Rates waeigh. London, seven 30 a. M. In frankfurt or paris. Lets have a look at where the markets open up. Or not expected to go all that far. Some minutes from yesterday, from last night to factor in the things as we start trading in europe. The fed, policymakers suggesting they will take their time, no stubborn inflation threat looming, and lots of trump related uncertainty. , andl policy uncertainty march seems to be less and less part of the conversation when you look at the probabilities of a rate rise and focusing attention instead in the market on the month of may. Lets look at what is moving around on the gmm. The bigis one of factors that has to be worked through the market. The Asian Session was flat, following u. S. Stocks downward initially, then fleshed out as we went to the session. Japan weaker on the back of the yen strengthening. That was a bit of the fed story coming through there. The korean won, but not a magnitude to be picked up on the gmm function. No Interest Rate change there. Dti crude up. 9 , and we are focusing on that today, Industry Data shows u. S. Stockpiles increased. That was the industry report. What with the u. S. Government data show later . It might show the first contraction in stockpiles this year. Lets get to bloomberg first word news. Here is juliette saly. Thank you. Fed reserve officials have expressed confidence they can raise Interest Rates gradually. Fomcs latest the meeting shows a hike soon might be appropriate to avoid the risk of an overheated economy. Traders are pricing in a one in three chance rate increase when policymakers meet next month. U. S. Treasury secretary Steven Mnuchin and has set a strong dollar signals confidence in the American Economy and currency depreciation over a longer horizon is a good thing. However in an interview with the wall street journal, he added shortterm dollar gains can have not so positive effects. The messages similar to the one he delivered in his confirmation hearing and he sought the clarified suggestion by donald trump that he preferred a weaker dollar. Meanwhile, President Trump is delaying until next week issuing a new version of his order restricting immigration impending travel to the u. S. From seven predominantly muslim countries. That is according to a white house official who did not give a reason for the delay. Trump has said a rebounded executive order tailored to address legal issues that blocked his original travel ban would have been released this week. South korea has pushed back against u. S. Pressure over its Foreign Exchange policy and current account surplus. Speaking at as the central bank kept Monetary Policy unchanged, the comments reflect the concern in the exportdependent country about the intentions of the trump administration, both with regards to korea and its largest trading partner china. And nasa has announced the discovery of seven earthlike planets orbiting a nearby star. These new worlds could hold life. They are less than 40 lightyears away in the constellation aquarius and a tightly clustered around a dim dwarf star. Three are in the capital zone where water and life might exist. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Matt life come a julia, but not possibly as we know it. Releases results, posting fourthquarter profit that missed estimates. The bank said it will close that unit that houses its noncore business six months earlier than expected. We spoke with barclays Ceo Jes Staley moments ago, and he gave us an update on the Restructuring Plan. All the efforts of last year means that in june this year we will no longer have a noncore Business Unit in barclays, and the second half of 2017, this bank will be what it once to be in the future and allow us to look forward, so we look barclays forward to ending the restructuring of barclays that has been going on for years in a matter of months, and i think our shareholders will respond well to that. Matt jes staley there. Join us now are our guest to talk about the banking sector. Lets talk about barclays and the positives after the numbers and the structure, the strategy story they delivered today. Free to be what it wants to be, barclays, as result of this closing of the noncore business or early, is that going to be well received by shareholders as he suggested it would be . I think so. Barclays embarked on this Restructuring Plan over many years, and the fact that we are talking about months as opposed to years, they are getting close to liberating this trapped capital. Remember, it houses Something Like 46 billion pounds of noncore riskweighted assets, so closing the units will liberate it. Matt so you free up the capital trapped in that part of the business. Hethat is one positive story wanted to put across this morning. On the slightly more negative side, some people comparing the up tech in fixed income, revenue up 33 or Investment Banking, u. S. Banks better than that, some estimate stronger than that. Jes staley pointing out to me there is a difference in the way their business operates versus u. S. Peers, something you could help explain. Footprintlook at the of the barclays fit versus 2011 and 2012, there is a significant decline in the business, so that suggests that barclays fit nowadays is lower than it used to be. If you compare it with goldman , it tends to underperform when the credit market is think, but it is still i 2017, if you get this u. S. Rate cycle, some momentum in the American Economy, because remember 60 of the investment u. S. Revenue at barclays is dollar denominated, so a strong u. S. Economy will make money 17 is a very good year for barclays. What you think barclays is most excited about . U. S. Growth under trump or a rollback of regulation . Out theeen to point regulators have been collaborative. Is that the secret for 2017, or is regulation arbitrage one of the big risks . Opportunity lies in the right side of the equation, especially on this steepening yield curve in the u. S. So rolling back or repealing part of the dodd frank may help barclays, especially the volker rule, the ban on proprietary trading. Socould be more up in 2018, remarks about a