You. First thing is first, we always check the markets. On whates us guidance investors think. The Federal Reserve continuing to drive a rally in the dollar. Asian shares falling, u. S. Equities higher. The topix finishing at the highest since december 2015. Yen was lower. Tokyo shares jumped after the dow at 21,000. Little bitocks a unchanged after closing at the highest level in more than a year yesterday. The dollar extending some of these gains after brainard became the latest fed official to support the case for an Interest Rate hike. Lets get to the bloomberg first word news. Heres nejra cehic. Nejra the u. S. Justice confirmed that attorney general Jeff Sessions had conversations with russias ambassador to the u. S. While he was a surrogate for Donald Trumps campaign. He said during his confirmation hearing that no contact occurred. Sessions said in a statement that he never met with russian officials to discuss the campaign. The news has prompted Top Democrats to call for him to the ousted. President trumps new travel order is said to drop iraq from the list of nations who citizens will be barred from entry to the u. S. For 90 days. According to white house officials, trump has delayed signing the new directive until at least friday. The order is a revision of a travel ban imposed in january by courts. Ocked snapchats Parent Company is going public at a valuation four times more costly than twitter. Snap inc. Sold 200 million shares in its initial public offering. It has a market value of about 20 billion based on 1. 1 6 billion shares outstanding after the ipo. The stock will start trading today under the ticker snap. The u. K. Government has suffered its first parliamentary defeat on the draft brexit law with the house of lords rejecting a plea to leave the bill intact. The upper house voted for an amendment that protects the right of e. U. Nationals to remain in britain. Prime minister may once speedier approval to trigger the bill. French president ial hopeful Emmanuel Macron is due to set out his election manifesto within the next hour after the centrist front runner was eight while attending an event in paris. The 39yearold has been gaining on the antiimmigration , inidate, Marine Le Pen polls of firstround voting, with a survey putting the gap between them at one point. Little news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. We are less than two weeks out from the fomcs march meeting and the odds of a tightening have risen again. The market now sees an 80 chance of a hike east on fed fund futures after governor neil brainerd, who has a reputation for being on the dovish side, echoed the more hawkish tone weve heard this week. Were closing in on full employment. Inflation is moving toward our target. Foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been for some time. It will likely be appropriate soon to remove additional accommodation, continuing on a gradual path. Francine the feds latest economic record reveals modest to moderate growth in the u. S. Economy. The beige book sees further tightening in the labor market but no significant acceleration in wages are inflation. Lets bring in trevor greetham. Right to have you on the program as always. Since the last time i spoke to you, look at the wirp function. Bute also looking at ois, 86 probability, is it a done deal . Trevor it looks like it. Weve had brain art and dudley come out in the last few days, putting march echo the table. The Economic Data is really strong. It is quite hard to argue for waiting. Of fede the pricing apectations, this was repricing on communication by the fed. Do we not believe the data . Are we just listening from austere fed officials . Trevor i think we all know which way the wind is blowing. In terms of deciding if something happens in march or june, people do hang on every word the fed makes. Theres a lot of guiding of expectations going on. The bundesbank would have told you march because they wanted to do june. In america, they seem to guide you to what they are actually doing. Francine because they are concerned they will catch the markets in a wrong way . Trevor i dont think they want to cause an upsurge in volatility because of a rate hike. We got the rate hike in december of 2015 and that was unexpected. That was part of the reason we had a second selloff. Francine trevor, lets bring you to the ois, one of our most popular functions. Probability of a hike in march is 92. 7 . Are you surprised that they still want to hike despite the lack of details from President Trump and congress . Trevor we didnt hear any major details from trump. We didnt hear anything that changed the picture either. People are expecting the tax cuts to come through. Theyre expecting some form of stimulus. Was ak every time boeing break in the backyard, that will s trillion as trump dollars of infrastructure. More importantly, the fed is looking at current data. Business surveys very strong. They really ought to be starting to raise Interest Rates again. Francine what would you point to to make the argument on the other side . Growth, that you are more worried about now . Trevor why shouldnt they hike . Think they should i think it is a question of where you start from. Low level oft of unemployment, i think they should start raising rates. Had aboutdebate to be how low the Unemployment Rate can go. But were not at a point where were at neutral Interest Rates. Francine what does it mean for dollar . Today we are seeing strength. Is there a level or a trend, if it goes fast, that it becomes dangerous . Trevor i think it will be a ratcheting move. Youve got times when the Dollar Strengthens because the fed is in play, and maybe a month later, not so sure about june because the dollar