vonnie: here are the top stories from the bloomberg and around the world. a blowout quarter for morgan stanley. there firm and stock bond traders pushing to a record. former fed chairman alan greenspan has his take on the central bank's latest move. and former imf chief economist will give his insights on the latest geopolitical risk for the market. a big show today covering that and more. we had 30 minutes into the trading day in the united states. julie hyman is here with a tentative start it looks like. julie: as we get more focus on micro and earnings, we have some jockeying for positions for early movers today and that is sending the dow lower and major with a change.

energy stocks are in the lead for s&p 500. morgan stanley had a call yesterday that perhaps we reached peak valuation, even as we get underway with the earnings season. here are the estimates for the s&p 500 and the price to earnings ratio, so pick values in theory would be around the end of last year. we will see if that is borne out as we get numbers. and let's see some of the stocks we see gaining as we see transportation strong. scx, four months after the death put a lot ofe efficiency and cost-cutting measures, and the new ceo kept them in place to help the bottom line. business airplane maker is up

7%, selling their tools for $810 million to emerson. textron is saying that the business plane demand is up on tax cuts and upgrades. on the flipside, we have tech weakness. ibm, part of the reason why the dow is struggling, ibm struggling with a turnaround and margins are crimped. shipments are going to decline in the second half of the year. here's a look at the european equity space, up for the fourth day since february the 27. ftse 100 the beginning out of the big five, up-to-date. sterling falls. equity strategists are tempering expectations for this year's games in euro area shares and forecast the stoxx 50 to exceed their january peak but seated climbing -- but see it climbing. expectation.

this is eurozone inflation accelerating less than it estimated last month. a setback for policymakers as they consider winding down on presidential stimulus. cpi, 1.3%. the estimate was 1.4%. core inflation, 1%, where it has been stuck the past years. different views on the ecb about when and how to scale back the asset purchase program. the ecb meets next week. this is the fastest first quarter's sales growth in years, beating estimates. demand forrong infant formula in china. gary and the plant waste business outside of north america has a rebound and the activity of line -- activia line shows good results. you have breaking news. vonnie: the bank of canada.

the canadian dollar is weakening by half a percent, almost a full figure after they left rates unchanged. merrill lynch saying it is a matter of when and not this. may 30 -- when and not if. the tiebreaker is the nafta deal, whether it points to an increase in may but for now, the canadian dollar is trading back 1.2603.the u.s. bank earnings with another solid report. morgan stanley beat estimates on almost all metrics as revenue topped $11 billion for the first time. analysts from ubs joining us on the phone. i was reading your earnings and you seem satisfied with everything. see car is the question -- car is the question from here on in. brennan:'tis the time of year to start thinking about it, that it has been less of a wildcard in prior years. i am expecting capital returns

will increase but that was one of the big questions on the call today, especially in light of the fact the fed has issued new proposals for adjusting the capital buffer spaced around the stressed outcomes out of c-car. vonnie: we had an interesting reaction. we saw it up 2% in a relatively flat market. why did investors give morgan stanley a pass? brennan: i think that the idea here is that we had a very strong results and morgan stanley had underperformed coming into the prince, so it was more about set up than anything else. i think we are seeing -- we had seen some concern around capital and such yesterday and goldman announcing their call, and they would bring their buyback to

zero, which raised real apprehension around their proposition. james gorman said they feel good about their capital position and there is no change in the perceivable future. i think that moderated a lot of concern, combined with really robust results. nothing was perfect, so there were couple of nitpicky points and bears could point to, the management did not really grow and it looks like loans might he slowing but as they explained on the call, some of that slowing growth is probably transient and a result of shifting to an underwriting that they had in-house versus outsource. seasonality.alk morgan stanley sought a slowdown in the second half the quarter. seasonality is going to be an issue. what do the next few quarters look like for the likes of

morgan stanley and goldman sachs? 1q isn: one to is when -- when most make their money, especially on the thick line. albeit how much morgan has changed their business, that is a topic of debate, how much seasonality is there? we saw it last year. we saw as he went into a slowdown in activity levels as the quarter progressed. april is not off to a smashing start but when we take a step back and think of the environment we are in now unlikely to be in for the perceivable future versus the past years, you have divergent andral-bank policy likelihood of reduced correlations, likelihood of a greater baseline volatility level, and this factors tend to support trading levels that are going to be higher than they

have been running. while i would expect this to come into play, i do think trading outcomes could be better than we have seen and what we notched in the mid-teams for both arms will come down on that seasonality and remain about the cost of equities at 10% and in the teen range for the year. rating on have abuy morgan stanley, $64, goldman sachs is neutral. which one could change in the near future? brennan: to me, given where we are at in the cycle, you need to be pretty careful about which brokerage you are going to own. i am not crazy about building out and unsecured consumer lending service at goldman sachs. that has me nervous on the market platform. i understand they want to develop or stable learning streams. at, soven where we are