stronger economy and potentially a steeper curve. Matt and later about the regulation. Been a busy week for the banking sector. Weve learned about the u. K. Banks and global foot print ranks. Tomorrow, numbers out of rbs. What are your expectations there . Standardo have chartered tomorrow. Rbs will probably be in the ninth Straight Year of fullyear losses. They have had an increasing it is verynst important. And also, they are getting close to a resolution of the European Commission and disposal of those. Those are two for important chapters. Matt you saw the share price pickup. Anna this new deal theyre trying to get agreement on. Relief that this uncertainty was out of the way for shareholders . Would haveause rbs been for sale, so they would not the been able to make assets have been complicated to be disposed of, and any pragmatic agreement with the European Commission, we leave some of the remaining here the doj, whicheing the we expect the issue. Anna thank you very much. A conversation about the banking sector. Lets turn to mining. Numbers from glencore 40 minutes ago. A few more details coming through in the last 10 minutes, hoping for a Credit Rating upgrade coming from the cfo at netnet could drop below 10 the and dollars by the end of 2017. The cfo saying glencore has never had a stronger balance sheet. The ceo saying they could consider a special dividend in 2017, wait and see mode for m a opportunities, and the time is right for rewarding shareholders. Commodities demand is good around the world, so says lynn core ceo. London, coming up, patients or policy, the fed has expressed confidence they can take their time on raising rates. We will discuss that next. , discussinge line the g. M. Per show proposal with Angela Merkel and theresa may. We are in paris with the latest on the talks and earnings story. Then we speak to mexicos Deputy Energy minister at 8 30 u. K. Time. Bloomberg markets anna welcome back. This is Bloomberg Markets european open. Lets get the Bloomberg Business flash with juliette saly. Thank you. Barclays posted fourthquarter profits that listed estimates come adjusted pretax profit fell short of the 640 6 Million Pounds analysts had anticipated. The bank recognize higher costs for deferred bonuses and fixed income trading rebounded less than u. S. Rivals. Elon musk said he still plans to deliver his massmarket sedan in july. The companys of the model three electric sedan remains on schedule and will reach production of 5000 units per week by the end of the year. Cars timing on the should ease concerns over whether the company can overcome its long history of product delays, as well as the impending departure of ceo jason wheeler, who joined the company 15 months ago from google. Handing over the daytoday running of nissan, he will remain chairman of nissan. Take the mantle of president and ceo of nissan, while his long time boss focuses on revamping mitsubishi motors. , juliette. You for all of last year, u. S. Central bankers found reasons not to hike Interest Rates until they did in december. Minutes from the fomc latest meeting suggest more conviction about more rate rises this year, just not quite yet. Cross over to mark cudmore from singapore. Good to have you on the program. What where the market moves we saw on the back of the fed minutes . Early hoursi got in london, things look muted and not a great deal of movement in the market. The Immediate Reaction was very muted as well. There really wasnt a big move. The dollar came softer and yields came lower, and that is because traders helped there might be a hawkish message in the minutes that wasnt in the statement previously. That seems slightly bizarre to expect the minutes to deliver something it hadnt, so dollar deals became lower and a slight bit of disappointment. Anna it seemed for a couple of reasons that the fed was willing to sit on its hands, and Market Attention moving away from march and towards may . Absolutely. I think it is a big decision whether it is may or june. March is possible, but certainly not profitable, and in fact, very improbable. With trumps speech to Congress Next tuesday, if he delivers a concrete plan with real details, i am suspicious, but if he does, there is a chance to guide the market towards a hike in march. That is a low outcome, but that is why there is still risk premium march as possible. Anna i have a chart here. To u. S. Twoyear yields over germany, and that soead the most since 2000, regardless of how quickly rates go up in the United States, the trends of lending to emergence and yields and emergence and centralbank policy is clearly something the markets are banking on. Absolutely, and we are not just seeing it with germany, japan as well, but that spread with germany is stark and to supportand helps treasuries good people will chase yield when they cant get it elsewhere. What is happening in germany is different. The u. S. Is trading a possible reflation story, where as demand is there because people are worried about whats happening in european politics, and buns are the safest in the region. Seen the interview with Steven Mnuchin and in the wall street journal. The dollar index up this morning. Steven mnuchin saying the strong dollar is a vote of economic confidence. Are we gradually learning more about what strength this administration once the dollar to have . It was hard to know from his additional initial comments, because he did qualify it. I dont think he was necessarily trying to talk up the strong dollar again, but certainly we will get more comments, and obvously trump might mention the dollar next week, so the rhetoric out of the administration has been making a difference in recent weeks. We need to keep an eye on it. It will continue to make a difference, but it is unclear what Steven Mnuchin might say going forward. Anna , mark thank you for your thoughts very much this morning. You can follow live market v go on yourmmli bloomberg. Up next, we look at the movers in todays trading, including peugeot, outside the automakers headquarters in paris. We will be back with some of the stocks we are watching. This is bloomberg. Anna welcome back. Bloomberg markets european open. Aets turn our attention to ps group, profit jumping 18 after group ceo spoke to theresa may and Angela Merkel about jobs, and talks continue of the purchase of gms european operations. We are outside peugeot headquarters in paris, where the company has been holding a press conference. I see you have been in the conference tweeting pictures of it. What a we talking about this morning . There is a positive set of earnings, even before we talk about the m a opportunities. Thats right. 