is strong. We find that the global reflation trade has been a oneway trade. The dollar has a sawtooth pattern, generally positive. Francine what do you do with treasuries . Trevor underweight bonds globally. Francine on the whole curve . Trevor broadly, yeah. On average at the 10year duration for the things we are doing. Equities seem to be the place to be. We had justago, gone through 20,000 on the dow. Francine only three weeks ago. I have a great chart showing how fast we gained extra 1000 points. Trevor greetham stays with us. Remember, if you are a bloomberg customer, go on to tv. Look at your terminal. Go to tv and you can ask questions directly to trevor through me. We have some great charts. We have data points. Then you can reach us directly. If you have any questions about where the dow goes from here or some of the best plays that trevor is going into, we will get those to him in the next couple of minutes. Stay with surveillance. The trump rally rolls on as the dow hits another record close in a presidency less than six weeks old. We will ask how much higher u. S. Equities can go. Plus, ahead of a major speech Emmanuel Macron, we will focus on the fastmoving rates race for the presidency. And we talked to former Goldman SachsAsset Management chairman and member house of the lords, jim oneill. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Heres nejra cehic. Nejra ab inbev has raised its target for cost savings related to the takeover of sab miller. The budweiser maker said synergies should reach 2. 8 billion at the same time adjusted fourthquarter fell to 5. 25 billion, missing estimates. Blackrock is said to have reduced annual employee bonuses by 2 to 4 from last year, the first such cuts since 2011. According to people briefed on ae matter, bonuses were flat year earlier. A spokesman declined to comment. The business is under increasing pressure as money flows into cheaper offerings. Mcdonalds has announced plans to roll out mobile ordering and delivery to all u. S. Locations in a bid to win over customers. The fast food giant is embracing the same Digital Tools starbucks and dominoes have used to grow sales. Many mcdonalds overseas restaurants already offer delivery, especially in asia and the middle east and the Company Generated almost 1 billion from the channel last year. Francine thank you so much. The trump rally rolls on. The dow jones hit a record high for the 12th time in a presidency that is only 28 trading days long. Let me bring you to my bloomberg terminal. This is the line you have here. To can see that, 20,000 21,000, tying for the fastest trip between round number milestones in the gauges history. The second fastest was the nine weeks it tough to hit 20,000. The s p 500 has also hit a record high. Where do u. S. Equity markets go from here . Trevor greetham is still with us. You like equities. You are probably heavily invested in the dow. Why . Trevor what we seeing is an upsurge in Global Growth that started before the trump election. The promise of stimulus has supercharged it. You are seeing a global pickup in growth synchronized across the major economies. Where are the Central Banks . The fed is talking about maybe doing something small in march. Printing money in europe, the u. K. , japan, very loose policy, and growth picking up, therefore equities are the best place to be. Francine it is picking up a little bit. When you look at earning expectations, they are higher than they were, but mainly on cost cuts. Could this actually reverse quite quickly on either cost cuts not being up to scratch or the president saying something that was already priced in . Trevor the data we look at suggests this is the biggest upsurge in nominal growth, growth plus inflation, since 20092010. You ask yourself, what was the crisis that gave you that springboard. You can see it back on your screen there. It was the china devaluation panic. We had one in mid2015. We had one in early 2016. Everyone thought the world was ending. China was in deflation. China is now growing strongly. Other Central Banks cut rates. Now we are the benefits of this. We are in the later stages of this particular move. I wouldnt be surprised if we hit some turbulence over the summer. I dont see anything at the moment that is going to put us back. A lot of tweets from the president but they have not pulled us back. Francine a lot of people dont believe he will go through with it. We talk about a new global order, globalization coming to the end, having to rethink how you distribute wealth. And yet indices ignore that there are a lot of western countries, thinking of brexit and the u. S. , that are more inward looking. Trevor it does make me more concerned about a fiveyear outlook for equities. There are some scenarios which would be quite negative. Where we stand at the moment, theres enough slack for growth to be quite strong without serious inflation. I do take your point that there are some pretty concerning things out there. We call this the wall of worry. Did you see what happened yesterday . All this kind of stuff. The markets are good at the moment. Francine what could be a canary in the coal mine . We mentioned china and concerns about how they deal with it, the nonperforming loans and the banks. Do we need to look at french politics . Could the possible election of Marine Le Pen actually mean this goes down significantly . Trevor we could get some corrections. I keep looking at the screen here. Where it says u. S. Election data, a little spike down was actually the brexit and it. Radaridnt trigger on my because it was only a oneday connect. You can get those sorts of things quite easily. Is someink there potential for that around the French Elections. It is likely that le pen will win the first round and people will be more worried about her winning the second round. The macro backdrop at the moment, the policy backdrop, is very positive. Tightening,t to get once we see Business Leaders rolling over, then we can talk more about these other trends. Francine all right, thank you so much. Trevor greetham stays with us. Up next, french president ial candidate Emmanuel Macron is to avoid getting egg on his face as he launches his campaign manifesto. We have the latest next. This is bloomberg. Francine this is bloomberg surveillance. The french president ial hopeful, Emmanuel Macron, is due to set out his manifesto within the next hour after the centrist frontrunner was egged in paris yesterday. 