Im mark barton in london. Check out whats happening to your european stocks. Near the highest level since december 2015. The stoxx 600 lower today after seeing the highest levels yesterday. In over 13 months. Big day in japan today. The yen weakening. The b. O. J. Boosting purchases of medium maturity bonds underscoring its commitment to maintaining its yield curve target. Sterile down against the dollar ahead of the big maytrump showdown. Well call it a meeting. Gold is lower today. Falling for a fourth day. That is the worst run since november heading for its first weekly drop. Investors favoring riskier assets, still gold up 5 in 2017. Lets get to the news. U. B. S. Profit more than tripled in the Fourth Quarter. Profit 848 million franks exceeding analyst stims. Shares are falling at the moment. The c. E. O. Ermotti said investors are confident but waiting for reaction from the Trump Administration. The most important thing for me is to see the clients are ptimistic. It is very important these the new administration puts in tion their plans and to give our investors even more confidence. U. S. Mexican relations have plunged. Nieto canceled his scheduled trip after trump pledged to build a border wall. Floated the idea of pledging a 0 tax on imports from mexico. C. P. I. Down. 2 from a year earlier. A weaker yen and pickup in oil prices are likely to drive up inflation this year. Bloomberg caught wake up Goldman Sachs japan chairman about inflation. Given that most forecasters assume that is not going to happen immediately, inflation should be improving later this year, that is likely to result in the reality that the bank of japan is unlikely in our view to dramaly change the current framework. News 24 hours a day powered by more than 2600 journalists and analysts. Mark . Mark the First International leader to meet face to face with donald trump. She will be key to starting a strong trade relationship between the two countries. A new trade deal between britain and america must work for both sides and serve both of our national interests. It must help to grow our respective economies and provide the high skilled, high paying jobs of the future for people in america and across the u. K. Mark neither may nor trump are in a position to begin negotiations. Madam may can go see whoever she wants. I understand she goes to see the new u. B. S. President given the history between the u. S. And the u. K. She is not going there to negotiate. Neither she nor mr. Trump are in a position to negotiate. It is a courtesy visit. Mark guy, she is recleeded from negotiating a deal for two years. What exactly can she achieve on the trade front . Guy i think with the greatest respect to the french finance minute i think he is kidding himself if he thinks this is just a courtesy visit. Yes, the u. K. Cannot sign on the dotted line when it comes to a trade deal because it is still a member of the union and in theory probably cant negotiate either but that is not how it is going to work in practice. The u. K. Is likely to start negotiating with the United States some sort of a trade deal. In fact theresa smay probably arriving in washington, d. C. With the outline of a deal already that has been sketched out so it is going to be something that is going to be very much part of this discussion but theoretically no in practice, absolutely. Some sort of a trade deal is going to be started, some early sketching out what it is going to include will be started and it is going to be difficult, Financial Services etc. Will be part of it but i think she is coming here to talk trade. Thats phrase from theresa may as she headed to washington. There are issues they dont agree on. Torture, climate change. How is she going to confront trump on those sorts of subjects . Guy i think she said she wants a frank, groan up conversation. Those are the words that we have been hearing from the Prime Minister. Remember as well she dispatched her key political advisors before this trip to lay some of the ground work. Hopefully she is going to it will not come as a surprise. She is going to be talking about the torture issue. The russian question is probably the really difficult one for her to manage at the moment. Now that president obama has departed. In some ways the u. K. Is a bit of an outliar when it comes to its with russia. There is going to be a call over the weekend. The russian question is one she is going to have to tread very, very carefully with. Mark i spoke to vince cable earlier this week. He said it probably is not the best time to go to washington. He would have rather she stayed at home. And go about it the way that Angela Merkel has distant respect. Not saying too much. She has chosen to go the day after the mexican president chose chose to pull out from his visit. Does she risk a political backlash in the u. K. . Guy i think there will be some that dont see it as a good idea but there will be plenty who see it as a good idea. The brexit side of the fence see this as a big opportunity. They see it rebalancing the table when it comes to negotiation story with the European Union. It gives the u. K. Another card to play. I think there will be plenty that will complain and theresa may will have to figure out a way of putting a grownup face on all of this. She is going to have to push back a little bit with trump to try and negate that concern at home. But i think if she can establish a positive relationship and maybe it doesnt go quite as far as reagan and thatcher, but if she can establish a positive relationship, that will be seen as a good thing. Nevertheless i think the timing, you talk about mexico, the timing could view this thing as very good. The mexican relationship is deteriorating so rapidly at the moment, gives theresa may an opportunity. The Trump Administration will want to be seen as one that is operating on the global stage. It is capable of doing trade deals. It is not all about protectionism. One way of showing that will be to signal that it is very ready