We have a lot of breaking news. We need to literature treasuries and the markets. Im interested in what japanese treasuries are doing today. Oil stockpiles rose in the First Quarter despite the opec cuts. Lets see of its having an impact on the price of crude. You can see its unchanged at 52. 96. We have that report that is extremely important. I am trying to filter through what we know and what we dont know. Despiteles are rising the opec cut. Thats the one significant thing. The Oil Market Needs time to rebalance as january stockpiles rose. There is little affect on the market so far. It. Will be looking at in the broader market, the dollar is slumping a little bit. Talking, he was said the dollar was getting too strong and shares in europe. Lets get straight to the bloomberg first word news. Rex tillerson and his russian counterpart vented their disagreement after hours of talks. They did signal that neither side is given up on improving relations soured by russian hacking and syria. If is unclear whether Vladimir Putin. He joined their meeting for more than two hours. I expressed the view that the state of russia relations is at a low point. There is a low level of trust. The worlds two foremost Nuclear Powers cannot have this kind of relationship. North Koreas Nuclear test site is primed and ready to conduct a trial. Thats according to a u. S. Research institute and monitors the country. Commercial satellite imagery shows activity at the test site. South korea has downplayed expectations of an eminent nuclear test. Saudi arabia has raised 9 billion in the bond sale. Thats 1 billion more than they were aiming for. Is tapping markets to help finance a budget deficit that may reach 53 billion this year. Londons Housing Market is in its worst slump since the financial crisis eight years ago. The price balance for the city fell to the lowest since february 2009. The report showed more respondents are expecting prices to rise over the next year. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Francine donald trump has his currency in his sight again. The president told the wall street journal he thinks the dollar is too strong, adding its hard to compete when you have a strong dollar and other countries are devaluing their currency. The reaction was swift area swift. In that same interview, he also said he wont label china a currency manipulator. The h switch from that is a switch from the campaign. Herel trade could rebound as long as rising protectionism and a tighter Economic Policy stays of the way. Anything that makes investors think twice is a big risk. That includes uncertainties in terms of Monetary Policy, trade policy as well. That could be good or bad risk. Anything that makes the investor hold on and see what happens before he puts his resources on the table, all of those things have an effect, including geopolitical tension, which we see around the world. Francine lets bring in paul donovan from ubs. Thank you so much for joining us. Let me start off with you. What was most present thing you heard from the president in the last two or three weeks. We thought he would stick to his campaign promise. Are you confident he is less protectionist . Isl the issue for markets we have not only uncertainty about policy, we have uncertainty about the policy framework, how its being developed it does seem to be almost random, some of these decisions. Yesterday, we got the flipflop on the china currency situation. We got a flipflop on health care, which got buried with everything else. It might take priority over tax cuts. Previously, that was it. You had your chance. Its not happen again. How dothe challenges is you handle this uncertainty . What do you do with this uncertainty about where the next policy is coming from . Francine is there an argument to be made that some of the uglier policies could now take a back step . Aboutu feeling better populism now that you are five months ago . Peter what youve seen in the last two or three days is the meeting of rhetoric and reality. During the campaign, we are going to bring back protectionism and jobs to america. Now that he is faced with the reality of dealing with the chinese in a serious technocratic matter, its more difficult than just making a campaign pledge. Its interesting to see the comments on china be a currency manipulator, hes not going to label them that. He says he wont. He says he doesnt think they are. If you look at the reality, they have been manipulating their currency, but try to prevent excessive weakness. They dont meet the criteria from the state department. Its this meeting of rhetoric and reality. I am less concerned about protectionism than i was. Francine because he is a dealmaker, thats what we keep being told, this is a caret so they get involved in geopolitics and Foreign Policy. Paul i diss agree a little bit. Ist we have learned so far not that hes being more conciliatory. He changes his mind a lot both ways. Weve had four Different Health care policies now. I think that is troubling. There is the chance he could flip back and change again. My concern is if the Trump Administration does not get its way with congress on various aspects of policy, the health care, building the wall, they put all their firepower on the one area. The president s Cup Authority with traded. That would be my worry about the flipflop. Francine isnt Health Care Different . I have heard what youve said in the past and people give them the benefit of the doubt. Health care is a little bit different because his party did not support him. He would have a much more sweeping majority on fiscal policy. Paul lets not forget in terms of