Welcome to bloomberg daybreak europe, our flagship morning show from london. Im anna edwards. Manus im manus cranny. Anna lots of earnings coming through, keeping and ill the transatlantic m a. We have sap numbers coming through, reiterating the 2017 forecast and giving us a host of numbers. Q1 revenue beating estimates, that is one of the headlines. Its coming in at 5. 2 9 billion euros against an estimate of 5. 16 billion. It does seem as if that is where we got the sap story. Jousting with longtime rival in thecore, this is context of the Software Says it ishe company being run in their data center and Cloud Computing software delivered online, for all those different products on different platforms. Oracle reported a big jump and that competition is key. Watch out for Software License sales, that is what the big factor is, and the prophets number is 1. 2 billion against an 1. 20 3e of one point 2 billion. In novartis, theyre looking at 1. 11. They have been spending money on their hard drugs, so marketing costs have been core. They confirm the 2017 outlook which should be low singledigit growth back at the start of the year. The adjusted net income is 2. 90 atillion, beating estimates. 2. 64 billion. Is thee want to see business originally penciled in. It is an attractive asset. A nice set of numbers. Net income of 2. 69, above the streak. Anna if you are a billionaire, you got richer yesterday here in europe. Take us through this chart. Manus everybody talks about the macro value, whenever Marine Le Pen is up to we can discuss, but if you are a european billionaire, your wealth accelerated by almost 27. 5 billion in the space of one day, 2. 6 of the wealth was added. And theand cac up, volumes in those markets were up nearly 200 . This is the momentum. You can see the poor are in asia. Anna indeed. Similarly from the stock market rally, because this is an dollars, a lot of that is coming from the euro gains. Lets show you where we are on various assets. Fascinating stories to dive into. We just got the euro up to show you where we are, with all the focus on it yesterday. The bloomberg teller index, we see some gains in the dollar this morning, the yen on the back of it in this mornings session. Manus that dollar story is going to be inextricably linked to what happened with donald trump and that potential tax. You have donald trump talking eurodollar at one 1. 0865. Can that break higher . Volatility dropped the most on record, the dollar index banging away. Anna you mentioned shanghai was a different story. Today they are more in track with the global rally, the shanghai composite up by. 5 , msci closing at a record, asian stocks extending the rally. Its a broader asia story but shanghai did drop, into that third week of loss. We will keep an eye on that story, and this is the Canadian Dollar against the u. S. Dollar, its lowest in the year. Trump was reported to say they could impose a 20 tariff in a briefing on some journalists, watching this sector. Wilbur ross says this is a bad week for u. S. Canadian relations. Manus that is what unnerves markets, on the flip of a time he can flip of a dim, he can change his mind. In regardsff lines to tariffs that are possible. Anna lets get to the first word news with juliette saly. Juliette anna, thank you. U. S. President donald trump has called for tax cuts for individuals and to lower the corporate rate to 15 , according to a white house official. Tomorrow trump plans to make public the broad outlines of what he wants to change in the tax code. Further details are likely to the left until later negotiations amongst officials. In south korea, a u. S. Nuclear power submarine has arrived as part of its scheduled to conduct routine patrols. The arrival of the uss michigan on the Korean Peninsula comes amid heightened tensions in the north over the Nuclear Weapons program. The u. S. Secretary of state is expected to discuss the denuclearization of north korea at his meeting with the Un Security Council on friday. Chinas nonperforming loans have stabilized and the pressure from capital outflows has eased as the nations economic recovery takes hold. Thats according to the Deputy Central Bank governor, speaking of the International Finance and infrastructure for a at bloombergs headquarters in new york. We try to maintain Economic Growth and also we try to work andhe deleveraging process making sure that our lending and broader money supply has been. Rowing consistently juliette turkeys Prime Minister has said his country is tired of the European Union treating it like a student. Speaking exclusively to bloomberg, he said turkey wont tolerate being talked down to. [speaking turkish] we see fingerpointing at turkey, instructions to do this, not to do that, as if they are the teacher and turkey is their student. That kind of thing wont be accepted by this nation. Unsolde the number of london homes under construction rose to a record of 27,000 in the First Quarter due to higher taxes. That is the highest level since they began compiling data in 2009. The rise comes as affordability issues and Economic Uncertainty dampen demand for the most expensive properties. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more on the bloomberg at top. Were in late trade here on tuesday in asia, and we are seeing a lot of games coming through once again in these asian markets on the back of these global risk on appetites. The nikkei in late trade up by a8 and we are seeing rebound in china after the shanghai composite had that 1. 