It hase last two days been up by 15 . Gold goes nowhere, just 12 in two days. You might have thought that. Crude continues to roll over one and at 15 half percent. The Republican Health care plan is running strong opposition ahead of thursdays vote. Joining us for more is Kevin Cirilli, our chief washington correspondent. Where do we go in the next 24 hours . Do the republicans have the vote . Know they do not. The sources i am talking about inside of the House Freedom causes House Freedom caucus tells us there was a fight yesterday with President Trump who arrived on capitol hill and singlehandedly pointed to the chairman mark meadows and said youve got to get on board with this bill. The senior aide says he is not on board. The key numbers 21. That is the number of House Republicans that this administration feels like they can have to set and oppose this getstration and then still this bill through. Now they do not have it. Alix the issue in the market is if health care cannot get through the house it will put off tax reform and that is with the markets are betting on. If it doesnt happen on thursday what happens to the rest of President Trumps agenda . At is all delayed in this will be a devastating policy below on the same week that james comey testified. He said his Previous Campaign liaison with russian officials and meddling in that regard so, look. If this doesnt pass and this is a big if, because the administration is whipping into high gear to say the least and they are working relying on budget director Mick Mulvaney and Vice President mike pence and others to get this through. If it doesnt pass, no tax reforms. Alix Kevin Cirilli joining us from washington. No tax reform. That was a threat the market was under yesterday. You had banks having their worst day since brexit. Health care index off by 1 and small caps really kicking it on the chin really taking it on the chin. ,ere with us now is zach apoian allocation strategist. It is easy to blame the latest tax reform for yesterday but dollar yields and commodities were already rolling over. What do you attribute it to . Lex i think you hit the nail on the head. In part it is more of an economically levered tax cut and infrastructure, being delayed or possibly compromised. Pay high taxes. Health care obviously would suffer from the uncertainty about Health Care Reform and small caps also pay high tax rates. Context,ng things in disconcerting what we have with little volatility in the market, this was our first down 1 day since october. To put things in context, yields have really been well behaved. Spreading 2. 3 to 2. 6. That was since the election. We are still smack in the middle of that range. Overall,his correlations are so low, implied bonds are so low and the dollar, even though it is giving back, everything is still well behaved. Really it is one bad day. Alix when i saw the markets yesterday, i thought where was the opportunity . But can you make the case to buy the debt when we are only 2. 2 below the alltime high . 2016think the lesson from was you cannot take Political Risk in the context of markets to seriously. In the end, these stories dominate the headlines, they are very important for our country and for policy but in the end, markets will work through and ultimately it is about earnings. The bottom line is that data is still very strong. Earnings continue to be revised up. Q1 looks up 10 . The backdrop is so favorable that we think we will construct we are construct of and longterm. Jon with the bias towards d. C. Taking up more time, you used the word compromise or that it was not going to get it done. I think compromise is the base case. Remember, before the election, both Hillary Clinton and donald trump were promoting tax reform, were promoting infrastructure spending. It was just in different forms for different plans. It behooves both sides to get this done. Trump has been very strong recently about trying to get something passed, not just for Health Care Reform but for the health of the party in the next election. Jon it is one down day of 1 , and it took a long time to get there but lets say we have a few more. 2016, 2014, you had a series of down days, and then they back away. We now have what many people are referring to as the president ial put. How does the ministration respond if you get a series of down days . When we do not get excited about alltime highs anymore . What does it look like then . In the last three years first of all, we didnt have dips, they were very shortlived and even looking back First Quarter of last year with a severe recession, we recovered in a matter of a couple of months. Since as it has gotten 2014. Today, the president ial put is fiscal policy. If fiscal policy is too expensive, the fed is going to have to be more hawkish to maintain inflation. They are acting hand in hand. If fiscal policy has to back off, so can monetary policy. You get this interplay between the two. The fed will be reactive to fiscal policy, and we think because of that they will help each other out. Jon isnt that a lucky scenario for the bulls . We are positive right now. We think the most important thing here is just that the economy is strong. Yellen said it in the last conference. We believe it. This is simply in anticipation of these policies taking effect. If fiscal policy turns out not to work out, the fed can be more dovish and we have a similar market to those last couple of years. Alix is it also helped by the fact that we have yields low and the dollar rolling over . We have that that is going to wind up offsetting. It has tightened marginally but they are still extremely accommodating. Alix