Anna welcome everyone to bloomberg daybreak our flagship program. Bank profit one point eight 9 billion euros ahead of the 1. 5 billion that had been estimated. We spent a lot of time with the other banks in the sector talking about whether it is in the u. S. , here in europe. It is an area where europe has underperformed. Thick revenue in the First Quarter jumping 32 . Helped by commodity performance according to the business. Activelyny says it is and omitting remediation plan as part of a settlement with u. S. Authorities. An update coming with their political connections in the United States. Up by 32 , that compares favorably compared to what we saw divert and. American banks where we are seeing an average of the top five, 15 increase in revenue in the First Quarter. Perhaps it will be a pleasant surprise. Just like many in the Banking Sector, particularly in the bank the french Banking Sector, people waiting for a second round of the french elections even though we saw a big relief rally monday on the end of the first round. A chart in terms here. The public money into french equities pacing ahead at a record. Tire highnch up tieup. At 801usted operating Million Euros operating operating. Them it isnews from the ceo will exit the business july 15 around a pro in regards to syrian payments to keep the business running. That should have knocked the confidence a little bit because this is a business which, of course, has ripped it out of the business. 600 Million Euros taken us in terms of operational facilities. Say upback program they to one billion euros in 20172018. A very comfortable operating after it be 801 Million Euros. The estimate is 787. Lets talk about the car sector. All six biggest carmakers in the u. S. Porting a reduction in the delivery. What does this mean for the economy . Manus if you look at european auto sales are at the record. Chinese sales are moderates. Do you read a great deal into what happens with the u. S. . This is the s p 500. You can see that divergence just over there. The question me about to ask ourselves is are the car sales a litmus test, the kerry in the consumer coal mine . Summary has to close the gap. The s p 500 if it will follow in syncopation as it has done for seven years would potentially. Rop by near 10 they saw growth in terms of their numbers. Correct some kind of pullback. What this means for plant production, a plant closes over happenedr, it has not recently but could that be back on the radar . Manus will talk about the broader assets are this morning here in europe. Australia down by 1. 1 . Iron or prices, copper futures also weaker. Chinese markets doing ok in the face of the apple disappointment. Australia market in is shut. Really coming under pressure. Manus you can see the iron or trading at a little bit low. Nasdaq futures, it is all about apple. Are you waiting until the new iphone eight comes up . That is the justification from the ceo as to why the numbers are missed. 58le dropped by 2 after million iphones were sold. That is the justification. Dropped quite significantly to the lowest in a month. Comments suggesting they are better than people have thought with lower oil prices. The uti up a little bit. Here is juliette. Juliette thank you. President trump has tweeted the government needs a good shuts down and september after congress agreed to a budget bill denying him his wish list. No money for his Mexican Border wall, a small cuts to the epa and full funding for plant heritage. Democrats called his threat sour and shameful. And his pick for investors say there may be a sanction with chinese companies. The Senate Foreign relations committee, recent actions by the north including another failed missile test has been able to convince china to take the situation much more seriously. There are other things they can do double medically and economically to send a clear signal that they as well of the United States and other countries in the world do not tolerate this expansion of Nuclear Technology and missiles by the north korean leadership. The Prime Minister has vowed she will not be pushed around in brexit talks with the European Union as the war of words with brussels escalates. Said Jeanclaude Juncker is learning she can be quite bloody difficult after a dinner meeting between the two. Today she will be a really bloody woman negotiating with the European Union. I must say i fear for this. Juliette 9 global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries you can find more stories on the bloomberg at top. A pretty quite a day for trade here in asia. Rest of the for the week. Hong kong is close to today. Soul closed as well. Thosex 200 really leaves declines in the region down by 1 . Iron or lower. Those banking stocks coming under pressure. Very fluctuating but we have seen a good again coming through in consumer stocks. Having a look at stocks in particular, and apple supplier backing that trend despite what we saw from apple. Tim cook the same people are waiting for the iphone eight. In singapore 6 substantially. Ahead of its consolidation saying it remains in a challenging environment and you have focus group down by 25 , the most since 2001 after it profits and jpmorgan downgraded the stock to neutral. Singapore banks are doing very well. You can see this reflected on this chart. We have been we have seen very solid moves, the white line reported yesterday. Week, will report next the overall singapore finance highs as ise 2016 the overall straight index. Boosted by thats return we have seen coming through from singapore banks. Manus thank you very much. We have had the earnings from the biggest banks that reported firstquarter and being estimates. As to buy a 20 increase and Corporate Banking revenues climbed 1. 