And im watching copper acteding better than expected up 1 . Now for a quick look at the week ahead. It is quite a week. Tomorrow earnings from bank of america and Goldman Sachs. Then Morgan Stanley. Then the inaugural meeting of the u. S. China economic dialogue will take place in washington. At 8 30 on wednesday we get u. S. Housing starts data. Economists forecast a jump for the first time in four months. Then thursday, followed by the president 45 minutes later. And the bank of japan will release its Monetary Policy decisions. At 8 30 eastern its weekly jobless claims. Then friday well have earnings rom General Electric and honey well. And then shell watch her episode of game of thrones. Overnight we have important and encouraging Economic News from china. Joining us now from hong kong, it looks like a beat pretty much across the board. Take us through it. Good morning. A big set of numbers for china, shows that theyre on tract to contribute one third of Global Growth this year. Its not just an external story. Exports are doing well. But on the ground domestic spending is doing well. Retail rose 11 . So i think across the board not withstanding the risk on chinas economy, which well come to, the overall growth stories, in a sweet spot pfment what about personal consumption . Retail sales were encouraging. Very much so. Thats exactly what the government wants. They want to rebalance the economy away from the heavy industry, export, and the like. But now were seeing increasing consumption not just of cheap goods but up the value chain. White goods. As the base continues to grow. Were seeing disposable income rose 7 . Thats even as wages stay stagnant. It was interesting that you had shanghai ending lower. I can only think it has to do with the newspaper warning of rhinos walk us through what happened there with that headline. Not to be confused, the front page of the peoples daily today. Im told they need to get a grip of not just the stress you cant anticipate, but the ones in front of the. And that is debt. The president himself attended a meeting, which is unusual. He said it would be a dare licks of duty not to tackle that. He likened it to National Security. So theres a sense that with the good Growth Numbers now chinas authority will have the ability to reinin credit. So whats the trickle down effect . Less import growth . Less export . Whats the trickle down for the rest of the globe the sense is that for sure theres a series of risk in the system but they dont want to go too far ahead of the reshuffle of the Party Leadership this year. Economic stability is their key. So the feeling is that the steps initially might be baby steps but the a broader impact shouldnt be too negative. I think the biggest fear is the trade tensions which linger between the u. S. And china. Another story i imagine theyre laughing again looking at 6 president 9 . Have we got any update after the method, the model they have to gauge the performance and whats behind the the official data they put out . Thats right. Theres a healthy degree of skepticism and often quite rightly so. It doesnt have the transparency or High Frequency in terms of the data we get out. And indeed chinas government itself has acknowledged they have a problem with some of the data especially in the northeast and theyll try to factor in their own numbers Going Forward. Nevertheless, its the only Health Reading we have on economy. The trend remains at positive. I think that probably gels with what other orders of private sector tells us, which is that heavy government stimulus has slowed under the economy. 9 is up not its 9 for debate. What extent have officials there been bailed out or how by the Monetary Policy and the direction of the u. S. Dollar more broadly . Thank thats abuse of the power of authority and theyve gotten lucky to some extent. Pressure on the currency was heavy last year. The had to spend a lot of International Reserves to spend the currency but of course the swing into dollars taken, its taken a lot of downward pressure across the u. N. And it hasnt been at the pace some hawks would have anticipated so that has taken pressure off china. If it was to reverse and the dollar would sort of rally again that would put pressure chinas own nd reserves. You discussed the meetings going on this week. One chinas own is trade. Particularly steel. Because we may even this week get a decision on that proceeding in washington. So chinese trade is going gang busters right now. Weve seen exports increase around the world, including a widening of the trade deficit there although imports from the u. S. Are moving higher. I think that in and of itself be all and end all for chinas economy. The worried that it might damage more relations. Especially the tip of the iceberg and tariffs on steel today. That would really start to hurt the chinese economy and of course hurt the wider Global Growth story as well. Thats why it continues to be an ongoing and caution in china in terms of how they want to deal with President Trump. We heard the chinese president talk about the need to open the doors for more investment in china. Thank you so much for joining us. That was the headline out of china for the most steel produced ever in china. But exports are down. Theyre producing it because they need it. The ones who benefit are brazil and turkey and india. Not the u. S. And not europe. You know what they would, though is to trim back on production if they need it. Thats not going to happen any time soon. Definitely not. In the word of commodity. Coming up former white house and obamacare architect will be joining us from new york city. The main event this week is the ecb holding its meeting on thursday followed by a press conference. The question, when will they stop or slow the pace of Bond Buying