The euro area is expected to confirm growth at a 10 year high this morning. How long can the ecb continue its expansionary policy . Buy softwares to for around 2. 4 billion. It seeks to bolster its Cloud Business. As they deliver fourthquarter earnings, the ceo gives us his first view. Good morning, matt. Matt we are less than half an hour from the start of european trading. Futures, sapropean shares are indicated to trade down, but maybe that doesnt mean much in a market that is indicated to trade down as well. Dax futures are down, as our ftse futures. It looks like we could see a negative open. S p are indicated to open down, as well. The cash missed price is looking for an even lower open. Look at bunds in my terminal, a threeday chart. Sell stocks and have to buy something. It looks they are buying like and are buying german bunds pushing the yield down to less than 70 basis points. 10 year bonds trading at 69 basis points and has come up substantially from days ago but is heading back down. Minutes if in 30 this is what the market wants to do, sell stocks and buy bonds. Right now, they are not buying treasuries. Those are still at 2. 17 . Interesting to find out whether or not we continue to see the equity performance going south, whether that puts some floor under the bond market. We are getting a lot of data out of the eurozone this morning. If you are long these markets, pretty much you are feeling at this morning. Canada trading lower, aussie overnight down by. 9 , the nikkei down by 1. 43, the yen is pretty well bid. Show you a great chart later. The market is long s p at the moment. Aussie is on offer, british pound, that is on offer. The safe havens are in,. L. Lets show you the commodities space and bond space. There is the bond story, yields picking up. Crude trading off, brent crude trading off, gold is an interesting 1 trading down, as well. We have seen a move higher in the vix. I dont think we are providing the selffulfilling spinning story the market needs to get and will get if we continue to see that moving higher. At the moment, gold is on offer with the bulk of the rest of the commodity complex. Lets get a first word update with Juliette Saly. The housein the u. S. , of Representatives Committee has voted to seek clearance from the white house to release a classified republican memo. It alleges bias in such government surveillance of people so rounding President Trump. Surrounding President Trump. People say the Justice Department pursued possible investigation under false pretenses. Have crossed a regrettable line in this committee where the for the first time in the 10 years i have been on the committee, there was a vote to declassification process and compromise sources and methods. Juliette the u. S. Treasury has released a Russian Oligarch with ties to vladimir putin. 100 14 senior political figures and 96 oligarchs in including several key figures. While those named wont face punitive measures, the inclusion may dissuade banks and other institutions in the u. S. And europe from doing business with them. Washington is pushing for a breakthrough on its catchiest nafta proposals within a month of the newragility mood of optimism after canada and mexico came forward with fresh ideas. Trade representative of the u. S. Told reporters he is hoping to make progress before the next round of negotiations. The three parties are due to meet in mexico later this month. Oppositionhe u. K. Labor party has told a handful of Business Executives he would rule nothing out on brexit accept a second referendum. Jeremy corbyn held a private meeting that lasted around an hour at his offices yesterday evening. Five people from the biggest lobbies were there. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more. Han 120 countries this is bloomberg. Matt . Juliette, thank you for that carried the selloff in treasuries has pushed 10 year yields to their highest level in nearly four years, but rising yields are undercutting the stocks rally, sending the ss s p 500 futures and major indexes down. Joining us from singapore, mark mliv strategist. Give me an explanation of why rising yields would hurt stocks. I would think if people are selling ons, they would have extra money to buy equities and if they sell equities, it would mean they are investing in bonds. It looks like neither is happening. But inot at the moment, dont think the higher yield is the main driver of equity weakness at the moment. We have had a massive amount of risk events in the calendar. The state of the union, the jobs report and there has been a run in equities. It makes sense to take money off the table. The monthend rebalancing flows are meant to see a shift into bonds and away from equities. Going to your question of why would higher yields crimp equities, it means a tightening of monetary policy. It is more expensive to take and borrow money, it is a tightening of monetary conditions and that is not good for risk assets. At the moment, we have seen yields rise 87 basis points in less than five months. Why is it suddenly mattering in the last few days . I dont know if it is a good story i think it is the calendar of risk events. Guy this is a [bleep] . Blip . Dont know but i that it isnt a blip that lasts a few days. We can get more volatility now, but it is important to emphasize again, the three pillars are stronger than ever. Growth continues to get upgraded, the earnings season has been great. There is an abundance of liquidity out there. The overall bull market inequities looks strong. That doesnt mean we cant have a multiday pullback. Finished on as p 2600 handle in 2017. Even if we pulled back a few percent, it would still be an amazing january. There is no reason to think that just because there is a