This is bloomberg surveillance. Final trading day of this week. Next week is a shortened trading we cure him london because of the main bank holiday. May bank holiday. Also on track for the Third Straight monthly advance, which is the best run since may 2016. Investors buoyed by the first round of the french president ial election on sunday. The next one is next sunday. Strolling up against the dollar. The best run since december. Highest since september last year. The best run for a month, also gaining for a second month. Gdp data at half past. That stopped sterling in its tracks as gdp comes in line with estimates, relative to the prior quarters. Today gdpr could see the economy expand at 1 annualized. Historically, the First Quarter has been week. Will the rest of the year make up for it . Will there be a shutdown, to name one issue . Trumps tax plan renegotiating. Geopolitical risks. Crude today is up, below 50 after a rally in the first half of april. Oil is set to end the month back below 50 a barrel. Here is nejra cehic. Nejra u. S. Secretary of state Rex Tillerson will use his first visit to the u. S. Security council today to try to show north korea that the world is united against his Nuclear Weapons program. Economic sanctions are expected to be considered at the meeting. President donald trump told reuters that a major conflict with north korea is possible if Diplomatic Solutions fail. In japan, a flood of Economic Data indicates the modest recovery in the worlds thirdlargest economy is recovering for a quarter, but inflation is largely refusing to budge, with the core measure rising just 0. 2 in march from a year earlier. He Unemployment Rate stood european leaders, excluding the u. K. , gather in brussels tomorrow to finalize the blocked brexit negotiating guidelines. The e. U. Warned that the remaining 27 countries are the main concern as it seeks to limit negative consequences for britains departure. Negotiations are set to begin shortly after the u. K. General election on june 8. With a little over a week until the runoff vote in the french president ial election, the rival candidates have stepped up their battle. There radically different views on frances place in the European Union and the globalized world is putting Emmanuel Macron and Marine Le Pen at loggerheads. The one who today has to create unity within a fractured france, against mrs. Le pen, who is the face of the national front, a party we have known for decades. Aunfortunately grew up with french Political Landscape marked by this party. It is the one of hate, refusal of the other, and a shrunken rants. France. Because yes, my friends, i am telling you, this president ial election is a referendum for or against france. , call on you to choose france not him. His platform is about the dilution of france. On his horizon is the deconstruction of france. United airlines has settled out of court for a passenger dragged off one of its planes earlier this month. Forcible removal from a kentuckybound flight sparked widespread condemnation, with footage of the end and incidentfootage of the going viral. The amount of the settlement is confidential. Im nejra cehic. This is bloomberg. Has become the latest European Bank to post disappointing firstquarter trading results. This failed to live up to the gains made up by its u. S. Rivals. Trading, fixed income along with the 24 jump achieved by the five largest american counterparts. Income from equities, the other main trading business, also fell more than expected. We had a very strong First Quarter of last year, and so on a quarter to quarter comparison, we did not have the uptick that a number of the u. S. Banks did. In part, we had a strong First Quarter of 2016. We always want to do better in the markets business. But we are comfortable with how we came out in the overall profitability of the corporate and Investment Bank is making good improvements. I think we feel good about the quarter. Picture fortive ubs. Its a clients return from the sidelines in the quarter. They added more than 20 billion swiss francs of money, boosting earnings in the Wealth Management business. That helped net income jumped by 80 , beating analyst estimates. The strength of this is what you have seen for the last several years, a superior return on allocated capital. We have a 24 return on capital. And without compromising on quality and excellence. ,e are a leader in many areas but they are the ones where we choose to compete. Of scotlandyal Bank Reporting a quarterly profit for the first time in more than a year. Upef executive mcewan steps costcutting and restructuring operating profits in the three months through march, topping estimates. The company is on track to lower operating expenses by 750 Million Pounds this year. Lets bring in our u. K. Finance team. Michael, lets start with you. Not the first of the banks this week to report disappointing fixed income revenue. Suisse barclays credit specific thing, or is it Something Else going on . Michael it is the americans versus the europeans on this, and it has been a continuing story of the american banks grabbing share. You have four major European Banks report this week. All four have disappointed on the trading front, even u. P. S. Ubs today. It had gains elsewhere, but posted a surprise drop in that. It has been a continuing story for the last couple of years, but it is to be accelerating. Mark some of barclays european peers are scaling back from some markets retreating. Is that an opportunity to win back the market share within europe . Michael i think that has been part of the