Welcome to Bloomberg Markets the european open. Im matt miller. Cash trade is less than 30 minutes away. Trump trades antagonism for bipartisan appeal in his first state of the union address, but his opponents find little reason to warm to his vision. What does this mean for his big Spending Plans . And under pressure. Pushing down on may. The u. K. Prime minister tells rebels back home she is not a quitter as she tries to drum up trade in china. Plus, brazil keeps giving for banco santander. Our interview with the chairman in less than an hour. We are less than 30 minutes away from the european open. Take a look first off, at the futures. Drop in u. S. Stocks, we saw a recovery in asian stocks and it looks like this could be the end of the global drought. We do see the ftse futures down, although only just fractionally and use the gains in dax c futures and cac futures. Not quite as tech heavy as the u. S. Stocks got hit the hardest. Lets look at the gmm this morning. As far as the big moves in indexes, you can see the new zealand index was up 1. 7 . There was a big gain in some asian indexes overnight. Especially those that were not super tech heavy were up. You see drops in luxembourg and canada. But these are probably closed markets. The rupee was a gainer overnight. The taiwan dollar, a big gainer. And the new Zealand Dollar you see as well. Some big moves on the gmm. Thats really going to be the story of the day. What is going to happen to equity indexes after the global route we saw from the u. S. Monday and tuesday. It looks to be over on a wednesday in europe. Look at the bloomberg first word news with juliette saly. U. S. President donald trump his first state of the union speech, telling congress and the rest of the world that this is a new american moment, in contrast with polling that shows most americans find him divisive. He also hailed the tax cuts as helping the u. S. Compete globally. President trump we slashed the business tax rate from 35 all the way down to 21 . So American Companies can compete and win against any one else anywhere in the world. Hasette theresa may landed in china with a message to rebels back home who want to oust her. She will not quit. She faces questioning from her facesship she questioning about her leadership from reporters on the plane. When asking if she would fight any formal challenge to her leadership, she dismissed the idea as a hypothetical situation. Chinas official factory gauge has called to an eightmonth low in january, 51. 3, compared with a 51. 6 forecast in the Bloomberg Economist survey. That is as efforts to reduce pollution dragged on activity. The Prime Minister has said he expect the nations economy to turn a corner by 2020. His administration is facing a wave of protests over Living Standards which have been slow to improve after the arab spring revolution. He says the government is working to reduce spending, revive exports and reduce social measures to make the concern of ostias dirt antiausterity demonstrators. [indiscernible] to create jobs, that is the number one challenge for us. Juliette global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Matt thank you for that. Traders seemed to like what they did not hear from President Trumps state of the union address, no mention of the strong dollar mantra, sending the greenback into retreat. Joining us from singapore is mark cudmore, bloomberg mliv strategist. Let me ask your take on trumps state of the union address. It was not quite as devices as you might have expected from this president. Is that a load off of traders shoulders today . Mark absolutely. The big takeaway from markets is that it provided some relief that he did not roil markets. This president is known for causing drama. It is very rare that he passes by without letting a moment for the media to height up what he said. Today the novelty was that there was no novelty. The issues,ided whether it was infrastructure. For the threat on trade, which might have been a negative. He did not say anything too worrying, and that will lift the gloom there from yesterdays price action. Matt we do see further dollar weakness today. Against a number of currencies. The yen stronger, the euro stronger and the pound stronger. What is going to stop this dollar drop . They seethe moment, this overriding sentiment. At some point these things do correct. Turn around hard to at the moment. The markets have dismissed the fact that u. S. Yields have rallied a long way in the last few months. Short and yields have rallied by 78 to 88 basis point. Inflation has not picked up that much at all. Overall, it has been positive and u. S. Yields are looking higher than most of the 10. Most of the g10. This is the market not focused on fundamentals. It will only turn around when the market gets too stretched, too bearish and at the moment, positioning is not overly stretched. Matt how much more upside could we see instead of a dollar weakness story, we could see some Pound Strength here. We could see further euro strength. How much does the other side of the trade have to do with dollar weakness . Been veryink that has important to some extent, that it has supported the story. The dollar weakness has been the main theme in fx. There has been some yen and euro strength. The yen strength seems particularly strange given today we saw the doj really emphasize that they are not planning to tighten policy anytime since. You had the doj governor and Deputy Governor saying the same message, that they will persist with easing and you had the boj increasing the bond purchases for the First Time Since july. They are committed to easing and yet, the fx market seems to be ignoring them. They might regret that eventually, but not at the moment. Same with the euro trade. Given how long the market is, you have to think it is