vonnie: we will take you from new york to london in the next hour and cover stories out of washington, d.c., harris and milan -- paris and milan. julie: we just have numbers coming out for the month of february. this is the consumer confidence index rising. 111.6 forom a revised the prior month, so it continues to rise and recently, we have seen that, characteristic of the data we have gotten in terms of confidence, whether you are talking about consumer or business confidence, the readings have been improved. i don't see any of the details in terms of the sub indices. movement,f overall

and the major averages today, we continue to see some small the kleins and small movement, overall as we are on track for the 55th straight session for the s&p 500 without a move of at least 1%. the dow not quite making a 13th street winning session -- winning streak. it is very little changed, either way. all three major averages down just a bit as investors await more details of president trump's tax plans and economic policy. we do have some earnings news that came out that is depressing several individual stocks pretty sharply, targets down 13 a half percent. -- 13.5%. out,ompany numbers coming missing estimates by a wide margin and the company announcing a change of strategy that is really caught investors off guard and says it is going to go more in the walmart direction and offer lower prices than it has in the past.

investors trying to get around that change in strategy. submitted torrigo some urging to sell royalty rights on its multiple sclerosis drug. at the same time, the company's earnings 2017 are forecast well below estimates and finally, ten et health care missing estimates, seeing fewer patients. on in the currency and rate markets, we are seeing the 10 year yield down just a tech in the u.s. dollar index is trading lower, even though we increaseg a march rate odds going up. after three days of the kleins, we are up with caution

ahead of donald trump's address, later. the volume of options on a index wagering against european stock volatility or wagering on european stock volatility surging to a record. futures are outstanding, getting an all-time high. equities are at their highest levels in over a year, investors are clearly hedging is the upcoming elections in france and germany and the netherlands threaten the current cup. one month implied euro volatility, the value is negative, meeting more volatility being priced three months forward as opposed to one month. if you look at it brexit time, they one-month volatility was much greater and consumer confidence week -- here in the u k as the pound slides and weak pay growth beginning to bite. the appetite for making major

purchases decreasing. all eyes on washington as president trump prepares to get his first primetime speech to a joint session of congress under increasing pressure to answer your questions about how he will deliver on key promises. three preview, let's get to kevin cirilli. -- for a preview, let's get to kevin cirilli. kevin: i just put this question to senator rob portman from ohio, and he told me that he is hoping that president trump will speak anymore -- in a way that helps to unite americans, and that is what i am hearing privately from advisers to president trump in his political orbit. he is going to advocate $354 billion increase in u.s. military funding, he will also advocate to -- advocate to increase funding -- decreased funding to the epa and the state

department, as well as foreign aid. will the gop show a unified front, both senators and congresspeople, post this speech? kevin: republicans have been somewhat divided on a couple of issues, including the border tax issue. that could potentially throw a wrench in president trump's plans to have a comprehensive tax reform by the august recess, but there were also republicans who have raised questions about this administration's relation ship with russia, including senator john mccain. as he looks to unify the different factions of the republican party, he is going to have to begin to put forth details and these are details that lawmakers are wanting to hear from this president in his speech. vonnie: thank you, kevin cirilli. mark: how will president trump's first speech stack up against history? joining us now is larry

hathaway, great to see you in london. best case scenario for those who are looking for details, clarity when trump speaks, later. what is the best case? larry: i am not sure there is a best case. it'll be rhetoric short on details because it is difficult for the administration to square its aims on tax cuts and tax reform and expenditure increases , with what is a fairly fiscally hawkish republican majority, at least in terms of the leadership on capitol hill, so i think there will be grand statements of intent but short on detail. mark: how will it be financed? all of these grand aims? the markets have really embraced the idea that this would be a progressive

administration supported by a progrowth congress. i don't think it is time to give up on that idea, but the reality is beginning to settle in and those realities are that unlike the reagan tax cuts, unlike the bush tax cuts, these will have to be paid for and applies to defense spending and if researcher spending and that is where things often get very messy on capitol hill. vonnie: it does not seem to have made that much of a difference. the written manufacturing index was very strong, today and can emerge confidence was strong. puts an end to even if we don't get specific details? larry: you touched on the reasons why markets have generally held up and equities have held and better than the market has, of late. equity market is taking strength that only from the sound economic data you just cited,

