tv Bloomberg Daybreak Europe Bloomberg July 21, 2017 1:00am-2:30am EDT
anna: a warm welcome to "bloomberg daybreak: europe." i am anna edwards. manus: we are ready for breaking news. second quarter revenue, 1.7 billion euros. that is in line with the estimate, looking for an adjusted eps. about 5.8 defense. that was the average estimate among five analysts. interesting comments coming through saying limited possibility has exceeded expectations. cautious on the medium-term prospect. could it be in 2020? that is one of the thought that jefferies and citi. more numbers coming through.
to eric, whoeaking will join us from philip's lighting later on. we will talk to him about m&a in the sector, his numbers, the led and the potential. manus: more breaking news coming through on the watchers side. we will keep an eye on hermes. swatch delivered their sales. they missed. the it comes to margins on business, slipping ever so slightly. property margin at 10%. temple 4% if the estimate. the operating profit, toppling of the business, that is also amiss. the market was looking for 389. a big miss at the toppling of the business in swatch.
hermes numbershe for you. what a week for central banks. the value of the euro going back to 2015. we are back to pre-qe highs. mario draghi was not able to put the word fx and policy into one sentence. quid pro quo. more in termsot of -- some attention is the phrase mario draghi used. that is not enough to stop the trade. we will talk to a guest on this. let's show everybody where we are on the asset classes. asian equities, this is the picture where it stands now. during the weekly advance is the
big investec -- the big message. much will investigation into president trump's business affairs slow things? we see global stocks at all-time highs. to an 11 dropped down month low. you can see the argument. we'll be rates differentials save the dollar -- will do rate differential save the dollar? you have the deputy governor coming up this morning. if you want to move the market, you get the governor what you can't say publicly. you have him out on the tape this morning. reiterating the banks preference for a lower dollar to avoid couple getting economic adjustment. the probability of a hike next february drops from 46% to 33%. the market has readjusted.
this is not a runaway train. there is the euro. our guest is sitting on set. anna: let's talk about breaking news out of japan. cj to sell landis. toshiba saying it is going to landis. they are putting up this company , although shares it has in this business from the japanese holding in that swiss company. manus: let's get to juliette sally with your first word news. greece has been
approved for a nuclear snow bailout from the international monetary fund. the washington-based find has with onea new loan point billion dollars. it ends years of speculation on whether the imf would join in another rescue. the uk's foreign minister has promised to make considerations to minimize the effect of brexit on japanese companies. that is according to the japanese foreign minister speaking in tokyo during boris johnson's visit. china central bank has boosted supplies of cash and financial systems. the pboc added millions of dollars. monthshe most in six after demand driven by tax and dividend payments pushed the
rate to a four-week high. hasi arabia's king overhauled the company's security agency. agency has been created that will be linked to the office of the prime minister , a title became also holds. king also holds. north korea's economy is growing faster than its southern neighbor, helped by military spending, including the testing of nuclear weapons. korea,ng to the bank of it expended by 3.9% from a year earlier. from three point 9% -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top .
the rally had to end at some point. we have seen asian equities in 10t for the first time sessions. yesterday, the msci asia-pacific index was holding at levels we hadn't seen since december 20 -- 2007. you have the yen moving against the dollar, the nikkei lower. japanese stocks coming under pressure. morgan stanley did upgrade the aussie banks today. jefferies indicated it is seeing lower second-quarter growth in a stock. it is worth noting it was about 70, suggesting it was overbought. we can have a look at a company in india. it is up after first quarter revenue and got a proofd -- and got approved for a share buyback.
