Come next year, we will probably have the ecb with a stable balance sheet, and we will talk about Interest Rate movement after that. Anna welcome to bloomberg daybreak europe, our flagship morning show from london. Manus another day, another set of Earnings Results coming for. Lets go to commerzbank, germanys secondlargest bank. Operating profits, 314 Million Euros. That is confirmation that the turnaround plan is indeed having a good start. They confirmed their fullyear outlook. Loanloss provisions just below where we would expect. 196. 5 million. When it comes to net income, this is the storm. 217 Million Euros. The market had penciled in 74 Million Euros. The bane of European Bank ceos lives, capital 12. 5 . The target is 12 million customers by 2022, shareholders gave them a d rating, but a good set of numbers. Just think back to september. Is validation of strategy 4. 0. Anna we will be speaking to the cfo later this morning. He will join the team on surveillance. Matt miller is on the ground for that interview after 11 00 a. M. We will speak to him shortly and get his analysis on those numbers and look ahead to the interview. Story, they have their finger in so many parts of the Global Economy. We will be speaking to them later on. Firstquarter net income, 176 Million Euros. Revenue, 217 million, up 5 to 6 . They said in march that the february revenue number was up, suggesting positive momentum compared to the First Quarter. Thats a positive sign from a deck of from adecco. Fascinating to get the perspective of the ceo, what he thinks about Emmanuel Macron and the labor market in france. We saw the temporary starting agencies as well. To what extent are we seeing clients on hold, or are they starting to say we cant wait for the rules . All of that will be coming up later today. Manus and their largest market is french, 3600 pages of labor law. Does that need to be rewritten . Lets have a look at the chart. We have a record of the s p 500 last night, but i thought this was interesting, this is the money flowing out of u. S. Equities. Last week, you saw one of the biggest outflows of money in 2017, nearly 8 billion dropped out of the s p 500. Btb, 84. 39. At the same time, this is a syncopated move. Global volatility is under pressure. We can see the vix index, havent been here since 1993. It is the longest losing streak on volatility since donald trump came to power. What you have is three weeks of gains in the s p 500, but the money. Where is the hot money going . It is more skeptical at the moment. Anna we were talking about shorting the s p. We will get to that analysis. Lets put up the risk radar and show you the asian equity session. This is the picture of the United States and the new records on the s p. Monday we closed at the highest level since june, 2015. Strong returns in the market for japan. China seems to have positive little bit, with those south korean stocks closed. Asx on the back foot because of financials. S p futures im underlining the holding pattern. Manus yeah. Lets see what comes next. Lets look at australia and south korea, both important today. Aussie, we are waiting on the budget numbers to come through. Scott morrison is expected to o deliver. Financials flagging the market lower, aussie dollardollar down, the lowest level since january. And of course iron ore, never far from mind, under pressure. South korea, lets see how the political results come in. Will the korean won look at the issues of trade rather than politics . Anna it seems pollution is a big issue. We will be on the ground there shortly. Lets get breaking news from akzonobel. They announced they rejected pbgs approach for the ppgs approach for the third time. This is one of the shareholding groups that have been active in trying to get akzonobel to take a more proactive approach, Elliott Advisers condemning the rejection of the offer. Rejectionhat this constitutes a breach of corporate law. The reason for the decline are unconvincing, according to elliott. Manus lets see if theres another swipe across the board of akzonobel. Meanwhile, lets get to Juliette Saly with the first word. Good morning. Juliette manus, thank you. Lodging is voting is underway in an election triggered by a scandal in south korea, with an increasingly aggressive northern neighbor. Allegations of corruption at the highest level of government have dominated the campaign, along with worries about youth unemployment and the feeling that economic revival isnt being seen on the ground. Former acting attorney general days passedsays 18 between a warning to the white house that Michael Flynn lied to Vice President mike pence and the administrations decision to fire him. She testified to the Senate Judiciary committee yesterday. Tweet, President Trump suggested any problems should have been flagged by the previous administration. Australias aaa Credit Rating is back under the microscope as Malcolm Turnbulls government prepares to deliver a government that appears long on spending and short on saving. The books are being, complicated with miner investments. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. That budget in australia weighing into the financial aspect of the asx 200 today, because there are reports there could be a 4. 4 billion levy put on the banks. The asx 200 is down. 5 in trade. Flat, but yesterday it traveled to that 17 month high. Hong kong stocks looking pretty good, but still seeing weakness for a seventh consecutive day in china. We do have some calls on the shanghai composite from Credit Suisse cutting the 12 month target to 3600 from 3800. Seoul on holiday today as investors and everybody else goes to the polls. Having a look at the stocks in the region, toshiba rising in hitting out at Western Digital with plans to sell memory chip business. Thirdquarter numbers hit my that report of a 4. 