Pushback. The dutch liberal beats the freedom party. We will speak to the head of the Dutch Banking Association and we will speak to axle labor axel weber. That interview up next. Matt miller . Matt 30 minutes until the cash trade opens up. Have futures up across the board after a positive finish for equities in the u. S. And around the world yesterday. The markets seemed pleased with Janet Yellens handling of the rate hike yesterday, as well as the dutch election outcomes. Very interesting loops. In other Asset Classes as well, you may not have expected a divergence in Monetary Policy getting stronger. Guy fascinating to see what will happen here. It was a dovish hike. That is why the market is doing what it is doing. Snp uptick 8 10 of 1 . Equity markets a big winner in this trade. The hong kong dollar, we got the smb, japanese yen up 3 10 of 1 . That is a problem for Haruhiko Kuroda as we watched to see exactly how the japanese deal with a feds tightening on a gradual basis. To commodity story, we have some Metals Trading a little higher. Gold will bid overnight. Up 6 10 of 1 . Lets talk about europe and in a little more detail. This is the trade i was watching. The only people and spread bund spread. Thead goes wider weve got spread tightening up as people price out the risk of Marine Le Pen doing well in the french president ial election. That is what we are seeing in markets and the reaction to the dutch story. A similar story in btps this morning as well. Lets get the first word news update with juliette saly. Juliette dutch Prime Minister mark rutte are has beaten a challenge by the antiislam freedom party. Forecast to take 33 of the 150 seats in the lower house of parliament against 20 seats for the freedom party. The result draws a line in the sand on the spread of populism in europe. A coalition could take months. Donald trump has proposed historically deep budget cuts that would dutch almost every federal agency and program. Under the 2018 budget request, it would be a reduction below 2016 levels. The epa would face a 30 reduction. It would free up extra money for the department of homeland security. President trump has promised to take his new travel ban all the way to the Supreme Court after the order was blocked by a judge in hawaii. The judge said there was clearly a religious basis to the order, which affected people from six muslimmajority countries. A president slammed the ruling is terrible and said it makes america look weak. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more. Han 120 countries this is bloomberg. Guy . Guy thank you, julia. The fed has raised its benchmark and continues to project two more increases this year, signaling more vigilant as inflation approaches target. Here are the highlights of Janet Yellens news conference. Todays committee decided to raise the target range for the federal funds rate by one quarter percentage point, bringing it to three quarters to 1 . It also reflects our view that waiting too long to scale back some accommodation could be required to raise rates rapidly sometime down the road, which in turn could risk disrupting Financial Markets and pushing the economy into recession. The basis for todays decision is simply our assessment of the progress of the economy against our longestablished goals of maximum employment and price ability price stability. The data from quarter to quarter, we havent changed our view of the outlook. ,e think were on the same path we havent boosted the outlook, projected faster growth. We think we are moving along the same course we have been on. We are getting closer to reaching our objectives, the policy is accommodative but also the level of the neutral federal funds rate is probably quite low. Have antheless accommodative stance of policy and it will be appropriate to gradually move towards a neutral stance. Weve got a special guest here to discuss that as well as all of the other exciting news. The european elections, what is going on with exit, the g20 meeting in badenbaden followed by regulatory talks in basel and what is going on. Weber is the incoming chairman of the International Institute of finance, which holds its meeting before the g20 in frankfurt. As well as the former president of indus bank. He knows a thing or two about Monetary Policy. Thank you for joining us. Let me ask you if you think janet yellen executed the perfect dovish hike yesterday question yesterday . A height itecuted was priced in for weeks. The economy is moving along the trajectory that it has all along. They havent changed their outlook. They are basically on that path and we expect another two rate hikes this year. This is priced in as well and the fed has indicated we will see Something Like three rate hikes again next year. There is some expectation whether they will accelerate that, but i dont think that is likely at this point in time because i think we will see a more movement by the fed. They will continue to be accommodative. They have no reason to be in a hurry. The reason was largely produced by rebounded in oil. It really hasnt affected core numbers. That will basically taper off towards the end of this year because it has peaked in februarymarch, we have seen a sideways movement of inflation as opposed to a continuous rise globally. A path andearly on find their projections justified by the data. The what does this do to dollar . How closely do