Matt well see what markets think of Donald Trumps speech and more importantly the fed speakers and we have a slew of fed speakers coming up this week. A lot of action could be driving these prices. You see futures up about half a per sent here in germany. Almost a full percent in paris and only about. 1 in london. Quite the spread there. Take a look at the bund trade here. U have investors driving off german debt. 0. 23 for lending your money to germany for 10 years, so yields are coming back up after hitting lows last week. Guy . Guy lets talk about whats happening in so many ways it was all about the fed last night and not about donald trump. The dollar index is up. That is dragging all the other paris down. Look at the pairs down. The yen is trading lower. The nikkei is trading higher. Going to be interesting to see how the European Markets get going. Look, the big story really, it is summed up in one shot. Let me move you over to it. This is whether or not march is live. You can see this this huge repricing that we have now seen. This is oas function. Shorter term, more liquid. We are near 90 probability that we are going to see the fed pulling the trigger in march. Janet yellen has boxed herself in the corner. Credibility very much on the line. Well be talking about that throughout the morning. Lets get a first word news update now. Thank you. The new u. S. Commerce secretary says washington will pursue a tougher approach with china and other nations over existing trade deals. Wilbur ross said his priority will be renegogotiating nafta a leveling the Playing Field with china which he described it is a most protectionist major nation. A tougher enforcement. Making trade deals. China . Everybody. Everybody. Exeskly with china, what are you looking to do . When can we anticipate that . As soon as we have the proper case. U. S. President trump has urged americans to set aside conflict and help him remake the fabric of the country in his first address to congress. He offered few details. Along with familiar themes on security and immigration, the president called for a trillion dollars of Infrastructure Spending and a redrawing of trade relations with other nations. President trump i believe strongly in free trade. But it also has to be fair trade. I am not going to let america and its Great Companies and workers be taken advantage of us any longer. They have taken advantage of our country. No longer. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy . Guy thank you. She said president trumps address was in the spotlight but we also heard from a couple of fed members whose comments have gone a long way in shaping Market Expectations for the policy meeting. We heard from jon williams who said a march hike is getting serious consideration. Then new york fed president William Dudley told Cnn International that the case for tightening has become more compelling in recent months. You can see this very clear. On your bloomberg this morning. You have the o. A. S. Drop down more liquid. This is whats happening now. The probability of a hike in march is now at 87 . It was in the 40s last wednesday. The mark has reapplies priced and repriced massively. An xf strategist at nomura is in london. Mark joins us from singapore. These two used to know each other. They still do. Jonathan, let me start with you. Why are we seeing dramatic repricing . When you have the fed comments as you had yesterday saying a hike is on the way, the markets have to correct pricing for janet yell season in a boxed corner now. When it gets to friday, she is in a tricky position to push back on that pricing. I think the noise were getting, the consensus, it is hard to argue. Im surprised were not closer to the 100 mark if this market rally continues. What do you think about that . ,. I. Argues these three yellen, fisher and dudley, wouldnt they know what each other is going to say at speeches if they speak in less than a weeks distance from each other . Absolutely. Yellen is getting slightly boxed in. I still think there is time though. I think the inflation data tonight is really important. Trump hasnt provided any particular reason that there needs to be hiking season. A week ago i thought march was no chance. Clearly now there is a consensus. You cant fight against market and it is looking more likely, however im not so convinced yet that it is a done deal. There is a lot more to play for especially inflation. Dudley saying it is more medium term. There is more a compelling case for a hike but not in two weeks time. Guy communication. Yellen used to be in charge of commune strategy. She ultimately now is responsible for the communication strategy with the fed. The communication strategy has one up to 87. 1 . Absolutely. I think it is about keeping their options open. I think it is notable, dudleys comments in particular. He was seen as being slightly dovish. These are certainly hawkish comments. It really took me by surprise and i think that is why the market has reacted. These are major comments but i think it is all about giving themselves an option. They can do something depending on how the data comes in next week. What would be worrying is if they went in after the yellen speech and there is only a 20 probability. This way the option at is in the fed times and thats the way they want it. Manus do you think, we saw matt with saw the dollar weaken slightly after trump spoke and then the fed took the attention away from the trump speech. Do you think the fed talk is first and foremost for investors this morning and not the congressional address . A mix of 80 fed and 20 trump. The extent would be the fed comments of course. The speech was president ial and talked about in some sort of way for a border adjusted tax reform. That is sort of porpts too for the markets here. Important too for the markets here. We toned disagree slightly here at nomura. Mix it up, 80 fed, 20 trump. Guy were going to carry on the conversation, talk on the