but the recovery of earnings in the u.s. we had an earnings recession that is now over. strong earnings and growth can help equities holding, at these high levels, but the bond market is something a bit different in the course of the last 10 days as yields have receded, somewhat. the market is probably telling you that some of the enthusiasm over growth policy coming out of washington may have been a bit overdone. larry summers echoes some of the things you have been talking about. >> the concern right now is that a lot of things, starting with the stock market are very much looking the way they did in march of the herbert hoover administration and that was an administration that did not work out so well for the economy. what historic parallels do you

see as relevant? larry: it is hard to find good historic parallels. this is an extraordinarily unconventional administration, in terms of the senior people, so it is hard to find historic parallels. the point i would emphasize is that for a generation now, republicans have favored tax cuts today and worrying about where to wind the revenue, tomorrow and it does seem that the tea party which is a major movement that came out of the financial crisis has strongly influence the number of the leaders. paul ryan and others on capitol hill, who are no longer white so inclined, they want those tax cuts or tax reforms or defense spending to be funded today and that is really something that is really a departure from everything we have seen and's reagan's time and it is a little it hard to find a good historic parallel.

mark: you touched on the fed, and we bring this chart which brings interest rate probability. a big move up yesterday, moving from roughly below 40 to about fd. what -- where do you account for that sudden move? we have seeny: more hawkish rhetoric coming from the fed, although a lot of it is coming from folks who have been more on that side of the ledger. comments which did not elicit as much a response, to begin to normalize rates and the apparels -- the , thes of waiting too late strength of the u.s. economy and almost all the incoming data continues to be on the positive side of the ledger. when she says that every meeting is live and there is a great opportunity, given that she can articulate the reasons are a rate hike after this particular

meeting, as well. mark: what has been the most interesting type of discussion you have been having well you have been here, and europe as we approach the key political calendar, which includes elections in that it all in scott a france and germany -- that includes elections in the netherlands, france and germany customer -- germany? larry: the risks we have eluded two, other it is disappointment in america or electoral risk in europe, first of positions across multi-asset portfolios have this risk on risk off flavor to them. it is hard to find diversification candidate. that is an area of concern for clients and investment managers ours -- where investment managers are spending time. earliered some charts around implied volatility.

one of the problems is that implied volatility tools do not really performed very well where they were big disturbances like brexit, especially with u.s. elections and the italian referendum, so there is a search under way to figure out how to best insulate portfolios against the possibility we like a negative surprise from washington or paris or holland. hathaway, chief economist at gam. special coverage, 9:00 p.m. in new york, 2:00 a.m. in london. i'm not sure i am keep all -- i am capable. vonnie: let's check in on the "first word news." emma: mr. trump says he believes his predecessor's riling up protesters against his in administration. he is pointing the finger at former president obama. think president obama is

behind it because his people are certainly behind it and some of the leaks possibly come from that group, some of the leaks which are seriously because they are -- they are bad in terms of national security. i also understand that is politics and in terms of him being behind things, that is politics and it will probably continue. former president obama's nonprofit group is one of many that supports antitrust protesters. former senator dan coats will be in the middle of a fight in his confirmation hearing, today. face tough questions from his former senate colleagues because of the intelligence he reads that intelligence agencies he will onrsee have tough questions the president and russia. are making major purchases has decreased, an indication that the drop in the pound is beginning to weigh on the largest part of the british

economy, consumer spending. global news, 24 hours a day, powered by more than 2600 journalists and analysts. up, a key business pen says she la will win the president elections. more of his exclusive comments, next. ♪

vonnie: live from london and new york, i am vonnie quinn. mark: and i am mark barton. less than twoics, months until voting starts in the french president election.

the polling has consistently and show -- consistently shown that marine le pen is set to top the first round ballot. francine lacqua spoke exclusively to tackle stellar, a key business advisor for the national front party. >> if we win this one, this one is for us. nothing will stop us from winning this one, because if the almighty had written the script for that election, he would not have written anything otherwise. what we look at with some enjoyment is that the markets look at our project for the country with a lot of interest. vonnie: i want to get back to that in a second, that i am still looking at the polls and trying to figure out what are the real chances of marine le pen winning. a look at the polls, and they are not that close. she would make it to the first round, but she would lose. the she have a bigger chance?

