Anna welcome to bloomberg daybreak europe. Where in the city of london. Manus its super thursday for the bank of england. Frances number three bank with every other bank in france which is delivering its numbers. Credit agricole worst numbers, the market predicted 700 702 million euros. Delivering stable revenues in 2017. Its the mortgage fees that are helping the banks. Credit agricole saying net income quadrupled in the First Quarter. They have the italian business trying to expand. It looks like the cfo expects stability. Trading revenue rose by 17 on fixed income money. That joins the overall theme that we had. Thats the story in parts of the banking sector. Also getting numbers from union credit. Firstquarter net income 907 million euros, a above the estimate of 586. 7 million. Interesting reading from my builterg colleagues, they it as the quarter where the ceo might need to prove profitability. According to the estimates, he seems to done just that. , italystalys bank biggest bank and the into it there was a real focus of bringing the bad loan situation under control a little bit, but what can you do in terms of that profitability in the business . It seems that the profits are really head of estimates. Versus the estimate of 703 million. Manus another headline on deutsche telekom. Billion. 5. 5 confirming the fullyear forecast as well. There more discussion in the United States overnight about the possibility of consolidation with tmobile usa. Anna interesting to see what theyre saying about the United States business. Strong numbers coming through from door to telecom over the last month, increasing their estimated subscriber gains for the full year. The strategy back here in europe wirelessabout winning business clients in germany as a face competition from the lights others. One and a tough competitive environment but they are confirming that fullyear forecast. If you ordered anything online or drop the letter in the box, the click of the button, its all online. Deutsche post delivers firstquarter earnings under 5 they said 2017 is going to be a more normal year. The Fourth Quarter was their best quarter in history. Its about the electronic delivery. Firstquarter net income, 600 33 million. We will have a conversation , frankn with the ceo appel, at 8 45. Anna that show investors where we are overnight. Were focused on the bank of england. We put in the kiwi and the Canadian Dollar, not just because Erik Schatzker is in town. He kiwi down this morning central bank really confusing economists, it seems, saying they will keep rates at a record low for an extended time, downplaying the inflation picture. Moodys downgrading six of their banks. ,anus a shot out on daybreak , today raises the flag its canada. Lets talk about commodities. This is on the inventory story dropping yesterday in the United States. Stockpiles dropped to 5. 5 million. Sachs says it was an opportunity for you to get long. Anna were not expecting to go anywhere very fast at the start of u. S. Trade. Another record high on the s p yesterday. For anyone whos overly concerned about what the confrontation between trump and the director would do to pass his agenda, the markets have not gotten to that story yet. Senior Senate Republicans have closed ranks behind President Trump after his dismissal of fbi director james rejecting calls for a special prosecutor to investigate russias meddling in the election. Meanwhile Jeff Sessions spent most of the day interviewing candidates to hold a job on an interim basis. Another 18 months before the bank can generate returns for investors. Speaking with Erik Schatzker, saying they want to raise the return from 9 to 11 . But warned that barclays ability to cut cost further is limited by the need to upgrade its aging technology. Topf you look at desk computing at barclays, our systems are windows xp. I dont think anyone knows about windows xp anymore. They stop programming that years ago. By the ended this year we will upgraded. 0 employees thats a sort of investment we have to make to get barclays on its right foot. Anna bank of england looking to revise its higher inflation outlook for the year when it delivers its Monetary Policy review later today. The market will watch for more than one Voting Member to vote for a rate increase. Thats at 12 00 p. M. London time. Chinas foreign acquisition frenzy is ending almost as to manically as it began after record 246 billion of outbound takeovers in 2016. Chinese steel makers are now controls. Hter capital crossborder purchases plunged 67 in the first four months of the year. 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. Loomberg at top talking about that rally in new zealand. Lets look at some of the other market players. The nikkei holding on to go 17 month highs. Australian share market in late trade is pretty flat and the cosby once again at a record on a recordkospi high. Looking at stocks were watching a 14 year low after flagging a potential 130 million loss in the First Quarter. Announcing it could have backtoback profit losses coming through in terms of decline in profit for the First Time Since 1994. Fallen to atals has sixmonth low due to weak demand. Weve been talking about china shares in particular, Mainland China shares being underwater. The msci china index has overtaken the csi 300 for the First Time Since the Global Financial crisis in 2008. The of that to thanks to likes of alibaba lifting the index. Weve seen an offshore premium coming through in nos chinese stocks listed in the u. S. Much, thank you very juliette. Optimistic about the impact of brexit on londons financial sector. He spoke to Erik Schatzker and inventiveity is enough to work around britains exit from the