45 minutes,t this is all we talked about, the earnings of last year, recurring operating income of 18 , 24 billion you rose, beating estimates. Peugeot also offered a dividend for the first time in six years and increased their midterm more than 5 recurring operating margin until 2018, and increase that number two 6 by 2021. We will have to see what kinds of questions we get from investors over the next 45 minutes during the q a session of this press conference, but we do know that the ceo does have a good track record of turning renault around. He did so with peugeot. In 2014, peugeot was on the verge of bankruptcy and had to be bailed out by the french. They had to sell another stake of 13 to the chinese. They had to cut jobs and close a major factory in paris. On this restructuring over the past three years did not forget prevent psa from falling behind renault, its main competitor in terms of deliveries. To acquire thege General Motors european operation, they would go back to number two in europe behind volkswagen. No certaintyd those opal talks will conclude. Thats what weve learned about this potential m a so far. This is exactly what we heard from the cfo on the Conference Call earlier before the press conference. He said there is no certainty that the deal will be reached, even though a lot of analysts we have been talking to here at peugeot headquarters expect some kind of announcement over the next few days, probably by the middle of next week. Obviously there will be a lot of questions about how they are planning to protect jobs in the u. K. , germany, and the same for opal. This will actually increase the dependence of peugeot on europe. Anna thank you very much. At the peugeot headquarters in paris, all details on the m a and earnings story. Coming up, the european open, how shares in barclays and glencore perform. This is bloomberg. Welcome back to the european open. European equity market about to get underway intimidates equity trading in around 50 seconds time. Futures suggest we will be fairly flat at the start of the trading day. Lower. E bit Market Reaction for the fed minutes generally were fairly muted but we thought a fall recovery in the Asian Session and the asian markets finished fairly flat. Weakness coming through on the hang seng, on the shanghai composite, and the Australian Market as well, but the nikkei closing out fairly flat at the end of the trading day. At the start of european trade, looking for some key movers the likes of barclays and glencore. Insurance names very much in the mix today. We will look for reactions to earnings fair. Let us get to the start of European Equity trading day. Anna it is 8 00 in london and unplug if you are watching in paris or frankfurt. European equity markets just opening up. What will they deliver for us this morning . Let us go over to nejra cehic. Nejra im looking at the gilt market open. The reaction to this fed minutes, pretty muted in todays session of if you look at the dollar and 10 year treasury yield, so if you look at the it looksilts yields, like we are edging slightly lower, down one basis point, 1. 19 . Do keep an eye on the front end, german bonds. 1. 1 my gilts yield down percent. Looking at the european stocks, the futures were pointing to a pretty flat open and that looks like that is what we have got on the stoxx 600. In terms of distribution, a real mixed year between the green and red. The gains. Leading on the downside, materials as the worst performers. Not a surprise given we are seeing real weakness in metals prices. We saw it in the same high shanghai futures. U. K. Banks, still very much in focus. We got those numbers from the Fourth Quarter profit missing estimates. That was because of accelerating , taking a charge for accelerating the cost of deferred bonuses and also, there was a big focus on the ficc, and you asked the question of the ceo this morning about that. He said he was happy about it jumpedt bond trading trailing usp years. Where it is not trailing is if you look at how it has performed since brexit compared to other u. K. Banks. Here, it is very much leading the pats, outperforming rbs, the, and lloyds in terms of recovery of its share prices. Anna. Anna thank you very much indeed, nejra cehic with details of what you need to know at start of the equity trading day. Just bringing up the mov function around the stoxx 600 to show us some of the big movers this morning. Easyjet moving down around 4 in todays session. Adp, also down by around 4 . Rio is also in there as well on the losing side. We have had big news out of the Mining Sector with glencore. It Beat Estimates as it posted its adjusted profit. 1. 99 billion dollars after deep restructuring and rebound in metal prices. The chairman of bloomberg lp is a senior independent nonexecutive director at glencore. Let us get analysis from the this earnings season, and specifically around glencore. The cohead of global macro and Market Research i Goldman Sachs joins us and will kennedy. Let us start with you, shall we . The beat for glencore this morning, thanks to the management of metals prices, the top line story around glencore. Fromencore is different its competitors because it has the big trading business along with the mining business. Ist is really interesting the trading business again is track, which standards through the downturn, but came in with a stronger profit since 2008, so they have both parts of the business performing very well, and that led to a big heat on the earnings, and it seems the turnaround is largely complete. They have beaten the debt target. Things look pretty good. Anna pleased about this that reduction thois debt reduction. They sold more shares and a lot of assets and their target t toto bring that deb 15. 