plan. He has put his weight behind the Investment Bank. People were calling for him to scale it down or spin it out. But when he came in, he said, we need this business, and part of that is a bet on taking some share from European Banks, but it did not come through this quarter. Mark the earnings have been overshadowed by attempts to unmask this anonymous whistleblower, in violation of the companys conduct policy, which has yet to properly play out. But it could result in him losing his job. Is the extreme scenario is regulators say he is unfit for the job. Most investors do not expect that to happen. Sound pretty today confident about his support from the board, from shareholders. He says he is still committed to the bank. But we are going to see over the next few months, the regulatory investigation play out. Mark persuade me that European Banks are still a good buy. Look at the screen to my right, the stoxx 600 bank index. Since it fell to a fiveyear low in july last year, look at the ones on some the gains some of those banks, the gauge of i55 percent. 55 . By the bottom was meteor last year, and it is the general bottom of the market. As a veryk at banks cyclical sector, where to play the recovery that is going on in europe, and the lowering of the risk that is what we are seeing behind the Banking Sector, but also behind the overall marker market. Beenuropean banks have lagging their u. S. Peers, but they are catching up because the european economy is catching up. We have seen a lot of efforts in terms of costcutting at European Banks that will bear fruit in the coming months. Veryrospects are still fine for the European Banks, so the steep rise after the bottom. There is still the momentum that is going on when it comes to the ratio of earnings. Mark more on that theme in just a few minutes. Michael moore from our European Finance team. Re stays with us. Career conflict. In morerump in gauging saber rattling as he heads to his 100th day in office. The latest as we check in on britains Economic Health with gdp figures in 20 minutes. We talk brexit and the general election. The former conservative party leader, iain duncan, with us. Mark here is nejra cehic. Nejra an unbroken twentyyear streak of Revenue Growth shows no signs of slowing. The company top profit and revenue estimates in the First Quarter as sales may be projections in the current period, reinforcing its message to investors that big spending on warehouses and movies are part of a winning formula. Google parent alphabet beat analysts sales projections in the First Quarter, ending a fouryear streak of missing wall street estimates after the holidays. Revenue minus payouts to partners rose to 20. 12 billion as google benefited from a surge in on ads on smartphones. Clicks on ads on smartphones. Rosoft plans in the cloud weaker demand for support services cap Revenue Growth in check. To 23. 50 6 billion dollars, slightly short of analyst estimates. That is the Bloomberg Business flash. Mark thank you very much indeed. I will put in my number. All be clear in a minute. Donald trump says a major conflict in north korea is possible if the Climatic Solutions failed, but senator john mccain says the president understands that military action is a last result. Trons comments come as he approaches his 100th day in office. Chiefwith us the Investment Officer at abn amro. We will get the chart. Dont worry. As trump approaches his 100 Day Anniversary tomorrow, where are trumpflation trade, which is part of the reflation that began . Didier i think the trump reflation stimulus is still in store, because the u. S. Economy , withown some good signs growth around one point 2 , essentially because of the very strong last quarter we had. Not needeconomy does strong stimulus at the time. Like dryomething powder, if you like. When we look at trump policies, we have seen over the 100 days a normalization of policies, with possibly the exception of the north korean affair. So far, we are not seeing an escalation, so it is still under control. Mark further gains in equities, and risk assets, do they have to plans,led with firm tax Firm Infrastructure plans . There is a document which is sparse in detail. Is that enough to give another leg up to risks risk assets . Didier there is still a hope to see a significant cut in tax rates. I think it is probably the point of the trump administration. Ofare not talking anymore the whole of the tax system in the u. S. , which is like going through the desert. But i think it will be rather precise. Trump will be focused on precise items, such as the tax cuts, such as the way to recreate the condition for the small and mediumsized companies. If you look, for instance, at the index of confidence of the small and mediumsized companies, it is very high. Mark look at this chart. This is a wonderful chart, g bt v. The gap between hope and reality. The hard data is blue. The soft data, yellow. That is not a worry . Didier of course. Lets say the soft data are more volatile than the hard data, because there is a big inertia in the economy. But i think it does not mean that all hope is gone. I think there is still a lot of things to be watched, in terms of exports, things that will benefit. There is something in store still on the hard data to manifest. Mark and you are basically saying, dont worry about normalization of Monetary Policy, because it is a background of this economic recovery . Didier yes, i think the normalization of Monetary Policy is a result of the recovery, and it is not a threat to the economic recovery. We are seeing the central becominghat