vulnerable to correction at some point. What market do you mentioned that could persist a bit further . The sterling one. Carney shifted yesterday that they will go for a more Monetary Policy approach, implying they are moving beyond the easy brexit scenario. That would be perceived as august. Th that will be perceived as hawkish. So, if he sees a conventional policy approach is being appropriate, that implies a lot of hikes. Matt it is not all about currencies. We had incredible equity swings in the last couple of days. And not just equity. We have seen volatility back across assets. Is that here to stay . Will we see more volatility in 2018 . I guess you cannot see much less than we thought in 2017. Mark that is right. It is hard to get lower than last year. 72ething over the last hours, i am getting worried. I was on your program earlier this week, i said the Global Equity program is remaining solid. Whats worrying me this week is everyone else is saying the same thing. Where have all the bears g one yesterday the dow jones fell the most in eight months. Suddenly we are not seeing any bears. Even the people who were previously bearish are going, it was just a correction. Investors were warning about stretch valuations and now they are talking about a meltdown. What is worrying me is i have gone through my inbox and i cannot find any bears. When anyone else is pretty i get fearful. I am slightly worried there is more to come in his correction. Matt thank you, mark cudmore for your time. Mark and the rest of the team on the bloomberg at mliv. Up next, buoyant growth, but slowing inflation. We look ahead at the euro area cpi data and what it means for draghis as it purchase plans. Asset purchase plans. This is bloomberg. Matt we have 15 minutes to go until the start of cash trading. Lets get up to singapore no, it is hong kong this week. Lifted up to hong kong for the Bloomberg Business flash. Santander has reported fourthquarter net income of 1. 5 4 billion euros. The banksbrazilian unit saw a 26 jump for the earning period. The artist lender posted the firstrate year of rising profits. We hear from the santander chairman at 8 00 a. M. Siemens has reported a sharp drop in quarter profit. Europes largest Engineering Firm says profit fell 14 to two 2. 21 billion euros. The results included a net benefit of 437 million euros. Surged afterronics it recorde quarterly profit. The maker of smartphones greens and Consumer Electronics also unveiled a stock lift. That drew the curtain closed on an eventful year, where a chairman was jailed for corruption. Said it is falling to apple has said it is responding to u. S. Government queries. They say they would never intentionally shorten the life of any of their products. Earlier, they reported that the wasand the sec investigating whether they had slowed older models. A Consortium Led by blackstone is buying 55 of the financial and risk units in a deal that values the business at 20 billion. That includes the pension plan, Investment Board and singapores sovereign will fund. Bloomberg lp competes with thomson reuters. Is chairman of bloomberg lp a nonexecutive director at blackstone. That is your Bloomberg Business flash. Matt thank you for that. Now, lets focus on the euro area economy. Headline inflation is likely to have slowed in january. We look at that data at 10 00 a. M. U. K. Time. Economists expect that volatility will be absent from the core measure. Lets talk about which measures will mean what for the ecb stimulus plans. Richard jones joins us now from berlin. Richard, some pretty strong Growth Numbers out of europe recently. We have seen a slowdown in inflation, especially in the core german numbers, which were out yesterday. What is going on . I think thel, growth backdrop is very favorable. I looked at 2. 7 growth across the euro area, and that is broadbased. You and i living in germany know about the Economic Growth story here and the strength we are seeing in europes biggest economy, but the broadbased growth we saw yesterday is positive. The big challenge for the ecb is to turn that positive growth dynamic into inflation heading in the right direction. We have not seen that so far, but i think one of the things we need to watch is the actual wage and negotiations going on in actual Wage Negotiations going on in germany right now. For the first time in 15 years, workers feel they are in a stronger position they can strike. If we have got into that shifting dynamic, that might lead to the inflation the ecb is looking for. That dynamic will be something new, not anything we have seen after the Global Financial crisis, matt. Matt first of all, it seems to me to be better to have strong growth and maintain inflation, but draghi wants to get to his target, as all central bankers do. What does this mean for the future of the ecbs asset purchase program, which now everybody is expecting to come to a solid and in september. September. D in richard we are not talking about runaway inflation. We are talking about inflation on a core reading of just under 2 , which is consistent enough still to allow strong growth, but at the same time will allow thiscb to get out of emergency Monetary Policy they have had since 2015. I think the big challenge for Central Banks and not only europe, but around the world is to actually see that wage growth pick up after we have seen the decent growth and amex in general. Decent growth dynamics in general. I think we are looking at a september or december end to qe. Matt we have Janet Yellens last meeting today with the fed, her last presser. What do you expect from the u. S. Central bank . Richard i think steady messaging. I think we will get more of the same from the fed. I think they will talk about the strong growth dynamics, about the job market doing very well. Still a little concerned about inflation. 