4 drop yesterday. We will speak to michael every, saying you cant read too much into this, but its different to what we saw across the rest of the globe. We are seeing risk on today and very Strong Movement coming through in the malaysian ringgit. Lets have a look at stocks, reaching a record high in hong kong, up by over 5 . This is on the shared by back, up by 77 year to date. Omatsu doing well on the back of caterpillar results. Is down by about 1 even though it had a pretty good quarterly update. That is one of the Companies Looking toward buying toshibas memory chip unit. Lets have a look at this chart on we were talking about that momentum that you cant pick in the china market, but the yuan could have a bit of a come back. This is the Bloomberg China monthly estimate, showing an economic recovery in china. This green bar is showing more inflows coming through into the chinese economy, which is getting solid support. Much forank you very that roundup. After round one of the French ElectionGlobal Markets rallied o the optimismn of the centrist Emmanuel Macron beating the far right candidate Marine Le Pen. Asian equities rose, the msci hitting the whole country world index hitting the all country world index. Anna in an effort to shore up more support, three le pen stepped down as the head of the National Front party in order to be a candidate for all the french people. She announced her decision in an interview with france 24. [speaking french] conviction, but now was a moment to move from work to action and this is the reason why it has been essential for me to take leave of presidency from the National Front. Today i have no longer the president of the National Front, i am a president ial candidate that wishes to unite all french people behind a project of hope and security. Manus joining us now on set, j. P. Morgan Asset Management strategist. When you see a move like le pen as she has done yesterday, was that a cynical move or a cunning ploy . I think its just a rebranding, i dont think its going to fool anyone ultimately. Policies,has the same and it doesnt increase the probability of her winning in the second round. Concerned,arkets are pulling looks likely that Emmanuel Macron will be the next president. We have seen that being taken positively by investors. We cant stop worrying about the politics, but we can focus on the fundamentals, which are improving quite strongly. France and the rest of the eurozone are quite positive, and pmi data is positive. What you are seeing if you look back to the start of january, 2016, since then approximately 15 of total assets invested in european equities came out. In the last few months you have seen, at most, 3 of it go back in. Anna le pens on some sort of andanding exercise, nt there was an interesting line about political paranoia and the European Equity story from one of my colleagues, talking about how politics are a reason to avoid european equities, and it results in investors kicking themselves. Is that the story written . I think it is. I think 2017 is going to be the year where there are lots of Political Risks that didnt happen. You have a noisy dog barking with no bite. That is creating attractive opportunities, lots of money coming out of european equities, and you would expect that a decent proportion would go back in now that the Political Risk has diminished. Manus we did this up, the monthly inflows. This is something, if you look back at last year, the amount of money that flowed out last year, talk to me about the flow. Are they reinvesting . Are you seeing money come back in . And what about the euro . M together. You are starting to see people reallocate to european equities. Its interesting, and conversations i have had with clients over the last six to nine months, everyone has watched the improvement and wanted to be overweight european assets, both have been scared to do so. Now you are seeing with the Political Risk coming down, money is finally starting to trickle in. Now that we have the announcement it looks likely macron will be the next president , they could become quite significant. Manus is that enough to turn a trickle to a flow . You have got germany, and and on i were talking and anna and i were talking about this i think italy is the bigger risk, but in a six month view it seems a long way off. Anna just think about germany and not italy. [laughter] if you look at the german election, thats not a risk. The probability of something going bad from a market perspective in germany is extremely low. I think investors can look to the end of this year, the Political Risk is dramatically lower, and that should turn the trickles anna you mentioned germany, so lets bring out this chart. This is german business confidence, a positive euro area data. When does this start to change the outlook from the ecb . Thats the question we will be asking. The might not get it answered this week but we will be asking, and it will continue to be asked into june. If you heard mario draghi at the last press conference, he was probably the most bullish i had ever heard him. Optic in growth, all the survey data suggesting what European Growth is looking like, and you would expect them to reemphasize that. I think it is still too early for them to change their guidance, but our view is that they will by the end of the year, and that is the tapering of kiwi. Of qe. By the middle of 2018 a will stop and that will have a meaningful impact on market, with higher bond yields. Manus a meaningful impact. Lets see how that plays out. Thank you so much. Bits and pieces of breaking news. If you are an investor in angloamerican, get ready. Angloamerican are considering the Oil Companies were under