4 in the we tell banking revenues. The bestou sometimes sometimes see is the ecowas, things grinding to a halt waiting. It seems that in france things continue and we will have to see how the elections unfold sunday. You have not seen hedging on the bond insurance . We have not seen anything that would lead to political uncertainty. There is political risk. An impact onve Interest Rates. How do you plan for that and what do you see in terms of longterm impact on Interest Rates . For the moment Interest Rates are low. What we do in that situation, we stay close to our clients, help them in the project. If you look at firstquarter results over french retail you can see loans of 7 , deposits up 12 . If that trend will continue that would immediately help to offset overtime low Interest Rate. The Interest Rates would pick up and that would further boost the contribution. There with their numbers. The Business Community in france making its opinion known. Of 13 Companies Said that marine le pens policies would it really harm the country. They have openly supported Emmanuel Macron breaking from eight reluctance to speak probably on politics. Manus four days ago, the polls leadolding with the macron of 6040. The head of Market Strategy, he joins us now. The countdown to coronation, theresa mays coronation later. It looks like macron will. The ceos are breaking with tradition. Momentum behind macron. That is what we expected. Ofple shifts away from sort the more radical views of the left and right we saw a melenchon and le pen and go towards a centrist normal policy. Pretty much what we expected. Obviously the risk is extremely scary for the markets. I think everything we are seeing right now, micron is going to win heavily in the markets on monday morning. We will make up any market friendly type of the of. In the first round there was no hidden or shut about that came out of nowhere that surprised us. The numbers were really much in line. Higher thanked out expected. It was in his favor more than anything else. It is will have a difficult time justifying a le pen win. Anna i invited of the french at it which i wont read in france. It involves their skins. It roughly translates to dont count your chickens before they had. This chart says you are in good company. This is about allocating to french stocks. Seeing brisk inflows last week and this is only after round one. The recent history is littered with unexpected results , be italian referendum, brexit, trump, clearly the conspiracists are coming out and saying what about the Trump Victory surprise . You have to price in that there is some sort of probability. Extraordinary things happens if Financial Markets but we do not expect it at this time because we did not see anything in around one. Manus the populist touch. Is aism it turns out cracker for anybody in the markets. To what extent does this carry through to the market . Most the 21st centurys recognized populist leaders three years after the election, look like that is of by 155. Populism is a winner all around. That is one of the beauties of populism. It does excite people. Exactly. It is not such a market negative or negative growth story as people like to make it sound. We dont expect it to be negative. We saw trumps populist views and the reversal we saw in the analysts that came on prior to the Trump Victory that were expecting a collapse in the economy and equities and a risk aversion to a complete reversal of where we are today. That chart says just because le pen wins does not necessarily mean it is over for france and the european economy. Not even remotely. Saying, what we saw with micron, we expect him to win handily. Anna thank you very much. He stays with us here on daybreak europe. Highlights for your day. The gdp hits the tape at 10 00 a. M. U. K. Time. The fed policy decision has 7 00 p. M. U. K. Time. Earnings from facebook and tesla. The fed the sites, the u. S. Central bank sets rates the day investors await clues on the path and the Balance Sheets. Your roundup comes next. This is bloomberg. Anna welcome back. It Rate Decision from the u. S. Central bank today while markets are skeptical of any action on rates today. Investors will look for clear see not just on the cap but the fed plan to run off the Balance Sheet manus lets pretend kathleen. Good to see you, lets start it off with risks. Signal, what do you think the signaling is going to be in terms of the concerns . We know the signaling will be subtle but we know because it is all about the feds policy statement. Those words that they so carefully choose are going to carry potentially big weights. They are not expected to really signal they are deviating from the baseline. Another rate hike in june and at least one more later in the year. No press conference, another reason why no move expected. Everyone is betting on june. Step back. Look at the big picture. The feds dual mandate. What the twists and turns are in the economy we have employment down to 4. 5 . Inflation not quite at its 2 market but close enough for us to continue to move in that direction. Lets step back from the big picture, lets get back to the last Inflation Report out two days ago. You will see the inflation is number the fed borrows, further away from the 2 . A headline at 1. 8. The headline was just above just above 2. 