are simply smoothly separated after coming into the emergency room after the big crisis. Really the action is not on what the central banker will do in the coming months. It is the real Business Cycle unfolding that will capture the attention. Mark back with you in a second. Up next, speaking with stimulus. Draghi shows enthusiasm about the euro area recovery. Inflation means he will not be fighting just yet. The latest on the ecb policy decision, and the output for europe and european equities. Mark the ecb maintaining its qe program. Remainonary pressures too weak to contemplate paring back stimulus. Draghi the coming data since our meeting in early march confirm that a cyclical recovery of the euro area economy is becoming increasingly solid, and that Downside Risk has further diminished. The risks surrounding the euro , whileowth outlook moving towards a more balanced configuration, has still tilted to the downside, and predominantly due to global factors. Mark we are with the chief. Nvestment officer at abn amro Monetary Policy backdrop is still very supportive of the economy. And you think that european equities are still the ketchup story of the Second Quarter . Didier yes, i think we are still at an early stage, because a lot of people were interested in 2016. People are confused with turning points. We are at the moment unfazed for european equities. European equities have been flying high. Effects that spillover of capital in areas of the various regions, one that can be talked about is europe. Europe is a developed market that is a huge ketchup story, but also emerging markets. The case for europe is a Strong Financial sector which would be boost to the european sector it is catching up. You are seeing decent energies backing the european markets. Valuations, more than in the have things for next year which represent a risk premium for the medium term. For private banks, for private clients of institutional banks mark this mornings recovery you keep telling me about, is this real . Storms had many false over the years. Didier it is a deception exercise, to go with the earnings forecast. From a verycome low, singledigit environment. Thes easier to fly above double digits in europe. This is accelerated by the economic recovery. And on the costcutting side, more than in the Banking Sector we know in the overall, lets say, industry of Consumer Discretionary we have a lot of ketchup stories in europe. , which wassector heavily beaten by the emerging markets at the time, they are recovering nicely. That is an area where they have a competitive advantage in places like france. Mark yes, france, gosh. The first round of the election, are you confident macron will win . And will the elections in june allow him to push through his reform agenda . Didier i think there is a strong chance that candidate macron will win. He has the advantage of adding a. Ery broad policy agenda it is not all left or all right. It is both. We can attract a broad base of the electorate. It is concentrated on forwardlooking. Used toa look we look at leaders for the economic cycle. They tried to reembark the people with what is happening. It is readying people for the momentum we are observing, and that is a big challenge for france. Mark we are talking brexit next. Stay with us. Mark welcome to our weekly brexit show. I am mark barton. Here is nejra cehic. U. K. Prime minister theresa may hosted Jeanclaude Juncker for talks at number 10 on wednesday night. The European Commission spokesman said they discussed the need for a swift resolution for the terms of the divorce agreement before talks can begin on the future. Although brexit will not be final until march 2019, the process of ratifying any deals needs to be concluded by autumn 2019. German chancellor Angela Merkel laid down a tough line for brexit talks with the u. K. Addressing the German Parliament yesterday, she reminded britain it cant expect preferential treatment, as she warned that some officials in london were harboring illusions. The comments came as the remaining 27 European Union leaders prepared to meet tomorrow to discuss britains exit. Largest business lobby called on the u. K. And the rest of the e. U. To settle any exit bill quickly and get on quickly. A good arrangement is not about doing the u. K. A favor, but based on solid economic reasoning for both sides. News powered by more than 2600 journalists and analysts in more than 120 countries. I am nejra cehic. This is bloomberg. Mark getting some breaking data from the u. K. , and the economy grew slower than forecast in the First Quarter, posting the worst performance in the services industry. Growth slowing to 0. 3 in the First Quarter, down from 0. 7 in the final three months of the year. That is weaker than the zero point 4 forecast by economists in a survey. Services grew by just 0. 3 , weakest since the start of 2015. Having made britain the largest growing g7 economy, consumers responded to rising prices in the fourth quarter, by the depreciation of the pound since the june brexit vote. Alsong and businesses facing heightened uncertainty as britain prepares for the general election in june and the start of two years of negotiations to leave the e. U. That is the euro rising against the pound today. A downturn in services, which counts for 27 of the economy, driven by consumer focused industries such as retail, hotels, and restaurants. The economy growing slower than forecast in the First Quarter. My guest this morning has been a prominent eurosceptic since entering the u. K. Parliament in 1992. He was elected leader of the conserva