manus was talking about what the deputy governor was saying today. earlier, we saw the aussie dollar try to push for the 80% level. they are saying it is not significant. if you have a look at what the market is looking for, it is expected interest rates in australia to go up from those record lows. that is represented by the blue line. tumbling below. manus: thank you very much. u.s. special counsel that is investigating the trump campaign and russia is said to now be looking into trump's business transactions. and: fbi investigators others are examining russian
purchases in trump buildings. for more on this story, let's bring in jodi schneider. give us your insight. why is this is significant, the expansion of this probe? jodi: it is significant, because things closer to president trump, broadening the investigation. it puts it on a different level than just looking at potential russian meddling in the election. you might recall that yesterday, in an interview president trump said that he gave essentially a warning to robert mueller, saying he is drawing a redline, that he should step over that line, and that he shouldn't investigate things that are not
specifically about russia and the election. it now appears that investigation is going in that direction. thank you very much, jodi schneider, with the very latest developing story in the united states of america. guest is with us. it is another step in the trump story. we wait to see how it unfolds. ultimately trump the rate differential story? the dollar should in theory be stronger. year-to-date, this is every major currency. the dollar is plummeting. politics is trumping rate differentials. >> i would argue, not quite. the coursestory over of the last few years. you can look when there is a fundamental challenge with
authority. it has a negative impact. even in 1998 in the middle of , itmonica lindsay scandal had an impact. it is still an interest rate story going on. the year differential usg germany has proven in germany's favor. been a greatve has indicator from of the dollar has done. as expectations of growth are moderated this year, the dollar has tracked lower. it is not just about politics, however, if that politics story does continue to build and you have a challenged the authority , yes, president absolutely.
anna: that takes us to what your expectations are for that yield differential. yourspecifically, what expectations are for yields in the u.s. this is changing. people are increasingly less convinced we will see this rate hike. convinced thisll year, yes. the message from the fed has been clear. if weget me wrong, continue to get week inflation numbers, the rest of the data that comes out is so so, that might change. has beenof the message clear. it is about next year were i think it matters. -- where i think it matters. cautious aboutbe
following the fed's policy guidance that far out. matter how times we have gone into a year, we have been expecting three rate hikes. i think next year we are going to be very cautious about it. manus: let's talk about positioning in the market. your eurok at this, positioning and dollar positioning. i want to focus on the dollar. don't skip off into mario draghi land. on. me what is going people becoming more bearish about the dollar? absolutely. years, ifive or six thought we were only in the early stages and people unwinding those dollar positions.
it for the way from negative yields. senseonly really been march that you have started to see a reversal. we are at the peak, close to the peak of dollar positioning. there is a lot that can come out. anna: where did that take us next on the dollar? what are your expectations of forecast. s? hit the peak of the great dollar trend. i think we could be in a multiyear bank trend. the question is how will be central banks react? about evenings later, but it depends on how other central banks react. maybe we move back towards currency wars again.
some of these stocks will realize they had an issue. the u.s. is going back. -- the u.s. is pulling back. the trade agenda on capitol hill. manus: we will begin to that more. simon, you stay with us. here is what you should be watching today. meetsemmanuel macron michel barnier at 11:00 p.m. u.k. time. honeywell bull deliver earnings. anna: we will get a rating update. a lot to look forward to. the ecb president says the region's economy is not there yet on inflation. we will focus on the monetary
welcome back, everybody. let's get a bloomberg business flash. here is juliette saly. juliette: thank you. immobile company says it is challenging a u.s. treasury department fine for violations of sanctions against russia. it says the oil company broke sanctions by signing given .ussia the violations are have said to have occurred in may 2014 when rex tillerson was ceo. microsoft turnaround plan got back on track in the latest quarter with rising sales. offered in the fiscal fourth quarter exceeded expectations.
that is your bloomberg business flash. manus: thank you very much. the ecb indicated it would soon take steps toward ending its stimulus program. mario draghi was careful with delivering and overly hawkish message that he would tighten financial conditions. anna: he said the financial bank is not -- the central bank is not there yet on inflation. take a listen. the very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline and inflation developments in the medium-term. say,e aware, as you unanimous in communicating no .hange to the proper guidance
also in setting a non-precise date for when to discuss changes. we only have to wait for wages and prices to follow course to our objective, to move towards our objective. the last thing a governing council may want is actually an unwanted tightening of the financing conditions that either slows down this process or make even jeopardize -- or might even jeopardize. is with us. derrick it sounds as if he was stepping back the spikes, aggressively thing to the market that the fx boys and girls did not listen to him. your interpretation? every he was giving
single reason. he used the haitians and consistency word. he's to the patients and consistency word. he mentioned the strength of the euro. he said only some attention. simon: he mentioned it. suggested because he did not focus on it enough that that was the signal for those in the fx markets to buy bank euro. -- to buy the euro. then we get into the conversation about what it is. is it september or october? simon: it depends on how old-fashioned you are. obviously, it was leaving it open.
