talk about the bigger picture. Will congress be able to pull a deal out of the hat at the last minute . Do. Hat is what they want to this is the funding for the government that has already been since thehree times new fiscal year began in the u. S. This would be a forced extension. Republicans are hoping to get a deal to extend it through by doing things like adding money to a childrens fund. Democrats want to add an immigration measure that would deal with the dreamers that were brought to the u. S. As children. Republicanrump and lawmakers have been trying to paint them as obstructionist for doing that. They have said that if they try to add that to the bill, they will be blamed for the shutdown. The republicans are trying to get the Immigration Office the table right now immigration part off of the table for now. The will have to deal with spending and budget issues, but at this point they are just talking about trying to get enough votes to avoid a Government Shutdown that would Begin Next Week and. Weekend. Terms of delivery from the president , one thing that he has delivered on his the promise to leave the Transpacific Partnership and seek a renegotiation with nafta. Our sources suggest that it is looking rather risky at the moment. What has this matt forte u. S. Trade what has this meant for it u. S. Trade Going Forward . Jamie the president has delivered on one of the planks of his trade partnership to leave bit Transpacific Partnership to leave the Transpacific Partnership. That has happened. There have not been a lot of successful negotiations with other countries. They are trying to get better terms for the u. S. In nafta. Although that is not going well, and the u. S. May walk away from that as well. While the president has succeeded in moving forward on ite of his trade promises, has not necessarily furthered trade with other countries, and in some with has isolated the u. S. On the International Trade stage and given more leverage to countries like china. Anna thank you very much. The big picture on the Trump Presidency and his record on trade. Fors bring in the cio aternational fixed income. Today we picked trade as a theme. A number of guests over the last few weeks have talked to us about how fallout from trade, even if they have not restabilized investment intentions, could be one of the big risks for this year. This is the u. S. Trade relationship with china, canada, with mexico. All of the key political topics that we talk about that could hold risks in 2018. May be. When you look at trade in 2017, it was booming globally, despite all the politics. A lot of it goes back to the underlying economics. At the strongest level since 2011. Manus certainly your Investment Bank side has done a lot of the analytics. 89 of the countries are now growing in the longterm trend. Worldwide inflation, have a look at this particular chart. This is global inflation. St wonder if aroundte what a jump to 2. 2 this year. We are finally getting to the 2 level. Are you mistrusting of the chart . Think about it, we are 10 crisis. Stfinancial Global Investment shot up like a rocket in 2017. You can get productivity gains when you get higher investment and then you unlock the magic of wage growth. Anna do you think we are set for a change . How does that set alongside yet the wage growth is making headlines on the back of those tax cuts. When you think of the productivity, it is pretty logical, isnt it . The next bit is that you get the investment and then you get the productivity gains. We are on the cusp of that this year. When you look at the inflation picture, the risk is higher. We last week we were did a word count on inflation, we have probably overused it. It me do something to make prettier for you. 4189. There was a moments last it week when we had the Inflection Point of where we steepened. My question to you is this. As the flattening bench is the flattening binge going to continue . It does, but it will not invert. The problem is when you get the yield curve inverting. There is still plenty of steepness. Anna you do not see much chance of a recession . You felt that it was a 5 probability and now you think it is 0 . Why are you that confident . When you look across the globe, you have every economy growing. Months, look back 12 there was a list of countries with problems. When you look at those today, even emerging markets look very healthy. Anna were not looking at an overheating story . The fed is going to have to respond somehow. What are your expectations of if we run too hot . To run causes companies too hot is Central Banks being behind the curve. Manus are we going to see a much more constricted centralbank policy this year . We could. Manus we will certainly touch on that next. Atis the cio of fixed income jpmorgan. Expectations for the Central Banks rate hike is realistic. We discuss. Isa later in the show, it m a time. We will have plenty to talk about on that front. This is bloomberg. Of singaporehot there. Day in the skies. You got materials, energy, and Health Care Stocks just coming back a little bit. They are a shade lower across these markets. Lets get to Juliette Saly with your Bloomberg Business flash. Nestle has agreed to sell its u. S. Units. Units, whichhe includes the butterfinger and is the firstnds major investment since the new ceo took his position last year. The Food Industry grapples with a drop in demand for sugary products. Wg. Re is an offer for i the group is lining up a firm offer. Representatives for brookfield and iwg declined to comment. Shrink its Passenger Car lineup and shifting only two lowvolume, highmargin models. Cfo warned that adjusted profit will fall this year to 1. 