what do you look for to add . The trade of values . Cyclical . Is that the flavor for right now . We are still in the camp that it is time to be more cyclical. Growth has done better in the u. S. We think the trade is the catch up of the cyclicals internationally just has not been priced as fully in the cyclical sectors internationally as it has been in the u. S. It is very important to be global and to own your International Exposure which structurally tilts more towards value. Great to have you with us. The appointment with us. Zach apoian with us. Coming up, he now runs the bank of cyber. It is john harrigan. John hourican. And coming up, from new york city, you are watching bloomberg. This is bloomberg daybreak. I am emma chandra with your Bloomberg Business flash. Rejecting a takeover bid from ppg industries. Europes largest Coatings Company turned down. Ppgs offer was too low and not in the interest of shareholders. It also said that the takeover would lead to job losses. Airbnb is changing its name in china and doubling its investment. The home sharing company cost new chinese name translates to welcome each other with love. It is offering customers in shanghai a new service of restaurant reservations and concert tickets. Ubs has become the latest bank to pass on the euro regions negative Interest Rates. It has introduced the change at a chart of 6 10 of 1 . Clients who dont agree have to close their account by the end of april. That is your Bloomberg Business flash. This is bloomberg. Population eurozone, populism has been sweeping. First with brexit and other elections at stake. We spoke with a former Prime Minister of italy about the prospect of the European Union. For me the fundamental factor which will decide whether the euro will oneday unravel or not is whether National Politics in Member States will continue to drift towards shortterm nationalism, populism, or whether we will go back to a sense of historical responsibility because the eu has been a historical faction. Still with us is zach apoian messy politics and a bank in the eurozone. Talk to me about that. I think the ecb is still finding a space. The average is the keyword. That is a struggle. The National Authorities were able to balance fiscal stability and Financial Stability with micro regulation and that causes tension. Jon ubs out this morning extending charges on deposits to some of their biggest clients. How difficult is the negative rates story for you . We talked about it and what it means for bond markets but to actually run a bank with the deposit rate at 40 basis points, what does it mean . There is a high correlation between Bank Valuations and an industry curve. There is a cost of money in the eurozone at an alltime low. In an investmentbased economy so i have some room but if you are in the eurozone you have to pass that on sunday you start charging. Jon is that going to shift towards the view that the banks want us to finance the economy by doing something with rates . The underlying problem is we are struggling to create growth in the eurozone and a very accommodating on a trade policy is fined during the crisis but what do you do afterwards . There is a lot of work to do. Alix all things considered, we it quite a bit, but it did outpace what happened here in the u. S. The driverng to be of markets . Is it not the fed, or the curve but that curve over in europe . It is going to be significant at bellwether for what happens next. The banking secretary is struggling to create profitability. If you cant create value, you have no source of capital so you create risk in the system. There is a lot of pressure. Hungarylk about risk, is an emerging market and was able to sell bonds for. 1 negative one basis points. That was lower than the u. S. Did yesterday at 73 basis points. Surely has to be the decisionmaking parameters for anyone investing in government bonds. Jon look at cypress. Banks, youvee got someone who used to run Deutsche Bank and you worked with wilbur ross, you have a massive team to address the issue but it has still been difficult. How long does it take to turn that around . When we last spoke week were a stabilizing situation but since then we have had one billion euros in cyprus is 6 gdp and we moved 20 gdp off our books. Credit is just under 2 . Were making progress. Jon but i think everyone looking across europe and seeing this, we are about redenomination risks in france, we have had capital controls in cyprus, capital controls and greece, and at one point one euro in cyprus was not the same as one euro in germany. Do you look at the system and say it has failed or that it would still be a success . During the greek crisis, a chapter of cyprus has gone down and come back up. We have the economy growing at 3 , secondfastest in the eurozone. We have a broadbased recovery underway. I think cyprus is an example of how to get the economy back up. Alix like the european banks . A we do, but certainly devalue section of the market. Conditions are tough as you here in the headlines. But equities have made great progress in the last six months. You have played very well into the reflation story. Up,growth data has turned and at the same time the positive inflation data out of the u. K. Yesterday u. S. Is looking better and china is looking better, and worldwide inflation has improved. This, ultimately, we think, will lift rates in the biggest head winds to the european banks right now. Alix do you buy the do you buy the reflation . I think weve got time for it to take. Alix so what is the biggest risk that you see . John kind of lay them out. What is the biggest headwind . Excess of there is an