Lose a key vote in the house of lords. Good morning. This is bloomberg surveillance. We have a packed show. Theres quite a lot of movement on the markets. This is a picture for your data. We are getting eurozone manufacturing pmi. This is for the month of february. They are rising to 55. 4. Anything above 50 means they are expanding, but it is a slight miss compared to what economists had been expecting. Im looking at euro. We are seeing a little pressure on euro. We have a market expert to give us all his thoughts on whether it is linked to some of the political turmoil we may see in france. Eurozone manufacturing pmi, 55. 4 for february. Onto your markets and without a doubt, everyone is looking at , hisdonald trump has said softer tone masking a little bit of difficulty for his agenda in congress. This is what investors are trying to look at. They are looking at donald trump, but they are really looking at the wirp function on the bloomberg terminal. Were looking at fed moves. The german twoyear down, 0. 87 . The u. S. Twoyear, i have a great chart comparing the two. The yen also dropping for a third day, spurring a rally in japanese equities. European stocks rallying a touch, 0. 8 . Lets get to the bloomberg first word news. Nejra the chances of a u. S. Rate hike this month have skyrocketed after two Federal Reserve officials signaled a greater willingness to tighten Monetary Policy. The caseudley told cnn for action had become a lot more compelling in recent months. San francisco fed chief John Williams said he expects an Interest Rate increase will receive serious consideration at the march meeting. We had a raft of Economic Data overnight. China showed more signs of stability with factory output beating out beating forecasts in february. Australia grew faster than expected. In japan, a Fourth QuarterCapital Spending excluding software rose 3. 3 . The u. K. Government is braced for defeat on a vote in the house of lords over the right of the e. U. Nationals to stay in britain after brexit. Label or labour and others are uniting to support an amendment. Such a defeat would complicate the brexit timetable. Scotlands first minister says a new independence referendum may be inevitable. Nicola sturgeon said it could be the only way to protect her countries interest unless the u. K. Softens its plan to leave the European Union and its single market. The ceo of uber has apologized and said he will seek leadership help after video obtained by bloomberg show him arguing with a driver. In an email to employees, Travis Kalanick said he treated the driver disrespectfully and said, im ashamed is an extreme understatement. You know what . Some people dont like to take responsibility. They blame everything in their life on somebody else. Good luck. Nejra global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine thank you so much. President trump has urged americans to set aside conflict and help him remake the fabric of a country in his first address to congress. Trump revisited numerous themes of his campaign using Broad Strokes to lay out his policy agenda in areas including immigration, infrastructure, spending, health care, and defense. Im going to bring back millions of jobs, protecting our workers, reforming our system of legal immigration. The current outdated system depresses wages for our poorest workers and puts great pressure on taxpayers. To launch 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 public and private capital, creating millions of new jobs. This effort will be guided by two core principles, buy american and higher american. Im also calling on this congress to repeal and replace reforms thath expand choice, increase access, lower cost, and provide Better Health care. Budgetding congress a that rebuilds the military, eliminates the defense sequester, and calls for one of the largest increases in National Defense spending in american history. By enforcing our immigration laws, we will raise wages, help the unemployed, save billions of dollars, and make our communities safer for everyone. Francine lets get more with morris reid, a partner at mercury and former bill clinton advisor, and kit juckes, little strategist at societe generale. Thank you so much for joining us. Morris, and you look at what we heard from donald trump, lack of details, the markets dont seem that bothered. Were they happy about the tone of the president , which has shifted somewhat . Morris it was actually very president ial. He was moderating his tone. He stuck to his script. One large it may have have been one of his better speeches. The magnitude of the president was there in all his grandeur. If you saw his Ronald Reagan moment where he pointed to the young lady in the crowd whose husband had died, he walked in there as a divisive candidate, but he walked out of there as president of the United States. I think that he lived up to the moment. The devil are in the details. We will see what gets done. I think he did do a good job delivering a speech that was well received. Francine is just the new donald trump . This doesnt address the deadlock that republicans in congress are facing on health care. Morris i think it was a good speech at the moment. He gave the right speech at the right time, perhaps unlike at the inauguration, which i thought the speech was probably out of context for the moment. This is a divisive candidate. He does one thing today, does Something Different tomorrow. I think ultimately people will measure him on what he gets accomplished. It was a lot of rhetoric in the speech, not a lot of detail. How do you pay for all the things hes talking about, is really yet to be determined. Francine the markets seem to like it. There was a little pullback in indices, but given the lack of detail, the markets must have seen a softer