Equities continue to rally, adding to their best start to year since 2006. Our european stocks going to follow . The u. S. Looks to open up pretty good. Head of inflation data at 9 30. The bank of england suggests u. K. Productivity could pick up quicker than expected. Can we still count on two rate hikes over the next three years . Matt less than half an hour ofy from the european open equities trading. Lets look at where futures are. Pointing to hire opens across the continent. Future are upc about. 25 . You mentioned s p, the many contracts up about one third of a percent and a percent missed price in kate indicates have a percent higher in the u. S. Markets like equity will do better after the Martin Luther king holiday. I have a threeday chart of the terminal andin my the flat line, no trading yesterday for Martin Luther king day. Yield have a spike in the on the friday going into the weekend. It came back down and now we see yields lower today, this morning trading down to 2. 54 . It doesnt look like bondmagged on came to how does the gmm look . Guy we will ignore the equity market apart from australia trading down because of the commodities, but i do want to highlight the dollar is trading up by. 2 . That is something to talk about with mark cudmore very shortly. He is increasingly convinced of the dollar call. The yen is trading lower and the euro down by around. 2 , trading 122 point 28. We get in flash and data around the inflation data around the continent later today. Lets look at how things are in the commodities space. Is trading lower, iron or is trading lower, down boy 1. 26 . A sharply negative call on iron ore. It believes it could be collapsing soon. Be talking to our Commodities Team to tell you what is going on there and brent, back below 70 a barrel. Lets get a first word news update with Juliette Saly. Brent crude has gone through 70 for the first time in three years as hedge funds increase their bullish bets on oil to the highest in more than a decade. The view that opec and its partners will and their supply cut surly is spreading, which citigroup and jpmorgan all predict a wind down will start through the middle of the year. A government is proposing biggest domestic spending spree in 2012. In last ran according to three people, the planin is considering a that will raise expenditure on transporter roads by 30 over the next three years and provide a boost of about 20 to spending on health care and education. Plan that will raise expenditure on xi jinping has told donald trump the countries should settle trade issues by opening up markets and cooperation. According to stay run chinas television, he made the comments during a phone conversation. He also called for joint efforts on the resumption of talks on the korean peninsula. Chinas central bank has boosted injections projections for the most in two months. The pboc pump in a net 42 more than agreements offset maturities, around 93 billion is set to leave the Financial System. Of the irisher rock band the cranberries has died at 46. She was pronounced dead in london at a hotel where she traveled for a recording session. Police are treating the death as unexplained. She sold more than 40 Million Worldwide and was best known for singles linger and zombie. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks very much. The dollar halted its decline this morning, but bloombergs index has made the greenback the worst performing currency in the last year. Is this dollar weakness distorting our view of the markets . Cudmore, bloomberg mliv strategist joining us from singapore. The reason you say the dollar weakness is distorting our view of the market is mainly because commodities are all priced in dollars, so the gains we think we see in oil and the reason you sayothers rg as you are holding them in other currencies. Mark absolutely, that is the largest part of it but not the only thing. Certainly in commodities prices, in oils a real rally markets. That is valid. The bloomberg Commodity Index is unchanged in many security metrics. It is not running away in dollar terms. When you look at agricultural prices, which are collapsing in dollar terms and local currency terms, are slumping. The multiyear lows across many currencies and this is negative for inflation. Also in currency markets, we have heard the narrative about sterling breaking to the top side, but the pound has not broken 2017 highs on the trade weighted index, but against the dollar. Also in the yen, we are hearing about yen strength, when the yen is the weakest currency in the last month apart from the dollar. The yen is a weak currency and we are hearing the negative of yen strength. There is a lot of strange narrative being misled by the size of the dollar weakness. I buy the dollar if the government shuts down friday in washington . I dont want to recommend an exact trade on this, but if we do get a dollar shut down, there is a chance of risk aversion, an extreme risk aversion, we still see deleveraging means a flow back into dollars. It is slowly being eroded at the margin, the fact is it will be the supreme one for many years to come. That means when there is risk aversion, there is a sell down of assets and that means retrenching to the worlds reserve currency, which means a flow into dollars and treasuries are still the ultimate safe haven in liquidity. If we get extreme risk aversion, there will be a flow into the dollar. What happens on friday is hard to know. This whole Government Shutdown tends to be a slow moving situation. It was a risk i worried about at the end of last year, it didnt transpire. Indoesnt suddenly happen one moment. There are soft deadlines being drawn out, but it will be more of a negative the longer it takes to get resolved. Ectr if i look at the screen on my bloomberg and put imports in the dropdown box, i can see china is the biggest trading partner from whom we buy, but after that, mexico, canada, japan the dollar is getting weaker, it is getting more expensive to buy this stuff. Is that a problem for the exporters