39yearold has been gaining on Marine Le Pen in polls of firstround voting with a survey yesterday putting the gap at just one point. In germany, Angela Merkel turned up the heat on her rival, martin schulz, accusing him and his party of being backward looking. Schultz held a rally of his own, bashing the rise of nationalism that propelled donald trump into the white house and britain to vote for brexit. Well wait the latest eurozone inflation figures. Trevor greetham, head of multi asset at royal london Asset Management, is still with us. I dont know whether you are focused more on ecb or the inflation data, or Political Risk. Trevor as a multi asset investor, we are focused on the big Global Trends that support different asset classes. We would be more focused on the Political Risks and how that might affect equity positions or exposure to the euro, rather than the european bond markets. I think you will get some wobbles off the back of this. Francine big wobbles . Worstcase scenario . What are the levels . Trevor the worstcase scenario is le pen wins the second round. Francine and that is negative for euro . Ive heard researchers saying there is not that much she can do in terms of getting friends out of the euro. Trevor theres not much she can do, but theres a lot she can try. I think you would see quite a big effect on the euro and quite a big effect on peripheral bond spreads. The ecb would want to do something to calm that down and that would make it much less likely they would enter into tapering and tightening. I think it would be euro negative. It would probably rattle stock markets. It would result in some kneejerk reaction probably from the ecb and stronger activity and stronger stock markets further on. I think it is more of a dip than a derailment. Wayight get that in a small en. You are worrying le p will talk about brexit and whether theres a chance of early elections in italy. I hear rumors of possible bailouts. We still havent sorted that. Are you short european equities because of it or attractive . Trevor we have three big themes. You talked about this global synchronized recovery, the dollar, the third scene is Political Risk. If it werent for the Political Risk, we would be overweight japanese and european equities. We are overweight japan, but underweight europe. Ande get through this year, the bad things dont happen, or if the markets reprice a lot lower because bad things do happen, then i think youre starts to look attractive europe starts to look attractive. Francine when is that time, after elections are over, the end of the year . Trevor maybe sometime in the middle of the year if we get a general market correction. If there are worries about europe at the same time, i would be interesting in seeing if there are contrarian positions. Francine and you would by Industry Groups . Trevor broad indices, the euro as well. We talking about my scenario, buying these things at a lower level relative to other asset classes. I dont think we have any firesale in europe yet. It may be that the political agenda result in a bit of concern. Francine trevor, thank you so much. Trevor greetham stays with us and we talk brexit next. Hes from royal london Asset Management. As the u. K. Government suffers a parliamentary defeat on brexit, we speak to a former member of the house of lords, jim oneill. We are seeing a little bit of movement. If you look at european equities , they are fluctuating a touch. Yesterday, they closed at the highest level in more than a year. Lael brainard he came the latest fed official to support the case for an Interest Rate hike. That is moving fed fund futures. It is now quite fully priced in, i would say. Dollar versus yen, 114. 26. This is bloomberg. Bloomberg surveillance francine bloomberg surveillance. Im Francine Lacqua in london. Heres nejra cehic. Nejra the u. S. Justice department has confirmed that attorney general Jeff Sessions had conversations with russias ambassador to the u. S. While he was a surrogate for Donald Trumps campaign. He said during his confirmation hearing that no contact had occurred. Sessions said in a statement that he never met with russian officials to discuss the campaign. The news has prompted Top Democrats to call for him to be ousted. President trumps new travel order is said to drop iraq from the list of nations whose citizens will be barred from the u. S. For 90 days. According to white house officials, trump has delayed issuing the new directive until at least friday. The order is a revision of a travel ban imposed in january that was blocked by federal courts. Company is going public at a valuation at least twice as expensive as facebook and four times more costly than twitter. Snap inc. Told sold 200 million shares at 70s dollars each 17 each. The stock will start trading today on the New York Stock Exchange under the ticker snap. Have. K. Government suffered its first parliamentary defeat on the draft brexit law with the house of lords rejecting a plea to leave the bill intac