Program . The latest news says they will slow the pace in september, rollback starts january and most economists see bond purchases ending in september of 2018. Oining us is andrew. Great to get your perspective here. The trade has seemed to be you want it except for today. You want to short those markets. You want to go into the euro and buy equities. Is that going to play out on thursday . Its hard to know if it exactly plays out on thursday afternoon. Im not going to forecast a couple of hours of trading a few days hence. But we are of the view that by the the end of the year could 1 . Ly be at and we have a 3,800 target on the euro stocks. And we are modest euro boom. So we think the theme in general will continue. But the question i have though is that was the theme here in the u. S. As well, when President Trump and the white house, you wind up having a fed thats going to the pair it back. But that trade didnt go out. You want long dollar, short treasuries. The only thing that worked is going long equities. I think its fair to say that there is some inconsistency in the consensus view. Because roughly speaking 70 of the time you have a strong euro. Europe historicically has underperformed because you get over half of european earnings from overseas. So our advice has been very much to buy europe unhedged and in addition to focus on those domestic plays which get the benefit of both relative euro strength and relative domestic demand growth. But when you ask the question will europe outperform in unhedged terms, i think the answer is clearly yes. Its 20 cheaper than the u. S. Relative last time European Economic growth and Earnings Growth was above the u. S. It was only on a 5 discount. So its something of a rebreaking story. Talk to me how you want to play that domestic story. Is that a stock specific thing . Its its fair to say it is quite difficult to play in any large size the domestic demand fee. Of course xy on it are the banks. Because they are abnormally domestic and historicically they do positively correlate with a stronger euro. So thats why we and indeed any others are of the way of banks. What we feel is even if yields did not rise then the potential rebound in asset quality because of the gap between the Mortgage Rate which is well below the rental yield would offset most of the disappointment if the bond yield didnt rise. In other words, the improvement in asset and loan growth. So in simple terms banks are a big way to play. There are other pieces we like that have high exposure to dormse stick euro. But yes that is prodly speaking right. Lets talk about european financials more specifically. Weve seen it come to play in italy, in spain. Is this a periphery tory for you or something in france, in germany . Can you be more specific on the banks . Well, its very simple. If you look at the banks they have the highest correlation almost with any sector with bond yields. Indeed, their correlation with bond yields is at an alltime high. Moreover when you look at that valuations relatively that broadly speaking neutral but the only momentum is that a tenyear high. And what i believe for certain types of banks, ie, retail banks, who have abnormal exposure to real estate as collateral and to household loan growth, that we are underestimating the improvement in real estate prices. Remember lending for retail bank is clat liesed by real estate. Were underestimating the improvement in real estate prices and the rebound in household loan growth. So you want to focus on a particular type of bank. Not so much in corporate banks in my mind but retail banks. And they tend to be found in spain and holland in particular, and there are one or two in france. Whats the biggest risk to your call on europe . We start off the year with a lot of risk. But it was the france or etherlandses or germany. Is it now or Something Else . We always thought the epicenter of risk in europe is italy. That could be broadly defined to have a joint list. And then they could potentially get more than 40 of the vote in the upcoming general election which would give them a 15 bonus. Then youve got to clearly enter your own parties in power. Now, what we hope is a five stars popularity is beginning to wane as in we saw in the general elections as indeed we have seen with their rather poor growth. And that they are also becoming less antieuropean. Theyre no longer antieu. Nd theyve ruled out a jointness. But italy is the center of a Political Risk also the economic risk. Its had worse growth in 2000 in depreast which is an achievement. It has one of the biggest fiscal problems and overvalued Exchange Rate. So yes italy is the risk. Global head of equity strategy will be staying with us. Coming up, blair efron. He will be here to talk about whether jamie diamonds frustration with washington echoes through other board rooms. Sigh M Fund Management is launching a fight against proctor and gamble. They say its stock has underperformed because of what it calls the companys slow moving. According to a filing they want to break up the company or replace its ceo. The hedge fund is trying to get Retail Investors on its side. Elliott management has a website and convincing investors that it can end underperformance by the largest mining company. They want it to end u. K. Ausestrailyam corporate structure. And the ceo is stepping down to take the same role as icb. She will leave the Discount Airline for seven years. Theyre dealing with slowdown in advertising and speculation that its a takeover candidate. Thank you very much. In the u. K. Here where brexit discussions are under way as the march 1e9 list edges closer. Theyve promised Real Progress in the negotiations over the future rights of european nationals in the u. K. While the chief spoke about the commission. The decision