Then actually our revenues are slightly up versus the First Quarter of last year. The Analyst Community was looking for was a sign that you had client balances back to levels we would have seen last year,. Especially your prime brokerage have you got that . Our prime workers business, we have recovered 50 of the bells we lost in the Fourth Quarter of last year. Not yet fully back. We see this in all businesses. When we need to be mindful of the fact that when clients come say, lets reengage, it is not that the following morning you report new revenues. It takes time to work on transactions. Take corporate finance. In reality what we are seeing is revenue in the First Quarter of this year is largely stuff we worked out in the prior quarters. See a lot of reengagement of clients across all business lines, or you can see some immediate effect in Asset Management, new assets and wealth management, that you can see immediately. Prime brokerage. When you compare with the Fourth Quarter of last year revenuewise we are up 100 million and we recovered 50 but it takes some time. Matt got to warmup the engine before you are firing on all cylinders, i get that. Your u. S. Peers saw a 24 gain in fixed income in currency trading. You had an 11 gain. Are you firing on all cylinders in this quarter . Are you going to match your peers now . Two messages. First of all, we are not yet firing on all cylinders. We are, we have seen the turning point in every space. In particular, when you look into the debt side, one point is really important to highlight and that is in october 2015, we took the conscious decision to exit certain businesses. One of those being the securitized trading business. Thats the business that is performed probably the best when you look at the last three quarters, most notably in the u. S. Aresome othef our peers benefiting from the increase in business five there. Not, because we are no longer an active player. We are pleased with the 11 we are seeing. That, we are very strong when it comes to more complex structured solutions. That can see not happen overnight. There are many things we are working on. I am optimistic with regards to the future. Mark lets speak to matt miller who conducted the interview. Can you explain the disappointment on fixed income and equities trading, particularly fixed income is lagging its u. S. Peers . Matt yeah, well, they basically just had an absolute cratering of client balances. So, the big hedge funds and institutions that trade through Deutsche Banks prime Brokerage Bank and the the Fourth Quarter and stop doing business with it to such an extent that it really hurt their market share of fixed income, currency, commodities, and equities trading. And they have been trying to get that back. But he was saying is they have gotten back 50 of what they lost. Theyre going to continue getting that market share back, or continue getting those client balance is back, because they are still losing market share. The whole pie is growing faster than Deutsche Bank is gaining in , on that revenue line. So, need to get back there and they have reached, he said, the turning point. Mark they are juggling lots and raced some capital. They want to ipo the Asset Management arm. Have we learned anything warned about the Asset Management ipo . [sirens] matt they have given themselves 24 months, two years to do that ipo. Of course, the market is hot right now. The market just digested an 8 billion euro recapitalization from Deutsche Bank. So, what some investors are saying as why not do that soon . I just spoke with union investments. They own Deutsche Bank. Think theydg, we really do this by the end of this year. Within the next two quarters they will be ready. Theyre preparing to do it so they have that option alley. I think investors, at least now, expect them to do it sooner rather than later. Mark did you hear anything from Deutsche Bank about brexit and the impact on employees and plans Going Forward . Matt indeed, we did. Already yesterday, we heard from a regulatory conference in frankfurt. That they could move 2000 jobs eut of britain as far as th banking businesses concern and another 2000 support jobs could follow. A total of 4000. Thats one scenario. Just do notk, they have the visibility yet. He does not think the politicians has the visibility as to how this is going to shake out. Abouts it is going to be a year before he thinks they can begin to really answer definitively questions about heir bankers in t london and how much business leaves the city in the end. Mark . Mark great job. We will speak to you later. We will round out most of todays, the rest of todays new s from banks. We have learned from heard from lloyds and bbva. Chris miller will talk us through Chris Wheeler will talk us through all of those. Lets have a quick chat with the senior european economist at Morgan Stanley. The economic backdrop in europe is far better than it has been for banks. Is lending forthcoming . Is there demand for loans in the eurozone right now . Up forgs are pick uing sure. In the near term, most confident surveys have surprised to the upside. Haverd data less so, begun to normalize an increase most recently. Weak, but it has been strengthening most recent. We are talking about an Economic Outlook that looks better than it is ever been in the past two years. Mark well continue to stay with us on surveillance. Hes under pressure to lay out a for exiting ecb stimulus. Draghi knows there is a lesson to be learned about pulling the plug to say. We look ahead to the Central Banks rate decision. This is bloomberg. Mark lets get to the Bloomberg Business flash. Sebastian lloyds boosted its targets and mid record lows in interest rate. Net Interest Income from lending rose 1 to 2. 