tone, which may be softened the tones of america first. Kit i think the markets liked it better than the initial media response focused on the lack of details. The Global Economy is doing well at the moment. This buys you a fair amount of time for these broad brush strokes. We will get to the detail and see where we go, but i think if equity markets are holding onto, are we going to get cuts in Corporation Tax, are we going to see money come home, nothing to scare them away from that. Meantime, Foreign Exchange and the Interest Rate markets got upstaged by bill beverly, frankly. Francine good point. Morris, do we expect to much . Hes been in the john a month and a half. Morris i dont think we expect too much. Timedoing more at this than any president has done probably in his first month. Perhaps what they need to do is slow down and try to get things through the legislative calendar. You see some of the challenges that are facing him with the tax cuts, infrastructure, all the things he wants to push through. Theres a process. Im not sure he appreciated that has much before he got there, but you are hearing they are going to push infrastructure legislation the next year. The legislative calendar is starting to catch up with him. I thought it was interesting when he said, who knew it was so difficult to get health care done . We all knew that. He started to face the reality of some things he wants to get done. Francine was he bringing the country a little more together . He needs to unify the country if hes going to get away with what hes trying to do. Kit he may be bringing congress together. Francine which is good, right . Kit it means he can get some things done. It might be a comfort for some people that the calendar limits him to three or four big things that he can probably get done on a sensible timescale. The rest of the stuff, buy american, higher american, immigration plans, what it means for wages, the political divide, the social divide, im not sure is going to go away at all. That is not going to drive markets. Its not going to stop me questioning, if you are trying to get wages up, arent you going to tighten the labor market faster . Francine how much do we believe that being policy and how much do we believe that being, he wants a quick win with a couple thousand jobs every month . Morris hes already doing that the way hes bracing embracing corporate america. If you have something nice to announce, give it to the president , you will get a little press, and your stock will bump. The thing that is challenging to me is, donald trump has a unique moment to cut Corporate Taxes and do things that congress would like to get done, but he for steps on his message the travel bans and the executive orders. Focus,ould slow down and he ultimately could push through a very interesting and attractive package. His congress will be up next year. Francine hes pretty focused. Morris well hes focused on the executive orders. He has not been focused on his legislative agenda. We will see when he starts to push things to congress. Ultimately, president s are judged on their midterm. How he does in the Midterm Election will dictate the second half of his presidency. Francine then we need to talk about this 15 Corporate Tax rate. We will ask morris reid and kit juckes. If you are a bloomberg customer, you can watch the show using tv. Type tv into your bloomberg terminal. You can follow our charts, analysis, and message the producers and me directly. You can ask us to ask questions to kit and morris. Lets get to the Bloomberg Business flash. Nejra nissan says it profits could take a 500 Million Pound hit following brexit. It is the first time the carmaker has put a figure on estimated costs of the u. K. Leaving the European Union. The Senior Vice President told lawmakers in london that 10 tariffs on cars and in england and levies on parts would be disastrous. Toshiba is said to be seeking offers for its memory chip business that value it at 13 billion. According to people i know youre with the matter, people familiar with the matter, it is being offered a majority stake. Toshiba is grappling with a writedown at its u. S. Nuclear arm. A spokesman declined to comment. Jpmorgans ceo has expressed optimism for u. S. Growth and his own industry if Donald Trumps administration succeeds in reshaping taxes and regulation. Jamie dimon was addressing investors in new york. Regulation, it is high time. No one in their rational mind can say what we do is completely perfect. Were not fanatics about it. We know there was a crisis. Nejra and that is the Bloomberg Business flash. Francine Donald Trumps speech may have taken the headlines, but comments from influential fed reserve officials appear to have moved the markets. The chances of a u. S. Rate hike have skyrocketed after William Dudley told cnn the case for action have become more compelling. The San Francisco chief said he expects an Interest Rate increase will receive serious consideration at the fomcs march meeting. Still with us, bloombergs editor will join us later on. In the studio, we have morris reid, partner at mercury, and kit juckes, little strategist at societe generale. Kit, wirp function. Yesterday it was at 60 probability of a hike in march. Last week it was at 36 . The bonds tell a different story. Who do we believe . Kit i think the further out on the curve, youve got a market that isnt convinced on a few es would make a difference. The whole thing is dampened down further along the yield curve. The way the market is moving, i think is the way i would describe it is, whatever the actual probability of a hike in marches, theyve now got more than a 50 chance of a hike in march. The market is split the doing two or three this year now. Francine everyone from janet yellen to the newcomer, patrick