By train to speak to commerzbank s ceo. Our cost cuts working for this german lender . Futures are positive for europe. We are in the thick of the corporate earnings season. We will be focusing on those corporate stocks. We have a positive start priced in for equities, castrating starts shortly. The story you need to take away is the dollar continues to remain bid. The euro is on offer. The greek market down by over 2 . Let me show you how the bunds are. The market getting more bid. Bit of aing a little fluff in the market but we are back to where we are in bund yields. The yield is. 296. Lets get a bloomberg first word news update. Societe generale has reported fourthquarter profit that exceeded estimates. Their income were 319 Million Euros to my down 41 from a year earlier but above the 350 million euro analyst estimates. The french lender announced plans for an ipo of its car leasing business. At the same time its deputy ceo told bloomberg why he is not concerned about the socalled frexit. Seehat is the likelihood to in france leaving the eurozone or europe, we consider that so remote that we do not consider it at all. Of course, you could see some positivity volatility on the market and we have always considered that [indiscernible] confirmed. Senate has to Jeff Sessions as attorney general after more than a day of contentious debate. 5247 vote in the republicancontrolled chambers followed 30 straight hours of debate. Alabama senator was too close to president trump, democrats said, and would not protect voting and civil rights. Countered sessions will put enforcing the law above pop does politics. Donaldrsuch has called trumps criticism of the judiciary after ovary order that blocked the immigration ban disheartening and demoralizing. Richard blumenthal told reporters about the comments after meeting trumps first u. S. Nominee. A spokesman aiding gorsuch confirmed the account of the conversation. President donald trump has set sent a letter to president xi in the first wrecked medication since taking office. It thanked him for a congratulatory note and wished the Chinese People a happy year of the rooster. He spoke on the form phone with more than a global more than a dozen leaders. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Thecan find more stories on bloomberg at top. . Att matt Third Quarter net profit was 131. 7 billion yen, were looking for 130 ¥2. 4 billion. Broadly in line with the estimates. Probably more interesting is going to be the forecast, nissan forecast fullyear, 2016, they are on a fiscal year net income of ¥525 billion. ¥520500 trolling 11. 8on for the year and trillion yen. Interesting in light of the big drop that we saw in china car sales overnight, down almost 10 for the month yearoveryear, the first drop since february. In february. Guy we will see how this is all explained. The markets are probably ahead of themselves, so says larry [inaudible] falling below 2 . Sounds like the guest we had yesterday, steve major. Calling for the tenure at 3 . Somewhere in the middle is kind of where we are now. Three, therth of market does not seem to make up its mind. Bring in our guest. Explain the market for me. Mark we are starting to see a bit of a squeeze at the short treasury position. The 10have come down in years basis come down 20 basis points from where they were two weeks ago. In that background we have a 30 year auction option we have the idea that court strong demand. Which shows there is a demand for long and debt. The markets are worried this move could accelerate on the yield side. When you talked to market participants, how soon do they expect to actually see some kind of fiscal stimulus, tax reform, deregulation from the Trump Administration because that is what fueled the climb in yields to begin with. Mark that is the worry. No one is convinced it will come along soon. I heard someone say there would be no legislature [inaudible] for it to the end of this year. That was conveyed by trump anyway in the four months it would be delivered. It is more the catalyst are much more about what yellen will do and win rate hikes might come through. Guy let me ask you a heretical question. Is work round wrong for march . Mark work is not always absolutely perfect for several ways. One is i think it is wrong saying 24 because the markets should not be pricing that much, they should be there should be no chance of the fed hiking in march. Core inflation is too low, and with uncertainty around policy, how can the fed hike . Some argue work is not the perfect measure. It is one of the best models i have seen on the street but it does not always [inaudible] either way that is way too high for me. Cudmore. He does write about the work on mlib, one of your first ports of call every day. Et some market analysis, smart stuff, absolutely promise you. Ofare joined by the head [inaudible] do you think the number is too high . Guest i think it is too high. I would be waiting to see what trump says what his policies are. I do not think something will happen until june. A summer rate hike would for me be on the cards. Nonetheless, i think interest late rates are too low. The economy is running to strong for emergency Interest Rates and that is where Interest Rates are right now. You only expect one hike this year in june, did you say, that is a lot less than the fed itself has forecast. We have a great function on the go which shows the fed or cast. You think that they will bring that down at the next meeting . Guest the first interestrate rise could be in june but overall, we might have three interestrate rises this year. My overall point is Interest Rates are too low for the strong state of the u. S. Economy. I do not see them doing it any time soon for the reasons you have given. Guy a lot of [indiscernible] is going out the door today. Backend, do you believe that the inflation story will get in