Provided to qatar during the financial crisis. Heineken margins will grow less than its target as the secondlargest brewer integrates its brazilian business. We speak with the cfo during this program. Matt we are less than a halfhour away from the european open. Take a look at where futures are trading. We were up across the board on friday and u. S. Trading up across the board. In asia, well, not across the board, i should say that. You dont see any trading in japan, but we do see european futures carrying on that global trend of a rebound in this case, futures. We are indicated to open up in the european cash trade stocks, as well. Take a look at bunds. The treasurys trade is on hold for japanese trading. We are indicated to see again in treasury yields. Here you see a threeday chart of bunds and the yields have spiked up. We are looking at 78 basis points right now, a gain of four basis points for german bunds. Expect to see treasury yields move up, as well. What does that mean for stocks . And what does that mean for other Asset Classes . We see correlation start to get higher and higher. Guy just keep an eye on it. There are a couple of ways to read it. Exit markets are well bid. I will broaden this out. Closed, so from saudi arabia to turkey to india, we are seeing markets rising. The dollar is trading lower this morning. 1. 82. Ro is up trading at we will give you a heads up of whats going on around the world. At the moment, copper is big this morning. You have the oil trade to watch out for. Pay attention to this column here. Yields are rising around the world. What is that telling us about Investor Sentiment this afternoon . Stocks are well bid. That could be a friday story. What is the monday morning story . We will talk about that in just a moment. Lets get the bloomberg first word news update with juliette saly. Juliette the u. S. Says its ready to engage in Nuclear Talks with north korea. Vice president mike pence dubbed the strategy maximum pressure and engagement at the same time. The comments signal a shift in american policy and it came after mike pence and moon jaein agreed to a dialogue during a conversation in pyongyang. Mick mulvaney has warned the u. S. Will pose a bigger budget deficit this year and could see a spike in Interest Rates. But cutting the spending shortfall is possible based on sustained Economic Growth from president trumps tax cuts. The white house is expected to release its spending proposals today, which will include a plan to cut deficits like 3 trillion over 10 years. But it didnt say how those cuts would be made. The israeli fighter plane that crashed on saturday was likely hit by a syrian antiaircraft missile according to an israeli army spokesperson. The f16 was hit after it struck an iranian control base. Its the first time israel has lost a combat plane to enemy fire since the 1992 lebanon war. Right elio has hundred pulled his short bids against u. S. Companies. Showed bridgewater capital has 13 billion in shorts. The biggest bears position of more than 1 billion is against total. Angela merkel says she is determined to serve another term as a german pencil or chancellor rebuffing critics. She urged spd members to back the Coalition Deal and next months vote, which will allow her to form a government after the deadlock. South africans rolling African National congress meets later today to transfer the power to jacob zuma. The party must result its problems, including accusations of corruption against zuma. They proposed to replace the president in december and expected to succeed him in the presidency, as well. London city airport is closed after a world war ii bomb was discovered in the river tames. Putpolice and royal navy blank around the device. City jets has canceled flights. They advised all passengers not to go to the airport and instead, contact their airline for further information. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy, matt. Matt thanks very much. Asian equities kicked off trading on the positive side. Stocks rallied, tracking a reversal in the u. S. Session friday afternoon. European futures are pulling higher. Treasury yields are on the rise. Early cash trading after close in japanese trading. Joining us from singapores mark cudmore. See treasury yields a again, does that mean equities are going to turn around and died later in the session . Dive later in the session . Mark i do think it will keep u. S. Equities under pressure. Until was a justification for higher yields, clearly higher inflation, that i think higher yields will keep equities under pressure. Thats why we have all eyes on this Inflation Report out of the u. S. The core inflation number, 1. 7 in still below target and it seems surprising. We will see equities under pressure until we see yields come lower. Its the same theme as last week. Guy why did the market get bored late friday . Mark i think was closing positions. A lot of people short of the market at panic levels, like they were saying its taking again. We are going through the trap door and its going to close. Was it started balancing, there is a lot of pressure for shorts to close for the weekend. The market shifted rep rapidly. However, there are still longs from the retail sector. Thats what i said there is more selling to be done. It makes sense to have a rally in the close on friday. Matt currencies seem to be on the sideline last week and we havent paid much attention to the euro level because its not back at that 124 high. 138 now,see cable at not up in the one 40s. Does it pick up this week . Mark we are starting to get pickup in volatility. We are seeing implied volatilitys rise. The fx market will not have a stability it had toward last year. Yes it has been lagging. But that might be about to change. Likee dollar, it seems its struggling to get any kind of bid. You would think last week would be a perfect environment for it to rally. But nothing seemed to help the dollar that much. It rose very marginally and that affects the market that wants to sell out the