do you think she has a better chance against -- we will take whoever comes and we will defeat him. talking about the polls, i want to remind you that the -- brexit and donald trump's election, they were completely and consistently wrong for weeks and months, prior to those major elections, and i can tell you they will be wrong, this time because i think that an election is about dynamics, and it is clear to all observers and to all french citizens that the dynamic is really on our side. francine: the polls for donald trump and brexit were a lot closer. certainly they were within the margin of error. give me a sense of what you

think the french people will go and vote for in the first round or the second round. is it the economy or business or security? >> it is both. we witnessed the situation of france which is a continuous downward slide for the previous -- the last couple of decades are wary of that, they can't have it anymore. on the subject of immigration, the frencheavily on community, and also, talking about business and the economy, it is going from bad to worse. we have something close to 7 million unemployed in this country, it is unsustainable. we have 9 million considered to be under the poverty level, so this is completely unsustainable to our project for france is

make france great again, and we will achieve this i making it grow again. >> did you meet with advisers from blackrock, barclays and ubs? we understand you met some advisors to marine le pen. >> we did. we have a lot of it -- a lot of interest from investors and the last few weeks and months, and it is quite a pleasure to discuss our project with these people, because they are very pragmatic, they are professionals. they are very businesslike, and this is the approach we take. the key advisor for the national front party. citigroup is in advanced discussions for a banking license and saudi arabia after a more than 10 year absence from the kingdom, looking to ways --

looking to ways to capitalize on financial reform. receive license talks. we will get more on that story -- we will have more on that story as soon as we get it. this is bloomberg. ♪

mark: this is bloomberg markets. i am mark barton in london. vonnie: it is time for our tuesday etf segment. julie: it used to be low volatility, then it turned to value and now momentum is having its turn, leaving factors in 2016 returns. we have our senior etf analyst at bloomberg and we should remind folks only talk about various it is these

criteria driving these smart beta etf's. it looks like momentum is the big factor? . how is it driving demand, this year? >> momentum is one of four factors that academics agree israel. momentum basically says markets that are trending one way trend -- tend to trend longer than you'd think because investors move in big herds. the key is to make it systematic. i call it performance chasing. etf's look at the stocks that have been doing well and try to ride it a little longer before everybody gets out. momentum etf's are kind of a new area of smart beta. they tend to get assets if they perform well. in 2013, they were up by 30%. this year, they are up by 7% and they are beating other factors,

not by a lot, but they are winning and last year, they were losing, so they tend to go in and out of favor, but right now there is a 7% return. julie: i think we have a chart showing what you are talking about in terms of the changing popularity of these factors. do we have that chart? maybe we don't. -- thereof products, it is, showing the momentum factors. in terms of individual products, which ones would you say are the most popular? the: the biggest one is black rock product that looks at six to 12 month performers and tries to screen out volatility by looking at direction and the other is the powershares dorsey wright. does is the same thing, although it looks at relative performance, so these things

have different weeks in designs, but basically they do the same thing, which is try to follow the heat and squeeze juice out of the trend. much. thank you so vonnie: still ahead, which companies have most on the line when president trump speaks to congress? we look at the factors that could go boom. this is bloomberg. ♪

vonnie: live from bloomberg world headquarters in new york and london, i am vonnie quinn. mark: and i am mark barton. this is bloomberg markets. let's get back to the breaking

news on citigroup, in advanced discussions are a banking license and saudi arabia -- in saudi arabia. we are joined by the person who helped break the story. what do we know now? is big time for citigroup -- it is big time for citigroup. this move is a big initiative from their side to try and get active the kingdom at a time where reform is happening and bank initiatives like saudi aramco to massive privatizations and bond issuance is, so we see -- this is probably the best time to be a bank. mark: what is it doing on the side, to target business opportunities? reported its choice sometime late, last year about city creating a task force internally, which included