i think there is going to be there pressure to's -- to stop tapering next year. sustained euro strength, which is a possibility , but i think is going to make it difficult for talks. -- for hawks. i think it is going to start to create a challenge. -- mber, we always used to say 120 was the right price. if you get above 120, i have concerns that currency strength will emerge and make it harder for the ecb next year. manus: it is currency wars, in essence. are.is where we
this is the chart and and i started the show with. that momentum, do you think the positioning in the market -- it is interesting as well. we are just turning slightly longer here in terms of our positions relatively speaking. this is the bloomberg euro index. if you weremon: talking about speculative position, there is an expectation that people are positioning for a move higher. he is talking about real money. manus: that equity money is coming back in from the start of the year. simon: you were talking about it could flow out.
the reality is -- and remember we started the year with incredibly negative and cautious picture with the political situation. greece adn i gon --yt,aly the attractiveness as you have seen greece and italy go it way, the attractiveness -- anna: is mario draghi waiting for more on wages? he could wait a very long time, given what we have seen in the u.s. and u.k. simon: i think he will be as cautious as possible. there is the other issue. he needs to have some kind of safety net for when the next turn comes. if he continues on with this ,ime of -- type of qe program what happens next time around? they have to do some kind of tapering. anna: simon, thank you so much.
year. i am always drawn to the fact that you technically missed on your revenue enter sales are down slightly. tell me why you are able to steadfastly stand there and stick by the full-year numbers. eric: good morning. thank you for having me. we are sticking to the guidance. at the q2 results, i would qualify them as solid. all our businesses are continuing on the perfect -- profitability improvement. sales grew by 14%. let's take a bit of distance on the growth profile of the company. we declined by 2.4% in the full-year in 2016. we have only declined by 1.3% in the first part of 317. the growth profile of the company is improving, and thus
we are confirming that the company will return to growth in the second half of 2017. ask about how led fits into that? this is part of the transformation of the sector. i was doing research by jefferies and another company, both questioning whether led will begin 2020. what is your expectation for where we see it begin that product line? for where we see it in that product line? connected ledot lamps. when it comes to connected lights, we see potential ahead. connecting 22 million might points.
that potential is fabulous, and i think it will attract growth. went: the other thing i more on is something the analysts seemed to be focused on. the amount of money you are spending on r&d. you talk about connectivity. where are you with your r&d budget? it is high. this is something analysts the market is underestimating. -- think the market is underestimating. 5% of revenues are spent in r&d. if you look at what we are building in the past year, we went from four or five years ago , and led-based revenue that was just a few hundred million. to more than a billion in 2016. we had to grow these numbers.
the offers we are selling in 2017 have nothing in common to what we are selling a few years ago. we had to make sure our r&d machine was capable of these offers. we have been releasing on the interactivewe call software. to allemotely connected the lights in an office space. it optimizes spaces and makes people more active at work. -- productive at work. back in only be done if we have the right investment in r&d. can only be done if we have the right investment in r&d. anna: what about m&a? the big story in your industry, ge saying that after more than a century in the lighting business they are getting out of it.
i am assuming you're not going to try and buy the whole of that. that would possibly run into trouble with regulators. are you interested in any part of that business? we understand it could be sold off in parts. eric: as a company, we are in the lighting industry. we are the leading company in conventional lighting, but also in energy lighting and connective lighting. we have been clear. we are targeting potential companies that would come with consolidation on the market. this is where we are focusing our m&a plans. anna: you see nothing of interest in the ge portfolio, to be clear? if it is just cap, that
needs to be defined. -- if it is just lapsed, that needs to be defined. for you, in terms of the pressure of brexit, drop of the the u.k. customer, is that something that is going to take place, your perspective on the latest moves in terms of pricing the pound and the u.k.? eric: there are many different ways to look at the brexit equation. around theinty conducivens are not to good business. we have been experiencing a softer market condition the past two quarters.