4 billion levy. Cbas thirdquarter profit was ok. This is a power stock in hong kong, up by almost 15 on reports of a mega power merger lifting coal generated stocks. The aussie budget is being handed down soon. We are actually seeing the bond bullish, outperforming the likes of norway. Purple is canada, pink is u. S. We are seeing quite a lot of steepening of these curves on concern there could be a fiscal budget spending blowout from the turnbull government, if australia tries to ramp up Infrastructure Spending. Anna juliette, thank you. Juliette saly from hong kong. We had earnings from comments earlier, lets break them down with matt miller, who joins us from frankfurt. Great to see you. Talk is the numbers. What are the key takeaways. The bottom line is one of them. Matt yeah, not just beating on the bottom line but reading the highest estimate in our survey of analysts. Beating on that income and operating income more than anybody expected, and also revenues doing better than anyone expected. The main reason for that, if you dig into the numbers and look at the big ones that pop out, firstquarter net fee and commission income, 887 Million Euros. More on higher volumes and securities trading. That has been the story on wall street, on the other side of the atlantic, and has been a story to some extent for European Banks as well. They are also able to cut costs further, and on track to cut their 9000 jobs they announced at the end of last year. That is part of their cost cutting operations that investors want to see, and Net Interest Income will be something people want to Pay Attention to as well. 1. 40 5 billion in Net Interest Income, this is a bank that analysts say will benefit most from an increase in Interest Rates, if or when that happens from the ecb. Manus yeah, the if and when are the critical issues. It strikes me when you talk about the security numbers, when we broke those Deutsche Bank numbers you were talking to management, and they said 50 of the business has returned, and the other 50 has floated to the likes of commerzbank and ubs. Will this be one of the things he will pick up with the cfo . You have a conversation a couple hours. Matt not as much. Didntbank, remember, lose a significant amount of clients like Deutsche Bank. Deutsche bank had a real scare, the confidence scare last year before that, and that is why they saw, especially Hedge Fund Traders fleeing their business. Commerzbank didnt have that problem. They are focused on the retail business. They are looking to add 2 million more clients. They have added i think 151,000 in the First Quarter. What i am going to be focusing on the cfo today is how will you go into get that other 1. 80 5 million new clients. One of the things they are talking about is consolidation, m a, buying those clients. Where are you going to get them . The market is a tough one. Anna matt, thank you. Matt miller in frankfurt. We will be speaking to the commerzbank ceo later this morning. Manus voting is underway in south korea after a campaign dominated by scandal, trade disruption with the u. S. , and growing worries about the unpredictable neighbor to the north. Anna shery ahn joins us from seoul. Good to see you. What are you seeing on the ground . What are the key issues . Shery this is a holiday in south korea, but when it comes to what i have seen on the ground it has been busy heading to the polls. From very early in the morning, standing in line in election polls. We are hearing for the National Election committee that voter turnout is around 56 . They are forecasting that it will be around 80 of eligible voters. Course, intense interest. It is unprecedented, coming off from an historic ousting of the president , being dubbed by the korean media as a rosy election, coming in spring when roses bloom, instead of the usual december president ial election. A lot is hanging on the line in dealing with north korea. When i talked to a few voters outside polling stations, young people are telling me that the economy is the priority. More conservative voters are thinking north korea is the most important task at hand. Ofus shery, just in terms the candidates, one of the big issues is trade, a lot of people saying they are trying to look through the current politics and talk about trade. Of course the u. S. Will be reviewing free trade deals with south korea. Where did the candidates stand on that question . Shery it has been interesting. The trade issue has been put on the back burner, given all these other things in south korea. But given that President Trump has called the koreanu. S. Deal horrible, theres a lot of focus on what the candidates are saying. Although they are all over the place, and there is little detail in terms of their trade policies. The leading candidate of the saysratic party of korea he was at first strongly opposed to the ratification, that has now changed his tune, saying that this is a pillar for strengthening ties of the u. S. About ist has talked suggested that it could be a Good Opportunity to look for more concerning parts, although his official statement is that they do not want to renegotiate the trade deal. Ahn, thank you very much. Lets bring our guest Simon Derrick in, chief strategist. South korea has its own idiosyncratic issues. When you look east, politics has traveled east, politics and trade. You mentioned the yuan. What is it that stands out as a key issue around the yuan . Heres a chart on the yuan. The thing that strikes a more than anything else is the attempt by authorities to punch it bubble. We have seen the impact with regards to the stark market, but i think