93 billion pounds, topping most estimates. Airbus profit more than halved. Its production glitches hit the newest jets. I just as earnings fell to 240 million euros. Nokia has reported firstquarter sales topped estimates after the slump in Network Commands began to stabilize and the company reached more revenues. And Samsung Electronics says it will not convert into a holding company, resisting a push by paul elliott singer. As they posted a quarterly profit that topped estimates on smartphones. Samsung announced its firstever quarterly dividend. That is the business flash. Mark as mario draghi faces increasing pressure to and they ecb stimulus, with you might want to respond with a history lesson. For weeks, officials have been publicly debating whether they might start to wind down there asset purchases and raise rates but draghis is determined not to repeat and error when his predecessor started tightening policy only to see the region slide back into recession. Still with our, the senior with us, the senior european economist at Morgan Stanley. T influenced by six years ago when policy was tight and had to be quickly reversed as the economy move to towards recession . Be extraraghi will cautious this year before he takes the foot off the monetary stimulus gas . In the central bank, that was the history, but in the other sense, you look at the data flow. It has strengthened, but one thing that remains weak just yet, its inflation. And that is the ecb target. Core inflation is. 75 . The European Central bank rather than shifting from dovish to hawkish, for example, will put in place a stepbystep process to eventually dialing down. The talk us through process going through the end of 2017. The process is longer than that. The first step is happening now, is about playing with words. Its about selected carefully the formulation that suggests that risks to the Economic Outlook are no longer skewed to the downside. They are becoming more balance. This will not happen today but chances are that draghi in june, he will say the risks have continue to diminish and in june the Forward Guidance is likely to change in two ways. The lower level of Interest Rates, the ecb may cut or drop or deemphasized strongly and also, the Downside Risks will be described as more symmetric. That is the first step. Then come september, chances are q. E. Cb will say sthe program will continue next year as well at a reduced pace. I would expect the tapering announcement in september to start in january. One thing that ecb will be more or less like the fed. First they scale back the q. E. , program and then wait before raising rates. In another respect, there will be a difference. They will shorten the time between the end of the q. E. Program, sometime next year, and the first rate hike. Mark still in 2018 . I place it in september, 2018. Mark it is a slow process which the market will understand. What is the impact on bond yields, then, throughout this process . The first rate hike actually will be only for the deposit rate. That is important because yes, it is the anchor for the riskfree asset curve, but in a sense it will be a dovish hike. Interest rates matter. Quiteill not change for some time. Commercial banks will continue to be able to borrow from the ecb at zero. Now there is also another rate, a deposit rate is 40 basis points. When they raise that, it will be small. The punchline is that the central bank will charge commercial banks less. It will be helpful for the banking system. A tightening policy, it is just a normalization of policy given that the deflation risks have defeated. Mark are you then hereby saying that core inflation is going to steadily grind reports from its 0. 7 . T low levels of grinding is the right word. I am not saying that core inflation will rise sharply in i am definitely not saying this will happen in the near term. What im saying is, if you take a year and half, yes, core inflation will normalize, for one, will be higher. The commendation of not meeting any more of the deposit rate 40 basis points are not needing needing anymore to keep buying at the current pace of just me that the stimulus gets dialed down. It does not disappear altogether. We will not go from negative to positive rapidly. We will not go from the q. E. Program to nothing. It is a process because the rise in core inflation is likely to be slow. Mark what is the impact on the euro, the currency itself, as this process gets underway, hte flip side,e the dollar and the fed is likely to be tightening policy at the center . The currency is a consideration. For example, if the currency was to weaken, that would allow the use some room perhaps to a faster pace. If the currency was to strengthen, there will be less room to maneuver but that does not depend on just ecb policy but it depends on what the fed is up to. A microclear from standpoint, the currency is competitive when it comes to european exports. It is strengthened by not strong just yet. Mark thank you for the moment. He stays with us. We will bring that ecb policy decision, 12 45. Followed by Mario DraghisNews Conference 45 minutes later. You can follow it all. This is bloomberg. Big day ahead. Mark Emmanuel Macron has been booed and whistled by striking factory workers in his hometown in northern france. [crowd booing] [police whistle] francine it came after Marine Le Pen fired up the crowd speaking following the incident, macron attacked le pen as part of the political establishment. Macron mrs. Le pen pretends to represent the people but she comes from a party that has refuse to respect the law. She refuses to see a judge of the french republic. 