side,look at the consumer with the launch of new offers on connective lighting systems, we also have been successful in growth in the u.k. we have recently seen the launch of voice-activated devices from amazon and google, and that is boosting our business, because we need to make sure we have connection between the voice-activated companies and our offers. we see that part of the business going fine. the uncertainty is not conducive. we have another issue to tackle. it is on the side of our employees. our u.k. employees wonder how the contract is going to look in the long run. at this point, we don't know. i am saying to people, we cannot try to guess what is not clear.
whatever is going to be negotiated, we will be will to act. in the u.k., we have a long history of success. we have customers, employees, and we make sure we support both. anna: a lot of uncertainty, people waiting for answers. eric, thank you for your time today. eric rondolat, the ceo of the lips lighting joining us from amsterdam. manus: let's get into a commodities conversation. we had the australian dollar and bankeputy of the central saying the board discussed its mutual interest rate. anna: the deputy governor downplayed the significance of that talk. civic thats no should be read -- there was no significance that should be read into it.
this time around, it just happened to be be mutual rate. anna: simon derrick is still with us. interesting there, trying to make sense of why they were discussing the mutual rate, not to read too much significance into it. distance in tightening we are seeing in other central bank than what the rba is doing. simon: they also mentioned currency strategy in there. australian dollar has been interesting. it has outperformed the chinese economy, outperformed commodities. one of the reasons is it became a favorite amongst the reserve management communities. they were looking for opportunities to diversify. as a result of that, the australians constantly fall on the strength on the back of that. they have worked hard to keep written policy as unattractive as policy of -- as possible.
stable ratherssie than pushing it lower. the fact that we have a weaker dollar and fx reserves are growing. i think that was a combination that fed into aussie strength. the problem is you start to see negative impact on the australian markets. manus: the essence of what the rba wants to, they wanted to stop a runaway train. this discussion about a new long-term rate being about 3%, that is the genie out of the back. do you think they have done enough to stop the mindset, or
is the genie out of the bag? these are bank bills, the aussie curve. do think the train has been stopped? simon: in the short term, yes, it probably has. he has made it clear that currency remains at the top of their list and they will do whatever it takes to bring that down. continue to focus on the currency rather than anything else. with that said, it is going to be difficult to fight against a smalleres in currency. it is hard to fight against inflows when they come. on the commodity related , brent went back over $50 a barrel. here? stuck in a range
we have a meeting of opec over the weekend. the big question will be, are they going to double down on the strategy that so far has suffered sleep addressed the problem -- successfully addressed the problem. the cap in oil price rises is not shifting. what is interesting is how some of these oil related currencies have different did themselves -- differentiated themselves. -- canadian dollar it is the fact there is underlying forces that are currency, and the fact that everybody knows the bank of canada has been hiking rates.
i think you're going to have the same problem with the bank of canada. it is going to be concerned about currency strength. across the board, we are going to -- manus: the other move was yesterday. rates came down to 6.75%. inflation is coming off. they are in a sweeter spot in their deficit. do you think they will cut more? these are some of the em currencies. if you consider where we prices, you have gold relatively stable to take in higher. i think they are probably going to get some of those inflows.
anna: simon, thank you very much. simon derrick, currency strategist at bny mellon. you're a bloomberg customer, you can click on tv . can influence the conversation, even ask the guest a question at the bottom of your screen. coming up, the u.k. foreign secretary works to reassure japanese foreign companies on business after brexit, but not everybody is convinced. this is bloomberg. ♪ ♪
that is up just a smidge. comes to the forefront and equity markets. will it trump the eco-trade? let's get to juliette saly. she has your business flash. juliette: a mobile company says it is challenging a u.s. treasury department fine for violations in sanctions against russia. it says the oil company broke sanctions by signing deals in russia. the violations are said to have occurred in may 2014, when now rex tillerson -- when now secretary of state rex tillerson was ceo. my percent turnaround plan got back on track and the latest quarter. profit in the fiscal fourth quarter exceeded analysts estimates and adjusted sales rose 9% estimate almost doubled 40 cloud services.