70 per share. The low end of the guidance is analysts were anticipating. Analyst expectations that ecb Interest Rates will not rise until the middle of next year are reasonable. He indicated that the forecasts are in line with the Central Banks forward guidance. Would endher the qe this year, he said that he would consider that appropriate. We have the cio for International Fixed income at jpmorgan with us. Juckes and he was saying that for as long as inflation does not really go gray gums in europe, that keeps the hawks at bay a little bit. The Monetary Policy in europe is set for an emergency. It is the lack of inflation. There is a strong case for the market taking that policy rate of zero two a low level of zero. Ow level the ecb is wait behind the curve way behind the curve. Manus well, that is a debate. This is a german tenyear government bonds. It is a very simple chart. I think he is trying to take away from hansen. There is one man who is talking in ais and eight tweet. Are we at maximum if we break at 6 . Beginning of on unfolding of the bond market . There is another issue with the bond market. In europe, youve got one third of bonds with a negative yield. Arecan see that the risks to move a fair bit higher. Factoring in higher Interest Rates, they seem to be moving higher in the very short term. What does the curve and up up lookingke end like . There is a very powerful anchoring affect from the 40 rates. End can see the front move dramatically higher. Manus i think she is thinking about she found a great article on the bloomberg. The emerging european economies are not afraid of the qe. Economies areour in much better shape than when investors fled our economy in 2008. Talk me through the market. 6. Equences of a break at higher fors yields the right reason. When you look at what happened before, yields went higher because they received poor credit. Higher for the right reason. That is not the issue now. Anna it is a reflection of higher inflation expectations. Thank you very much. Manus up next, chinas appetite has led to aer surprise increase in the demand for Global Clean Energy investment. Where are the dollar is being thested where are dollars being invested . We will talk about that coming up. Clean energy is where it is at anna this is bloomberg daybreak europe. It is 6 30 in london. The dollar is a little resurgent this morning, selling earlier this week. The power and Transportation Business is reporting q3 sales. Their 2020nfirming goals. That is something analysts were looking for. Hey are continuing to progress ceo of a siemens we understand this morning they are moving forward on that. No one can nejra deny it is a strong start for asian equities. We are seeing japanese stocks pull back from a 1991 high. The hang seng pulling back from the record high. China looking flat at the moment. Australia lower. A little risk aversion coming into these equities in asia. Lets look at the dollar on the next chart. Dollaryen reversed after six days of yen strength of dollar weakness. Overall, the bloomberg dollar index rebounding a little. The general trend for much of 2018 has been downward. The Bloomberg Index at its since 2015. Maybe curve flattening has something to do with it. The bloomberg dollar index has look at if we take a what is happening with oil, a little pause. Brent closed above 70 per barrel for the first time in three years. It is below that in todays session. Yesterday we saw wti drop, and it is weaker today, pulling back from that threeyear high. Finally, bitcoin dropping as much as 26 in yesterdays session, regarding a little today, up 6 . Ethereum is swinging tween gains and losses. We are atssion 11,419. Manus the Property Market may be sluggish. The billionaire chairman of dubaibased sees plenty of opportunity in the city postbrexit. He is also looking for growth closer to home. He spoke exclusively to bloombergs Yousef Yousef gamal eldin. We have one project, we sold more than 50 . We are looking at london as a future market. I see istanbul as an interesting market. It has softened a lot in the last couple years. If you enter a market when it is soft, you buy assets at a peak. Yousef brexit has not turned you off at all . No, i see a big opportunity. Other weeks ago, clear signs of oversupply . Would you agree with the oversupply story, or that the dubai market needs to do more . I think we have one of the most amazing, visionary leaders in dubai. City to theg the best of the best. I think dubai has huge potential. Tourism is growing. Retail is growing. Some of the sectors like retail is not growing like before in double digits. Get 15 million in tourism going to 20 million. I am very positive. I dont see any issue there. Yousef in terms of the success story, would you be willing to sell a bit of your steak in the company . E in the company . Yes, i dont mind selling at the right time. Yousef one of the kearns i heard was there might be changes in the dividend payouts, what they saw was reduced cash flow. Can you say, or reassure them that you do not foresee changes in your dividend policy . 