1. 5 is not pce at where they want it to be, but that is consistent with what we have heard in the past from the fed. Changes will be coming from powell, but that will take time to take affect. Matt get more on richards take and more of that from his teammate on the bloomberg mliv blog. You can find that on your terminal. We are minutes away from the open, 10 minutes and change. Coming up, we look at your stocks to watch, including page h m, capita, and siemens. The bloomberg open, now just nine minutes away. Matt we have breaking news from hna, which owns a stake in Deutsche Bank. They are looking to sell 16 billion worth of assets in the first half. Keep your eye on Deutsche Bank shares at the open, as this is a big holder and is looking to sell 16 billion of assets. It does not specify which ones in the first half. It does not surprise the market is the Deutsche Bank among those sales. Joining us from our Equities Team is paul jarvis. There is a lot to watch today. Obviously there was a slew of earnings out this morning and we continue to get a lot of equity news and there is real volatility here. H m was out this morning. Paul abu dhabi , the news is better than we might have expected, big from a number of fronts. The dividend being unchanged at pretty good news. There were thoughts the dividend might come under pressure. The pretext par profit in the market was better than expected. We knew those sales were really very weak. That is reflected in the h m strength today because they dont expect to meet their growth target for the current fiscal year. Matt weve already seen a huge drop in that stock, down 45 . Things do not look good at the open. Paul i and shares to open lower today. For have cut the sales infineon. This is due to the dollar. The dollar weakness is really hurting this company. They say the depreciation will negatively affect more than half of the company revenue. Matt we have seen the strong euro hurt a lot of companies this morning and over the last couple days. Stock you are watching closely. Paul they are extending the dividend and seeking new equity funding. They are indicating that if they underwriting in place matt it is a 2. 3 billion pound company. Too the ceo says they are widely spread across multiple markets and services and they are underinvested in the past. Really, he is taking all the right steps, but this will hurt capita shares this morning. Juliette we are getting a look at the very latest stock stories from our Equities Team. Its available to subscribers via the mobile app. The open, jsuust four minutes away. 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. Matt we are less than one minute away from the start of stock trading across europe. Lets look at futures. It looks like we will see an end to the global route that kicked off in the u. S. Around the world, twice basically, and a stopped in asi overnighta. We have futures up across the board. We have futures on the s p 500 that are gaining as well. Here you see the wei screen. Weve got the present mispriced here. We are looking at an indicated open of about 0. 2 , even on the ftse. Its important to notice the percent misprice here. If you look at just the wis scr indication wean could see a drop. We could see a less tech heavy europe this morning. We are now getting to the stock market open. Lets take a look at the monitor and see as these markets pop up. We do see the ftse opening just up zer ositively, 0. 05 . The dax takes a long time to open, i have to say. I dont know if it is because the germans want to be more exact, but it takes them longer to open. Xhe spanish are open, the ibe is gaining as well. A very marginal gain, but that is the 1 change we saw in the u. S. Last night. That has got to be a welcome relief for investors. The cac is up 0. 2 . The core markets look to be a little bit better than the ftse. We saw on the indication, we will see if that pans out throughout the day. Still waiting for the dax and the smi to open. So, the germanspeaking countries will take a little bit longer. The breakdown is for the integer groups. Financials look a little bit mixed this morning, though they are down this morning. The santandero ceo later on. Industrials are for the most part green. We have a lot of earnings out from industrials. Siemens with a little bit of a disappointment. That could be the red pie piece you see there, but the rest of the industry is really gaining. Consumer staples, very green this morning. Consumer staples being up is not necessarily a good thing for a long market, meaning investors are defensive. Health care is down the morning. Discretionary is good this morning, as well as materials, energy. I. T. Is down a bit. The stocks got hit hardest yesterday. We see infineon lowering the expectations for the year. Back over here, we will see if the germanspeaking indexes have opened up. The dax and smi are still closed. We do see a 0. 10 gain on the ftse here in london. We the double that i in paris. 0. 2 wiss smi is open, down this morning and the ibex, unchanged. Still waiting for the dax to open. Stocks the breadth, 340 gaining. Thats ok, because that is the story today. Actually, siemens up, 1. 4 is morning. So, siemens doing quite well, though they had a little bit of a disappointing earnings announcement. Pretty sure American Tobacco is up, one of the most offensive stocks of all because they make a product where want to start buying it, you cant stop. Nestle is also a gainer. We saw Consumer Staples will be strong this morning. Volvo up this morning after putting earnings a little earlier on. A lot of them are stable here. Record bank highs are a gainer. Botin, we willna hear from her later in the program. Total is also getting this morning. Take a look at some of the losers here. Lets get rid of the winners a