pressure, the miners retrenched, angloamerican saying they have had an agm where they revised the pay policy of their senior directors. Program,ing up on the President Trump set to release his plans for changing the u. S. Tax code. A big cut for individuals and corporations. Details next. This is bloomberg. Manus its 1 19 in the afternoon after lunch in hong kong. Hang seng is up 1 . Overcast, i wont venture a meteorological interpretation of i whether it is msit for rain. News from north korea. The kcna carries comments from the foreign ministry, condemning President Trumps briefing with senators on north korea. North koreas maximum pressure engagement policy is reckless this is the north korean comments. This as the North Koreans conduct their largest ever artillery firing drill on the 85th anniversary of the peoples army founding. Anna the president is set to do the briefing later, saying people have ignored north korean risks, this after the president xi urged restraint. This is some of the geopolitics that markets are focusing on this week. Lets talk about more breaking news in europe. Numbers out of volvo, the truck maker. These are firstquarter numbers. Adjusted operating income, 7. 03 billion swedish krona, nicely ahead. North america truck markets are giving us a number, 215,000 units. In terms of net sales, a touch ahead of estimates. Volvo navigating an uneven demand picture. Helped byruck orders improving economic prospects, including german confidence. Whereersus u. S. Markets demand has been flagging following a period of higher purchases. We will be speaking to the ceo of all the at 9 30 a. M. Manus lets get up to speed with the business flash. Juliette saly is standing by. Fog or rain . Juliette manus. For 4. 3 billion. It would present them with a stronger foothold in america with access to a number of stronger pharmacies. Europes biggest publicly traded Health Care Provider also made a smaller purchase to gain mercks portfolio, copycat versions of complex biotechnology drugs. Ppg Industries Says it may launch a hostile takeover of sweetened offer doesnt bring the dutch chemical maker to the table. Ceo told bloomberg you will take the proposal directly to investors if there is no agreement by june. Shareholders meet tomorrow, and some are in favor of the deal. And that is your Bloomberg Business flash from a polluted hong kong. Anna thank you. Juliette saly, with the meteorological pulse. 6 23 in london. Lets talk about the u. S. Donald trump will call for cutting taxes to individuals and lowering the corporate rate to 15 when he unveils his tax point tomorrow. Manus according to white house officials, trump will provide a broad outline for his taxes, the will leave details to congress. Trump appears to be backing down over a fight for the Mexican Border wall. According to journalists, he could delay asking congress to fund the project until september, and the shift could make it possible for lawmakers to pass a spending bill and avoid a Government Shutdown. Anna jpmorgan global asset strategist still with us. We have a briefing on tax do ue tomorrow, north korea briefings today, shut concerns looming large at the end of the week. I supposedly market perspective, theres a more immediate nature, the tax plan will be the big focus. What will the response be to a 15 plan . Is that feasible . If they could deliver it, it would be a huge boost to earnings. If you look at earnings expectations next year, they are hardly buzzed. The market moved but not on the back of higher earnings expectations. Theing earnings grow over next 12 months by 10 12 , even without tax cuts, if you have got that kind of tax cut delivery we wouldnt expect it to come through until 2018, but i think if you try and cut taxes that much, it is very unlikely that it will be able to get through. Anna hes having a falling out with ryan, 20 , 15 , clearly a battle. I think markets are at least initially going to be pretty dubious if that is the headline. Anna and we are just getting broad themes, arent we . Manus the devil would be in the details. What caught my eye is that the final stage of the bull market will deliver Strong Equity performance. If i look at what happened vix got demolished. Are we on the last leg of the dying throes of a crackling bull run . Within the well be last two years of the bull market. Manus not this month . I dont think so. Even if we only have 12 months left in this bull market, what you tend to see is the average return over the final 12 months has been about 25 . Manus you dont want to be underinvested at all. Certainly not. If you have two years left, which is feasible, returns are close to 40 . You dont tend to see markets peter out, they go out with a bang. That keeps is pretty cautious. Even though valuations are starting to look stretched, its risky on a relative basis to take risks and wait. Anna where does that leave treasuries . I was reading a story, treasury gurus blindsided, a lot of people struggling to get their heads around how a tax reflation trade is. Our view is that the pullback we are ceiling is not we are seeing is not sustainable. It will never be a straight line. The trend is clearly upwards. When you look at what the market is pricing, you will get one more rate rise this year, what next year, one the year after that. That seems way too slow compared with whats going on the economy. Manus thank you very much. 25 . Mike bell stays. We will hear what the italian finance minister has to say about the French Election and how president macron could impact brexit negotiations. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what d