eurodollar now. That is something people are paying attention to. Up next, were going the carry on and talk more about what happened last night on capitol hill. Trump making america wait again. Sweel discuss what the president said or didnt say in his big speech to Congress Last night and a beat for beijing. Top officials meet to reign in risks. Later well talk about the u. K. Sector. All of that coming up. This is bloomberg. The market open 20 minutes away. Matt welcome back to the European Market open. Futures pointing to a positive open here in europe it is a dollar climbs after fed speakers and the u. S. President speak to congress. Lets gets now to a Bloomberg Business flash. Thank you. The c. E. O. Of uber has apologized and said he will seek leadership help after video obtained by bloomberg showed him arguing with a driver over fares. He said he treated the driver disrespectfully and said that i am ashamed is an understatement. You know what . Some people dont like to take responsibility for their they blame everything on somebody else. Good luck. Nissan says it could face a profit hit following brexit. It is first time the car maker has put a figure on estimated costs of the u. K. Leaving the European Union. Telling lawmakers in london that 10 tariffs would be disastrous as nissan would have to absorb some of the impact. Matt . Matt thanks very much. U. S. President trump has made his first address to congress revisiting numerous themes from his campaign, trump used Broad Strokes to lay out his policy agenda in areas including immigration, infrastructure, spending, healthcare and defense. President trump im going to bring back millions of jobs, protecting our workers also means reforming our system of legal immigration. The current outdated system depresses wages for our poorest workers and puts great pressure on tax payers. To law firm our National Rebuilding i will be asking congress to approve legislation that produces a 1 trillion investment in infrastructure of the United States, financed through both public and private capital creating millions of new jobs. This effort will be guided by two core principles. Buy american and hire american. Tonight i am also calling on this congress to preel and replace obamacare. With reforms that expand choice, increase access, lower costs and at the same time provide better healthcare. I am sending congress a budget that rebuilds the military, eliminates the defense sequester and calls for one of the largest increases in National Defense spending in american history. By finally enforcing our immigration laws, we will raise wages, help the unemployed, save billions and billions of dollars and make our communities safer for everyone. Matt still with us, jordan fx strategist at nomura. Mark, let me start with you. We have established that the fed has taken control of dollar movements. You can see it in the chart. At what point to markets disappointment with a lack of detailed plan interests the president come through in crisis . Absolutely. I think that the fed is dominating the shortterm price action at the moment. I think there is two Different Things moving here, two different speeds. One is the trump reaction. The positive side. Reemphasized the infrastructure need with the positive. The market is relieved that he didnt go down any petty attacks on the democrats or the press. That seemed like a relief rally on the trump side. However, overall, he didnt provide any concrete details and i think the market will become more disappointed by that as they get time to analyze the speech and think when are these details coming . The fed element, that might depend on what happens with inflation tonight. Certainly that is hawkish at the moment. Guy jordan, i always love to watch what paul ryans face looks like during these kind of events. You look at him and wonder what kind of a battle he is anticipating. How hard is the president going to find the confrontation with congress particularly over spending and cutting some big areas of entitlements. How big of a fight are we setting up here . With trump and his allies, i think the headline yesterday was interesting. Steve bannon and paul ryan coming to some sort of agreement on the borderadjusted tax reform. That is a headline we should pay more attention to. That is one of the best links donald trump has. It is the senate that he might struggle to get through any legislation. We have to ask ourselves if he is really a republican he could be pulling from democrats to get this pushed through, especially on the infrastructure side. Guy if we do see the border tax becoming a reality rpgs what do you think the European Reaction will be and how big of a burn will ceci . So the European Reaction shouldnt be too aggressive. If you think about it, the u. S. Regime as ferent tax it stands. However, because it will be throwing a tax on imports, it will be like an import tariff. The logic from the market is that you have a 20 increase in your import costs and the dollar will compensate for all of that. That is reason why it is ok. It wont harm the consumer too much. We tend to disagree slightly. How much we disdisagree is an open question. A 20 increase wont see the dollar appreciate linear 20 . It could be less. Matt i think a lot of optimists were happy to see donald trump bringing Infrastructure Spending back to the forehere. But as you point out, the lack of details means we dont see an imminent sign he is going to boost the economy, not without any legislation. How do you deal with the timing of that in your Investment Decisions or how should the market deal with that . What do we need to see that changes this bull run if we dont get any active, investable, actionable details from the president . I think that is one of the issues that the market is grasping with at the moment. They are really struggling with it. Some people think stimulus is going to come through really soon amidst a warning last week that it wont affect Economic Growth this year. Stimulus is not coming through iminnocently. It is important to know that Trump Asking Congress to approve a 1 trillion infrastructure deal. Who knows how kled go through. There might be problems in the senate. Even if it gets through, it might take sometime. It is not actually that imminent. I think there is still a bit more they need to do to get to the right level of expectation that is appropriate for the realtimeline. Guy where do you expect eurodollar to go . We have had a lot of talks. Thursday, friday, last week, shy of the 1. 