harker, has said march is a live meeting. The psychology of them doing it is because they want to keep it alive or because they want to preempt the markets . Kit i dont think they think they can go easily if the markets arent prepped for it. You have to prepare the market, clear a path. I think this fomc is still very easy to dissuade from action on a given meeting because theres not that much inflation. But they need the market to be ready. Francine if they dont do it in march, does it make a difference . Are we splitting hairs . Kit in the big scheme of things, no. Or may or is march june, do i really care . I think it only makes a difference in, if you go in march, the chances of three hikes this year are quite a lot better. Youve got more time. Because weve only had one in each of the last two years, you asked me last week, what did i think this time last year my forecast starts to feel conservative the minute they go. Francine morris, talk to me about this 15 Corporate Tax rate. This is priced into the markets. Where is it going . Is it reality with the huge deficit that means donald trump really hasnt pushed at home . Morris if theres one thing he should get done, it is the Corporate Tax rate. That would be delivering on a promise to corporate america. Something republicans and democrats can rally around together. It will spur the economy. If you look at the stock market, deregulation has been priced in. Certain industries are excited. When you talk about Corporate Tax rate, it impacts everyone. It is really a way he can touch every american. Francine im looking at the figures. 20 trillion in u. S. National debt, 200 trillion in unfunded entitlement obligations. His 15 to much . Morris maybe it is too much, but any movement lower is in the right direction given that america is so high. This is something he campaigned on. This is something barack obama could have done as well. This is why the president needs to look at the legislative calendar and focus on things he can get done. If i was advising him, this would be the singular thing. Francine kit, does the market reprice . If he backs down kit i think the Global Equity market rally is based on good Economic Data and the expectation in the u. S. Of Corporate Tax cuts. Francine stay with us. Morris reid and kit juckes. His theresa may facing a blow to her brexit timetable . We look at a potential looming loss in the house of lords next. This is bloomberg. Francine this is bloomberg surveillance. The u. K. Prime minister is braced for defeat on a key brexit vote in the house of lords today. Opposition peers are uniting with rebels from Mays Conservative Party to support an amendment that would protect the rights of european citizens to remain in the u. K. After brexit. Still with us, morris reid, partner at mercury, and kit juckes, global strategist at societe generale. Derail when she triggers article 50 . It seems like a spanner in the works but nothing existential. Kit she can compromise on this in any case. Or she can force it through. I dont think it is anything like as big a deal as the fight about the exit bill, as in how much it is going to cost to leave, which is going to drive the agenda. Francine how do you see it banning out . She says yes, you nationals can stay here . Kit some kind of compromise. People who are here dont automatically get the push off. More long drawn process for taking control. Francine should we worry about scotland, morris . Morris i think it is great politics for scotland. How can the u. K. Stay in the way of their independence when theyve done the same thing . I would go very aggressive into trying to break away. Francine and then renegotiate with the e. U. . Perhaps, and if you cant get a better deal, see if you can go directly. I think this is great politics and they should move very quickly if they want to get something done. Francine lets talk again. Thats say theres a referendum in scotland. How does theresa may deal with this. Kit probably she says, have a ight,endum, its your r then she goes fullcourt press on the economics of the referendum, in terms of scotland on its own, and brings it back to economics. Francine does it change her negotiation with e. U. . Does it mean she couldnt go to general elections or there couldnt be a second referendum on brexit . Kit very difficult to see how that works. I dont think you get a different result because scotland is having a referendum. I think the focus is, lets have the argument about scotland. ,ou cant be churlish and say were going to decide to leave europe, but you cant leave the u. K. I think you fight it on public finances and economics and take it from there. Theyre having a difficult time with brexit as it is. This is going to be very hard, particularly if it is a hard brexit. Folks in scotland are being politically expedient, they go fast. The chances are better if they try to do their own brexit now. If they are looking to get a better deal with the u. K. , perhaps they are not as politically expedient. If im advising them, this is the time to do it. Francine who do you advise they talk to . Im told that brussels are very difficult. They see themselves as guardians of these treaties. Does theresa may need to go to each country . And who does she speak to . Morris i dont think anyone would want to do anything for theresa may at this moment. I think theres a lot of anxiety and hatred at this moment. If she went there, that would probably work against her. Kit i would agree with that. I think what europe is doing is rallying around to stop any contagion. That is another of scotlands problems. We will get back to the individual countries that dont like the idea of bits of their countries pulling off. That is a theme that can come back. The rest of europe wants to hunker down, rally aroun