5 billion, so they went further than pledged. Look at businesses like glencore, they have been theorted by a reboot in commodities sector, and the ceo saying this morning that demand is good around the world. Commodities demand is good around the world, so do you think we see these Commodity Prices are sustainable . Francesco we think they are. That is the punchline. The way we look at it, on the demand side, picking up what the ceo said, the leading indicator suggests Global Growth is outstripping most analyst forecasts. 25st have anywhere between 3. And 3. 5 Global Growth, but the pmi suggests four. That is a soft indicator. We are waiting to see whether it translates into actual growth in the second half of this year. Anna is that too much supported by chinese fiscal will that is the usual tension. Francesco we have seen china dish out credit that is being reflected in better pmis. Point,say, well, at some the day of reckoning will come, but i think it is broadbased. Europe has beaten expectations on the demand side, so that is the picture on the demand. On the supply, we have a very different story. We have the story of energy where the surprises have been positive on the supply, mostly from shale, so we think prices are not going to go much higher than 55, 57 dollars, and most of the returns will come from that, the market giving you carry. We are bullish on industrial metals. There, we see basis points i we see a supplyside story that will lift prices. Anna when you look at some of the comments we are getting from management come i know glencore, not like the other pure mining businesses we talked about earlier on this week, but the time is right for rewarding shareholders. Risingrevious times of Commodity Prices, we have seen mining ceos tended to put more money into the ground is actually rather than giving it back to shareholders. This is a slightly different cycle than . Will it looks like there is a willingness i mean, they do seem keen to give the upside back to shareholders and the ceo at glencore mentioned special dividends today so that continues that trend. Were they early in the recovery cycle . We will see how that pans out over the next year or two. Anna they could consider a special dividend over the next year or two. Will kennedy joining us on the mining story and Francesco Garzarelli stays on the program. It is six minutes past eight in london. Coming up, president ial pack. Macron forms an alliance. We will discuss that next. We speak to mexicos Deputy Energy minister about Trump Presidency. That is 8 30 u. K. Time. We speak to the ceo of another 8 50ny at a 50 gmt gmt. This is bloomberg. Anna welcome back. This is the european open. Let us check how the markets are doing this morning, 10 minutes into the equity trading day, and this is where we are, the stoxx 600 lightly negative. The dax not moving anywhere very fast. Muted reaction to the fed minutes. Nejra cehic joins us with some of the story. Nejra a big week for u. K. Banks. Im starting with barclays. That fourthquarter profit number was a mess on a charge a charge for deferred bonuses. A lot of focus on the fixed income trading and the jump in that is trailing its u. S. Peers, so what were the positives for the stock to be writing 2. 5 . The key capital ratio rising expected. Analysts also, progress in the effort to the vest the african urine it african unit. He said he was pleased with the Investment Bank performance. Overall, very much like how the Investment Bank performed in 2016 if you took m a fees, underwriting fees, we were up yearoveryear, one of the few Investment Banks actually accomplished that, so we think we gained market share in 2016 and we like how we performed in the Fourth Quarter. Have barclays shares outperformed other u. K. Peers in terms of an increase since brexit. Moving onto one of bouygues. It forecast increasing profitability. Swiss re down. Analyst estimates and this was down to losses for natural catastrophes weighing on earnings. It was starting a stock buyback program. We are seeing no shares on the downside. Anna. Very much, nejra cehic, with some of the stocks on the moves this morning. Emmanuel macron has agreed to an alliance with his centrist rival french law francois. To his offer. The move boosts his run for president of france after a fairly difficult week. Still with us, Francesco Garzarelli from Goldman Sachs. When you look at the french political story, how nervous are you about french assets as a result of concern about who heads to the elysees palace . Look at thee context of how nervous the market is, and what we can tease out from the french section is france is definitely driving the european fixed income complex. By and large, people are short duration. That is a core risk investors have on at the moment that reflects with what we were talking about earlier, commodity reflation, inflation going up, Central Banks becoming less commodity, so that is the theme prevailing in markets. People express it in different ways so they are sure france as because it reflects a duration of play. Politicaluse of the tensions. I do not see in the crosssection of prices anything suggesting that we are about to riskss a bout of systemic like we had a few years ago. Anna i have this chart here which shows french bond yield widening, election uncertainty, and contracting a little bit during the press conference with macron and bayrou coming together with less chance of splitting the vote. When you look at the price action, you dont see anything that is suggesting breakup of the you. This is around the edges, people of the e. U. This is around the edges. Francesco i think so. You could say, why am i shorting a 10 year bond in france . Well, because im nervous about the Headline News from here to the first round. We will have a lot of incoming information. We have had scandals, leaks, etc. , etc. , so that is all ahead of us and creates volatility, but is 1 a good yields for a 10 year bond . Say, probablyuld