Eking out a ss gain. Gold pretty much goes nowhere nd oil relatively flat, but under 50 a barrel level. House of to the forons introducing the plan brexit. The European Union. E will monitor it for the headlines and bring them to you as they develop. Want to bring in simon kennedy. In the last 24 hours, how has this moved forward in a any shape or y in form . I think the big take away is europeans said before yesterday, they continue to say after it. If you thought there was a the , if you thought europeans werent serious about arious issues, refusing to discuss the tray deal before the divorce was settled, yesterday of a wakeup call. Across the region from angela the Eu Council President the message was, were onna sort out the difficulties first, the divorce, the budget border ow to have a between the two islands. All these issues. Ones were not discussed. Would prefer to discuss them deal. A trade the new trade deal is going to have to wait. Simon, trying to make this approach. A blended approach with trade concerns, security concerns. Trying to get a solution for both at the same time. Hows that going down in europe . Particularly well. Its a reaction. It yesterday ed that basically uk lot of continent. The so if you want the sharing of nformation, youre probably going to have to pay for it in the form of more trade. Insulted some in europe, european parliament, brexit immediately saying there be a trade off in security and trade in this topic. Y was a separate obviously playing down a little this morning. But still making the point that is on the ecurity table for brexit talks. I want to bring in michael oore all joining us from london. Michael, i asked the question yesterday to steven morris. At jp re jamie diamond morgan, what are you thinking . You doing . Right. So i think they have a number of options. Advantage j. P. Morgan, some of the other International Banks in a s they have offices number of these european cities. J. P. Reporting today that morgan is looking at buying another Office Building in dublin. Option they could do. They could also expand in some of the other european cities. Youre going to see a bigger presence from these u. S. Banks the continent. How many people might they move to dublin . The building that theyre in talks on has room for 1,000 employees. Thats yet to be seen how much filled will actually be if they go through with this deal. Diamond inly, jamie talked before the vote about moving as many as 4,000. Other banks have been 1,000 plusso you can certainly see movement. What weve seen so far are banks a small ans to send cohort at first and see how the negotiations play out. Into w does this read back the negotiations . Look at david davis talking to parliament. To what ebb tent does he feel pressure saying were going to ose a lot of people to dublin, we better be good in our negotiating. That was made earlier that everything that britain was told before is starting to come true. Banks have repeatedly said were out of have to move london, move stuff out of london if theres any sign that were hobbled by brexit. Yesterday there was great theresa may making finance part of that trade deal. Time she said that. Real shot to the bankers. At the same time they heard from urope that theres time to negotiate that deal, that a transition is not necessarily in for may. Signs of a show some shift. The more uncertainty they live they e more likely that will enact those worst Case Scenario contingency plans. Good to see you. To focus ink we have in. Lloyds of london is setting up a post brexit line. Fine. Its tens of people. Its not hundreds of people. Tens of people. J. P. Morgan, who knows whats going to happen with them. 1,000 People Potential peu. Talking about desks. Were not talking about filling in ffice with 1,000 people dublin. Practical matter those are valuable jobs. They move people around, i think make its a difference. Im struck by the fact that dublin. Its not frankfurt. It is easier to commute, easier to go there. Labor laws are easier. Right. Back office set up for many of the people moving to dublin. I want to bring in from london, usa economist. Ubs cohead of ethics. Anything, ve learned what is it in the last 24 hours . Much. Havent learned that the letter didnt change the uks position dramatically. Away, you do have a take its that the uk continues to grudgedly snail like move e. U. Position. Remember if you just step back and think 12 months ago, the u. K. Was that e the e. U. Would give up its the u. K. To allow restrict migration. Weve moved from that position essentially the u. K. Giving in saying we understand thats not going to happen. Weve slowly, month by month, moved towards the e. U. Position. Were still not there. We got a bit yesterday. Theresa may talks about allowing the European Court justice, not jurisdiction. It was vaguely worded. Towards allowing more Supreme Court justice jurisdiction over the u. K. Bit of talk about the exit as well. Weve moved a little bit away. Move further to get a deal in the end. That deal will likely not be as good. Thats kind of like the macro look. Ubs eeing more calls from as well as Morgan Stanley that you want to buy the pound. Citi thinking the ftse will rally to 8,000. Distinguish between value . Ise and a potential we are not in the fact that it will strengthen here. Ubs investment banks knew. At the same time theres a lot of knee jerk reaction thats going on because of technical including positioning and different kind of trade related distortions. Going the main thing forward will be the macro outlook. To weaken. Starting as a result of squeezing wages. Will weigh on consumption. Investment is slowing down and will likely continue to slow down. A big issue res with balancing of the economy happen. Eeds to all these things point gradual but steady pace of a decline of pound. Noise,t, given all of the so many people turning to the pound, i think the surprising remains that the pound above 