2017 was a good year for dubai. Do not see anyi change in our dividend policy. We have made it clear several times. We will stay with our dividend policy. Yousef are you looking to do additional projects that are built around the brand in dubai or elsewhere . We enjoy a good relation with the trump organization. They have helped us build one of the best golf courses in the region. They are helping us with our second golf course. Announced that they will not take any more projects outside of the u. S. Yousef if they were to change their policy you would be open to new a new project . If it is a benefit for us and them, and willingness from their side, we can always look at those deals. There are many things that could upend the twoyear rally we are seeing in emerging equities. No one seems to agree on what they are. A nearterm rally in the u. S. Dollar at near record levels will probably prove a temporary setback for developing nations stocks. , cio forgartside International Fixed income, jp morgan is still with us. You have spoken bullish about. Arkets for 2018 what is your view on emerging markets . When you look at emerging markets, you get Global Growth great for emerging markets, then you when you look at valuations, investors should be focused on turkey, brazil, russia, where you have healthy doubledigit yields. Manus the dollar hitting the lowest level since 2015, one thing that comes to mind is when , weave this herd mentality have this group think that the dollar will continue to defend. Descend. Ue to to what end are you bearish on the dollar . And do you think that a reach for yield over rogers the dollar . Nicholas when you look at the dollar, that is a crowded trade. The dollar is stronger in the short run. We get a little dollar strength, strategically the dollar is likely to be week. End you are looking at 135 in terms of eurodollar. Any pullback in emerging markets that is your buying opportunity. If we do see a stronger picture in the United States and globally, and we do see hikes as you suspect the fed might have to deliver, can the dollar remained negative for all of that . Do we not get a point where markets say ecb policy might be changing quicker but look at the rates you can get in the u. S. ss if the fed three or four times, it is an interesting debate, but the bigger shift comes from other Central Banks starting to catch up. That is likely to drive the currencies. I want to tie together, money last into these high yield funds at the start of the year, we saw a flow of money. We turned around ever so slightly. We updated the data. Everything that you look at, what about high yield . Are you as robust in your outlook for high yield . You should be flying. You are not too close to the sun. Ultimately, you risk default rates. Default rates are low. And you look at spread, they are about 3. 5 . I am not saying they will go back to 2. 25, but there is room for the spread to contract. , cio Nicholas Gartside for International Fixed income, you very muchnk for being with us. If you are a customer and are leading for work, download everything. We also have tv. Tv is the function we want to tell you about. You get all the extra functions. You get to influence the conversation by clicking on ask the guest the question. Manus china still has an appetite for solar power. It has led to an increase in Global Investment in Renewable Energy and cutting edge technology. Is according to bloomberg finance. America was the secondbiggest market, despite president trumps efforts. Boom talk about the solar we are seeing in china. What has been driving this . A move toward environmental. Wareness in china angus what took everybody by surprise is not that there was a strong investment in renewable it took another leap forward. A couple things behind act, one is most people took the view that china could only digest new solar capacity without having problems with curtailment. In the end, developers went ahead and built projects, and figured they would get the tariffs sorted out later. The other factor, solar is now so cheap, at a more local level, Small Projects are going ahead in local fields and rooftops just on the basis that it is very cheap. You can get electricity at a good rate. Manus there is a Staggering Number in the research. Billion 330 billion was invested in 2017. You got solar and wind, how do they compare to coal and gas in the terms their amount they are able to generate . 335 billion is global, not just china. In terms of the amount of new capacity added last year, we. Ave solar at 98 gigawatts call and gas combined would be 80 gigawatts. Wind, 56 gigawatts. In 2016, solar was the biggest of the four for the first time. 2017, it was not only the but biggerthe four, than coal and gas combined for new capacity added. Anna what is the outlook when we look ahead . Clean energy investment. Angus it will be another strong year for solar. Another couple of interesting in our figures, electric vehicles are a strong area as well. Sales to be about 1. 5 million this year compared to 1. 1 million last year. We expect another record. Anna prices are still coming down . Pricing in that is new projects that would not have been economic before. Manus the whole conversation and i are having, is there a new demand . Angus there is also the driver of cost reductions. The quicker economies scale in, you get cost reductions. Evs, and batteries for storage. Us. thank you for joining did anybody mentioned the ambassador yet . The hourminutes past and no one has mentioned of the ambassador. Delivers. Always unit,stle confectionary it is all about m a. The they wont know what ambassador is about. We will keep that joke inhouse. This is bloomberg. Anna this is bloomberg daybreak europe. Lets turn our attention to deals. Onex is said to be preparing a deal. That is according to people familiar with the matter. They say that bid will value owg 3. 