not. Q have a mixture of those two. If we were to see an escalation of systemic worries like a breakup of the euro, i would suspect that bonds like spain would, under greater pressure, greasewood and rally like it has wouldoing, greece unravel like it has been doing. Anna the periphery versus the core. Just like 2011, i guess, we saw. When you look at how the ecb should respond through all of this, i spoke to a guest in the earlier around, and he was suggesting he was worried that the ecb because of political pressure in germany might be tempted to tighten policy a little bit too soon when there is all these political risks out there. Francesco i mean, we characterize ecb as a place where you have these big fights between countries and different ideologies about Monetary Policy. I think all representatives of the ecb have told us they are looking through the rise and headline inflation, focusing on core, and they are unsatisfied with the fact that court is running around 1 and expectations on inflation are not that high, so if they then they conduct Monetary Policy, for instance, remove this idea that policy rates could go even lower. We learn in 2016 that lower rates hurt the banks. If you are a bank centric region might be euro area, hurting the banks is not exactly a good idea if you want to promote growth, so if they move rates up a little bit, or reduce the corridor, but do other things to give us more guidance or extend qe, i think that could be a good thing for markets. Anna did we definitively than in 2016 that negative rates are bad idea . Francesco i have, i surely have. [laughter] francesco i have learned also that reading and listening to different policy makers, how they change music, i mean, at the beginning of the year, up to probably march, april, negative rates were, you know, the best thing after sliced bread, but come the summer onwards, there has been a greater recognition of the damage of this does to the financial industry, so you know, japan artist the yield curve to generate more slow and we have seen pretty much the same happening in the euro area. Anna we had confirmation of german gdp data today, one of the stronger parts of the european economy. What do you make of the strength a coming uppean dat from germany and france and other parts of europe . Cant Strong Enough ecb take the foot off the pedal . Francesco it is a mapping between where policy rates should be and the incoming birth and inflation data, so these indicate for the first time in probably three to four years, rates would be slightly positive, so the direction of travel is surely upwards. I think the trick here, which will be very bullish for reflation trade that in europe is that the ecb, is going to retest what the model resist what the model say. Anna politics . Francesco partly for the politics, but i think more fundamentally, inflation, the inflation target is on a one touch option. They want inflation to remain at 2 , and we are still distant from that target. Anna thank you very much, francisco guys are really from. Old francisco gaz the fed expressed confidence it can take its time on raising rates. Questions remain over trumps fiscal plans. This is bloomberg. Anna welcome back. This is Bloomberg Markets, the european open. The Bloomberg Business flash. Sebastian barclays has posted Fourth Quarter, profits that miss estimates. Falling short of the 646 Million Pounds analysts estimated as the d costs. Ognize elon musk has said he still plans to deliver his massmarket electric sedan in july. The model three electric sedan remains on schedule and will reach production of about 5000 units per week by the end of the year. Reassurances on the part timing should ease concerns over whether the company can overcome its long history of product delays and the impending departure of cfo wheeler. Of theseoday running nissan handed over to a new ceo. He will take the mantle of president and ceo while his longtime boss focuses on revamping mitsubishi motors. Fomcsinutes from the latest meeting suggest the fed is set on a series of hikes this year with a vigilant eye on u. S. Economic it appeared one . Its are asking is how much Donald Trumps policies will support the fed hike outlook. The u. S. President meets with the ceo today to discuss new tax and trade policies and job creation. Francescos, garzarelli, cohead of Market Research at Goldman Sachs. What did you take away from it, esco . Francesco i think it is trump uncertainty. It almost feels like they see the equity market or expectations having been boosted by the election from what was promised, so let us call it the trade already in market, and they are waiting like we are in markets to see what he actually delivers, and all the incoming information has suggested lately that it will take a little bit longer to get the details of the tax plan and to see those policies then work their way into the numbers, so i think this is a juncture we are at and they have some time on their hands, but not a lot. Anna is march off the table for you . Francesco i do not think it is off the table. As you show on your screen there, there is a one in three chance anna 76 on the table. Francesco 36, exactly. ,t probably is a little bit personally, a little bit higher than that, probably a 5050, because we have payrolls, cpi out of that meeting, both of which could force their hand, so it would be interesting to see how the markets react to a fed march hike, because one option could be that we just reshuffle probabilities. We maintain, you know, the view that it is going to be 2. 