dip, it can be a sizable construct correction, but structurally the environment remains good for equities and 2018. Matt but if it turns out that people are spooked and the market does get risk averse and wants to sell equities and other risk assets, where do you see the safe haven trade . Is it in treasuries . Do we start to see people buying treasuries is it in gold . Is it the yen, which has been stronger against the dollar already recently . Out of those three, treasuries will be the one that appeals. Robert yield is being offered at treasuries at the moment. It is more appealing at the s p. Spike up in treasury yields make them appealing if there is proper risk aversion. It is important to note that so far, even though we have seen weakness across risk ask it risk assets, there has been no sign of risk aversion. At some point, if this goes a bit further, i would expect to see a little stock loss price action where you see gapping moves where people shortterm traders. At that point, you will see a flow into treasuries. Guy always a pleasure. Mark cudmore from the mliv team. You can follow mark and the team on your Bloomberg Tom mliv. s ceo andpeak to sap asked why he is spending 2. 4 billion dollars to boost s. A. T. s Cloud Business. That conversation is next. This is bloomberg. Welcome back to the European Market open. 18 minutes till the start of cash trading. Lets get a business flash for your top headlines with Juliette Saly in hong kong. Writers is in advanced talks to sell a stake in its risk business which accounted for more than half of its annual revenue in 2016. The unit provides a range of offerings to Financial Market professionals with 6. 1 billion in annual sales. Reported it is in talks to buy 55 of the business for more than 17 billion. A spokesman from blackstone declined to comment. Bloomberg lp competes with reuters. Hna has told creditors it is facing a First Quarter shortfall of 2. 4 billion in the chinese conglomerates ability. According to people with knowledge, the funding gap was last financial details week. Hnas representatives declined to respond. Dubais emirates has confirmed it is in talks with fiber bank to acquire the turkish unit. 99 , rosewhich held as much as 20 in istanbul, the highest in three years. According to people familiar, the moscowbased lender has held discussions with other gulfbased lenders. Billionaire michael dell is planning to create a Corporate Structure that would help his ampanies better manage massive debt load. Ae favored option aside from Public Offering for dell is combining the businesses and shifting del potro debt onto the other balance sheet. Allow Free Cash Flow to be used to pay out some of the debt. Representatives from both companies inclined to comment. Daniel pintonamed and gordon smith as copresident s, positioning them as front runners to succeed the ceo jamie dimon. They will take the president role from dimon, who plans to stay in the top job at the u. S. Lender for about five more years. That is your Bloomberg Business flash. Juliette, thank you. We are 15 minutes from the start of european cash trading. Lets talk about what equities we should be focusing on. Joining us from our Equities Team, kathleen. A big focus on tech this morning. We will be talking with Bill Mcdermott shortly, ericsson another one to watch. We have a higher state taken in ericsson and fabian is known to push through aggressive measures if performance isnt satisfactory. We will certainly see what kind of results they will come up with later. Talking about a 20 upside. Bullish view kasper a bullish view. Ask sorry, i want to weekly about swatch. We have a couple stocks indicated open higher him is one. What is the story there . Kasper it has been doing well. Taking massive marketshare. Competition some from apple. Otherwise, food stocks are doing well. Hello fresh meal deliveries doing well. Higher revenue than expected. Dominos pizza, a u. K. Franchise doing fairly well. We have some stocks that may be pressurehat general that we may be seeing from the higher bond yields and all of that. Guy the market is called sharply lower this morning. Names,k at individual but the tide flowing down from european equities will be fairly strong. What is your sense what is your sense of what is going on in the european stock space heading into these numbers . Kasper like you said, there is a broad push lower. We have seen that in the u. S. , and stocksyields have been doing fairly well. We may see a slight correction. Whether it is the start of something bigger remains to be seen. Sper from our stocks team, thank you. You can get the latest stock stories from our Equities Team by going to first go on your bloomberg. You can also subscribe to that with the mobile app. Europes largest Software Firm just got a little bigger. Has agreed to buy Callidus Software for 2. 4 billion to bolster its cloudbased business. New cloud bookings grew by almost a third at constant currencies. Joining us from waldorf is bill. Cdermott, the ceo of sap good morning. Let me first ask you about this acquisition. I remember covering sap as a young reporter 17 years ago and at the time, acquisitions were a massive part of the strategy. Is this a come back to that old waldorfbased company . Well, you are still a young reporter. No, it isnt. We havent done a deal in three and half years, but this one was too good to pass up. This is really a company that helps us define this customer driven growth revolution. Every ceo wants to be in touch with their consumer. They want to protect the privacy of that consumer. Themwant to interface with in any channel on any device, and then they want their sales force to take a lead all the way through to the collection of money and the incentives that