7 billion. Ferrero, the italian maker of nutella is making a bid for nestle. Lets stick with the chocolate industry, the candy industry. What are your thoughts on why been under pressure to do something drastic . Market they were the number four player. They could not get up to a decent market share against her she and the top players. Ey and the topsh players. Had annestle has whoraction with dan loeb was more friendly than your average activist. In regards to nestle, is this a reaction to activism, or is it just smart and strategic . I think it is the latter, it is a smart move. It is good activism. It is making sure they do moves quickly. Ceos i wonder if there are trying to get activism on board to push their agenda. Perhaps not. Lets talk about what they plan to do with the cash. They dont need the cash, they have one of the most enviable Balance Sheets in the country. There are going to be rumors around any asset that is available. Weve already seen on the health care side, their name at the top of the list. They sold the business for scale, they wanted to be nutrition. Shrewdly. Invested they have done a good job so far. Duncan fox with the latest on the ferrero and nestle deal. Some forces are propelling force is higher. Strong domestic and international economies, low unemployment rates, and easing Monetary Policy. Companies like walmart are boosting pay packages. Inflation, good to see you. Good morning. Happy new year to all of you. Manus there giving pay raises at walmart, and giving back dividends. 2018. Ion, how do you look at inflation globally . It is pretty easy. It will stay subdued. Price iso up, accelerating a lot. Where we have had inflation well below those levels of previous decades. Expect a modest uptake. Anna in the United States were we seat cpi numbers edging higher, this has been the missing part of the inflation to. We talked about productivity improving globally. In the u. S. You dont see inflation gathering to quickly . Holger we do see inflation rising, core inflation will go up over the course of this year. The labor market is tight. We also have more investment. We will have productivity improvement. If rate inflation accelerates by a half percentage point, then placetivity will leave in it is a modest rise but nothing the yet the fed will have to worry about. Manus i want to get your perspective, you talk about moderation of inflation. To what extent is there a divorce between our expectations is . Us what the reality reinvest, the minor utterances we have had, do you think the landscape for Central Banks changes dramatically in 2018 . Holger no, we expect the fed to move four times this year rather than three times. The expectation they would do saye hikes, for hikes we the markets are starting to price that in. Anything dramatic like a 50 somethingt move, dramatic like that, that looks highly unlikely. Anna you mentioned productivity. In the last hour we talked about productivity. Productivity isnt everything but almost everything. Where is the enthusiasm from investors that is driving productivity gains coming from . Is it because rates are so low and money is so cheap, that eventually that took hold . Holger it is more that it eventually took hold. The environment has been good for a number of years, but in the wake of this great financial crisis we had, it has taken a while for companies to put their is. Y where their mouth year by year, without a major accident, competence rises and a to act on that rises. That is what we are seeing. We are returning to the old normal away from the new normal of subdued investment. Manus thank you so much. Up next week will break down the numbers. It is all about the guidance. 2. 2 billion euros. Morning from bloombergs new european headquarters. Anna this is bloomberg daybreak europe, and these are the top stories. Nestle, ferrero demand, the chairman akes he would sell a 15 s ste as he eyes up the london market. It has softened but the right time to acquire land and make projects, we have one project. We sold more than 50 . We are looking at london as a future market. Manus very warm welcome to bloomberg daybreak europe. Everywhereing cars, it would appear. New registrations for december are rising. That is the breaking news in terms of 2016. For december is self, we saw a bit of change. European car sales rose to a 10 year high. Romeo, that isa the highest on record. December itself showed a drop down by 4. 8 versus a year earlier. Economics ofhe europe, on a planet at the lowest since 2009. Posted its steepest increase last year, 12 . Renault up 7 . Alfa romeo, up. Lets talk about the car sector in more detail. We have numbers in from the vw. Toyota vw sales up to a record 10. 