dollar again when it gets a chance. Maybe that will happen later today when we get more details on trumps budget and people say this administration is abandoning pretense of a balanced budget. That means a wider fiscal deficit. And essentially the dollar is eroding its own place in the dominant reserve currency, which means the needs to be more structural flows to sell the dollar. But thats a long string longterm story. Guy s oil the same story . Is oil a different story . Reacted to the recounts friday. Clearly there is a speculative position to think about. We have seen which seem related, but not completely related to the equity story. Mark not sure im the best person to ask. I got oil wrong. I didnt expect it to go quite so far and less so long. I thought it would run out of steam earlier, that it did push a long way. I think overall, there is a sign of clear picture picking up and when that starts trending, it trends for a while. You can expect to see reduction pickup in the u. S. And that will put prices under pressure. There is a position to come out of the market. What we saw last week is that refiners or smart money in the market were selling down futures, which was indicating that prices were coming under pressure. I do think oil prices will come lower from here, but i remind the fact that i didnt think they would go so high in the first place. Matt thanks so much for joining us. Mark cudmore is an mliv strategist in singapore. You can follow his insights at mliv , a great way to get prepared for the trading day on the bloomberg. Coming up, setting on misery. Not everyone lost out. We will focus in on the surprise winners. That conversation next. This is bloomberg. Guy welcome back. Youre watching bloomberg. 16 minutes to go until the cash equity it open and europe. In the meantime, lets get a Bloomberg Business flash. Heres juliette saly. Comcast is considering making another bid for much of 21st century fox two months after fox agreed to a deal with disney. Comcast has offered six he billion dollars for the assets, which include the movie and tv production, a 39 stake in sky, and paytv channels. Thats a higher bid than disneys 52 billion offer. Emirates signed a contract for 23 new planes with an option for 16 more. After airbus admitted it might have to terminate the project unless new orders came along. The clinic is most important aircraft is still suffering troubles. Airbus has suspended some deliveries of the neodue to fresh issues with engine supply. The planes biggest customer, indigo, reported three and fight shutdowns and three more takeoffs were abandoned on the ground. Harvey weinstein is being sued by new york state for creating a hostile Work Environment at his company. The lawsuit may complicate weinsteins attempt to sell his studio and a 500 million deal. They say while his behavior was without not not without fault, its not illegal. Ticketing to reduce crowding at peak times. A oneday ticket has increased by 11 to 135, while a similar ticket at Walt Disney World now costs 129, five dollars more than before. It follows the record year of attendance at u. S. Disney parks, crowding and longer waits. Thats your Bloomberg Business flash. The unwinding of the short vix trade is one of the biggest test of these of last weeks stock correction. Now the blowup in volatility has sparked a shift in the futures market. This spiked to a record net long last week, not surprising although it could bum you out. Lets bring in dani burger for more. This reminds me of the old days on the new york start Stock Exchange when you can make money by following the huge crowd thats shifted from one side of the floor to the other. But does it tell you anything about longerterm positioning . Dani what a 21st century version of that. Moneyssentially minted over the past few years because we didnt have volatility, it was so low. At the end of the day, we have been saying this for a long time, volatility is and he reverting. Me reverting. This chart is merkel. This has to do with people taking shortcuts. This is both of those calculated together. Long bets were put back on. Before this, that had been cheap to do. It has been relatively cheap to take on a hedge. People hadnt been doing that because you would still have lost money. Volatility would stay subtenant, very low. So now this veneer of calm has been cracked and people are realizing maybe volatility is that backed. Maybe its time to put on long. Guy two quick questions. Its further out. What does that tell us about whats going on now . In these people are nervous right now. People are these nervous right now. It comes from going from one contract to the next. Thats ruined when you have back rotation. We look at the vix curve to get a sense of how the market feels, not just the vix. You have to look at the elevated levels, but also the backwardation curve that goes into the nerves. Matt lets talk about the winners. There are some great stories. Tell us some of the stories. Dani i have to admit, this is one of my favorite ones. They are called Ibex Investors in denver. The reason this is such a joy to report is because we have been talking to so many investors who are so burned i this ball up in the vix etps. And these investors took the opposite bet. If you look at the research out there, some of the amazing reporting by my colleagues, we have said that these can blowup. When there is so much money in these funds there needs to be a lot of assets the strange feed Loop Feedback loop can happen. They put 200,000 down on essentially a put on one of these short volatility etfs. They put it on the week before and then come the fifth when these things blowup, that turns into a 17. 