get paid out to the sales professional and any channel they are operating in. This completes us, in a sense in the category as the market leader, calidas fills an important space and it will just help us take over. Bill, good morning. The cloud bookings look really strong. Can you maintain this kind of momentum . Thank you very much, guy. It has been a fantastic run. As you know, we have almost 8 billion in cloud assets between the revenue and the deferred revenue. It is a really big as this and we have done this only in the last eight years. Continueoday we would to grow our Cloud Business at through 2020, when i reiterated our longterm guidance. The companys firing on all cylinders. If you take cloud come a software and cloud, the operating income, we are the only company within our space with the trifecta of those and operating growth also roaring in double digits. So yes, we can and we will continue this. You about, let me ask the currency headwinds you face. From anoking at a note , as do with a buy on sap 23 of the 34 countries that companies that cover you. They said it was more pronounced than they had modeled. Does the strength of the euro concern you right now . It wasntuld prefer as strong, for sure. Yes, there is a strong euro and that does put headwinds on us from a currency perspective, but as it relates to the operations and what we can do to run the we are still blowing through our goals in spite of the headwind on the currency. So yeah, i definitely would prefer if the currency was a little less strong, but what i am excited about we are the only company in our space right ,ow that is gdp are certified that is this whole global data arrive at sea. We have our consumer, we have the board room and that digital realtime enterprise connected to the back room on an endtoend basis. I davos last week, every ceo talked to is feeling good about the economy at large and want to run their business simple. Take out the waste, take out the nonsense, give me an end to end view on my consumer to my product and help me win. That is what we do. In any currency environment, in any environment, in about 25 industries in 190 countries, sap will win. Notebill, the analysts that matt is referring to talks about weakened license momentum. Is that a blip . No. reality is, we have changed the Business Model to a more predictable cloudbased model. Now, 62 percent of our revenues are completely predictable when we start the year. Soon, they will be up to 75 . Areave transitioned we in 2018, more of the revenues of sap will be in the cloud than any place else. We have also told the Capital Markets today, the momentum climb on the margin now goes in full force. You have a company that is highly predictable. It is cloudbased, and the margins are climbing. That is what we wanted. As it relates to the core license, we are still growing. We are growing that core license had a couple of Percentage Points when everyone else in our peer group is in doubledigit declines, so we are kind of giving you the best of all worlds. You can deploy the software how you like. Pervasivelearly the computing theme of the 21st century, that is why we grabbed a hold of it and our core continues to grow unlike anyone else in the industry. We are where we want to be right now. Itt you mentioned davos, believe you had a lunch or dinner with President Trump why do you wear their while you were there. You are in a great position to talk about Capital Investments that businesses make and the president has said his tax hasrm his tax cut bill given business the confidence and capital that they need to start making investments. Do you see that happening . Do you think we will see more companies spend more money to improve businesses as a result . Bill absolutely. I think President Trumps tax plan has been extremely well received. I was at a dinner, as you mentioned, with 15 other very Large Companies ceos, they were all my customers. They were all talking about their investment thesis and how they are increasing it. They are increasing jobs, manufacturing, output. The Global Economy and the theme at davos was all about collaboration in a fractured world, but clearly, there was not a single ceo i talked to that wasnt feeling good about the economic momentum. I started my week with president prime in france, met minister trudeau, benjamin netanyahu, Prime Minister modi and everyone of them, including President Trump of the united states, was bullish overall on the Global Economy and the ceos are feeling very good right now. We are in a good investment ballpark, and i particularly think 2018 will be the year for investing in jobs, in manufacturing and growth. Bill, a pleasure to speak with you. Thank you for your time. ,aps ceo Bill Mcdermott congratulations on the acquisition. I want to flag something that will happening soon. Cap text is a lender in south africa. Capitec has been a strong share performer. There is a fund called viceroy which has released a report this morning into what it believes and this is not backed by our there are in thisant flaws business. We will come back to this report and talk about it in a great deal of detail later on. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Guy one minute to the start of cash trading this Tuesday Morning in europe. We expect weakness for european equities. Eurodollar trading at 123. 53. We have seen interesting action in the bond markets. It is interesting to talk about monthend, the nikkei trading down. The yen is one of the few areas the market is hiding out in. Some 70 oning down the brent contract. S p futures point to a negative open a little later on wall street. Lets see with a fair valuation looks like. 6 7 . London down by. 5 . Individual names may get caught up in this