5 or three this year, so they are not going to do it. The way i see it, if they do go in march, and we get, you know, on that French Election fork, a turn on the moderate side, than they have the option to strike again in june, and then to have the second half of the year. We could be looking at three hikes in 2017, which would be a surprise. Questionsee chinese take the fed in the past. Would european politics do that this year if we got unexpected results in the French Election, for example . On their radar . Francesco if there is nfci shock from europe into the u. S. , for sure. My sense is the magnitude of the shock of what we are seeing and what we were discussing earlier is not going to be big enough to fear the fed of course. Anna when you look at the taxation plans President Trump has, and what we know about plan werehere a tax generally and the border tax included in there, is there something that looks exciting to you about that or something that looks less so . I mean, what does a good outcome look like on the tax front . Francesco the border tax is exciting some people. Warm. Not super the probability of seeing this through is no higher than maybe one in three, it really top. Top. Ally it creates a lot of variance between winners and losers. Anna big exporters. Francesco precisely. That will basically create gridlock in parliament. Border taxof comes into play is to mitigate the blow to public finances from the tax cuts. Central case, how we think things will work out is mr. Trumps promise of 15 statutory tax rate will not go through. It will have something closer to 25 and a broadening of the tax base to pay for it. , thank yourancesco very much for your thoughts. Francesco garzarelli, cohead of Market Research at Goldman Sachs. Next, we speak to mexicos Deputy Energy minister about oil and trump. This is bloomberg. Anna welcome back. This is Bloomberg Markets, the european open. Central Bank Officials say they can take their time on raising rates as questions remain over trumps fiscal plan. Bonds and bonuses, barclays mrs. Analyst expectations barclays misses analyst expectations. Restructuring should and within months. A swift miss. Fourthquarter profits fall 45 weigh. Tive rates. E speak to the cfo, david cole good morning and welcome to Bloomberg Markets, the european open. I am anna edwards. Let us have a look at how we are shaping up across the European Equity space. Actually, we are exceeding expectations with those very slight move to the upside on the stoxx 600, up by a touch in europe, the general theme or mov mood of things. The cac up stronger than it was at the start of the trading day. One thing that is strongly higher this morning as the oil price, 54. 25. Secretary of and Homeland Security john kelly are in mexico today, speaking immigration and security. Mexicosddress with foreign relation minister. Though to speak about the impact of Trump Presidency on mexico and the oil industry at large, im very pleased to say we are joined by , so. Aldo Flores Quiroga thank you very much for coming into talk to us. A lot of conversation around ofc and i know you are one the countries that follows what opec is doing and in some cases fines up to what opec is doing and cutting back on production, so would you weigh in on your latest thoughts with this Production Cut . Process is going very well. Opec members have a high level of compliance with the agreement last november. Fairly good compliance from nonopec members. We have said from the very beginning that we are supporting stable markets, collaborating with producers and consumers to make sure that that is what happens. Anna if opec cuts, you sign up, too . Aldo we are in the process of natural decline in our production, incorporated into the business plan, so our contribution has been a managed natural decline of our production. Anna let us have about the upcoming block auctions we have as theco with that backdrop. Economic uncertainty in mexico in the wake of the trump election. Will the industry look to speed up investments in the oil sector in some of those block options . Is that something you are looking to . Aldo we come already from a very successful run of auctions that incorporated onshore fields. We are going to repeat that for 2017 and 2018. Hopefully, with more speed and surface included. Anna how much more quickly are you hoping to move . Aldo we already has scheduled three more rounds for june and july that already brings substantial substantially more month. More amounts. We are planning. Anna a successful deepwater will auction last year attracted some players in the deepwater space, big producers. Is there going to be another one . Is it going to happen this year and whereabouts . Francesco aldo aldo towards the end of the year like we did the last one and dissipation from the large energy companies. The usual suspects that Everybody Knows and is used to investing around the world. Anna when we look ahead in the 2018, there isy, the president ial elections taking place, there is the possibility we get a rather different government than the current administration. Have an impact, the possibility the administration changes significantly . Aldo here is the thing, the opening of mexico is enshrining the mexican constitution. This was a constitutional shift that guarantees this new framework and model and by the end of this year, we will be basically done with the opening of the full value Energy Sector from upstream and downstream. Anna no change in the politics could prevent that path . Aldo we are very much committed to implementing the reform. Anna into another administration, there is a risk . Aldo it may or may not change focus, but the truth and what matters is that the Legal Framework is there in the constitutional guarantees. The new institutions are being already set up, so we expect continuity. Anna issues on the refining gasolinet increased imports to the United States. Is there appetite from International Businesses to come in and install Refining Capacity to mexico . Aldo there is some appetite. Mexico is a very large market and we had complications that were temporary, circumstantial refining systems, and we expect production to come back up to where it was traditionally, but this does not mean we do not welcome new investments. We are receiving quite a number of expressions of interest to participate either in refining , what is the word, transportation, storage, distribution, the full new infrastructure that is required to be participating in the new mexican reality of the Energy Sector. Anna what is the scale of interest in International Companies refining and mexico . Aldo if you think of the full set of investments that are potentially going to