this whole thing, the Campaign Starts again in december. Weve got midterm elections next year. You know american politicians alike. Approval ratings are low, the risk is he goes to appeal to the base and his support race and does that through the threat of protectionism later this year. Tom the argument is he seems to understand economics better. Hisr reality is informing decisions to a greater extent. Care,k regarding Health Health care reform is difficult in any country. Particularly difficult in america given the situation they have there. It doesnt surprise me at takes longer to get consensus. Thinking the stimulus, i there is some rationale to argue that you can have a bipartisan support to reform. We have the 2018 election coming for the midterm. What politician wants to go back to his electorate and didnt get anything . Francine when you say he doesnt get what he wants at the moment, he will go back to what he does best, which is protectionism. What do you most worry about . Is it forcing people to come back . Paul we are looking at selected protectionism. You want something you can tweet about. You want something you can go to your base in the rust belt and in 140 character say look, i did this. It doesnt matter from a political perspective how effective it is. In most cases it is not effective and does more harm than good. A lot of people say he is a businessman. This is one of the most worrying things. Business people are protectionist. They look at a micro level. Picture,ok at the big protectionism can be superb for an individual industry and disaster for the economy. Thats one of the risks we see. We get a businessmans approach to protectionism coming through. Francine thank you so much. Lets get to the Bloomberg Business flash. Hsbc says some of its largest clients have asked for their business to go through your. The head of Global Professional banking said clients arent waiting to see what brexit deal the u. K. Strikes. They are ensuring they can continue training, whatever the outcome as they cant afford to wait. A Credit Suisse traitor who was fired after being accused of hiding 18 million in losses is suing the bank for unfair dismissal. The criminal case was dropped last year. He filed the suit in a london tribunal. An aprilin april hearing has been delayed until summer. First quarter Revenue Growth matched analysts as expectations. Sales rose to 21. 3 billion euros. They plan to throw float this year. Fallouteen the biggest this year after profitability of its franchise market. Angry United Airlines customers can that their fury at a juicy target, the chief executive paycheck. The manhandling of the man dragged off and overbooked flight in chicago and his response was widely viewed is below par. Its not going to help his cause. The airline will come passengers on that flight to cover the costs of their fares. That is the bloomberg is the . Business flash. The u. S. Secretary of state and Vladimir Putin and the foreign secretary vented disagreements during hours of talks in moscow. View that the the current state of relations is at a low point. There is a low level of trust between our countries. Foremosts two most Nuclear Powers can have this kind of relationship. They have been heightened by developments in north korea. A u. S. Research institute that monitors the country says the Nuclear Test Site appears primed and ready to conduct a trial. These pictures are from september of last year. Commercial satellite imagery from yesterday showed in increase activity. Still with us is paul donovan. Peter, lets start with you. At what point does Foreign Policy or the concerns have a real impact on the market. Peter if we get more talk about further sanctions against russia, that will have an impact on markets. It will have a bad impact on the ruble for sure. Its good theyve been talking insane we have bad relations and we want to improve them. Again, trying to get from where we are now to where we need to be is a long struggle. Youve got to superpowers basically who are diametrically opposed on some very important issues. Both of the parties have invested Political Capital in the serious situation, thats going to be very difficult. Ago,four or five months the russians were singing because they thought they had a prorussian president in the white house. That doesnt seem to be the case now. Francine when does this translate into economics . Paul this is actually noise. The way it translates into economics is in one of three ways. , youirst and most obvious start dusting off the oil forecast. The second is the general sense of confidence and spirits among his this people. That i am quite skeptical about. What we find is the reported surveys say these react to what you are saying. They react to the media. That reflect the reality. You might get exaggerated news. The thing that is starting to concern me more and more about this is as we get completed home countryget a buyer. People are keeping their money to close to home. We have a less efficient allocation of capital in the world which makes for a less efficient economy. Thats going to affect this in the next three months. Over the next five years, this could be problematic. Francine does that influence productivity . Paul it does. Inefficient products being given a lifeline in other countries because people say its not very efficient. The world looks very nasty out there. Im not going to put my money overseas. Francine this is what we are seeing at the moment. Fix is usually the one that we look at. Indexes, howity much do you believe them . They dont really mirror each other. Is it market liquidity . Peter it definitely is the