anyway as aggressive as someone the market believe some in the market believe . Guest we should be seeing the best deepening. What might happen is we might see a bear flattening. Price andld start to lower growth. What trump is going to do is push for much higher growth which could lead to u. S. Recession. If people thought to look at that, they be wooed see the best [inaudible] before we see the bear flattening. About the talking idea that raising the u. S. Debt pretty bigll be of negative and the debt will be a drag, a big drag further down the road. That goes to your case that may be actual you want to look at duration. The story is not going to be as good. A shortterm, longterm story. Guest moore debt interest over the longer term, i think in the short term we will see a boost to growth, we will see growth going at a faster rate than it otherwise would. Of markets, the market should always be forwardlooking and that is why the flattening may come out. I wonder what you think that will do to policy. It has been maybe a bit rushed, a little bit uncertain. Do you think that smooths out at any time, or does policy coming from the white house continue to been . Jagged as it has guest i think policy will be jagged. Huge we are there are amounts of uncertainty. We are waiting for trump to come through with his policies and that is where why there is so much [inaudible] on the sidelines. Trump will stick to his guns and he will have a very progrowth, proreflation policy. He will not worry about the markets, maybe to some extent. He will think might policies will be right for the longer term, markets need to accept they will be right. Stay with us. We are just getting going. Donald trump is going to be absolutely front and center as we continue our way through this morning but i have to say there is an awful lot of Corporate News that we need to digest. French, italian, all on deck this morning. If you are bloomberg customer you can watch the show using tv as well as the video stream. You can follow all of our chats which i will say is excellent. Send us some questions and your thoughts them if we did a good job, which questions we should the asking. Go to the bloomberg tv site. Coming up on the show. Big oils earnings seasons. We will talk Commerzbank Matt has commerzbank. We preview earnings from the big italian bank. All of that coming up. This is bloomberg. The open 17 minutes away. Matt welcome back to bloomberg markets. I am matt miller herein frankfurt. I will interview the cfo commerzbank. Markets futures pointing to, a higher open in the equity markets. I want to get more on what is going on around the world. The income decreased to 183 Million Euros as provisions surged to 219 Million Euros in the quarter, still above analyst estimates. We will be speaking to s cfo. Bank net income increased as fuel prices recovered. Earnings for us to 329 Million Euros, beating estimates. Germanys largest steel maker is trying to transform itself into a diversified Industrial Group and raise annual earnings to at least 2 billion euros. Shares in u. S. Chain nordstrom saw their biggest oneday gain in two months yesterday, despite being lambasted on twitter by donald trump. The u. S. President slammed to the company for dropping brand. R ivankas his tweets have hammered stocks in the past. A volley lost at Lockheed Martin temporarily erased most 2 billion in market value. That is your Bloomberg Business flash. Guy thank you very much indeed. Total breaking ranks. The French Oil Giant [inaudible] for the adjusted net income. Short of fell forecasts. The markets have focused another places. Will figure out what happens next with oil and this will feed back into the fixed income trade. They cannot figure out whether or not we are about to see us shale 2. 0, that it will drive oil prices softer once again and some of the data points to that stateside. When you factor in what youre looking at here in terms of fixed income trade, how big a factor is oil going to be, how does it play into the inflation story Going Forward . Has we have some of the 2014, bond yields around the world collapsed and people could not explain it. Inflation expectations collapsed and that led nominal bond yields lower. They have two big an impact. People pay too much attention to the oil price today and what will happen over the next 10 years or 20 years. It has a really big impact. Worried that, there are so much of the oil patch in highyield and so much highyield debt is coming due. Do you worry we could see default rates kind of trip up . Guest the story should become more mark much more benign. I do not see a large increase in default rates. Having said that, and were generally about u. S. Highyield, that is the market that we are talking about here. That is [inaudible] from this time last year. Yields are at 6 today. I think all the good news is priced in. We should only clip the coupon from here. Price isfar as the oil concerned, do you think that Rising Oil Prices have taken the pressure off the default rates . Guest Rising Oil Prices, commodity rices, they have taken the pressure off so to the point where some Shell Companies we thought might have gone out of business a year ago are back on the string. Is coming clear is that the oil prices cant and the shale guys are getting more iterative. It is clear i want to put mats question together what is with what is happening in the highyield market and the expectation yields a story. I wonder if oil is more muted and the effect it will have. We now know that every time that opec turns the caps off, the shale guys turn them on and the factors will balance out. The i am wondering you have highlighted some incidents where it has had an impact. Is oil to factor where once was when we think about the reflation trade, will oil deliver this time around or will range bound be more range bound . I think it will be range