Bloomberg daybreak europe. I am anna edwards. Manus i am manus cranny. Are you exhausted . Have you already spent your possessions on affects . The probability event of a rate hike has gone from 30 to 90 . What has happened to the dollar, it has faded. Butd glory this morning passes the moving average. Band, we aren a trying to make our lined up what we want to move, fire, or aggressively trade. The best winning streak since may. Anna we wait for janet yellen to speak. Putting for thoughts. Lets put up the risk radar to show you where we are. And japan dropping after three days. Japane the number out of and an increase since december 2015. That is being overshadowed by the biggest questions. Appetite how much anybody has to continue the global rally. We saw stocks retreating from those highs. Raw materials in retreat which led the stocks down. Markets are talking about a fall in rick attacks. You have the total volume however, 40 below the 100 day average. The bottom line is this do you believe in stockpiles in the United States america is going to trump what opec does . A volatile picture in the oil markets. You mentioned we are as a threeweek low. Earlier this week we arrest a sevenweek high. It seems these two competing andors still competing driving more movement. Breaking news if we can get to it, numbers coming through this morning. A host of breaking news in the insurance vector. Operating profit 1. 4 billion. Andng a new ceo for germany giving us the assets under management at the end of december. 204 billion swiss francs. Manus welcoming any global move. Good news for Life Insurance companies. Thank you. Jeff sessions has removed himself from investigations into russian influence in american callscs to it comes amid from democrats to resign over his conversation last year with a russian ambassador. President trump says he has total confidence in his attorney general while Jeff Sessions says his discussions were not related to the election campaign. I never had meetings with russian officers operatives about the Trump Campaign. The idea that i was part of a continuing exchange of information during the campaign between trumps surrogate and intermediaries for the russian government is totally false. Donald trump has set his defense secretary will lead a great rebuilding at the u. S. Military. Uss gerald ford whose construction is delayed and over budget. We will have the finest equipment in the world. Planes, ships, everything else. Soone going to have very be feisty movement in the world. A Marine Le Pen victory would spend dust spell the end of the eu. Marine le pen whence it is game over for europe. It is impossible to have a leader of one of the most important countries of the European Union as somebody who is against the European Union. Japans inflation rose for the first time in 14 months, offering some hope that price gains may continue inching toward the target. Household spending fell 1. 2 . Three times the forecast drop. Higher inflation is at the heart of the environmental revival efforts. And you and ill Higher Oil Prices and a weaker yen. Friends all fillons woes deepen as elected officials this own his campaign and police searched his home yesterday. The string of departures including Campaign Treasurers gerald boyer and bruno. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Stories ond more bloomberg at top. We are rounding up most of the agent asian equity session. The nikkei down by. 5 . We can is coming through in hong kong. Its declineending ahead of the npc in beijing. Australia really hurt today by the weaker muscle prices. A huge slowdown and travel related socks in korea. Really hit hard down by 13 . Reports that china has proposed a curb to south korea in terms of trying to crack down on travel path travel packages. Nintendo swiss consul, shares of 4 in japan. Extending losses today. Have a look at this shot as well. We know that the hong kong rally has been going very strong. The hang seng itself has had a great start to the year but that has started to teacher out. We are seeing mainland inflows into the hong kong stock market starts to dry up. The hang seng up 8 over the course of this year. Anna thank you very much. Joining us from hong kong. He packed week. Resulting in a drastic change in the rate expectations. Three crucial voices, all of which carried the same forces. Manus today we hear from a voice that really matters. Janet yellen. She delivers her Economic Outlook at 6 00 p. M. U. K. Time. Ahead of that the market is going to be focused on a shot. Life tv has not been kind to me. Lets have a look at this. We have of course a graphic version of this. Into the studio head of strategy and economics at ubs. We are you exhausted . We arrest 90 . Nail in afinal verbal rate hike from janet yellen customer yellen . Onehe message has been explaining why the market is moving this direction. This not a done deal. Good in thet of u. S. Data but there are some reasons to be careful as well. Why do you think the market adjusted so quickly . We have heard commentary from the fed for some time. Something this week and who said them, maybe the fact that there were voices in there. Something about that really captured the markets. They have sounded as if they are getting ready to vote for a height a hike in rates. Economy has been doing quite well for quite some time. The fed is keen to get rates higher. In aare keen to do so optimal way, not get them fire as soon as you can. Ultimately in a way that allows you to get them well away. Manus the one thing that struck me as we read your note. Consumer confidence is all taken off in 2016. That versus some of the consumption numbers, you have a different one when you look at the construction numbers. You are more irked. Early data fory the first month of the First Quarter of the year. Real consumption, it looks like, was pretty significantly weekend in january. We think it is tracking around 1. 