do a decent deal with the kingdom. Mark guy johnson in washington, d. C. It is a fine line, isnt it . Does she have more to gain or lose tpwhi visit . John you have to look at it by what is in it for both sides . The u. K. Trade side, the u. S. As a country is the same size as a trading partner for the export side as the e. U. 27 is a block. Some sort of understanding early on would be potentially a blow to the u. K. Trade as we move through brexit. And then i think the point guy made, which is that the u. S. Has a new administration. Many fear they have a protectionist agenda. Yet trump has come out and said im a deal maker. It is very important to watch the mood music from his perspective. The u. K. Is a Major Trading partner for the u. S. But in terms of exports to the u. S. , it runs at 1 6 of the size of the exports that mexico sends. Mark a trade surplus with the u. S. John thats right. With the u. S. It is a relatively modest amount if you look at the broad u. S. Economy. It is a grownup trading partner. The u. S. Can strike bilateral deals or at least look to do that or perhaps take some of the air out of the some of wind out of the sails of those pointing at the Trump Administration saying protectionist, anti free trade. Mark how do you expect sterling to react . Lets say we get some sort of mood music . How would Sterling Sterling has risen for the second week gainst the dollar. It is moving on depending the way it seems to be leaning whether it is a hard or soft brexit. If a deal is spoken about today, does sterling rise or fall . John are we going to get talk of a deal . On average, the u. S. Takes 18 months. Mark trump says i want to strike a deal with the u. K. In a couple of years. John yes, it would be good for sterling sentment. Without a doubt. Is it going to push the sterling into a strong rebound . We would argue not. Were beginning to see early signs of significant jump in inflation. The bank of england seemed unlikely to be raising rates this year. The real Interest Rates are continuing to come down. Ultimately what does that mean . It undermines the position of the currency. We have nowhere wr near to understanding what the article 15 negotiations are going to look like. Once we get the refocus back on that, then sterling could resume some of its weakness. Any boost get at the moment we would tend to fade. Mark the post trump trade has returned, hasnt it, john . Equities up. Bonds down. Gold is falling again. The dollar the last couple of days is back in favor. It had been on the downward trajectory. Were getting more of a clue as to what trump policies are. This reflation trade that pushed the dow to 20,000. How much further has it got to run . John im reluctant to call this the trunch trade. This started in the middle of q 3. We began to see inflation picking up. This is the First Time Since the immediate aftermath of the financial crisis that we have seen a rise in Economic Activity in all Major Economic regions. Thats the trade that were on today. Trump may have crystalized it and helped to find a narrative around it. Can we see improvement in asset markets . Yes, i think we can. We have about a quarter of the p reporting so far. We have top line beats around 55 pbt of the s p. We are beginning to see something of an earnings pickup. Can that carry markets somewhat higher . Yes, lets not get carried away with things. Markets are still expensive. You know, positive, yes. Getting over, perhaps not so much. Mark back to you in seaboard. If you a bloomberg customer, you watch the show using bloomberg go. Follow our chart. Follow our function. You can message us directly during the show using the i. P. Function. Lets get the business bloomberg flash. Sharp drop in Third Quarter earnings. Profits fell by 53 after that Million Pound provision after that accounting scandal in italy. 3. 7 licon giant billion pounds as chief executive officer makes the companys biggest ever deal. Shareholder also earn about 16 as tesco absorbs booker. Bugle missed profit in the ourth quarter after spending on hardware. Shares fell more than 2 in extended trading. Thats the Bloomberg Business mark . Mark u. B. S. Profit more than tripling in the Fourth Quarter. The bank putting aside less money for litigation. Manus cranny is in zurich. He has been speaking to the u. B. S. Chief executive. Big beat. Stock is down today. Square that circle for us. Manus down 3. 3 . Were watching what the analysts are saying. They have taken less of a litigation charge than the market anticipated. There is a number at practice here. Transactions in the Fourth Quarter were at a record low. The question, ermotti and i chatted, there is a difference between optimism of trumpnomics and the reality. A seasonal adjustment for people squaring up their tax issues. Transactions at a record low. Those are the issues that the arket is focusing on they have not hit the bottom line in terms of transaction. There is a big theme cog. It is about what happens in america. Have you, when would you want to scale up there and whats happening with consolidation . Well, the success is well, indeed in equity, i think the investments we have been making in the last couple of years to rebalance our business, a little bit more towards the u. S. Is paying off. I think if you look at our u. S. Businesses in general, particularly we have been doing having a strong performance, you know, when you ok at also a little bit more activity, i hope to sustain this business. Manus everybody is looking at america. There could be deals in the offing for u. B. S. You may look at m a. Will you scale up in the United States of america on Wealth Management . When would you be convinced to shift gifts in what you do in the u. S. A. . I think we are already very convinced in what we do in the u. S. A. Were a Wealth Management business in 2010. 150 million pretax. Last year we posted 1. 