be considered, we are talking about 16 billion of just infrastructure. You think of the cost of refineries, no new refineries necessarily being planned, but investments in existing refineries, maybe revamping them, those are significant investments and you can add them to what we have in committing investments for upstream, and that is close to 50 billion already. Guy anna some anna investors might be interested to know what your plans are around shale. There seems to be delays around the first ever shale field auction for mexico. Is that very much on the radar . When might we see that first auction . Is on the aldo it radar. We must develop new regulations, so it is safe to work in this field. One thing to keep in mind is that we just our opening mexicos Energy Sector after 80 years of it being closed, and that has required setting up new institutions and regulations. Those two are basically the upside we can begin thinking about that type of field. Anna we see a shale boom taking place north of the border, we . t you have got relationships with shale drillers in america that you are utilizing at the moment . Good yes, and it is a indication of the potential and mexico because those formations extended to mexico and mexico is already ranked among the depending on the district you look at top six, top four owners of these type of formations. Anna one thing i wanted to ask you about is the ongoing dispute between mexico and the plannings communities, to auctions onshore areas for oil exploration. Is this something you see being resolved soon, and will there be other similar cases . Aldo more than disputes, they are consultations. It is part of the process that is in the law that we must undertake those consultation that make sure that whatever investments are being made comply with Environmental Centers and definitely, they comply with the social life as we need to make sure the local communities are also part of this. Anna do you see a way through, will you be able to auction the blocks . Yet to check have out the consultations involved and we will see what the final decision is. Anna im in, donald trump just to wrap up the trumpation, donald relationships with mexico is making a lot of headlines. What are your biggest hopes for the kind of relationship mexico and the United States can have . Is nafta under reconsideration . Aldo with a relationship of Mutual Respect and very fruitful relationship. We had a very consummate tree trade relationship, corporations from many areas in different areas, security, a complement complementary relationship. We expect to continue having a fruitful relationship. Anna has there been any change day to day . Aldo not so far. Quiroga, aldo flores the Deputy Energy minister, joining us on the european open. Up next, barclays and brexit, hear what the ceo told us about the impact of britains e. U. The parts are on the u. K. Economy and on the business. This is bloomberg. Anna welcome back. This is the european open. Let us get the top stock stories this morning. Maritain it the members for us. Nejra starting with barclays, whose shares have risen. Fourthquarter profit missed estimates on a bonus deferral charge, and also, the bond trading revenue, that jump in that really trailing usp, but what analysts and investors seemed to be focusing on is the key capital ratio rising more than expected and of course, barclays ceo, you spoke to him earlier this morning, and he struck a positive tone about brexit when he spoke to bloomberg. Everyone is very encouraged with how the consumer has responded. Consumer spending is up quite a bit, actually. Consumer credit is up. Jes we dont think it has gone to a level that would generate any necessary concerns, but inflation is up, and we have to keep an eye on Consumer Confidence as that inflation number goes up, but if we can keep the confidence level and keep it going, i think we are in reasonably good shape. Nejra barclays shares have outperformed its u. K. Peers in terms of the recovery from the brexit low on june 27, so moving on to glencoe, overall commodity producers out of worst performers out of Industry Groups on the stoxx 600 fury glencore is one of the fuel rising. Adjusted net income, a beat for the fouryear adjusted a turnaround helped by higher Commodity Prices and strong trading results. Glencore said it is considering a special dividend this year and this bearing in mind, ok, glencore shares have actually doubled in the past year. Finally, im looking at the veolia. At the reaction seems to be more to the guidance of what it said for 2018 and 2019. That is what analysts are saying. Theinflation is among headwinds for 2017 and it said it does not plan significant acquisitions for now, but it may make acquisition of up to 400 Million Euros in the future. Sebastian Federal Reserve officials expressed confidence they can raise Interest Rates gradually. Latest meeting also shows a high a fairly soon may be appropriate to avoid the risks of an overheated economy. Policymakers meet again next month. Secretary Steve Mnuchin has said a strong dollar signal confidence in the American Economy. However, in an interview with ,he wall street journal they could have a not so positive effects. Suggestions clarify by donald trump that he prefers a weaker dollar. President donald trump is delaying until next week issuing a new version of his order restricting immigration and banning travel from the u. S. From seven predominantly muslim countries. Ordersaid the executive tailored to would be released this week. Cuts,gs jump 18 on cost recurring operating income climbing and beating analyst estimates. South korea has pushed back against u. S. Pressure over its Foreign Exchange policy. ,peaking at the Central Bank Governor lee said the nation only asked to check extreme swings in the won. Both with regards to korea and also its largest trading partner, china. Announced the discovery of seven earthlike planets which could hold life in the constellation aquarius, clustered around a dim for star in the dwarf star in the socalled habitable zone. 2600 journalists and analysts in more than 120 countries, this is