ebay has shaken investor confidence with slow growth and activity of across the marketplace. the company said growth merchandise by them increased 3% to 20 $1.5 billion in the second quarter. that is a marginal gain from the previous period. two whistleblowers are set to share a record $61 million award from the fcc for helping make the case that j.p. morgan misled clients. -- fcc and j.p. morgan declined to comment. that is your bloomberg business flash. let's turn our attention to the brexit story. the u.k. foreign secretary has promised efforts will be made to minimize impacts on japanese companies. for scott's and is in tokyo to work on strengthening relations.
the comments were encouraging. under the pound has been pressure this week after a second round of the top being held in muscles. they ended yesterday with the use chief negotiator telling the u.k. to come back next month with more details. is the chief currency strategist at bny mellon. it is round two. nobody expected anything prophetic. we are charging over the irish order. -- irish border. saying we want our money back, channeling margaret thatcher. there is no agreement for citizenship for european nationals yet. your assessment of where we are. would you expect anything more? simon: it would have been nice if the message had been more positive.
is, the clock is ticking. didn't -- there didn't seem -- the fact that there seems to be substantive disagreements emerging -- in article drop on analysis. where we will be once more. you have to draw dots where we are now to get to that point. where is the market? set up doket mindset not like the pound at the moment? simon: over the course of the last 13 months, sterling has become an animal of politics. the proof of that is to go back
to last august when the bank of england cut rates. influenced have sterling have all been about politics. sterling, weder look at what is happened in the past with u.k. politics. it has been a fascinating one. the argument that there was thetical uncertainty with pound doesn't fit quite with the story. they have a minority led which is about as strong as it could be. period,dp during that this is the calm before the storm. here we are in the 1970's. this is real gdp. we are nowhere near.
thes slightly over egging risk. simon: looking at it from a purely political perspective, minority governments don't necessarily downgrade sterling. in 1975, you had a government that had a not explicitly hard left stance. over the course of 1971, 19 76, on the back of that, you have a 30% decline in sterling, and then you had the imf. wasn't about a government that was unstable. it was about the agenda of the government. every top -- anybody talks about the government falling over. many people saying labor would exceed.
theresa may has so unpopular at the moment. is that the risk to sterling, that kind of labour spending agenda? that is the media hype. simon: yes, that is the answer to that. the last time around, you had a manifest that look like a 1983 manifest. if you were to see something like that coming in and you have brexit at the same time, that would present investors with a tough picture. it would be a difficult thing for sterling. it is about politics right now and has been since june of last year. i think you can't avoid that as being an issue over the course of the next two years. anna: the euro persist the pound, to some extent.
despite everything mario draghi tried to say, as we discussed earlier, the euro went higher. what about the euro pound at the moment? simon: if the political like they didinue like they did master, then i think pressure on sterling continues as well. manus: doesn't get to parity? simon: i think we approach it, yes. the political pressures are not going to abate. i think the combination of a euro that is strengthening and the pressures that are going to be there on the record clock, even if nothing else, even if we don't have any political
uncertainty within the u.k. -- what about the government? it takes a six month until you see policies being enacted before the pressure came on. that kernel of doubtful be an investor's minds. bethat kernel of doubt will on investors minds. manus: we have too much of a possibility of a rate hike in the u.k. before the end of the year? simon: yes. they could hike five basis points. -- i could hike 25 basis points. anna: simon, thank you so much. simon derrick at bny mellon. we will be speaking to the former u.k. chancellor.