they watch that . As a former central banker, how closely do you watch the currency your moves effect . Axel Central Banks really take the Exchange Rate as a data point in their decisions. It is not a decision variable. Neither the fed nor the ecb are small economy Central Banks. They focus on domestic performance. The Exchange Rate plays a role in that. If you look at the u. S. , a degree of openness dependent on trade in the oil in the last decade has moved from 8 to 12 . It is more important to the fed Decision Making because it is more important to the u. S. Economy. They are going to focus on the economy and what is happening there. In that park, they will look at the Exchange Rate where there is some benign neglect. But they cant afford Exchange Rate to a rail the u. S. Recovery and in that sense, they will have one eye on the Exchange Rate as the data points, guy good morning from london. Looking at the discretionary budget the Trump Administration produced. The implication seems to be it is more neutral than the markets have priced at this stage. You think we going to see a fiscal expansion that many hope for. And if we dont, what are the implications . I think we will definitely see a tax program which has been announced by the Administration Early on. The question always was, how is that financed . , or atcing expenditure the going to issue more debt and therefore, will it be accepted in the conservative quarters of the Republican Party . They have always had issues with the debt ceiling. The indication we get from here is that a large part of the counter financing of those tax reductions is going to happen by cutting of the expenditure and some other sectors affected most heavily. There are some standard ones like the environmental issue, each will raise concerns in the rest of the world because we just came out of the paris meetings with the clear commitment to reduce carbon emissions. Also subsidies to agriculture might have to be seen in the context of the trade policy that would be more inward looking rather than continuing Global Exchange of goods and services and agricultural goods. Thele package indication it gets for me is, a lot of it will be financed by reducing expenditure rather than issuing debt. To some degree, that is reassuring because moving into a more indebted situation, given height already, would raise questions. Those are becoming more clear. Guy just to stay on this briefly. You mentioned the two we have priced in, that you are whatting from the fed you think the fed has priced in in terms of what will emerge from washington, from the white house in terms of tax policy, in terms of the fiscal policy more broadly . Is anything priced in, are they making any assumptions within the dot plot right now . I think janet yellen was pretty good about what the fed has repeatedly said is when they are very a comment if and Monetary Policy was the only game in town, they took that drastic action because other policies were limited in their contribution to stimulating growth. There was a relatively restrictive fiscal policy and no structural reform policies. How that the new administration is talking more about moving from Monetary Policy carrying all of the weight of stimulus to fiscal policy stimulus and Structural Reforms and Infrastructure Spending are on the policy agenda, that will allow the withdrawal of some of the monetary accommodation in a gradual fashion and take into account that other policies that will stimulate outward will kick in. When she talks about the withdrawal of stimulus, it should be taken into account other policies would provide additional stimulus relative to the past. At this point in time, there is no concrete proposals on the table and that is why the fed has taken notice of the fact that other policies will emerge, but it is too early for them to factor that really into the projection because they are pretty uncertified at this point. I dont think a lot is priced in in the feds curve at this time. What they expect is a gradual ability of the economy to walk on its own. As the economy is stronger and more consumption driven, they can afford to withdraw some of that stimulus because the u. S. Recovery is becoming self sustained. Matt you talk about trumps more inward looking policies policy plans, but also the importance of the Global Economy, open global trade to u. S. Growth. That seems to be the message of the german presidency to the g20 this weekend. Ahead of that meeting, a meeting with Steve Mnuchin in berlin. Very i think europeans are dependent on having Good International relationships and trade goods and services. It is how the European Union has evolved. Coals founded as a cold and steel unit but has expanded. Trade benefits both sides, and will be the message of an inward looking policy, particularly from the largest trading partner of many countries, the United States, will rock that balance and the International Community is looking to signals from the indicated they have they want to renegotiate some of these trade agreements, there reements andag benefit both the United States and the rest of the world. Matt what message does Steve Mnuchin bring to g20 . Axel they will basically look for a package. There are concerns the u. S. Administration has in putting policy priorities on reregulation of the financial industry. Many things you hear is weve done enough, we have done a