bloomberg. Anna. Zone, but note habitable enough for me, thank you very much. Remember, if you are a bloomberg customer, you can watch the show using tv and getting the live video stream. You can message the producers of the show directly using the ib function of the bottom of the screen. You can see me discussing the mexican oil story just a few minutes ago. Program, a fall in profit this morning. We will speak to the companys cfo. That is next. This is bloomberg. Anna welcome back. This is Bloomberg Markets, the european open. Swiss re has presented natural catastrophes weighed on earnings. Insurer bylargest premiums announced a Dividend Increase and Share Buyback program of up to one billion swiss francs. The companys cfo david cole joins us now on the phone from zurich to a good to have you on the program. Thank you for joining us. Tell us about the profit outlook for the business with the numbers you have reported today. The drop in profit, miss against estimates and the prison environment, what is your estimate . David your reference to q4 results which were impacted by a catastrophe loss, a windstorm in the u. S. An earthquake in new zealand, that is part of what we do in our business, we absorb that type of volatility. That is the purpose for a company like swiss re to exist, to support its clients in being able to recover from those types of events. In terms of forwardlooking, no doubt pricing pressure has continued across the property chain, but we remain disciplined in our underwriting. It is one of the reasons we have pulled back capacity from the market with the january renewals, so if we had a very mix,diversified business above pnc, it also life and health activities, we remain a strong competitor in the terms of ourn ability to offer very taylor, highly valued solutions advice, insights to our customers. I think we remain very wellpositioned. Anna and the pressure on pnc pricing, you mentioned, and one of the solutions to that is being around the products idea. How can the tailored products boost profits . Boost tailored products profit by actually adding incremental value to our clients, which they are willing to compensate us for, and an area which is not commoditized. Tohas to do with our ability offer tailored insights to support customers in their longterm growth journeys and also, our ability to provide very longterm security given our very Strong Financial position to maintain an excellent balance sheet, capital levels, and our customers appreciate that. Anna i know you have done a sizable return of cash to shareholders today, but m a has been something that the company has been keeping its eye on. Why have they decided to return the cash today and not go out and do more deals . David just as i was referring to on the underwriting side, it is important to maintain discipline on the potential m a side through within the reinsurance base rank, there is not a need for us to be actively pursuing consolidation types of positions. We have a strong position. Some of our other Business Segments, Corporate Solutions, life capital acquisitions, they are very much a part of what we do from time to time, but also it is important to maintain discipline. If you look at our result over the course of 2016, we printed three point 3. 6 profit. We continue to invest in the business, we think it is important to return excess capital to our shareholders and hence, we have the increased dividend by 5 as well as the request to the shareholders coming up for a reauthorization of a one billion Share Repurchase program. Anna what are you looking for on the m a front, david . Are you in talks with anyone at the moment . Not refer tod any talks. We look for opposition that would help accelerate the achievement of our strategies, the strategy we have communicated to each of our Business Segments and of course, acquisitions need to meet our hurdles. That is discipline i would like to refer to. Over the last several years, we have made a number of acquisitions in the Corporate Solutions space. Phil. Ore recently, in in brazil. We acquire the guardian business and executed it during the course of 2016. Those types of acquisitions i think r jack lew the type of thing we will continue to look in the market for, think we will continue to look in the market for. Anna when you look at the way you invest the money you are managing, david, have you seen any change in your investment and Asset Allocation strategy as a result of trumps victory in the United States . Has that changed things for you . David we are a provider of longterm production and we invest on the longterm basis. We want to be a very prudent investor, very comfortable with our overall asset mix. You referred to elections in the u. S. This past november. There are other elections last year as well as a couple of important elections coming up this year. Each has brought a certain degree of uncertainty. We cannot predict the outcome, but we can position ourselves very well to be able to respond at respond agile respond agiley. We will have to see how they pan out in terms of policies that get implement it and changes in the rules. Anna david cole, cfo of swiss re. Breaking news over in brazil. The producer and seller of iron ore pellet manganese, gold, nickel, etc. , getting the corporate report for the Fourth Quarter from this company. Net income, 525 million versus a loss of 8. 5 7 billion a year ago. In mining business whose fortunes are turning more favorably as we see more robust pricing on some of those commodities coming through. A big day for barclays. We are keeping an eye on the share prices of barclays as it moves higher. This is bloomberg. Francine how soon is fairly soon . The latest fed minutes signal cautious confidence, but the markets do not see a move in march. As theing hurts barclays misses expectations on Fourth Quarter profits. The ceo says the Restructuring Plan is almost complete. We look forward to attending the restructure of barclays that has been going on for years, in a matter of months. I think shareholders will respond well. Francine is invitation the sincerest flattery . Marine le pen says she wa