7 4 million vehicles. This is the last months missing ingredient in trying to work out who would do best in 2017. We need to hear from toyota. It looks as though they held on. Vw probably got the top spot. Robust customer demand countering the dramatic fall basalt at the height of the diesel emissions crisis. It looks as though they are ahead of their japanese rival. Cap have to wait until later on wes month we get details have to wait until later this month to get details. It looks like Sales Numbers have missed what the market numbers wanted. , they dorter numbers guide for the full year and operating will remain unchanged. Quarter, barberry saw erry impacted by the u. K. This is where we are seeing a little bit of an issue. We are seeing advertising spending in the uks falling. Miss quarter retail sales for burberry. Low Single Digits for them. A little more on the fashion side. Anna the fashion side in germany, the Internet Business giving their take on the fourth quarter. Growth strategies, giving us a breakdown. Rate we are expecting the final results on march 1. This is a preliminary look at things. 4. 7 onose as much as january 11. We are getting breaking news, confirming a merger. Will put more of that in our business flash. Lets talk about the risk radar. It is showing stocks are ,etreating from record highs trying to avoid a shutdown. Tillerson talking about the conflict with north korea. Global equity markets are shrinking back a bit. Index retreats. Substantially. The s p slid more than 1 from its peak yesterday. We are seeing the dollar in resurgence a little bit against the yen. On the startre up of the u. S. Trading day. News weve got breaking bit proposing, a a merger to own 60 of the new company. Lets talk more about asml. They had their First Quarter sales that trailed estimates. Atst quarter revenue came in 2. 2 billion euros. We are going to talk to the current cfo. Good to see you. This guidance you given to the market, this is the first instance the market will focus on this for the First Quarter. People are talking about animal spirits. What worries you most about the outlook for the First Quarter . Wolfgang let me start with where we finished last year. An absoluteshed record year. Revenuever 9 billion in which is 3 upwards of the prior year. 40 up from the prior year. We have up positive outlook going into 2018. We will see Significant Growth in revenue and in earnings. , what happened, our q4 came out significantly stronger than we had expected. Billion which 2. 6 was a function of Strong Demand where our customers ask us to make every effort to ship tools can set asidey demand. We were able to accomplish that. In that sense, we have such Strong Demand that we pulled over 400 million into last quarter. The revenue guidance for the First Quarter is slightly lower, but if you take the two quarters combined, it is significantly better. It is the start for a very exciting year for us. Profitability and revenue will continue to grow significantly. Talking a very strong story in terms of the picture. Can i ask you about something topical in the industry, surrounding intel chips putting a strain on that company. That is one of your clients. How do you expect that to affect your business . Wolfgang it will not affect our business at all. It is always difficult for us to comment about the operations of our customers. This is a temporary thing. We see no impact whatsoever in our business based on the intel topic. Anna are any of your customers asking for changes to the equipment you are supplying . No conversations with your customers around the story . Wolfgang no. On the need for storage and computing power. If anything, if software was used and slows down the process, there is potential more need. It is not affecting our business for processing power. Manus one question that every cfo is going to get from us is about currency. A great deal has been made about the rally in the euro. Are you hedging . How are you dealing with it . Mind whenthrough your you see the euro dollar at a threeyear high . Befgang we are relatively we have a practice that we do euroce our tools in predominantly. Our invoicing is done in euro. Based incurring more cost in europe. Cost base we had in asia and the u. S. , we do stand a forward contract. When we have a big increase of instance, that of one percentage point on that margin. We are relatively insensitive to it. Anna what about the sacred nice Global Growth . It is something we talk a lot with our guests. Is that something you can evidence when you look at the spread of demand globally for asml products . Wolfgang we benefit from a strong semiconductor. That growth and so my conductor is strong. If you talking to people who do forecasting for a living, they think semiconductors will have a strong year. Last year, growthless 5 . Intensity is continuing to go up. With our products, we can outgrow the Semiconductor Market which we have shown last year, and which i am sure you will see over the coming year as well. So my conductor growth is going strong. You see applications in numerous fields, and we are very positive about that. Manus one of the products everybody wants an update on are the newest equipment you deliver. How would you categorize that . Dealang we had a good last year on uv. Almost all of our customers were deeply engaged to a degree where they have committed it into volume manufacturing for their of memoryenerations modules. Revenue is more than three from 2017. We are planning to double it in 2018 with a very strong order intake. , our backlog is over 3 billion euros. We are planning to ship 22 systems this year, which is more than doubling from the prior year. 2019, we see a demand that is higher than what we can deliver, but we believe