1 . Why is the fed going to look past all of this . First quarter gb just ubs 017. Consumer spending at 0. 3. That is a transitional weakness in the First Quarter bounceback and the Second Quarter inflation. Look at the longterm, and you are going to see that the economy picks up and so does inflation. Bottom line, the odds of the rate hike in june are 70 . Nothing in may. Watching the policy statement is what is going to count. Thank you very much. One i as always on the fed, we will be speaking to the former fed chairman. We will be bringing the former fed germans take on where we are right now. He is still with us here on daybreak europe. What are your thoughts on the fed . How many do we get from here . Fed, three andke 2017, 5050. We are on the less rate hikes, a shallow curve. The numbers are not coming in. We saw a different from the upward rise in trends and it will make it difficult for the fed to step on the brakes. As they said earlier, the labor market in the u. S. Is strengthening well. On limits down to 4. 5. Earnings growth picking up. Participation ratio improving as well. The fed is going to look at that and say that is really important. Things are tight so we need to client base down. One in june, one in september and we are done for 2017. A battle to have got to eight, do not be fooled. The fed is more of a duck than a decoy. More duck them decoy. Basically you have a calm demeanor at this meeting. There is a vigorous paddling going on underneath. What they really want is to zero in on a conference of strategy to reduce the size of alex sheets. Develop balance between hike versus Balance Sheet. If there is anyone flying think i think that is what should market. If they shift away from Interest Rates and more toward Balance Sheet management that is a big thing for the markets especially fx traders who are expecting higher Interest Rates and the effect on the u. S. Dollar is one of the prime year primary reason for positioning in q2. Thehey shift, that means strong dollar positioning is going to be less likely. That is a big piece for fx traders. Anything they need to do is balance the softness that we have seen in a q1 and start saying this is transitory, we have conference confidence in the economy. Signaling they have faith in what is happening in the u. S. From a volatile standpoint is going to be extremely important. We will be watching the jobs report friday. How strongly positioned in the dollar is the markets . Thel they respond . Positioning has come off significantly. There was a buildup for three or four hikes early in the year. It has come down to 23 on the upside. People have pulled off the dollar positions on the iron and level. There is positioning or a possibility that there is positioning in the u. S. Dollar. If the fed comes out and says we have faith in you the u. S. Economy. U. S. Interest rates as the primary tool for managing monetary policy. Watch the dollar pop. We are expecting for the next few months, the dollar to start gaining the upper hand within the g10. What he think that is most . Obviously the sensitivity on the short end of the curve, dollaryen is prone for an excitement. One of our key movers. Obviously the fed has taken a poll. The treasury has gone out into the market and talked about what you would accept. If if they knew or what happened with the rest of the Central Banks around the world able to go to the 4050 year. Is that going to be important . This is a 10 year Government Bond yield which is inextricably linked to the dollar. How big a piece of news do you think that might be . From our positioning we dont think it will be particularly revolutionary. One of the most liquid most traded understood instruments out there. I do not think that is going to shift overnight because the ad duration to the curve. To me it is not going to really affect our forecasting. The underlying strength of the u. S. Economy, we started the program talking about this. Carmakersbiggest report delivery declines in april. We are not experts in the auto sector but you are watching this from a picture. What does it tell you about the u. S. Economy . Do you get worried or do you think there are big transitions going on . I do not think this time is different. What we are seeing is a natural correction and a very strong rally when it comes to the consumer as well as the auto sales. We think the u. S. Economy is externally healthy. The reliance on a strong labor market continues to boost sentiment. We see it in the surveys. We see it in the confidence. Not seen it so much any hard data. We saw manufacturing come up. We think it is a temporary cyclical pullback rather than a shift in the health of the u. S. For is a fundamental driver positioning in front of the feds and such. Head of Market Strategy. Manus bloomberg had a conversation with the secretary commerce secretary. 6 28 p. M. Tories are seen at making gains in local those tomorrow. How good it will they be for the general election . Things be talking all exit. Brexit. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Matt it is 2 30 in the afternoon. Us guest this morning tells tolaryen could make it 1. 16. Good morning. I start with equities in asia we are seeing equity markets closed in japan and south korea and hong kong. Markets really generally marking time before we bit we get that decision from the fed as you look at the dollar index. Interesting things happening below the surface. This is the msci asia index excluding japan and the book value has risen to a twoyear high. Interesting things looking at valuation