5 . That is ok but not stellar. If you were that Consumer Confidence hasnt shot up. There been moves since the president was elected. At this point we dont have a lot of clarity about what the fiscal plans might be. We just have the framework. As those plans are put into action it may be disappointments ahead. It brings Consumer Confidence down a little bit and campers the optimism we see. Whether that is enough to derail or trigger a much hike we will have to see. We are pretty stable as for the overnights on u. S. Tenure 3 by the end of the year . We think the yield will end of the year not far from where they are now in we think growth is going to be all right. We think the fed ultimately will raise late rates. We question whether those hikes are employed and ultimately will materialize. We are pretty mutual on those. Manus thank you very much. We will bring you coverage of that speech by janet yellen. Can followustomers it all on key live. Anna annual u. S. Monetary policy a wealthier host of speakers. The keynote will be speaking given by stanley fischer. Jeffrey lacher of richmond and john evans are due to appear. To 3 15 p. M. Break, it is trading day. The company is now bigger than deutsche bank. Its 28 billion market cap. Anna china, 3000 kilometers dissent on beijing is the president lays the groundwork for a political reshuffle. Ahead of the National Peoples conference. We speak to data on the very latest in the president ial election. This is bloomberg. Anna welcome back, this is bloomberg daybreak europe. It is 3 16 in tokyo. The dollar against the yen has more militant than earlier this moment more movement than earlier this morning. Lets get the Bloomberg Business flash. Heres juliette. The ceo has said he sees as the big holy grail in asia. Speaking exclusively to bloomberg at his Companies Senior management conference in central and. As you know, it is to try to aderstand and deploy successful on short strategy. We are continuing to work through joint venture partnerships so that we have find the right model. Management will be more broadly accepted and recognized. Juliette most companies are planning to continue intense negotiations through the weekends with the aim of announcing a deal on monday. The deal would create europes second what this secondlargest automaker. Manus thank you very much. Was day one for snap. It went pretty well. That is the understatement. The biggest ipo since twitter. The stock rose 44 from 17. That is what you call coaching caching. Anna translate that into various european linkages. Lets get more with Bloomberg Economist tim and taipei. Snap had a fantastic first day 10. What significant does that hold . Compared to a few european it names. It was not bigger in terms of profitability. Clearly, theres a lot of hope and dreams tied up into the snap ipo. 44 firstday close sounds fantastic. Put it in context, if you look at the average of internet ipos in the u. S. Over the last 10 years, those are priced at or above the range with an average of 49 . Those broughton day one think it will go further. What does this say for the others who have had up momentum and desire to get out there and get a string of other highly valued startups . They want an exit opportunity. This sets the stage for them doesnt it . It does absolutely. Spotify has two part of their recent funding stipulations, they have to come to market some time. What we are seeing with snapchat is there is a lot of demand up there. To buy intonts ipos. A lot of supply and not enough demand side and supply the ipos. Anyone who comes in the next year or two should do quite well compared to what happened to snap today. Anna thank you very much. A fascinating story. About u. K. Politics. Accusing her of sacrificing a Living Standard in scotland. Says in recommence eight the departure from the eu will take more than two years. Brexit negotiations will take a long, long time. Two years is not enough. One facing out on many fields and it would be very complicated. On the british side, because at the end of the day there is not one brexit you theresa may is wrong when she says brexit means brexit. There are many brexit. Head of u. K. Economics with us here. This is something youre watching quite leslie. What story does it tell us . It was the focus earlier this week because they sold out 7 million guilds in january and there has been some demand for u. K. Assets might fade as a result of the referendum. We put that in a wider context and say nothing to worry about you very volatile and the back end of last year they bought a record amount. There is no sign of a drop in command from overseas investors. What an eye by working at is the convergence between u. S. 10 year bonds in the u. K. And in the u. S. U. K. Over u. S. Is looking very stressed. Do you agree that u. K. Over u. S. Is incredibly stressed and the end of qe may change the direction of this spread . A remarkable charts. If you look at the pope before 2016, these were almost handinhand. They have completely decoupled. Two basic reasons for that. Two main drivers. One is brexit and the referendum and all that, where the first rupture came from. The second is the outcome of the u. S. Election and the stuff we touched on about the possibility of large fiscal stimulus which is where they shot higher compared to other markets. This spread is a historic wide but there are good reasons for it. We think they stay around this level. End and that is already priced in. In our view unlikely to be the last we hear of the story. We think the u. K. Will slow significantly this year and well have to enact further monetary easing. Anna the next move is not a rake rate hike . Is going to be an easing of policy. What does that do for sterling . You you need a transition cocoa. Wet heard from the just heard it was going to take longer than two years. It risk proponent is that drops below 120 and there is no big transition. Currency, i the think the conversation is shifting. We think sterling has started 113 relative to other economies as we expect to see. A lot of talk about how the so far referendum has not had a got in cap on the economy. There are optimistic noises being made about how this