manus: russia probe expands the u.s. special counsel is expected to look into trump's business transactions. that such a move would cross the red line. anna: the imf agrees to a bailout worth $1.8 billion. the euro holds dollar gains. jackie says they will assess stimulus. australian dollar slumps the most since may after governorxecutive argues about tightening. ♪
manus: will come today greg europe, our flagship morning show. anna: i'm anna edwards. it's 7:00 here in london. the headline across the bloomberg, first quarter organic service revenue up by 2.2% of it the estimate was up 1.5%. this is better than the estimate and where is that momentum coming from? maybe some of that is coming from europe. also giving us numbers for the first quarter revenues, going into these numbers come in the organic service revenue growth is likely to stall in the first quarter after stalling in the previous quarter. that was the conclusion of bloomberg intelligence before. we came through with something more impressive than that. the company says it was consistent. they are sticking there
concerning outlook for toy 14. -- 2014. manus: as we get a little bit more, we are still waiting on those covers. there is a delight. she has done something with those numbers. let's talk about the markets. there is a decision in the market as a to whether you last yourself onto the extension of the trump investigation versus the record of the global equities. patience is what we have to wait for. we have to wait for the inflation story to light up. 0.7%.is off you can hardly call it a dramatic opening punch. anna: let's put up the risk radar and show you where we are in the agent session. -- asia session. u.s., this is what we
have in asia right now. the bloomberg dollar index pretty flat right now but yesterday the fault in the latter part of the session was a key story. we are in the middle of the earnings season. have beaten estimates at the bottom line. that part of the conversation in the next half hour. manus: we have a red-hot headline. 590 pence for its shares from cdc and blackstone. that is one line coming through. they vote in favor of the offer, .ffered 500 pounds that deal coming in from cdc and blackstone. anna: they have a market cap of 2.6 billion pounds, $4 billion. delivering payment solutions.
the world pay conversation very recently and now we have a safe. -- a safe. safe. manus: we finally got the numbers coming across the bloomberg. this is the second quarter, confirming major term revenue growth target of it that is the top line. that is just below the estimate of 8.5% of it in terms of actual 1.3 6 billion, that is what is in line with the market targeted. what you see there is made in france, the whole concept behind the brand. they are targeting production and increase productivity last year by 50%. they are targeting more productivity by 18%. the business is up 9.7%, the market had 9.7%.
anna: let's get a bloomberg first word news update with juliette saly. juliette: greece has been approved for a new conditional bailout from the international monetary fund. approvedtive board has a new loan worth $1.8 billion. it ends two years of speculation into whether the imf will endure another risk and give the seal of approval with euro area creditors. the australian dollar has slumped the most since may after the deputy governor dampened expectations for policy tightening. he said an increase in other central banks will see great does not automatically mean australia needs to follow. the aussie dollar went up 1.5% on tuesday after the delight policy meeting suggested growth picking up. u.k. foreign minister has
promised to make considerations to minimize the effect of brexit on japanese companies operating in the u.k.. that is according to japanese foreign minister speaking in tokyo. they are meeting with investors and business represented us. there's exporters are unprepared for leaving that european union according to the yousef survey. it's found almost half have yet to review their strategies after the brexit vote. eu is a trading partner for 85% of exports. north korea's economy is growing faster than its southern neighbor, including the testing of nuclear weapons. according to the bank of korea, gdp expanded 3.9% from earlier, the fastest 1999 and higher than south korea's rate of economic growth. global news 24 hours a day, powered by more than 2700 journalists and analysts in more
than 120 countries. you can find more stories on the bloomberg at top . it is the final trading day of the week. we have japan and australia closing out for the week. 1%, alsodone 2/10 of closing down 6/10 of 1%. we had morgan stanley upgrading the aussie banks on the apparatus. the csi 300 is down a third of 1%. in 10 sessions we are seeing the msci pacific index retreat from the december hike we reached yesterday. it has been a solid two weeks before -- two weeks for asian stocks. technologyhing aac having its biggest drop in two months. they are seeing lower second-quarter growth, signaling
overboard territory before today. india's surging up 7%, the most in four years after first-quarter revenue was debased. down 3.25%. posing we have been talking about the aussie dollar and it has been an interesting week for the aussie. this green line is the neutral real interest rate that was mentioned earlier this week, i .5%. the yellow line is 1.5%. that, we saw the aussie try to rally to 80%. we could see higher rates and it shows that the blue line will see a market rate interest hike in australia but still a long way from 3.5 cent rate. we should not be taking too much significance from these comments. manus: thank you very much, have a great weekend. is was special counsel