many years into recovery, i do not want to build that out now. it makes me nervous about near-term results. it could be the right decision long-term. i feel much better about the business at morgan stanley with a huge wealth management business, more stable, and trading business more lever to equities then thick. to me, it is about is this more than anything else. brennan said the bank securitized and had its best performance in four years. what about securitized products?is there a resurgence there ? brennan: i have to admit that was surprising to me. i think that had to do with what they saw as an opportunity. i'm not so sure i would say this is something to count on happening regularly. one thing i got was interesting and comments related to that was they are using their balance sheet a little more to provide lending to support and using the deposits they are raising in the

wealth management business to lean in where the loan growth and loan demand is more robust. right now, that is on the institutional side. to me, that suggests that the trading business, aided by that type of activity, is at least durable. vonnie: thank you, brennan hawken, analyst at ubs. let's check in the first word news with kailey leinz. : president trump says a secret meeting between mike pompeo and the north korean leader went smoothly. he traveled in advance of a possible summit between the president and kim with a focus on the nuclear weapons program. president trump said details of a summit are being worked out.russia's president is trying to dial down the tension with the u.s. he wants to get president trump another chance to make good on pledges to improve ties and

avoid escalation. earlier this week, president trump back to a from imposing more sanctions on russia. investigators have found evidence of metal fatigue on the engine that exploded on a southwest airline jet. one passenger was killed. the first in-flight fatality in southwest history. the boeing 737 was flying to new york from dallas with an emergency landing in philadelphia. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. vonnie: thank you. let's look at some data. the 10 year u.s. treasury trading at 2.83%. not much has changed. the vix is down the dollar index unchanged. pretty we get 89.52. crude oil futures are higher, 1.8%, and the dollar at 21.

gold futures are above 13.50 an ounce -- 1350 announce. let's get to tom keene at the world bank imf spring meeting with a former chairman of the federal reserve. tom: we welcome all of bloomberg radio and television wonderful and lengthy interview with alan greenspan. the chairman of the former leader of the federal reserve system. alan greenspan on the political economics and turbulence we have seen across america politics and for that matter the global economic system. chairman greenspan, wonderful to see you. i must flip here. let's go immediately to the death and the deficit of this nation. you and i celebrate the life of pete peterson, one of our leaders, insane watch out for the debt. on, $155ent on and billion in 1987 when you took

over stewardship of the fed, and that we are up to $1 trillion deficits. when does it affect america? chairman greenspan: sooner rather than later. what the important issue is until it becomes obvious that there are consequences to that, such as inflation beginning to emerge, the political system does not respond because confronted with a choice of increasing spending and cutting taxes on the reverse is very obvious that the vast majority of the congress and president usually come out in favor of what i would call loose fiscal policy and are prescribed to that 100%. tom: why have we not seen that fear of inflation and higher interest rates yet? you have been more balanced about an inflation and not been a doomer, where it is right

around the corner.why have we not seen it yet as we migrate from $400 billion to trillions of dollars? chairman greenspan: there is always a considerable lag and it depends to a very large extent on what the state of politics is. when you have a conjoining of republicans in a specific policy, almost irrespective of what the data are doing, that is implemented. today, we have more severe differential and differences then i have seen back to the civil war, but i have just been part of the co-author of a book on economic history of the united states, so i am steeped in history. i could tell you there has been nothing like this in american history. tom: does the debt and deficit limit a compact -- contract the

degrees of freedom that any central banker has? chairman greenspan: to the extent that it impacts the money markets, which it always does, then that is a critical issue for central bankers to be concerned about. tom: you don't speak about fed policy. that has always been your approach. we have a monetary serous now with the vice-chairman replacing stanley fischer and richard -- with richard clarida of florida. what does it bring about in the debate of central banking? chairman greenspan: i do not think i could give you a standard answer everyone agreed upon, nor do i argue there is a right one. the general focus now is on what is the equilibrium interest rate? it is an old concept, which goes back many decades, centuries, as you would say.