to leave the eu has consequences and we have to explain what these consequences mean for them. The pair saying a similar tune after completing negotiations after round one. Its incredibly important we now need new progress. And compare our risk positions in order to make good progress. Joining us now from the city of london, the collupnist and lets begin with you. What is concrete progress look like today over the preceding days as well . Well, i think the three main things, we have to understand that there are quite things of sort. I doubt theyll be able to get that much concrete progress through. But i think recognition that some bill will be paid i think will be taken very well in certain european capitals, not all. But i think the rerknigs that they will pay something towards the budget and means they will not have to redraw it up to 2020. The heat ake a lot of out of their discussions. I think the easiest thing to do is reveal the more foreign nationals from the European Union the heat out of their discussions. And t people overseas in europe that should be a solvable solution if they can agree this middle ground of having a court which or t subject to the ucj indeed u. K. Supreme court but is a middle way ground. Perhaps in the hague. That could take pressure off that as well. What does it say about the the level of progress . Consider the idea the concept the u. K. Just agreed that the very idea the bill needs to be paid. Then they need to work out how big that is. Thats going to take a long time. Isnt it . It is. The only car we have in this is some sum to to pay not be breaching International Law at soim point in the future. But i cant see why the current government wants to do anything without really a clear outline of what a trade deal might be. Eyve s the only card th got to play and theyll pay it as late as they can. There is something due without putting a firm number on that. But both sides there are other investments. The European Investment bank and other things which in theory pour back into the u. K. So if they are honest there are numbers there and they can frame it, perhaps some independent arbiter can rule what the correct thing is then maybe its a small step. Its easy to get boxed down and consumed. But you though looking at the world of expertise how much attention to you pay not negotiations . And give me an idea of what you consider noise and what you consider signal. Of course everyones got an opinion. My personal opinion for a long time has been there will have be a very long transitional period after mark howsman 19 partly for administrative reasons to get the customs declaration system up and running. Partly because the minimum rade negotiation has taken longer. Ponal because of the nightmare remembering it will almost be impossible until the parliament acts in 1e9. Just a practicality. I think the longer the transitional arrangement, it could easily be suggested two years. Then the greater probability. But nothing else has changed. So the key to me is the length of the transition or deal. So i assumed personally a twoyear transitional deal. In terms of march 1e9, in terms of the equity market. Just remember the golden rule. Nearly three quarters of u. K. Earnings come from outside of i think the longer the transitional arrangement, it c1 the u. K. The most important thing its sterling. Ironically the worse negotiations go the more sterling weakens and the better it does. Thats the bottom line,. From new york city coming up very soon well be speaking with donny, former bank of england policy maker as we counter down in a few weeks time. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Jonathan from new york city, you are watching bloomberg daybreak read im jonathan ferro. But you up to speed on the 500, second s p straight week of gains. Outperforming, we are up by zero points on the 100. On the other board, here is the situation in the fx market. Session. Pound on the a down by a third of 1 . The dollar showing strength. Yields lower down by two basis points. On the u. S. 10 year, following the soft data on friday on retail. In the markets, lets get you up to speed on what is making headlines outside the business world. Americans feel good about the economy but not so good about President Trump. 58 of the survey say they are moving closer to realizing their own career and financial aspirations. That is the highest level since the question was first asked in 2013. 55 of americans view President Trump unfavorably. Mcconnell hill, mitch has put the vote on the Controversial Health care bill on hold. John mccain is recovering from unexpected surgery. Comenell is struggling to up with the votes he needs to pass legislation. In venezuela opposition leaders say more than 7 Million People. Asted more symbolic votes the mock vote has no legal impact. Lobal news, 24 hours a day im emma chandra. This is bloomberg. Thank you so much, emma. We are the middle of earnings season. Will sentiment wind up evaluating valuations. Revision for the s p and we have seen the biggest jump in those earnings revisions since 2014. You can see that they jump you are so far. Despite the fact that we are record high on equities. Andrew garthwaite is with us and he has a target of 2600 and just raised his urine forecast his forecast. Do you see that backing up sentiment . Broadly speaking, yes. That is been close to a fiveyear high. Modestly rolling over, against the year on year change in the s p. That has had a good fit going back nearly 20 years. If the s p is flat from here it is implicitly assuming a large rollover in earnings. We dont see that degree of rollover. Nearly 9 ofsting Earnings Growth this year. Eight and a half next year. It is slightly below consensus for next year. 3. 5 percent for low consensus. The normal rate is 7.