bankers to evaluate opportunities in saudi arabia and the bank has been constantly having those discussions causing us to see one of the business as atunities and coming in key bank on the mega bond issue. $17.5 billion of sovereign bond issuance, so they have been on this for a while, and they realize it is a big opportunity and they are moving at the right pace. annie: does that give it advantage over other foreign banks that are in saudi arabia such as deutsche bank and so forth? >> it helps to have shareholders who have linkage to the royal doesy, himself, but it

give an advantage, but i think , itaudi arabia, or a bank is not a easy task. they have been doing the right things, but it is a lot of commitment on the ground and people on the ground, once they have this license, but also participating in some of the key reform initiatives, which .ncluded the bond issuance forof the banks pitching ipos, that is the kind of initiative we would like to see them taking part in. vonnie: the regulator would have to give a license, is there anything to suggest they would be any of prisons to that? >> i'm sorry? as far as we understand, the license is not final, but we do know they are in advanced discussions.

a lot of factors would come into play, but so far, based on the discussions we have seen, it should not be a big surprise. mark: are international banks doing the same customer >> there are a few other banks who have a role. they are looking at a banking license, the first in the kingdom. a few days back, they were commenting on using their own capital to boost trading. vonnie: we're going to jump in and say thank you. before we talk about the trump trade, wilbur ross sworn in as former -- as secretary, moments ago. let's listen in. >> without any mental reservation. or purpose of evasion. >> or purpose of evasion. >> and i will faithfully

discharge the duties. >> and i will well and faithfully discharge the duties. >> of the office upon which i am about to enter. so help me god. >> so help me god. >> congratulations. [applause] vonnie: commerce secretary wilbur ross, there with his wife, being sworn in by vice president mike pence. that is another kick some of these puzzle of the trump train and maybe we will get more details on what commerce will look like in the first part of the trump administration. less than 12 hours away from that trump address to congress. or bloombergw stocks reporter joe q lee and you look at bloomberg markets live, paul dobson. these stocks have had an

incredible run up in the sectors. is there anything that could be said to cause these to stall? >> what hinders on the specific details he gives. thele often to get tired of vagueness of what he has been saying. if you look at the infrastructure and trade, that was one of the hottest trades in the stock market up until a couple days ago. it has since come down and yesterday, he re-inflated it by saying he would spend big. he did not give any details, but people are piggybacking off of that and buying stocks, assuming he will follow that up with comments, tonight, maybe a dollar amount or a timeline. one thing that could cause stocks go down is if there is any signs of the timeline is going to be delayed. these measures people expected in 2017 being in 2018 or even further down the line could definitely be something that would weigh on them and we have

seen that for certain areas. vonnie: we have certain details already. we have a $54 billion amount. a 10% amount. we know that obamacare is going to get taken care of before taxes. there are certain things we know. what will investors be looking out -- looking for? trump comments or the reaction of the gop? >> trump comments will cause futures to move, and which sectors will be leading the way. one thing people will be paying close attention to is any sort of guidance on tax of one, but it means the tax -- ofo the repatriation tax countries holding cash overseas, all the way down which is expected to help tech companies in particular. mark: which sectors, looking at the stoxx 600 since the trump

victory, all rising, led by basic resources, tech, autos, health care. which industry groups are the most liable to move on the back of trump's talk? the miners have done particularly well in europe. they're -- to build everything, you need to pull more materials out of the ground. curve, and the yield i think what of the ones we want to watch out for in europe is defense companies, kind of hidden among industry groups, including industrial and obviously health care is something that has reacted. ,ark: among your conversation commenting on just that, defense spending. the spillover to national budgets and you cite a barclays piece, achilles' heel.