so there is nothing new out there. all i can say is when i was fed chairman, it was not evident to we watched what drove where we were going with a yield on the 10 year note. the result of that was you have got a coalition of round those who are protesting a longer -- forecasting a long return of inflationary forces. in my judgment, that was the ideal way of coming at it. could forecast sometimes with the 10 year note was going and we came up with a conundrum, -- tom: everyone else said you are wrong. 1 chairman greenspan: basically what -- [laughter] chairman greenspan: basically

what we did is we tightened money and we expected history would have demonstrated that long-term rates would have gone up. they went down. tom: let's rip up the script. this is important with alan greenspan. you know richardson and the georgia school, and bernanke's work on economic history. you mentioned the new book you are involved in. the question is can central banks get out front of the debate, or by definition, are all central bankers reactive process, where they must react after the fact? chairman greenspan: no, in fact, after the fact is a little late by definition. there are anticipatory actions, which footnote reserve endeavors to take. during my almost 18.5 years, we were very conscious of what the forces were out in front. that did not mean we could

forecast correctly but we tried. 1993, for example, we actually created what you thought was not possible, something called soft landing on the economy, which is beginning to search and we put a cap on it. we tightened it until it stabilized. tom: one of the guys before you had a pipe. and you just looked at the smoke rings to see what they were looking at and now we have the power of press conferences. are beginning to much information out? is that part of the problem with the forecasting? we are talking too much while we are doing it? chairman greenspan: i do not want to comment on that. tom: let's switch gears. this is an important essay that we both were looking at. we say good morning to all of bloomberg radio and television worldwide with the chairman. essays a wonderful s --

about the fabric of europe within the new populism. i want to fold it back to the group of seven and the desperation out of world war ii to make for a cohesive europe, as well. are we losing that institutional memory that allowed us to make europe as one and without war? chairman greenspan: it is still there, but the forward movement came to a halt with the euro. in other words, i remember distinctly how it was part of the g7 group of central bankers and weance ministers, periodically would discuss in the late 1990's something which we called a new concept, which would integrate all of the major ones, and the purpose was political. namely, a step on the road towards full integration

politically of europe. that never happened. tom: but this is critical with chancellor merkel visiting president trump on april 27. governorn ecb and its with talks about it and it cannot be a german leader because they are too austere and conservative meet those you do not see from mr. draghi or others. do you buy the cultural distinction that the germans really should not run the ecb or be the president? chairman greenspan: let's put it this way, the germans, essentially, a controlling the whole euro system. you are just looking at what might be evidence that northern euro, countries north of malign ilano, are basically supporting

countries low. you can see it not necessarily with only the net expo. if you look at these southern northerneas and the europe areas, there is a flow of funds since the beginning from the north to the south. even more relevant is something called target tw, a clearing euronismo of all of the banks. that is a zero-sum game. it is a measure of all of the movements. tom: is it a flawed system? today with the esm, is it a broken system are smart does there need to be substantial amendment to the european

clinical economic structure? chairman greenspan: let me tell you what the data shows and you can conclude yourself. at the moment, you can line up to the central banks bank of greece. by the extent to which they are net borrowers were creditors to the system as a whole. must always bem zero. what we see now is a credit of over 900 billion euros that have been built up. thirdse essentially two of all of "the positives." gethe downside, you would -- i would say a number of different countries, italy and spain would be big, and recently, the european central bank. tom: these are some of the

dynamics. , to get back to the arch wantion in america, -- i to get back to our debt and deficit. it is extraordinary the debt we have seen. passed thatve historic tax legislation? chairman greenspan: strangely enough, the tax legislation was not bad in and of itself. in other words, moving the corporate marginal rates down was important. as ireland demonstrated in 1998 -- tom: does it skewed to a new gilded age? chairman greenspan: no, the trouble is it is unfunded. cut, the did with this change has been positive, but they have not attacked the issue of entitlements. tom: you did this 30 years ago, 40 years ago. is that the immediate task we

must revisit, social security, legislation before the 13 years are over where that becomes a problem? chairman greenspan: we are long overdue on that issue. one of the reasons as i recall -- pete and i would discuss many things, but we never spend as much time on it as i think we should have. fund andp this special basically it is the purpose of that, to confront the issue deficits. what everybody is running into cutting social security or medicare -- i would say is the -- i amonceivably trying to find the appropriate word to describe how important

this is. you cannot cut benefits now it is the third rail of american politics. tom: what does the republican party need to do to get back to conservative debt policy? chairman greenspan: reread ronald reagan and make a major commitment to it, which is spending cuts first before you try to do tax cuts. tom: alan greenspan, thank you. with your reading list for this summer, look back at some of the challenges of the reagan budget policy. thank you to bloomberg radio and television from washington. vonnie: wonderful conversation between bloomberg's tom keene and former fed chair alan greenspan, finishing on politics and how they had the third rail of u.s. politics.