86 through europe. Been weaker than what was expected over the short term. Of ets take the other side the trade, the euro. How are you on that . Ow might that affect the negotiations in brussels . We are bull ourb euro. That its mostly an ssue of price versus fundamentals. Cheap. Euro is extremely multidecade chief. Very very big degree of pessimism priced into the european Interest Rate to the European Assets more broadly. Market is waking up to the that European Data may actually be a lot stronger than people had expected it has been. Surveys. In that direction. I dont think thaf per se is something that we dont think the dollar l get through the roof. Therefore that is mostly market a policy ther than thing. I just want to go back to the financials with jp morgan opening an office in dublin to accommodate 1,000 people. Talk to me about hiring. Who will be doing the hiring . And where is the investment to come from in the United Kingdom for the next two years . The uk. A big issue for the economy has held up for six consumers have capped spending. Its falling, not happenedly, it is falling. You look at the credit flows in the uk yesterday. Businesses. To the growth rate slowed. Where is this investment gonna come from . We have a potential very volatile period ahead. We dont know where the trade end up. Ll will the uk keep capitulating in deal to get a good trade or will it not. There are big risks to deal with this exit bill. Agree to pay it . In that sort of environment, imagine that the fdi is going to boom or the investment will. Thats why im pessimistic. Ook, i have been too pessimistic for six months, but i still think its the right call. Uncertainty. Ot of were going into a volatile period. I dont think that will be uk growth. O how much visibility as an the ukst do you have for economy . How do you provide a forecast gdp for anything beyond 2017 . I can talk to you about tales woe, trying to translate into gdp growth. E have tons of High Frequency data in the uk. What we do know is it is going period. A very volatile bank of england reacted unusually preemptively. Process. Thats our job. I think the really big picture here is theres a lot of uncertainty. We just heard in business investment. Onsumers are facing a big squeeze on their income. Uk se things will slow growth. Not catastrophically, but to where it was in the past. See you. O robert wood of bank of america. Coming up, well be digging into policy. Two fed officials explain why the economy might be calling for series of rate hikes. Tune in tomorrow. You do not want to miss this conversation. Exclusive interview of William Dudley of the srefrb bank of new york. Thats all coming up. This is bloomberg day break. Mazon has come up with a bold new plan. It wants the makers of oreos, heerios to start shipping their product directly to Online Shoppers and bypass chains like target. And bloomberg learned an executive from General Mills and other attendd food makers will a meeting at amazons Head Quarters in may. Of h m fell toward a four year low. The Swedish Company said it may cut prices in the Second Quarter by more than last year o reduce inventory and h m suggested on a Conference Call that reaching its sales target or this year would be challenging. Jp morgan is looking to expand the wake of the brexit move. The bank is in talks to buy an Office Building that would have 1,000h space for more than workers. Jp morgan said other options are the table. Thats your bloomberg flash. David . Thank you very much. John williams warns that equity arkets may have overpriced promises saying i do think the markets perceptions of whats got to happen kind of ahead of reality, close quote. While his boston counter part thought the economic picture might justify as many as four hikes this year. Year would be much less than what we did at the last period that we were coming out of recession. At that time, we were raising it every single meeting, so its fast. As relative to that, this is much more gradual even if we did it every other meeting. Joining us from london is coceo. Rn fund he is with us. You. Me start with im not sure as i listen to these two fed president s talk hether theyre agreeing or disagreeing. Will fed rate hikes be etermined by monetary policy, by under lying fundamentals in the economy or by whats going with fiscal ton stimulus . I think its probably a combination of all three. What you have, you had Inflation Expectations pick up dramatically from a base of elements. Youve had the Unemployment Rate reach the level where youd inflation to come over the fed models. And you have an expectation of fiscal stimulus where the promise needs to translate to reality. Crucial point where the combination of those will determine whether or not two rate hikes this year or four. Because this is not a normal cycle. O were looking for Different Things to normal. You look at the market place, with respect to bonds. The possibilities are waoeuenning out rather than narrowing down. E have a larger range of possibilities for this year because of the uncertainty in washington. Yes. I think in particular youve got next three months are very very crucial. Ofve seen the first failure donald trump to enact the healthcare reform. Reform iss asking tax a bit more complicated in that. Infrastructure spending which easiest to e thing get through due to bipartisan support, that seems to be nowhere to be found. It is a time where you have to see these expectations translate nto reality in terms of meaningful change rather than remain status quo. For me the status quo would three rate to hikes. If you start to see some new olicy hikes come in, youre talking three, four hikes. Look at what william said in valuations being a little foggy. Had the brookings report last researchers who said we could be zero balance forward. E time going at the end of the day is that a yielding y high assets, risky currencies. What do you think about the that . Eck of i