what is the flipside of trump spending so much on defense? >> it is interesting to look at, going forward. trump is spending more on defense and encouraging the euro area nations and all countries in nato to spend more or at least to come up to the 2% of gdp spending target that kind of underscores the nato agreement. a lot of the euro area nations are currently way short of this, the onesise surprise, that have the highest debt, italy and spain and portugal, barclays has some astonishing figures on how much actual money it would come down to them having to invest to come up to this target. some are close to $100 billion -- someone close -- somewhere close to $100 billion. it would challenge the debt levels, the debt sustainability and the appetite of bond

for those higher deficit nations. mark: you have written this great piece, companies with high tax rates. fund managers are still underweight in the financial sector. the potential exists for more gains. >> that is something that floated by. and what we point, are seeing is, it is all about the deregulation of dodd-frank and scaling back these measures that are kind of put in place to make banks more transparent and as a byproduct, maybe a little less profitable. people are piggybacking on that. you cannot ignore the rate hike story. banks have long been figured to be the sector to benefit most from higher rates.

some of that can be treated to janet yellen. -- can be attributed to janet yellen. more room to run in banks will be a good area to keep a close eye on. vonnie: mark was looking at the stoxx 600 and what groups have moved since the election. if you look of the s&p 500, since the election, these are the groups that have moved. huge upsides in real estate investment and banking. how much of the upside will go to companies with significant operations elsewhere or are based elsewhere? >> that is an important thing to point out, because we do have this repatriation tax. all these companies holding chileans of dollars overseas and they don't want to ring it back to the united states. trump wants them to, and he

wants to lower that rate, so we have a basket of companies that have the lowest -- the highest percentage of overseas cash holdings compared to market value and some companies to watch, it is not relegated to any specific sector. we're looking at xerox, western union, first solar, hewlett-packard enterprises. a wide range of industries. if you are looking closely at the repatriation tax part of tax reform, those of the companies to look at and you want to look at the companies that are doing a business -- a lot of business overseas and not bringing those profits back. vonnie: thank you for that. trump'swatch president speech, live in full on bloomberg tv. our special coverage begins tonight at 9:00 in new york. i think he said that was 2:00 a.m. in london. mark: i will be fast asleep, or

maybe not. snap to be one of the biggest tech ipos to hit wall street in years. this is bloomberg. ♪

vonnie: you are watching bloomberg. mark: this is your global business report. starbucks has been a vocal opponent of president trump's executive order on immigration. the company's chief executive tells us why he is against building walls. vonnie: the fallout from brexit continues. widespread job cuts. take, theoday's quick

future of -- are they finally ready to leave government control? starbucks ceo howard schultz says his decision to hire 10,000 refugees was not a political one. scholz says it is part of starbucks's company culture. >> we are living in a world that is very fragile, and there is a lot of uncertainty, and i think we have an obligation as a company to add value to humanity. if i can say it in my own way, this is the time where we as private citizens and as business people need to build bridges, not walls. iran's economy pulled out of a recession following the nuclear deal. the agreement clear the way for the country to sell oil on the international market. it runs is up 7.4%.

the imf says most of that is due to oil. what does that the only place where british finance jobs are under threat because of brexit. according to a report published by the lobbying group city u.k., two thirds of the country's finance workers are located outside city of london -- outside the city of london. it could put theresa may under pressure to defend rice -- defend finance in brexit. is looking to attract more retailers with its mobile app. once prescription orders have been place, they can now use new express lanes at the store. vonnie: time for our quick take, where we provide context and background. for decades, morgenstern it's fannie mae and freddie mac were the foundation of the u.s. housing market. they turned out said he profits

until the 2008 financial crisis when the government help them out at a cost of $187 billion to taxpayers. today, they are profitable again and their days of -- days as wards of the state may be coming to an end. u.s. treasury secretary steve mnuchin says fannie and freddie should leave u.s. control and the new administration will get it done quote, reasonably fast. major owners of shares want the billions of dollars in dividends the currently go to the treasury. congress created the federal national market association in 1938 with the mission of reviving the housing market after the great depression. traditionally, banks that made work -- mortgages held onto them. fannie mae suited buying them from lenders, trading money for more loans and helping fuel a housing boom after world war ii. mnuchin says government ownership of the company

displaces private mortgage lending, but he did not say they should be well endowed or limited as a number of prominent congressional republicans have called for. the stalemate is leading some to argue that a more strongly related anion ready should be allowed to retain profits, and build capital reserves. next allow them to leave government control. the so-called recap and release program would lead to big profits for some shareholders. that is your global business report. head to bloomberg.com for more stories. will snap's ipo live up to the hype? for wall street, the question has already been answered and the answer is no. bloomberg's editor at large, erik schatzker is here to explain. erik: the reality is giant ipos like snap are not a great