bound. Prices time the oil traded at 115 and we went to 27 this time last year. 55, if you go back to 27 from where we are, [indiscernible] by 75 . Matt you will stay with us. Quick break. A we are getting ready for the market open. The start of Equities Trading in europe. How will the banks play into todays trading because commerzbank has net profit that fell but beat the streets estimates, the same at socgen. This is bloomberg. Matt welcome back to the European Market open. I am matt miller in frankfurt. Guy johnson alongside me. We are watching stocks that may move at the open. Banks are front and center. That is why i am here to talk to the cfo of commerzbank after they put a profit that beat street estimates, it fell 5 from a year ago but Beat Estimates by a pretty decent margin. The question is, how will traders react to that . Theres the possibility that traders could be reasonably positive. Socgen will be interesting, looking forward [indiscernible] ofwill talk to the cfo commerzbank. Ofre is the possibility [inaudible] to happen with french politics. The numbers fairly good out of socgen. Cant complain about those. Publicist. S just keep an eye on that. Leaving on thebe Perfect Moment or maybe a little bit too late. It may take a little bit of a hit later on. The other stock is what is happening surrounding the italian banking story. Data from the italian Banking Sector later on as we continue to see the atlantic funds struggling to set up any kind of it decent and peel market, secondary market in italy. That is something that is going to develop a little bit. This lets come back to the banks. When you look at what is happening here, when you think about what is going on here, onmerzbank has been getting with it. Costs have been cut and cut aggressively. Matt absolutely. The question will be, how do you work in a negative Interest Rate environment or an extremely low Interest Rate environment . It is hard to expand margins the matter how many people they fire, as long as Interest Rates are the slow, at lease that is what i expect him to initially tell me. Maybe striking up a fight with mario draghi. Guy he expects rates to start rising so maybe that is positive news that could come and maybe the rack end of last year was the low point so that rate story will be fascinating. That is what london looks like. The market open is next. Guy good morning. Welcome. You are watching bloomberg markets. I am in london. Matt miller is in frankfurt. Matt has your morning brief. Matt good morning. Not even considering it, socgen tells bloomberg the probability xit is remote. We hear from the deputy ceo. Assets as monte paschi struggles to sell. The bank and the fund set up to help it will need even more money. As guy said, i have trouble to. Rankfurt to speak with the cfo our cost cuts going to be enough in this low Interest Rate environment . Engles,sk stephen joining us at 11 30 your time. Guy matt, we are anticipating we will be seeing a positive start for european equities this morning. The ftse 100 in positive territory. The cac opening up fairly strongly. Less about index levels and what is happening with individual names. Let us find out what is going on. Manus cranny. , thanks. Y johnson story. Look, there is a the dollar is strong. That is a critically important thing. The dollar is up. We have a big day inside africa today. They seven of the dollar rally, but what does it mean for equities . You have to ask yourself. Nejra will take you through the breakdown. Industrials up. 8 . Is going to catch the market. Totale is front and center. Will50 possibility le pen go to power. It is a value trap in europe if you think european banks offer value. Ifsuggests otherwise even doddfrank is reduced. This is a disconnect. The blue line is the fiveyear paper. It is the bond spread, so the blue is the bond spread between germany, sorry, france over germany. Cdxs are swaps. It is nowhere near the peak of european debt crisis, but i take you back to one year, there is a disconnect. The Insurance Market on default in france is way below the which isu have seen, nowhere near historic highs, but volatility is rising and the traders have stocks positions to cover themselves. Let us get it to the three stocks to watch. Nejra what strikes me first of all when i look at the three stocks to watch is how different this picture looks to another day when i was looking at bnp paribas, bp, and another company. That Beat Estimates. A surprise jump in earnings from french Consumer Banking earnings which rose at the Global Market division. Socgen announced plans for an ipo of its car leasing business. That earlier this week. Commerzbankhe commo , a jump in provisions for risky loans. It did beat analyst estimates after the ceo has been refocusing on corporate clanking. Commerzbank, partly owned by the german government, it has a 4 d, compared with increase for Deutsche Bank. The shares have been outperforming Deutsche Bank for this year alone. Total. E looking at it has raised its dividend by 1. 6 . The go around for a dozen new projects in the next 18 months after fourthquarter profits beat analyst estimates. Targeting can Investment Decisions in 18 months, so it is a beat, and we are seeing total moving higher on that. Guy some of the key stops there. Down and down hard. It is leaning on an index lost point for the stoxx 600, the impairment at the top i not going down well. There is a sector of fax from publicis. Bp is moving on the back of what is happening with total and so is Royal Dutch Shell and interesting to see rio trading higher as well. To theet us come back bank. In some ways, and we will talk to the guest with this about this little bit later on, in some ways, europe is a binary outcome for some of these banks. We either end up with total disaster on the political front or we end up with actually , ecb tha,economy ecbmproving ec