25 billion of pretax profits in the u. S. The momentum in the u. S. Is still very good. We are very focused on growing organically. But of course, as i mentioned in the past few times the time of consolidation in our industry is clearly starting and it is almost inevitable to address both overcapacity and in some cases a profitability issues. Manus when you said you wanted to be one of the players in that consolidation . Consolidation is one option, is not the option. You ve to always look at know, what fits into our strategy. We have a clear strategy. We dont want to really dilute our strategy just for the sake of consolidating. There has to be a, you know, a merit. A strategy and financial merits in doing that and we are open to exploit any option that makes sense. Manus there is no doubt about it. The investment side is so much better than the market had thought about but it is a fundamentally different Investment Bank. If we got a big uptick in the rate business through 2017, 2018, can that sustain . The c. E. O. Has all of his ducks in a row. All he needs to do is get those clients to go from at the most excitement about fiscal programs in the United States of america to the reality of cracking on. Call your banker. Get a deal. Mark, cold. Mark it looks chilly, manus. Well see you later. John this is a great function. This is our stoxx 600 banks index. Not ours. But the stoxx 600 banks index. Look at the rebound since those fiveyear lows in july. Reflecting what yourmsage saying. The fs in the Third Quarter, the pickup, the changes, the turn happened. Place . Turn a fiveyear flow july. Have we wean seen the work because of the pickup in rates . Look at the facts and what is coming out with earnings across the sector in the u. S. The european earnings season only just got started. Financials have in the main beaten where in the previous darling, the bond, the consumer space has fall an little bit short. What does that tell you . You have a sector which is sensitive positively to rising Interest Rates, steeper curbs. All of that feeds into a better picture for the financial sector. The reflection that we need to see more follow through where these animal spirit and confidence trends late into actual deals is probably absolutely true. This is probably a time of the year when many bankers are out there talking to their clients about deals. That kind of thing. If we get more certainty as to what trumpnomics looks like, it is broadening out across the globe. It is reasonable to expect you could see a pickup in activity at the same time you have this boost to margins and fixed income businesses. Loans beginning to ease back, which creates a better backdrop. Mark there has been a wonderful breath to the move in u. S. Stocks. Technology, manufacturing. All rising together initially, the rally was led by financials. You look at the dow, you have seen a pickup, the likes of i. B. M. And boeing which encourages many. This is 20,000. Is that encouraging for you . Yes, it is. What it does is pushes back a little bit on most. U. S. Stocks have rvery expensive. They are a little bit above their long run through cycle average. But the fact that youre getting leadership coming through broadly. The fact that youre getting the beginnings of an earnings pickup after a couple of years, a really soft patch in earnings gives us a bit of confidence. We would look for this to be much more classic later cycle type of environment now. We have seen the move in a reflationary environment. Were in a more normal Business Cycle so we can look for later cycle plays, value stocks, financials, smaller cap domestic u. S. , all seem to be areas where there is room to run there. Mark just getting some breaking news. A terrible week. Share fallen by 20 . The head of the company is leaving. B. T. Today released earnings. Big drop in profit. We had on the upside consumer mobile. Those businesses looking good. The week has been dominated by the disclosure this week of years of irregular laters in italy. Irregularities in italy. So the news continues to fly. Shares of b. T. Are lower today. They have been absolutely hammered this week because of this accounting scandal in italy which forced this writedown. The head of europe is leaving the company. They are not troubled by the u. K. Prime ministers meeting with donald trump over a future. S. Trade back easing fears. German fans minister schaeuble, with me John Billiton is here from jpmorgan. The i. M. F. Is not in a deal. We dont have the bailout agreement in place. Germany is making fighting talks. The political situation in greece is not as strong as it has been. Is greece simmering there as it has done year after year after year . Were all focusing on germany, italy. Dutch elections. Has greece got the potential to blow up again in 2017 . Greece has always had issues it has to face. Ultimately we saw greece debt to g. D. P. Peak out around 160 . Greece has had a crippling depression. Ultimately the signs that it is ng through rely on and that is sterble case that were seeing better data, were seeing better momentum across europe generally. The idea that greece is out of the woods is probably a little bit farfetched. Ultimately you go back to any deep period of economic stress it takes many years to reposition and restructure an economy and certainly greece has the potential for further aftershocks. Are we going to be in a situation where we have come this far down the road where germany and other major yepian nations would be willing to toss european nations would be willing to toss greece out . No. We would watch places like greece, portugal, etc. Over the course of this year is potentially providing a little bit of volatility at the margin for europe but certainly the bigger concerns for many there be elections in the netherlands, in france and germany and rightly so. We got about 40 by g. D. P. Of the eurozone going to the polls this year. It is a big deal and quite rightly were looking at those major nations. Mark John Billiton of jpmorgan. Up next theresa may prepares to talk trade with trump. Im going to bring you our special weekly show. Brexit