should be negotiated smoothly. We dont think the market is telling you that and we would agree with the idea that two years is a very short timeframe to agree on such material and radical changes in relationship and the closer we get to that deadline the more the markets are going to worry, confidence is going to sour. We think that that is a likely course of events. Anna how do you look at Political Risk as we approach the French Election . A risk reversal rate, the relative movement can put things around. It drops to a record in february, not a new story, but dropped to a record. More risk to this French Election since 2004. This is a big item. There is reason for that. Friendly, we have seen this before. A couple of times recently where the unexpected happens and if you look at any gauge at the likely outcome, it consistently chose that the shots of Marine Le Pen winning are low but not insignificant. Were there to be another shock it would dwarf everything we have seen. Manus a binary outcome is possibly helping us. She is still not ahead. This spread, is that the benchmark we use or do we use currency as most volatile elements . For us it is peripheral spending. If you saw expectations mount that somehow things will be different and she might help somebody have a real chance of winning, peripheral spread is where you going to see the most distressed ahead of time. Then the currency becomes very vulnerable anna it would not be france, it would be italy, spain, all those other markets we talked about. 2011, 2014. Thank you very much. Were going to talk about china. The key economic type and what we can expect from the congress. Decide theogether to future plans. This is bloomberg. Anna welcome back everybody bloomberg daybreak europe with hong kong. Moves lower in some of these key equity markets over in the asian session. We are getting breaking news, lets get to that. Japans pension fund posting a therd 92 billion gain in octoberdecember quarter. And whatund this story they are able to invest in and what they are not. Saying,oment a are 15. 2 gain on japanese stock. For now equities added 16. 1 . Manus on the bonsai they have lost 1. 07 going into negative territory. They gained 8. 82 , the same story as you saw in sweden the other day. Rocking it out on the equity exposures. That is japanese pension fund, all very well for them. Nowhere to go, you know where to go. Cover story . Anna all about the fed waiting for janet yellen and stanley fischer, a roundup this week. Dont miss the Economic Outlook at exit clock p. M. U. K. Time quite like that image. The question we have been asking is are you exhausted . The fed volume, 1500 contracts, normally they trade for million in a day. The market is more cautious going into that. At 9 30, that closes a. M. Inbably jogged along february 254. 1. Anna daybreak focuses on the pimco story. 75. 4 billion in assets. His income fund, surpassed the federal funds considered the worlds largest. Manus markets are far from the heart, how is the dollar looking . Reporter i will come to the dollar and a second. Good morning. The Global Equity rally has taken a bit of a pause. It has carried through to the asian session, the index lower. After threeg losses days of gains. Australia down, singapore lower, south korean stocks tumbling the most since november on reports that china ordered travel agencies in the country. He bloomberg dollar index is losing momentum after five days of gains. You can see a number of these currencies weaker against it. The 10 year treasury yield study around 2. 48 . Day slides. A three nickel of 1. 3 . A mixed picture with metals. The yen actually gaining against the dollar today. It is weaker on the week, down 8 . You can see this weeks action here. Stallingd momentum near the 55 Day Moving Average as it did in midfebruary. Yellen and fisher speaking today, it could get the boost it needs to push ahead to the next area. G metv, six triple for 6444. The dollaryen, 113. 13. The twoyear treasury yield, the touched 1. 33 on thursday. The highest since 2009 and it is holding above 1. 3 . Tight most closely to that policy. Wellhas not performed to off the back of a stronger dollar. Down. 2 but is down almost 2 on the week after four straight weeks of gain. Anna think you very much. Lets talk about the chinese story. The political elite will reveal their economic tide it kicks off on sunday. Joining us from china. What is at the top of the agenda . Arerter top of the agenda the economic priorities for chinas leadership. Theyre going to unveil many of these on sunday and what investors will be looking for is how much of a stomach they have for Slower Growth as they switch their focus to these financial risks, the credit of the expansion we have seen in the last 12 months. To that end we will be looking for the new gdp target for 2017. 6. 7 last year, they may lower that target to get more wriggle room. That may be increased marginally. More fiscal space since the fabled bank of china starts to financialsteps toward regulation. We have heard colorful words from china regulators about crocodiles in the Financial System manipulating the market and an amount of chaos among regulators. We may see more coordination between chinas regulators insurance, security, and spanking. On the economic front and the political front. Manus talk to you about foreign much would trump dominate these discussions . Be pepperedely to on questions about donald trump and u. S. China ties. Theent have eased since phone call in february. The silencing acts for china is showing it can be strong on issues like taiwan for its domestic audience while not aggravating trade. It is not want to get into a trade war with the u. S. It does not want that to damage its economy. Another area of focus will be north korea. Intentions tensions there are rising. Division amongst chinas leadership with how to deal with north korea. We are likely to hear about military spending. Taiwan,lso hear about the South China Sea and hong kongs leadership a couple of weeks after the meeting. Obviously a