5 million profit for them. Really remarkable and it shows that in this whole environment of shorting volatility, if you were willing to take a contrarian that, contrarian that, not only did they get laughed at, they made a pretty profit. Only put were the the position on a week before . Dani this is something they continued to do. Executives wouldnt comment on the specifics, but they have been detailed in another analyst report, so thats how we know some of the numbers. They would have lost money on this trade prior to this monday, but out of the money options, they were so cheap. They literally got laughed at going to the exchange to get these listed and they said listen, we dont know how to price these. We dont know what price tags to put on this. Exactly. Nothinglost money, but compared to the 70. 5 million they got in the end. 17. 5 million in the end. Matt and they celebrated in colorado here in the alps. Dani, thank you so much. We are minutes away from the open. Take a look at your stocks to watch, including airbus, which has been forced to suspend some deliveries of its a320 neojets. Engine problems . This is bloomberg. The open is just nine minutes away. We are six minutes away from the start of european trading this morning. It looks like equities will be following a percent on from the move we saw in the s p on friday stateside area we are stateside. We are going to be focus on barclays relating to the capital raising. We will also be watching whats happening with airbus this morning. They have had an ongoing problem with a version of its 320 neo, the one that has the pratt. That continues indigo and India Airlines with its continuing problems. Lets get details. I think its a negative story and this is a hugely important plane for airbus, so this plane really puts airbus on the map alongside boeing. It allows them to create this duopoly within global playmaking. They turn out about 50 of these planes a month. Thats a huge moneymaker for them. Its more ecoefficient than their previous planes. Boeing has been forced to improve their own planes. Its a hugely important point in the market. The story is going to be negatives in stocks. Guy we should point out there are two engine options. Matt . Matt i want to ask about asko. One of the chemical units are in play. Whats that story . Joe the ftp reporting apollo coming into this unit is valued at 10 billion euros. Thats a huge unit. You will remember last year that akzo, who owns a wellknown brand, they fought off an attempt from the bg to take ppg to take over some of their assets, so this talk from a bit of apollo for the chemicals unit is obviously going to be a positive for the stock today. Guy thank you very much indeed. We are going to talk to the heineken cfo or a shortly. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Guy minutes ago until the start of cash trading. What you need to know . The euro dollar is edging off after pushing higher earlier on, the dollar generally on the back foot. Tokyo happening is asia, closed and we have a big outage with the Chinese Markets as we get to Lunar New Year later this year. That was interesting. Lets check you whats happening in terms of the fair values here this morning. We are looking at a positive start. They are all called higher. The s p and dow are called higher, as well. Itll be interesting to see if this lasts throughout the day. We will see if things push higher in yields and bond markets this morning. A little bit about the stocks we are going to be watching. Take a firm high on airbus. Heineken, we will talk to the cfo shortly. Lets show you whats happening with these markets. Lets give you a heads up on what you need to know. The ftse 100, 7092 to close. Where every going to be opening up this morning . Hopefully with a number. Thats some cause for concern. Im going to show you whats going on in terms of the story relating to the sectors. As we begin to open up, energy looks like its a little off. I will wait for that to open up. Materials looking strong. Financials looking reasonably strong, as well, as that wheel goes green. There is a few areas not looking so good, but they are beginning to fade out a little bit. Matt that is pretty amazing. Look, on friday, on the stoxx 600, we had only 100 stocks up for every 500 that were down or 100 for 500. Today its almost reverse and that we have 456 gainers, only 17 losers right now. So its a reversed completely. Take a look at the gainers here. Thats the percentage change. These are the ones getting the most. I will switch it to index points so you can see, novo nordisk is pulling up the most, but wrote a child and bp are weighted, as well. They go santander is one of those that rate elio has been big in shorting. We also see rate elio has been big rate dalia ray dalio has been big in shorting. Inneken is the biggest drag terms of points on the stoxx 600. Right now down almost 3 at the open. You can see heineken and Heineken Holding both down there. We also have air france down right now considering the airline issues we have in this market. We have sky falling, paddy power, falling. Very few losers, they are not off by much. Heineken is down almost 3 . Guy . Guy i want to come back and take a quick look at the monitors. We are reasonably positive, up by around 1 in terms of the numbers we are seeing in europe. I still dont have a dax open, both will get to that in a minute. Generally, most markets are reasonably well bid across europe as we see the Market Pricing in that move that we saw on friday. That late rally we saw in the s p. Asian stocks are quite strongly bid, as well, recovering from their worst weekly route and 2011. Tokyo is closed. We had a positive start in europe. Are we done yet . The cio is going to answer that question for us. Guest what we are seeing here is runofthemill correction. We see these all the time. In the nineyear bull market weve had guy we havent had one of these in a long time. Guest thats probably why it feels so exceptional. But if you look at the bond market in 2009, it feels like a bear market. But we are seeing a correction of 10 . Even in the bull market of the 1990s, which was the strongest in the u. S. , we saw a five or six of these. So its pretty normal. Matt what about the volatility that we have here . It seems like we are back to p, 1 day, 1 or more u or more down. Can you make more money in a market like th