think thats a matter im sorry. Going to ask you to get a word in there. So, if you actually think about it a little bit more, we through the maximum kind of we have gone through equities. Rally in we have grown through probably he maximum pressure for now on the pace of inflation acceleration and bond market hasnt slowed off. Expectations of where rates will be in the future is on the igh side if you look five, ten years out how the market is pricing the path for the fed. Know, there are certain risks ahead of us that may show realizations are not necessarily, they may prove to be domestic. At the same time, you have growth that is reasonably stable, so what youre looking is assets that that dont of hurt any more because high waits. A well lates have established market. T the same time, dont require huge amounts of additional growth. Emerging hink about market bonds, whether youre thinking about Investment Grade their assets do well in an environment where bond yields not breaking out stable and at the same time huge mount of additional growth to perform. So are we in a world then where the entire yield curve and we lower for longer could be in a frog tkpweu time . Ation for a very long yeah. I think asset allocate is a very constrained required able. If youre 300, 400 billion 7 return, with a theres only so many things you can do. His isnt like japan which has been at low rates for almost ever. Then they funded the trade lsewhere for high yielding assets. Amount of high yielding assets that can absorb the amount of to meet Pension Fund Obligations is narrowing still. With the d a bit recent ten year move but is still very small. Emad, the reason williams comment is so interesting is because the Federal Reserve, for part, is a reason for the cenario thats led to these valuations. The minneapolis fed said the third wheel of the federal eserves mandated financial stability. What role does the fed have to play . From my view, if valuation equity and it provides very good Growth Capital for the underlying growth. The feds job is not to push up stock markets although theyve deliberately. Their job is to maintain the economic stability or the economy. Ind of u. S. And i think that again theyre constrained in what they can do. Not talking about 4 u. S. Rate. I dont think anyone believes that. Range, in this narrow again. Mostaque, thank you. Altman is going to be right here. This is bloomberg. German inflation data coming well below the Previous Year on year. Well below the previous months reading. Joining us for more emad moustad. Does this take off any hawkish forward . Going first, its important to keep in mine that inflation rates the be coming down on headline level for a number of economies including the u. S. And in the next few months. We have gone through a price significant very role in boosting them higher. Theyre returning back to more ppropriate level in the next few months. Second, when it comes to asset at a s, we are still higher level than we were this last year. When it comes to policy makers, means that they cannot in this inflation environment amounts of eme additional new easing, which in the at at some point second half of the year, the ecb will have to start discussioning it. Having said that, the market has into the idea ay that they may be hiking already 2018. Ear, if not early and i think when inflation starts to come to more normal discussion may prove to be a little premature. This is basically what policy been discussing in overuro area very raoepbly the last week. Themos can you extend that to europe as well. Maybe people got a little too excited. It is lower than many banks thought. And the upset weve seen recently has been driven by energy . Appened with absolutely. I would highlight three more point. To add to your the first one is that by and large the biggest amount of the last rates over few years has been commodities. Always tend to under estimate the upside and downside. The second thing is theres very little convincing globally for many years now. Space of low inflation. Right. Basically youre seeing having less of an effect. Gentlemen, thank you very much. Both of you are sticking with us. Ian pwrepler. , this is bloomberg. From new york city, youre watching bloomberg day break. To speed very up quickly. Down 27 on the dow negative 3 on s p500. We are set up three days into trading week for the biggest week of gains so far at least this month in the states. Euro three day losing streak. Euro weakness again this morning. 02 , south of a dollar. . 008. Reasury, big over the last couple of weeks. Thats the situation. Headlines ou some outside the business world. Thank you. In europe british Prime Minister theresa may will begin the process of taking back thousands of European Union laws. May published proposals to incorporate 19,000 europe based laws. It will then be up to british decide which ones to keep. Chinas president will meet with week. Ent trump next the sum pheult will take place at mr. Trumps florida resort. First time the wo meet since President Trump took office. They are expected to seek Common Ground on issues ranging from trade to north korea. Back for President Trumps revied travel ban. Judge in hawaii extended a federal halt from six muslim nations. The judge ruled that white house religious bias. His ruling could stay in effect overturns gher court it. 120 l news in more than countries. This is bloomberg. David . Thanks so much. Not just that travel ban. He also will be meeting with the secretary of the treasury today to walk through the options open for tax reform. Here to give us a preview kevin cerilli. The do we know about options that will be presented to the president . Treasury secretary mnuchin said he will be the go to point comprehensive tax reform. Hat buys them some time to weigh in and decide on key controversial issues that have ecided policy laws as well as lawmakers on capitol hill. The border adjustment tax has backed by