investigating possible ties between the trump campaign and russia. anna: this is according to someone familiar with the probe and investigators are examining russian purchases of apartments in trump buildings as well as other deals. manus: let's get to jodi schneider in hong kong. another day, another potential extension. referring to this deal as crossing a redline for him. guest: this is significant because it is brings us closer to the president himself. this investigation is into potential russian meddling in the election. is -- looks like that he that some of the business decisions and business ties the president has are being investigated as well. in the new york times interview -- hee yesterday, he said
essentially warned robert mueller against looking into rings beyond actual -- things beyond actual russian meddling. that would be a redline. it appears that is aligned that has been crossed in the investigation. they are looking at things more broadly which raises new questions about what they may find. anna: that new york times story raising other questions as well. jeff sessions says he has no intention of quitting. what do you make of that? guest: it's interesting, isn't it? boss whoasted by his said he was very disappointed that the attorney general had recused himself from investigating the russian meddling, that if he had not done so, we would not be stuck with a second investigation and if he was going to do something like that, he wishes he would
have known about that before he appointed him attorney general. as are not things you would not want to read about yourself, but the attorney general he is staying, he is not leaving. he was one of president trump's first supporters during the campaign. he was one of the few senators on capitol hill who not only supported him but was an early believer that he could be in the white house. for now, he is saying it might make for awkward conversations, but for now he is staying. manus: thank you very much, jodi, with the latest on that trump russia investigations. we have another guess. i day, another extension of potential political woes for donald trump. the equity markets, are they listening? should we be listening more? the conversations and a and i have had with cios say that risk
is this, we have to double down and deliver on tax in the back half of the year. that can put this proposition back on a firmer footing. think there are two different debates going here. when debate is the macro side and one debate is the micro-site. the macro side, these are taking a long time to brew here. a lot of focus on tax cuts, etc.. this will take longer to play out than what markets anticipated. switch to the micro-site, these are looking good. the earnings coming out of the company, really good set of numbers. we have seen companies beating top and bottom whites. realicro-story is what the excitement is. anna: is going to be irritating on the macro side. what it canh care, deliver on capitol hill or away
from capitol hill, do you look at the debacle there and all these other distractions and say, that means tax is delayed? or do you look at it and say, now the need to do something is even greater because they need to do something on health care? is that an alternative narrative? guest: we have midterm elections next year. there is, as you said, a need to it'something done, whether health care care or tax. if you are donald trump, you want to walk into those elections having achieved something. there is a will to get something done. it will take a while to rally the republican party to get the votes to push the reforms through, but they will definitely want to get something in place before the midterms. manus: let's talk about stocks. microsoft you hold and the headline we have is that they regained its turnaround
momentum. -- is this going to be the belly of your tech? so much focus on facebook, amazon, google, but we look at companies like microsoft and think it's fantastic business right now. we look at what the dollar has done into transmitting -- transforming the business into the cloud. the budget was on his triple digit. cloud.9% and it was guest: absolutely. we look at the commercial annuals and we get this run rate at around $15 billion. the important thing for me is the margin side for me. the hot margin is up 10%. they are not only growing revenues at a high rate. microsoft is about the cloud, they are the number two player
behind amazon. amazon is well ahead, the big player in the market. the list of sectors disrupted by amazon is growing, isn't it? guest: it's been a remarkable story this year. department stores come up this year we saw auto-parts, manufacturers, we have seen the supermarkets. yesterday it was the home-improvement stocks. clearly disrupts a lot of business models out there right now. iserencing home-improvement topical with what we saw in home depot. for investors, you need to look at the business model of the company. if you look at the home-improvement stocks, the main gross driver for home depot is the big-ticket spenders. people walking into the store spending more than $900. that is where the growth is. that tends to be, building professionals, special contractors, etc..