in other countries, especially in emerging markets . Yes, the dollar weakness we are seeing is going to help the inflation story in the u. S. The combination of Higher Commodity Prices and a weaker dollar making prices more expensive will raise inflation pressures in the u. S. You might see the fed accelerate this cycle. We are getting deflationary pressures elsewhere as the flip side. Can bel Economic Impact negative for emerging markets if this keeps sustaining. It doesnt feed her quickly, so we need to see sustained dollar weakness. Will the trend continue . The u. S. Consumer is the main buyer of goods in the world. Marginal consumer of most emergingmarket exported goods, so when the u. S. Consumer though itakened, even is an easing of financial conditions and helps financial markets. We go back to this emergence financialaring markets and real economies that arent soaring to the same level. You. Mark, thank mark cudmore from the mliv team. We do seem to have a little in theo taunt detente market. O to mliv go up next, iron ore selloff, barclays critics the end of the bull market in iron ore as oil reaches threeyear highs. Agriculturalabout commodities, as well. That is next. This is bloomberg. Looking at a picture of our brandnew European Headquarters in london on Queen Victoria street. T ofing fea architectural genius. 70 minutes to go till trade opens up in markets. It is looking positive in futures here and in the u. S. After gains in asia overnight. I want to get the national and global headlines. Lets go to Juliette Saly with the business flash. Book ae bps expects to posttax operating charge of 1. 7 billion in the fourth theter of 2017 for remaining Business Economic loss and other claims associated with the Court SupervisedSettlement Program and established as part of the deepwater horizon class action settlement. They say the cash impact is expected to be spread over several years. Tencent back chinese start up looking to raise funds at about a 17 billiard valuation as it advanced expands its Video Streaming Service to southeast asia. The platform in the same vein as instagram is targeting around 1. 7 billion of financing, almost six times the level it managed in march. A representative couldnt immediately comment. Slumped to the lowest level since december as cryptocurrencies continue the selloff amid rising scrutiny from global regulators. Began which first targeting the industry last year, is escalating its clampdown on cryptocurrency trading, targeting Online Platforms and mobile platforms that offer exchange services. That is your business flash. Guy lets talk about the commodities space. It is one of the big subject. Imminentre selloff is according to barclays, with prices ready to collapse to 50 a ton by june. That is after rio tinto confirmed its fairly flat outlook for iron ore in the year ahead. Meanwhile, yesterday, brent crude closed above 70 a barrel for the first time in three years. Will kennedy. , good morning. Lets start with brent. It closed above 70 a barrel in dollars. Been on an upper trajectory of late. How much of it is down to the dollar and if not, what else is going on . Crude prices have a lot of tailwinds, one of them is the dollar. The surprising oil has been how quickly demand has been growing. We are adding more than 1. 5 billion barrels a day and for all the talk of the demand, demand is seems to be growing and that is helping opec in its challenge to bring down inventories but on the supply side, opec has shown a degree of discipline. This is real. There is a real tightening supply demand balance in the world. U. S. ,this morning in the lori inventories are being targeted by saudi arabia, the surplus is almost entirely gone. For all the shale production, they have managed to drain stock piles. Oil today is much more valuable than a year oil a year from now and that is a reversal from the situation six months ago and shows a tightness in the market. Matt why is demand rising like this . Arent we all switching to electric cars and using hybrids . Is it industrial . Where is the demand coming from . Will we are going to drive electric cars, but not yet, it seems. It is being driven by auto sales around the world, people driving more and it is also being driven very much by the strength of the industrial rebound. Diesel that goes into factories, forklift trucks, diggers, that kind of things. A broadbased economy has been good for oil across chemicals, diesel and construction to gasoline in cars. Guy ive got the recount from the United States, ticking higher. May pentup demand still to come through. The white line is the recount, the other is the reserve data. The United States total Oil Production data. Lets talk about the white line. About the white line. If that starts to go up and sharply, how much will that undermine the case for 70 a barrel on brent . Will this is clearly the biggest risk to prices and we have always talked about the idea of a shale cap. Most people have that cap on i think 70, people by surprise but there is no doubt the shale industry is likely to cap twice. As we get out of the winter, people will keep drilling more and that will it elicit a flood of shale oil from oklahoma and colorado. Ofhave data at the beginning the year from the Energy Intelligence agency in the u. S. Which said u. S. Production will reach 10 Million Barrels in 10 Million Barrels a month, that shows the growth will not go away. Ive got a great chart from the bloomberg. Btv 9138. An type g versuss oil demand supply. The total world demand in white has come up pretty strongly and 17, but you can see the supply is making a comeback, as well. Guys point that the rig count is rising, that shale guys are starting to bruce oil produce oil does opec need to worry about this and what can they do about it . And russia will have a concern that they dont overheat the oil market. I dont think many people in opec want prices to go toward 80 a barrel. That is probably too much, but it is worth remembering that for all the supply coming out of the u. S. , there