10 ounces and tell those who has lost hope denounce and tell those who have lost hope, she is not the answer. Mark are you looking ahead be on the second round. Are you confident macron will win and casting your eyes on the legislative elections which take macronsjune, andm ability to a, win a majority or b, be able to push for reforms . Theres two angles. We are looking beyond the second round. Best guest was that macron would make it to the first, even before this result. Yes, the legitimate elections are important. Our best case is that well have a more Fragmented Parliament than usual. Of gradual,one study, progressive reform rather than radical, sudden reform. Mark is that possible in a Fragmented Parliamentary system . To the extent the process is gradual, yes, i think its possible, but a Fragmented Parliament makes it more difficult. And the program would argue not for a sudden structural transformation of the economy but hopefully study, steady, progressive improvement. Economy that an finally got the win senate sales the winds in the sails . Look at the confidence data. This is a country that is outshining germany. Now the cycle is getting better. Less cyclical than the german and he italian economies. When it comes to france, that is important as well the global cycle, the domestic cycle, the but what ismentum, more important is that the economic public presence. The potential growth rises. Albeitreforms moderate, this is what will make us more positive over the longer term. Mark the fans that france has caught up with germany the fact that france has caught up with germy, it means that a rising tide is rising all boats . Dataem to be seeing the eurozone strengthening. The economy is firming up. Yes. Now we have more countries and more sectors contribute into that. No longerrea is flying on one engine. Mark what are your big concerns Going Forward, politically or economically . Two concerns. One is beyond the cycle, there is an institutional restructuring of the euro area. There is a lot that needs to be done on that front. Some has been done already. The Banking Union as an example. But we need to see a striping of an institutional architecture macron victory ensure that process quick and . Easier formake it any german chancellor to work with france but i think the issue is broader than that. Eventually, extra integration, one would want to see. That is a concern. The other is that the cycle has strengthened, but from a low bas e. The numbers are good but more from a european perspective. Rather, they would be quite disappointing still for other faster growing economies. We need to see a potential growth recovery, not just a cyclical recovery. Mark thanks for joining us for Morgan Stanley. Up next as lloyds shakes off brexit concerned, we will bring together in the news from all the European Banks reported today. 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. Mark you are watching bloomberg surveillance. Lets get the latest first word news. Sebastian the white house says President Donald Trump will not immediately his countrys participation in the north American Free trade agreement. The decision came after trump spoke with the leaders of mexico and canada about ways to renegotiate. Meanwhile, the Trump Administration has made an opening bid for the biggest tax cut in u. S. History. The plan calls for the slashing 15 he income tax rate foto for businesses but fewer than 250 words, the document offers little in the way of detail, including on whether the cuts would increase the deficit. This package is about growing the economy, creating jobs. It is about the economy. As a starter, President Trump aboutin and talks Economic Prosperity and jobs and what are we doing to stimulate Economic Growth. That is how we are looking at this plan. Sebastian the bank of japan has kept its stimulus. Policy settings unchanged the Central Bank Says it is likely that cpi will not top 2 until after 2018. That underscores the view that any exit from monetary easing remains far away. How we implement the exit strategy depends on the status of the economy, inflation, as well as the financial conditions at the time. Discussing the specifics of the exit is premature. We will continue to communicate with the markets as needed. Sebastian we get the ecbs latest policy decision at 12 45, followed by Mario DraghisNews Conference. Bloomberg customers can follow that on tlive go. Emmanuel macron has been booed and whistled by striking factory workers in his home town in northern france. [ crowd boos] [whistles] sebastian it came after Marine Le Pen fired up the crowd. Speaking after the incident, Emmanuel Macron attacked le pe