issue. People dont trade that much on geopolitical stories. I make the analysis that if you israeli development, if you traded on those reasons, you would lose a fortune. Even last year, despite the russia headline noise, the ruble in russian stocks were pretty good. Francine is that Central Banks in general . Is that markets . Peter they ignore geopolitics is launching dont have safe haven assets. Consequently, investors are still in a situation where we do have yield and performance. This noise doesnt doesnt tend to have a impact. Francine lets talk about oil. Paul was talking about the impact on oil. We have that inventory increasing for the First Quarter despite the opec cut back. Coming up, we are live in a stem bull with a crucial referendum on constitutional changes. This is bloomberg. Francine a referendum on turkey could grant new powers to the president. Its great to have you on the program. What kind of result are we expecting . Turks are eligible to vote and if they vote yes, they will give the president sweeping powers and limit the role of the prime minister. The polls are too close to call right now. They are in a connect. Divideds a deeply nation. I want to tell you of an interesting twist. We have just learned that if turks reject this constitutional change, there could be another referendum. That is according to the president s advisor. Its worth noting that if there is a yes vote or a no vote sunday, there could still be early elections. Francine im reading the story now that you were just mentioning. May need tothey hold another referendum. Oftens something we dont see in western democracies. What do investors think . Investors hate uncertainty. Modey has been in election every single year. Vote, therea no could be another election. Investors are saying that a yes vote would be market friendly and we could see a brief relief rally. If we look at the lira, its the worst performer this year and emergingmarket currencies. Its depreciating 3. 5 against the dollar. Thats after hit record lows. We will see how the election plays out of the market. Francine thank you so much. Lets get back to our guests. What you make of turkey at the moment . Is it uncertainty or is it too risky . Clearly, this is literally a 5050 call in terms of the polls. I would agree. If we end up with a yes vote, that gives a degree of shortterm certainty. We then focus on the longerterm question about is this a government that is going to produce the structural reform, is it going to be able to attract capital and talent to the economy in the longerterm . Those are all difficult questions to answer. You volatility. Another referendum if you dont get the answer you want the first time around. I think that would be creating more shortterm volatility. Covered e. M. Have for years. Ramy when you look at it over the years peter it has a very constant trend. That has been very high in turkey. Youve got Central Banks that have lost independence and a lot of that is because of political pressure. Regarding the outlook for the lira, i agree. It would weaken dramatically. It just increases uncertainty in a significant way. Vote, shortterm we can see some stabilization. The longerterm questions remain. The interesting thing for me in the selection is it doesnt really change anything in reality. We already have a factor executive presidency. Its formalizing it. Francine we have another great chart. We will get back to that shortly. Up next, why hsbc says some of its biggest clients are saying goodbye to london. We will talk about that and some of the passport issues. Its a very beautiful picture of london. We will get pound levels a little bit later on. Well be joined by stephanie saunders. We will talk about some of the policies that the boe could be putting in place. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Surveillance. Lets get to the bloomberg first word news. Donald trump is spoken out on the dollar again, telling the wall street journal he thinks its getting too strong. He thinks that makes it a very hard thing to compete with other companies countries. The reaction was swift. In the same interview, he said he wont rand china a currency manipulator. The is a shift from campaign. Rex tillerson and his russian counterpart had that to their disagreements after hours of talks in moscow. Bated did signal that neither side is giving up on improving syria. Ns showered by it has been unclear if letterman put in would snub tillerson. In the end, he joined the meeting for more than two hours. I expressed the view that the relations is a low point. There is a low level of trust between our two countries. Foremosts two most Nuclear Powers cant have this type of relationship. Francine the Nuclear Test Site in north korea looks primed for a trial. Commercial satellite imagery shows activity at the test site northeast of pyongyang. South korea has downplayed expectations of a nuclear test. The International Energy agency said things increased during the First Quarter. That has brought World Markets very close to balance. That should decrease stec piles in the Second Quarter. There were out put increases. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Francine thank you so much. Largest clients of already asked for their businesses to be routed to the bank in europe. The head of global commercial banking says theyre not waiting to see what brexit deal the u. K. Strikes. Can tradensuring they whatever the outcome of negotiations as they cannot afford to wait two years. Lets get with our banking reporter. Thank you so much for sticking around both the. Welcome to the program. What we learned about how ma