eu. We have bankers and salespeople all across europe continuing to engage with europe. Upt like having to set Holding Companies in the United European Union doesnt require us to set up structures across europe to make it more robust and more within the fold of europe. You know what im getting at. Does the hardness of brexit determine how great the impact is on a bank like barclays . Thatuld be decisions taken might not be in the best interest of the free flow of capital. Of the tenets, if there were couple things that came out of the financial crisis as positive, i think the coordination of the g20. As we reregulate the financial industry, lets not inhibit it barriers, the free flow of capital. So long as those barriers are not put up, there will be workarounds around brexit so london will remain a very important source of capital for europe. X relative to your peers on the subject, you are an optimist, at least you are constructive. What is the upside being optimistic . What gives you that degree of confidence that they dont have . Am just expressing what im think thats what i think. I dont know if its optimism or pessimism, it is what i think. We have a Bank Subsidiary in ireland that is part of the european union. Have 1200 employees today in continental europe, from milan to paris to frankfurt to madrid. Uncertainty, but having been in the Financial Services industry, its amazing how creative the financial industry can be. Anna the ceo of berkeley speaking to Erik Schatzker. The bank of england released its minutes of its most recent meeting in his new economic forecast. According to Bloomberg Intelligence analysis, we can , there arete of 71 one fewer voters this time around. A downgrade on gdp growth and forecast for inflation to be nudged up this year. Manus so he brought in a specialist on risk who got up extra early. Brownie points for the day. You say though rates are entrenched. I think its interesting, you do worry about the buildup of dissent. , the minimum number of people there could be one or possibly even to more. Its not as if with that close to a hike, but still, if it turns out that there were three hikes, three votes for a hike, that would be quite a big deal. I guess the governor gets a little bit extra if needed. When do we expect any movement from the bank of england . Rateslleagues are saying wont start to go up until 2019 and looking at the probability of a hike by december 2017, its lower than it was three months ago. Expectations are falling. I think thats true. Obviously the bank is got to come up with its you of how the economy is going to develop. I suppose since the brexit vote last summer, the bank has been surprised by how resilient the economy has been, but nonetheless, wage growth remains sluggish and inflation is going up. Consumption is falling. U. K. Is not a hurry in the any more than there is anywhere else. Manus from the market perspective, and you look at this is u. K. Ay, real rates, and they have started to move higher. Define inflation indexed isso the real rates that meant to continue in this environment . I think it does. If you look at the scale on this thing, theyre edging higher. Manus coming up to the 200 day moving average. 2. 5 percent real rates, there Something Different the market expects for the u. K. Outlook Going Forward. The bank ofthat england is going to keep real 2 forates negative at another five years. If you looked at the 10 year rate, you would not see rate very different. It is an extraordinarily low rate. Anna and a lack of reaction from the bank of england. You could argue that it is saying that the bank of england free for to keep money a 10 year or longer horizon, certainly a five year horizon, to keep the economy going. Anna so inflation is on the rise. Its going to be hard for the bond market to stay like that. It will go up and am pleased that gone up 40 basis points from the lows. Lawrence will stay with us. Anna and more on the banks policy decision, followed by governor mark carneys press conference 30 minutes later. You can follow all the action on the bloomberg. Up, fbi fallout, republicans told the line as the latest on the contentious firing of james comey. This is bloomberg. Anna welcome back to bloomberg daybreak europe. The Trump Administration started looking for a new fbi director after firing james comey on tuesday. Democrats protest the president s move. Kevin has more from the white house. Kevin President Donald Trump fighting back against criticism that he mishandled the firing of at the eye director james comey. Spokesperson telling reporters it was a surest form of hypocrisy for democrats to be outraged after specifically calling for his own ousting during the president ial campaign. Members of the Senate Intelligence committee had invited the director to testify privately in a meeting next week in the senate. Elsewhere, mixed reaction on capitol hill. Absolutely laughable. Both parties at different times for dismissal of mr. Comey. This is not watergate. The clinton investigation by any measure was very much a little size. Its time to take a new direction at the fbi and i think the president has made a wise decision here. The president is said to be considering several employees already at the fbi. The u. S. ,cking with calling for three more rate hikes this year. In order to avoid an overheated economy. Saying the bank should gradually reduce the Balance Sheet. After years of forcefully advocating low rates. Our guest is still with us. ,ets talk about these comments as someone who is in favor of the low rate environment, and he seems to be more hawkish of late. In 2017. Es, three more how do you view his comments . He certainly an activist. In a way, is doing