more practically, it is slowing down demand. The thing that strikes most obviously as commodity prices. Imports fore lowest several months or more, and that is making, itself felt not just in terms of prices but also in terms of major export partners as well. Australia is a classic example. Anna manus pulled up this chart this is the yuan trade Weighted Exchange rate. This is where the pboc wanted to focus. This is yuan versus all trading partners, and it has been pretty stable. If we are looking at places to worry about where china contingent could come from, it is not this particular story. Thats exactly right. Ever since we introduced capital controls, the chinese have done an astonishingly good job of managing the currency. In fairness, if we move away from the basket and look at the dollar, pboc has managed it in an increasingly tight race. Anna it might not please those who want to see an act more like a global currency. Thats exactly right. From chinas perspective, keeping currencies stable is always the top issue, and it always works. Manus thank you very much. Simon derrick. He stays with us. Anna coming up, the Prime Minister of britain gives her partys branding a personal touch ahead of the election next month. Instilling discipline within party ranks. This is bloomberg. London,ust gone 6 21 in 1 21 in hong kong. Juliette saly standing by with the business flash. Juliette manus, thank you. Commerzbank has reported firstquarter net income ahead of all analyst estimates. Bankecondbiggest listed of germany says income was 217 Million Euros in the last three months, ahead of average forecast of 74 million. Commerce bank says it is still keeping 12 or above. Saudi arabia and russia have signaled they could extend production cuts into 2018, doubling down on efforts to eliminate the Global Oil Supply surplus. In separate statements hours apart, the largest crude producers said publicly for the first time they would consider prolonging output reduction beyond a sixmonth extension, widely expected to be agreed at this months meeting. And that is your Bloomberg Business flash. Anna juliette, thank you. Now its all about mary. Thats the message from the british Prime Minister, as the hoping fornister is popularity over jeremy corbyn, uniting lawmakers when it comes to votes on the brexit deal. Ubss chairman axel weber said brexit would be both painful for britain and the rest of europe. I think there will be a pretty hard exit at the end, and that will have a very negative repercussions on europe, on the continent in the u. K. , and it will spillover continuously over the next two years into market volatility. Anna Simon Derrick, chief currency strategist at bny mellon, is still with us. What is moving the pound . Where are we . Dollar,gainst the u. S. We see the campaign by the weour party at full steam, see branded theresa under which conservatives are campaigning. What is going to shift the pound through this campaign . I think what we are seeing is a shift. The first three months was very much about domestic u. K. Politics. May,s about brand theresa and whenever she gave a speech that painted herself as being a strong leader, it would do well, and we did extremely well on the back of the general election. However, if you look at the performance over the course of the last few weeks, there has been a subtle shift, because it seems to move back toward considering the negotiations. When you have those announcements from the European Commission about their negotiating staff, they didnt like it that much. I cant help feeling that we are quietly moving back to considering the details. As a result, i suspect that the election results, unless there is a shock, relatively speaking it is factored in. I thought what was surprising was the results in france over the weekend might have had more of a negative impact for sterling, purely given the fact that mr. Macron would push towards anna yeah. Manus yeah, he has already called brexit a crime. Clearly. Is side we had the bank of england meeting in a couple days. Lets have a look at the inflation, whats happening, and the longterm expectations, rolling over. Kristin forbes defended at the last meeting, and i think the notes said it was relatively little upside to consider. What does it take to garner more dissent from the bank of england, or given that inflation picture, are they deluded . [laughter] historically, the bank has always been prepared to turn a lot over. Remember, we were running well above 4 , and then we stopped every month but not doing anything about it. You will remember earlier this year they said they made it clear, they expected inflation to overshoot during the summer months. They clearly think we are going to get towards 3 or 4 on inflation, and they are prepared to look through that. There, whostays up knows. I think its unlikely youll see anything dramatic this week, or that we will see anything dramatic in the inflation report. Anna are we interested in what happens to wages and the u. K. . A British Company finding it harder to find the right staff, a report from the recruitment and employment federation, talking about a shortage of suitable applicants across a whole range of industries. This seems to be a story gathering momentum. Does this put upward pressure on wages years ahead . That could be a structural shift, and it could change the way the bank of england looks at these things. The issue is that, for the moment, we simply see this with the shortterm perspective. They have said they believe its a shortterm spike in inflation. But it could become structural because we struggle with labor, and the levels of start to change the story. Manus it will become a structural issue. Simon derrick, bny mellon. U