business for wall street and it is mostly because the fees on these big deals are so low. long gone is the fixed 7% commission on ipos. these days, the listing companies are in the driver seat. they have all the leverage and they use it to whittle commissions down to as little as 1.1% on the facebook deal, as you can see here. morgan stanley was paid $68 million to lead the facebook deal, and it may sound large, but it is not a windfall when you think of all the man-hours morgan stanley had to pour in, to winning the bake-off against the other wall street firms and then running the roadshow, meaning introducing facebook executives to investors around the world and put it into perspective. it accounted for on the .5% of morgan stanley's revenue and less than a quarter of a percent

of their total revenue. vonnie: we have to compare the other sort of equity underwriting in comparison to other years to know what that really means, but it is not nothing. erik: it is not nothing, but if you think about the hype and excitement behind deals like snap, it is surprising, and the competition the goes into winning them. snape is not raising as much money as facebook did. it is not going to pay as little commission. it is going to have to pay something in the order mark of three or three and a quarter percent. but that small change is going to have to be split by 12 banks lead and comanaging this offering. vonnie: why the competition, and why bother? erik: i'm not sure exactly how to order these things because you might think to yourself that ego should be at the top of the list. i think the number one reason

these banks are so hot to trot for big ipos is the need to meet institutional demand. they represent people on both sides, the listing company and the people who buy the stocks. there is a lot of demand for ipo shot -- ipo stocks. others are going to be long-term holders, but that relationship is increasingly important for these banks, in a regulatory -- in whichlike trading firms have to justify their value to clients. number two is the ongoing corporate client -- corporate client relations. staff has things -- it could want to raise debt, you need to turn to wall street for the most part, and then there are cash management activities for which a firm like snap will also take commission and finally, you can put it at number one and number three. there is the stage factor.

these firms want to be seen as winning the business, because in most people's eyes, the winners are doing something right. mark: how good a business is it? erik: equity underwriting is in secular decline. i hate that term. if you look at a chart, illustrating equity underwriting fees earned by the largest firms , the largest underwriting firms on wall street, you will see over the past four years, they have declined. 2016 was not a great year for equity underwriting or ipos. of deals being taken to market has consistently dropped since 1995. there are a number of reasons for that. private capital, why is uber still private? it can still raise money in the private market.

regular -- regulation inextricably tied to the growth of private capital. the pace of innovation. we have heard questions raised over whether silicon valley is minting enough new ideas. this decline does help illustrate the growing importance of somewhat lucrative deals like snap. every dollar counts. vonnie: the first tech ipo of the year and definitely generating excitement. thank you for that wonderful report, bloombergs erik schatzker. coming up, more of our interview with bloomberg's ceo. -- with starbucks' ceo. this is bloomberg. ♪

vonnie: this is bloomberg markets. get more on the interview with starbucks' chief executive, howard schultz. it will open a location in italy.

francine lacqua spoke to the chief executive. peoplea, per starbucks, don't realize we have been in china for 17 years. we have 2600 stores in china. we opened a new store in china every day. usis a fantastic market for and the next roast three -- 3000 metersll be and incredible, opening in december. that chinaicly probably will exceed the u.s. in terms of the number of stores. we just -- >> by what year? >> we have not said.

mark: it is 11:00 a.m. in new york and midnight in hong kong. 30 minutes left in the trading day in europe today. i am mark barton. vonnie: in new york, i am vonnie quinn. this is the european close on

"bloomberg markets." ♪ mark: we are going to take you from new york to london in the next hour, plus covering stories out of washington, amsterdam, and paris. hero the top stories we're following on the bloomberg today and around the world. all the focus here in europe on marine le pen french presidential race. are investors listing another risk spot? we will discuss whether the populist movement will take hold in the netherlands. vonnie: investors are waiting president trump's big speech to congress t tonight. will he unveiled details on infrastructure spending? toys for the biggest growth this year. we will speak with credit suisse on its latest report o