lot already. The system is more stable. Lets do an impact study on what happened with financial reregulation and do we need additional measures . On top of that, the u. S. Really is the Major Trading partner of many countries and was there legitimate concern that jobs in the u. S. Are a key priority for the administration, this should not happen at the expense of International Trades because even the u. S. Is a much more open economy now than it was 15 years ago and a lot of u. S. Exports in particular in the tech sector, depend on the Global Economy consuming and importing these goods. That is why the internationalization of u. S. Corporate has happened. Of theernational role Global Economy for the u. S. Is as large as it has always been. I dont think globalization is something you can reverse. It is something that has its own forces Going Forward and standing in the way of that would produce negative spillovers and a break on Global Growth. At the point when Global Growth for the first time looks to be brightened and the imf doesnt rip revised down, you need a continuation of the Global Exchange of goods. That is the message from the german president. Matt when you listen to mike or the message out of Steve Mnuchin this weekend in bonbon, does the u. S. Team bring you a consistent message with Donald Trumps tweets . You feel they are ready to engage question mark axel the administration messaging is more nuanced and the International Community is looking for a nuanced messaging. Mnuchinthe things steve has said about the attitude welcomed bydollar the International Community. The dollar is the core currency of International Financial system. It has come out stronger than it financialhe last crisis. The International Community looks at the u. S. As a partner in international organizations. There is a strong hope that the key to winning the process will lead to a commitment of the u. S. To be part of that international process. We need a global level Playing Field for Financial Markets. People are looking for consistency of International Engagement by the u. S. And not for inward looking messaging. It needs to be nuanced messages and what we have seen from the administration recently has been more nuanced and we saw. Top can we talk about strip spreads question btp we see boones bumd spread heightening. Do you think investors clients have overpriced Political Risk in europe . Axel i wouldnt say it is overpriced. Of oural risk is the top political our risk agenda anyway. We have been very clearly saying that the top risk we face is going to be Political Risk and it has migrated from being an emergent market phenomenon. What you see in the market is a number of risks. The dutch election was the first that point that markets are gathering on a longer trajectory of european electric elections. The next is france, then we have early election in italy. The market is either in a relief rally or more concerned, depending on the results. What we have seen in the dutch election is the center has been holding, the liberal party has not lost as much roads as was a shortnd that leads to relief rally in the market. It wont last because the next elections are in april and may. And there is big concern there as there was in the dutch election, that the center might not hold and the market is going to look at every data point, every speech or political act to anothertter the risk of step back in european integration. European integration is challenged by brexit. That is the first data point, the market was concerned. There was uncertainty and Strong Movement in volatility in the market and that will continue. Byope will be plagued Political Uncertainty the entire year. Even greece, that is looking for another nation, might come back as a problem over the summer. Thaty of Political Risk might materialize in europe and the market is going to react with volatility and caution as these data points materialize and elections happen. Guy hints of early elections in greece as well. Lets talk brexit. You are thinking about 1500 jobs moving from london as a result of brexit. You making an exception assumption that we see a hard brexit question exit . Axel we need to manage risk. We need to be prepared for every eventuality. We need to look into all of these options. The key for us is not to take a certain decision. The key is to maintain as much as we can, option maliki. Want to make decisions we regret, but cannot afford to wait until all the political dust has settled. For us, a key point will be the triggering of article 50, which at that point makes the exit britain in my view, undone reversible trajectory for the next two years and then we look early on how hopeful we can be that Market Access from britain to european markets will continue. I think it is not going to continue on the basis of the old arrangement, britain needs to have a new it arrangement with the eu. Any grandfathering, except for a short transition time is not in my expectation. We need to understand what the new arrangement will be. It will have to be a new service and trade agreement with the eu. Those take a long time to negotiate and the Financial Sector is looking for the fact that Financial Services make it to the top of the priority list of theresa mays government. So far from what we read and hear, we dont have that impression that has happened, and that will be an important commitment fo