deliver. That technology is being embraced by our customers. Milestones,g the and it is going to be the workhorse of the industry in the next decade. What does that do to the 2020 guidance, 10 billion Revenue Target that youve got . Can i get you to move the dial on that . Or you 100 assured on that, may youd overdeliver on that . How would you look at that target . The target we established in 2016 was a 11 billion. In taiwan, and that added to the target. When we set that target, we actually set a target range. Set the outcome in 2020 will and itthe level uv will depend on the end demand in the market. We gave a range of around 11 billion. It could be below 10 billion, but it could be in excess of 14 billion. It is too early to make a new forecast. What we can say right now, certainly when we look at the uv adoption and the market, and everything driving the market, we can rule out the worst cases. It is fair to say there is a bias to overachieving those numbers. A formale not doing update on it. We are looking good within those scenarios that we have sketched out in 2016. Anna thank you. Wolfgang nickl. When the ecb can raise rates. What did this voice add to the conversation . This is bloomberg. 40 minutes until the start of European Equity trading session. , stumbled ever so slightly. Yields bund yields, what happens when you get to. 6 . To bring the bond market back. Dont get out of the starting blocks. Getting a rights issue announcement. Report, pullroup your revenues rising by 11. 6 . They say they are wellpositioned after a successful outcome in 2017. Lets get to Juliette Saly with the business flash. Nestle has agreed to sell its confectionery unit two ferrero, and its first step away from the candy industry that invented milk chocolate. The sale of the unit which includes baby ruth brands is the First Investment by the swiss food giant. To focus on healthier and faster growing categories like coffee, pet food, and water is the Food Industry grapples with the drop in demand. For is preparing an offer iwg that will value the Company Point 7 billion pounds. According to people familiar with the matter, they are lining up an offer. Representatives for brookfield and i wg declined to comment. Not available for comment. Under the deal, you bm holders theeceive ubm combined group would owned by former shareholders. That is your Bloomberg Business flash. Predictions for mid2019 rate hikes are realistic. Was do you make anna saying earlier it takes a hawk anna to come out with a slightly dovish line. Manus is it realistic for a rate hike . I think he is going to go, you got too excited about the rate pressure from the ecb. The market is getting a bit overexcited about what the ecb may do. The ecb has given us clear guidance. Reiterated the ecb in my view, at the end of september it will be over and there will be time until the first rate hike. I see a chance for ecb hike as early as march, 2019. We are getting a little closer to that, but still so far away we should not get too excited. Anna ending in september, is that your base case . That is the base case. Would that be a surprise to anybody in the markets . Should everybody adjust to the in september . I think what we are seeing now is the markets adjusting to this view that in september it is over. That should not be a surprise. But the time the ecb tells us more officially this will be the case, say in june this year, it wont be a surprise anymore. , a tweet wasields sent out yesterday. We talked about the rate of the bund yield at the maximum bearish position. If inflation is rising modestly break the world, do we. 6 , and what happens if we do . Within the next few months we are likely to break. 6 . It may happen in the next few weeks but i would be surprised. We may be getting into a phase with the market over excitement about Central Banks is being calm by mr. Weidmann. Volatility. Et is the yield, it is still a fairly low yield. Anna so we dont need to worry too much about the moves and bund markets. In politics, what should we count on in german policy . It is not done, but there is a chance it will actually happen. Would like to be in opposition. Againsthey vote leadership, that party would be in such a deep crisis it might have to face new elections. Probably the Party Convention would shy away from that. Manus you also talk about what is for european stability, and harmonization of corporate taxes is calculated. You envisions for roadmap in 2018 and 2019 . The point ofnk this coalition is that the german conservatives, merkels side has now put in paper how far they are ready to go to meet mr. Macron, which is sort of going some way towards that with the promise of more german money or the eu budget, with more funds for investment, with something to deal with the shocks. Germany has responded to micron macron, and the debate can start in earnest. Anna thank you very much for your time. That is it for bloomberg daybreak europe. The european open is next. Manus auto sales rose to 10 years highs. Nestle, and ad lot of stories to keep track of. Manus we will do it all again tomorrow. Guy johnson and matt miller are right here in the hot seat next. Guy good morning. You are watching bloomberg markets. Matt miller is over in berlin. Matt, cash trade now less than 30 minutes away. Guy so, hard candy. Nestle sells the u. S. Confectionery unit to italy. Is the sugar high over for investors . Red, pulling back