are other places where supply is constrained. Venezuela, we have seen false and production and they can even put oil backed into the market if they wanted to if opec headed up its deal. There are places where a lack of investment means that the oil that has come out of the market because of natural decline and it is in being replaced. Thinks ironarclays ore will collapse. There are a lot of infantrys at chinese ports right now. Closed a lot of factories over the winter to clean up the environment and his argument is they will open some of those steel mills in the spring, which will mean the profitability we have seen in the chinese Steel Industry will collapse and it will be bearish iron ore prices and he is finally pessimistic about the strength of the chinese economy. This is an interesting concern i saw pop up in the iron ore stories. The chinese economy has started to worry people. Why is that . What specifically are we seeing in the chinese economy that is weighing on commodities prices . Will it is not weighing on oil, but demand for oil is more broadly based globally than commodities. As we have said in the past, china is the majority of iron ore demand in the world, slightly more than half of copper demand. If you see weakness in the chinese economy, that will show much more quickly through on metal and iron ore than on oil. Guy everyone is getting excited about the impact commodities will have, but there is a bit big basket not going up. Wheat was a story the last few days, but i have the agriculture index up here. And youeen going down, wonder what will happen next. Will it has, and we have had a strong commodities rally pretty broadbased since last year and wheat has missed out. The story of wheat is that we have seen a string of really strong global harvests. Wheat supply has been booming in the u. S. And in russia, in particular. Russia has emerged as a global wheat superpower. It is the worlds biggest exporter and production keeps rising harvest after harvest. We saw a downtick this week because we had the department of agriculture in washingtons report, a snapshot of global agriculture, and it pointed to two things. In the winter, wheat harvest in the spring is likely to be bigger than anyone forecast and secondly, russian exports are likely to keep growing. Matt well, thank you very much. Will kennedy, our managing editor for commodities. Were talking about commodities now. I want to switch over to talk about equities, the why will switch to one that is based in this sector because it will be important to watch. Team,ur equities Alexander George esca joins us. I want to talk about bp taking a horizonn this deepwater claims, the closure of deepwater horizon what is the story and what will the stock action look like globally . This was expected, but this is the first time we actually get the amount. Figure, 1. 7 billion in the Fourth Quarter. The cfo commented in the statement that this is not going to be a strain on resources for the company, it is fully manageable within the companys existing structure and the cash is going to be spread over multiple years. It shouldnt we dont know how investors are going to take this. , we will see what they think of that, but it is manageable up according to the company. Is one bright spot in the real estate space, savos. They said their 2017 results are better than expected and stronger end of year then anticipated with heavy commercial volumes in the u k and other european and asian markets. That is a bright spot, especially at a time when there is so much uncertainty hanging over the real estate market. Is retiring,eo being replaced by another highranking executive, so there is not going to be a gap there. , pretax profits beats estimates. This could move in the beginning of the session. What do you expect from jp sports . Aleksandra that is expected to sales over the Christmas Season were particularly bright. Some hope for retailers there. A presence in the u. K. , as well so that will be interesting to see. Guy alex, thank you very much. , joining us from our stocks team. You can check out all of the fantastic news every morning. You can find that on your bloomberg. Coming up, the market open. Futures are pointing to a recent reasonably positive start. The u. S. Is called sharply higher, the doubt by up by. 1 . This is bloomberg. Guy minutes till the start of cash trading in europe. What kind of a session can we anticipate . U. S. Comes back today, so that is a factor. Asia had a strong session. Im not sure that will translate in europe. The nikkei was up by 1 . 1. 7 ,ng kong market up by being led by chinese blue chips. Barrel onbelow 70 a the brent contract. Keep an eye on the commodities story in the open in europe. It will be a feature on the oil story and the bp story and the rio story and the barclays call on iron ore. Eurodollar the other story. Theerns surrounding formation of a german government. That could weigh on the euro. Just to show you the fair values in europe, broadly positive. U. S. Ones lit a little more positive. Lets get into the opening and figure out what is happening. Which markets will be doing well in europe . At 7771. Is trading story about the brexit line being harder. And smi are expected to open higher. The ftse has gone negative. The ibex is opening a similar amount. Lets take you to the sector story. The financials are a little mixed. Numbers a little later. We will watch them carefully. Industrials look pretty positive, but i want to drier i did the commodities space. Draw your eye to the commodities space. Softening up and slightly hotter areas within the material space. The iron ore story, the story surrounding the commodities space more broadly. That will be a factor into the story there. What do the names look like this morning . Right now, we have more than 300 winners for about 170 losers. If you look at the mr page on the stoxx 600, this gives you the biggest percentage gainers and losers. It wont show you the biggest names that are adding and subtracting points from the stoxx 600, but