it's quite a big leap of imagination to assume those guys are going to go to amazon to buy their big-ticket items. the home depot business model is relatively insulated. that's not to say amazon cannot take some share in lower items. manus: you saw amazon do the deal with whole foods. if you take your proposition as , which the quid pro quo is very nice if you can pass the cookie stand, hold your nerve. there you go. there is the proposition. they jumped the rubicon. they can be in the market for more m&a. fair point.s a i would say if you were amazon right now, you cannot disrupt everything. all these industries -- manus: tell jeff bezos. exactly. i have no doubt amazon will
continue their pace in what they are doing, but investors need to focus on it. yesterday was an overreaction to some extent. anna: you are in good company that. a few other houses are making the same comments. in relation to the 4% selloff we saw in home depot. thank you very much. he just staying with us on daybreak europe. manus: have a look at jim and because it takes a look at the moderate change situation in europe. stoxx 600 34, waiting for abundant markets to show some signs. the market was about consistent patients from mario draghi. you have -- anna: a little weakness coming through in the middle east market as well. we'll talk about that later. this is bloomberg.
a.m. on sunday8 morning in hurling. -- friday morning in berlin. juliette saly is standing by with your business flash. networkand innovator corporation of japan will hold a public offering of their stake in switzerland, raising $2.4 billion. toshiba will sell its 60% stake for $1.4 billion while the government backed incj will sell 40%. they plan to sell the entirety of their states. ask a mobile says it is illegally challenging the treasury department find four degrees violations of sanctions against russia.
they broke sanctions by signing deals in russia. the violation is said to have occurred in may 2014 when secretary of state >> tillerson was ceo. >> tillersonur -- was ceo. -- rex tillerson was ceo. this is your bloomberg business flash. policymakers are waiting for wages and prices to match economic growth. its games 50 raised with equity investors struggling to get used to the prospects of life without the ecb from running the floor in the market. -- from providing the floor in the market. it's the relationship and it has
done negative again between the euro, the drop in the stock 60. was prettyeeling it much still there in scale yesterday. i would agree with you on that point. when we look at the euro movements this year, we have had a significant move upwards. it has been based around my are draghi's comments in tapering. you are seeing the tapering because of the strength of the growth we are getting back we are about growth in europe now. the inflation story is not there yet. from a corporate perspective, inflation is not a bad thing. inflation is key to that story playing out. from a corporate perspective, a bit of inflation would be a welcome thing. europeovery story in it's interesting to see it mentioned in the numbers. it's one stock you have interest
in. words of the ceo, we have made a good start in the year in europe where our momentum remains robust. thane company more geared the company has expected? guest: we focus on the organic revenue. that was ahead of consensus. there is a lot of fear this year. mobile has been a competitive space. we go back to the debate, companies have had a hard time pricing the mobile. good news for consumers. not so much good news for the company's that were getting there. overall, organic numbers are pretty solid there. castle story remains good, good news for the dividend. telco is probably the most hated sector in markets sentiment. any upside you can see that will be taken well by the market.
manus: perhaps one to go on the second date during the week is the banking sector. you cut it up, things are shifting in the european central bank that is arbitrary to whether it's six months or a year, but will likely be a shift. that will ship yield curve. we had a conversation with nordic bankers yesterday. how do you look at their economy?y to improving guest: we look at the earnings from the u.s. banks last week, they reported decent numbers, consumers seem to be in good shape in u.s. and in europe. we see that in terms of loan growth manus:. 9.3%. part of the recent you haven't seen more of a bounce goes back to interest rates. -- thet disappointing
biggest disappointment we saw was the income line. we saw the tenure yields had a significant bounce as people started pricing inflation. -- they lookched at it as compressed quite a bit. you have not seen that upside in terms of interest markets. anna: just a quick word on asml. at stock was at 113 now it's 132. they are increasingly turning to hugh freeze and these are enormous distractions it seems that many in the tech sector are taking up. guest: it'sown well a fascinating company. the real id is uv technology. the extreme ultraviolet lithography. it is revolutionizing chip manufacturing. they cost tens of millions of euros to build but what they do
so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business
delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. ♪ guy: welcome to bloomberg markets, the european open. we will bring you the first traits of the day. here is what we are watching. the mandate expands the council, extending his probe to president trump's business transactions. will this keep a lid on the u.s. dollar? the euro rose on. there is no signs of stopping its rally of the ecb's mario draghi.