regulation, there is a concern for the whole experiment across europe, and i think that causes people to create excess caution rather than create the conditions. Jon but when you look in the politics, the campaigns of marine le pen, the members in italy, do you think that caution is justified . People not being happy with their lot in general and the superstructure across europe not affecting those in action. We heard the greek crisis trundle on for a decade. Action that ise too small for a crisis to crisis keeps going. That is the repeat formula for many of the actions taken by the eurozone. Is but on the spot, what the ultimate solution for greece . I am not a politician and this is a private view but not a but i think we need to socialize debt, draw a line under it and move on. Alix talk about value and potential risk. Are you interested in the peripheries in that way . I think greek equities is such a small component of emerging markets at large. Alix and bank debt . Greek bank debt. In the Wealth Management business it is not appropriate for the majority of our clients. The best way to play this is straight brought emerging equities levered to the relations going on. Zach apoian thanks for joining us. And John Hourican from the bank of cyprus. You will be staying with us. Head of u. S. Economic will be here and later, republican congressman Tom Mcclintock on the health care debate. Do the republicans have the votes . This is bloomberg. Jon the big date is today. In one weeks time, Prime Minister theresa may will trigger article 50. Still with us a man who know something about u. K. Banking, John Hourican, bank of cyprus ceo. You know that industry inside out. Now, weat the situation are talking about the u. K. Losing passporting rights in negotiations with the European Union . How significant is that . The starting point is the u. K. Has already handed much of its prowess to the united states. The majority of Global Capital flow actions now happen outside of the u. K. Some still happen there. The passporting issue is as much an issue in europe as it is for the u. K. There are Many Companies in europe passporting into the u. K. We need a more mature conversation. We are going to have trade is the center of prosperity. We need to have a more grownup conversation than some of the rhetoric in recent days. Jon around the issues in greece and cyprus. It didnt necessarily follow the course of logic. Why not this time . Im not sure it will. If 70 Million People leave a trading block, that is a big deal. It suggests there is something wrong with how things are being worked. We need to get back and have a cold drink and actually talk about how we are going to Work Together rather than how we are going to separate. Jon in london at the moment, how do you see industry coming out on the side of two years of negotiation . Sense will prevail at some point because it has to. Majorty of london is a place where Capital Requirements meets capital provision. That will continue postbrexit. We have to make sure that europe is advantage from that continuing relationship rather than this avenging itself. Jon are you confident the u. K. Can make that argument you just may down . Financial services . Them at my time at the rbs and they are very smart people. I think when we get down to the real basics of how this works we will find a sensible solution because it is mutually assured selfdestruction it is not an option at all. Jon in london, do you think any advantages are there to do that . We are preparing for premiums at some point in the future. We would like the index to be included at some point in the future. Cyprus is is certainly dislocated in terms of its performance than greece and that should stick and investors minds. We are seeing better volumes, not necessarily better price actions. Jon was that a bank casting its about in confidence for london at the mobile Financial Hub for the years to come regardless of what happens . Unquestionably. London is a major center and we think it will exist no matter how difficult the negotiations maybe. Jon it benefits both sides to come out of this with a deal around passporting. Your basic case at this point, what is it . Going to have to be a sensible retention of the majority of the issues around passporting for both sides because otherwise you damage both sides and that cant be right in the negotiation when it is a lose lose. Jon John Hourican, bank of cyprus ceo. Alix we are still seeing banks wanting to move their workers out. Frank for and paris are the big winners. A cant wait. That is also some kind of negotiation as well. Alix so do it. Robert shiller, Macro Markets cofounder and chief economist will be joining us later with the s p had it 1 down for the First Time Since october. He was warning about this a few weeks ago. Chiefrbc Capital Markets strategist will be joining us. Two hourse markets, and four minutes away from the open, the dow down 2 10 of 1 . The s p 500 on a fourday slide. Lowsuries are big, yields on the 10 year. From new york city, you are watching bloomberg. The biggest week in tv is back. Wow, watchathon has netflix . Hey, drop a beat. [ beatboxing throughout ] show me orange is the new black. Wait, no bloodline. How about bojack . Luke cage. Oh, dj tanner. Maybe show me lilyhammer. Mmm, show me last chance u. On second thought, maybe pompidou. Narcos, fearless, cooked, the crown. Marco polo, lost found. Grace and frankie, hemlock grove. Season one of. Show me house of cards. Xfinity watchathon week starts april 3. Get unlimited access to all of netflix and more, free with xfinity on demand. 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