0640 level. Now were backing back down again the border tax is something you discussed and we also have the election in the netherlands coming up next month as well as the fed. 1025rks painful level. Once we break below 10 5, it makes the parity trade a possibly. If we see the eurodollar break below 10 a, if the Dollar Strength continue tos here then we are asking about the european side rather than the u. S. Side. There is still a long way to go on the French Campaign for president selection. I think eurodollar could head towards parity if la pens risks stay ahead. The hedging cost over the French Election falling slightly. The market has these moments where we might win a bit off when the risk is lower. Pure risk hedging for it. It should drive euro on the hedging side. How far europe falls if she wins is a big question. Were talking more at. 98. Matt if you dont think le pen is going to win the French Election in the second round, to buy the euro right before . Someone asked me the same question before the night of brexit and before the night of trump. It is a strategy. It is one where i dont really push it. I think the risks are too big if she does win. Not just yet from these levels. Not just yet. Guy guys, well wrap it up there. Great to speak with you this morning. Jordan and mark. Of course you can follow mark and his team on your bloomberg go, fantastic function if you want to get an idea of what is going on out there in the market and a smart analysis to go along with it. Were minutes away from the market open. Coming up, misses on q 4 ref knew. Well have your stocks to watch next. The market opens in seven minutes. This is bloomberg. Matt we are minutes away from the open. A couple of stocks watch this morning. For those trading in germany, lando is a stock to watch. An internet retail they are a put out Fourth Quarter revenue below estimates. It actually beat on earnings before earnings and taxes. A measure that german taxes stress. Fourth quarter Revenue Misses estimates and that has it down more than 4 in trade gate. Watch zalando at open. Guy . Guy lets talk about whats happening. They have a huge presence in the United States. They are cutting costs aggressively. Expected to beat on the profit line and delivering strongly on the cost line. 78 . Pean equities are up. The European Market open is coming up next. It is four minutes away and it is likely to be a positive one. In italy. Sive action you are looking at live pictures coming from sicily. Amazing shots coming out of that country, of that volcano. In some ways, you could argue the move we have seen surrounding the fed march meeting, tectonic movements, i would argue, there, significant movements. The markets now pricing in a huge move, but lets face it, though their much cooler pictures than anything else we could show. Att well, i mean, that is great analogy to what happened, going for 40 of a rate hike in march. It is an exposure metlife and what you rarely see in this market. I want to show you the dollar for a moment because we saw, this is the bloomberg dollar index and we saw it come down as trump spoke. This is 2 00 a. M. U. K. Time to 4 00. It has now come back up on the fed expectations. This is the power of the fed over the president on the dollar. Guy the market is opening up your let us see what these Market Makers have to offer this morning. This is the picture we are checking, 1 jump in many of these today. This is what we saw overnight from the fed and follows what we saw from donald trump. The fed seems to be driving the action. Cace 100 opening up. 3 the has opened up. 3 . Up. 8 . Ac some underperformance from the ftse 100. Interesting stocks stories, ethics stories, bond market stories today with all of the action. Manus cranny. Manus no stock markets will be moved again. Couple of other things coming through. Seefinal pmi, beginning to german inflation data across the terminal app. The dollar is stronger. [coughing] manus excuse me through financial to our better bid. The china manufacturing data, that is nice and brisk. The transition mechanism from a weaker yuan in the any factoring numbers. Here a nice broad sweep. Anything that moves the bond market is going to be interesting for financials. Thats is incredibly important. A little bit of a quirk this morning. Seeo live and you can what they were talking about. This is the formation the teams were talking about. 40, and we take you to 104. 94, and take the parameters down to parity. Formation over the last couple of days. Keep an eye on bunds. This is the been future the bundsfuture. 3 billion euros worth of bunds. 20,000 contracts are the equivalent there of. Fascinating consumer prices, 2. 4 year on year. The bund yield as you can see rising ever so slightly. This is as much to do with the movements you have seen in the treasury market, the belly of the curve, am i twice, with the bond market. Ec treasuries drop on the back of the dudley and williams conversation yesterday which trump talked about here that is transferring to a lower opening on the bund market, paring up some of those initial losses. Im off to Digital Radio with caroline heffner. Let us speak to matt. , i wantl right, manus to his band a little bit on that german inflation point that you mentioned. We are getting the data across from saxony, the former east german state that contains in 34 was the yearoveryear figure. Dresden, the yea