the same sort of thing we heard the fed say. Saying the data is Strong Enough , in a way, if you compare where he is and where the fed is now to where they were at the back end of last year, what happened to the dependency . Anna is this official fed messaging thats designed to push up the chance of a hike in june . View, is not necessarily coordinated, but the fed the issue remains the level of the twoyear yield. Although the twoyear yield is that recent highs, were still 65 basis points below what the fed with supply. Manus the market has gotten quite aggressive in terms of pricing. September has gone from just under 5 last week to 40 on tuesday. It has almost doubled what it was a week ago. So youre saying that is eerie would be more aggressive on paper. The fact that is at the more doesnt the repricing of the Broader Market is something the fed would like to see, the fed is not want to shop the market. Anna they been talking about the Balance Sheet. We dont have the details yet on what they plan to do around that , but how will that you worked into your thinking . The fed has a problem with the front end of the yield curve and at the back end of the yield is that the term premium in the bond market remains surprisingly low, even now, a little bit below what we saw at the end of the paper. You can see its trying to get steepened again but it really is struggling. Sheou think of the commerce conversation accelerates, is talking about getting ready to do Balance Sheet reduction after the next hike. We expected him to Start Talking about it toward the september meeting and to enact Balance Sheet reductions next year. So this is a little bit ahead of what we were thinking. But this is another big ministry for the fed, why is the term premium so low . You can push the 10 year yield , thats what a reduction in Balance Sheet would be four. Anna stay with us on bloomberg daybreak europe. Manus ill have a conversation with Charles Evans from the chicago fed tomorrow. Its 2 30 in back, the afternoon over in tokyo. The dollar against the japanese. En trades a little bit weaker 6 30 here in london, 7 30 if youre over in italy. Insurer, waiting for those numbers. Mv. M waiting for o when we get those, we can always come back. Lets focus on the bank of england for the moment. The bank of england is expected to leave its benchmark rate unchanged at 12 noon london time today. Followed by governor mark carneys News Conference 30 minutes later. Good to see you this morning. Forecast, and the theres only two forecasters who nk he may dont expect a change of heart and policymakers today. Expecting from the economic upgrades and predictions is an upgrade to the inflation forecast for 2017 but a lowering of the growth projections. According to economists, this is not likely to translate into more votes for a rate hike. In fact, just one policymaker is expected to break ranks and it will most likely be Christian Forbes who did vote against her colleagues in march, citing the outlook for inflation. Cap and questions over whether others much all assumed and thats likely what will capture the markets imagination today. Other signals voting with Kristin Forbes in the future. Sterling has rally this year, the best g10 performer, in fact. Year and theree are the political hurdles to get over with the election and the twist in terms of brexit. Anna mark carney can be outspoken on some super thursdays. Of course we had the election on the horizon. Yes, we do. If ever there was a time for mark carney not to rock the market, this could be it. As theonths ago even bank of england raised its inflation and growth forecasts, he managed to maintain a dovish tone. Now there are more concrete reason for him to do that as well. These are the first comments that the boe went into preelection fervor. Analysts are saying is likely to talk down the rate hike expectations and if you look at the markets, those expectations for a rate hike have been pushed further out. In march there were Something Like up 50 chance of a rate hike by the 2018. By now the market has pretty much priced out the probability of a rate hike before november. Thank you very much. Lets talk about that breaking news crossing now. The Insurance Business out of italy, the largest insurer, net , also missing estimates falling versus the year earlier. Q1 results concern confirm the strategic profitability objective has been reached again, the company said. They talking about increases in net acceptable to lower nonoperating investment, mainly due to continued policy to gainate hike game and stronger impact of taxation. At combined ratio coming in 93. 1 . In terms of the breadandbutter on the combined ratio and proportion of nonlife premium, that looking a little bit sluggish. Have omv, whaty they referred to as a clean that above one or two the estimates that i have. They talk about it unprecedented move in the First Quarter results. They say production costs fell to around nine dollars a barrel and they see the cost of production dropping to around nine dollars per barrel in the overall scheme of production costs. This is what was seen across all the various oil industry participants that weve spoken to. Have a conversation with their ceo. He will join us at 7 15 this morning. Reiterating the current 2017 outlook, sales ahead of estimates and ultimate operating profit coming in ahead , confirming their forecast. Numbers coming out of telefonica right now but we wont dwell on those too much. Headline, if you think the markets are hot, the up for thedex closed First Time Since 2000. A nice headline on that sweep of earnings. Lets get back to the broader picture. Knowledge the economy is getting stronger. Was presseddraghi by la