the long-term spending is not being taken care of with those concerns. mark: word he have passed the tax legislation? is the in itself, but it fact it is unfunded, and the first question was, what do you make of the debt burden. -- former chairman clearly when you have a choice as a politician to cut taxes and raise spending, you do want the obvious one, which is cut taxes and raise spending.let's look at what is happening to equities on both sides of the atlantic. one hour until the end of the wednesday session. stocks rising. midsession of the united states. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ live from bloomberg world headquarters in new york, i am vonnie quinn. mark: live in london, i am mark barton. markets."loomberg

look at indices on both sides of the atlantic, shares in europe gaining today. a different story in the united states. a small gain for europe following the u.s. and its fortune and jumping around with a mixed bag of earnings dissipating with the geopolitical tensions and breaking is. vonnie: crude oil is trading higher and aching up steam, up 2.2%. will they cross the $68 a barrel mark? we shall see. this is on inventory. of further drawdown by more than a million barrels. the survey was looking for an increase in inventories of about 400,000 but we got a drawdown, which underlines a report price drop in crude inventories. that was a major drawdown, more than 3 million barrels of it draw down when the survey looked for less than 100,000 barrels.

refinery utilization was down by gasolinewe also got inventories, a drawdown of almost 3 million barrels. it will be interesting to see the price actions. so far, picking up steam on this less supply in the markets. 68.12 for a barrel of crude now. time for our segment that focuses on that top stories in the municipal bond market with taylor riggs. taylor: joining me is the head of usable fixed income at newberger berman. theknow the question is supreme court yesterday heard arguments about whether to let states start collecting sales taxes on internet retailers that's not currently charge attacks on the customers. how badly do these states need the revenue? james: badly. you are talking significant amounts of revenues, by some estimates billions of dollars.

if you think since the financial crisis, states of local governments have been raising revenues and that usually is sales taxes, corporate taxes, and it is hard to raise them because there is much less flexibility to do that. we think you will see something that could be important for municipal issuers. table: another important thing -- and that -- taylor: another important thing is we are in the middle of budget season. it was a nightmare when it came to other states. how do we expect the season to go? james: it will be another tough season. last year it was a nightmare. you had new jersey, illinois and connecticut with late budgets, unnerving to the municipal market. the place to look up this year is the state of illinois. they passed a bad budget last year and had to use an override of the governor's veto to pass

it. the politics there are as toxic as they have ever been. i do not like illinois geos for yield curve.the i think you should wait for a better entry point as the budgetary process plays out but there is an interesting trade on the short end. right now, you can buy a two-year illinois go at a yield of three and a quarter percent, almost double what you would get on a aaa rated bond with the same maturity. basically, you are getting two bonds for the price of one, a good deal if you can tolerate headliner risk. taylor: staying on the short end of the curve. another the is the relative outperformance of high-yield versus investment grade but you are arguing you can come up to more liquidity. why? what is the argument? james: spreads are incredibly tight end so much money has come in from central market liquidity. the are pulling back now. onthe last year, the spread

the high yield index has come in on over 100 basis points. now is the time you want to be up in quality and nimble so in volatility picks up, you have things in your portfolio you can sell to take advantage of bonds at a better price down the road. qualityso we are up in on the shorter end of the yield curve. that is james is slang -- james iselin. vonnie: great stuff with their muni moments. catch it later online. back to european and brexit issues. theresa may's brexit strategy basing a renewed test today. her signature go returns to the upper chamber and her opponents are seeking to over hold the measure, and a key sticking point is to see if britain will continue talking with the european union after its leave. we are joined by the minister of finance for luxembourg, pierre

gramegna. what is the chance it is taken up by the house of commons? pierre: i will not do a guessing game and reduce parliament but it is obvious this negotiation has proved difficult for both sides but more so for the british side because there is a lot at stake. unfortunately, and has become evident that being part of the eu single market is key and it wasn't evident before the vote and now everyone is trying to find ways to mitigate the loss of having the general access, so discussing about keeping a customs union is a topic that is important and one that would help for goods to come into europe from the u.k. more easily and vice versa, so i think there is a bilateral interest. the hard brexiters said they did

not want a customs union, but britain has one for countries that part of the eu and it is functioning well. vonnie: it sounds as eu would be recessive to staying in the union, but what would britain have to give up to get that? has a price.thing if you have a customs union, you have to discuss to having the same rules. for the time being, united kingdom has the same rules of origin as the european union and the same for environments, and so on. you cannot have your cake and eat it if you want complete independence on your legislation, so it is give and take. if the u.k. wants to do it, i would advocate the european union and commission should take them up on this and work on this but obviously, the u.k. has to make up its mind. mark: finance minister said today that a solution to the

irish border is needed to ensure the transition period happens and the other deal struck between the sides. are you confident in irish board of solution can be found before or at the eu summit in june? pierre: it is a guessing game, but i think the reassuring thing in the matter is you have a transition period after the exit next year and then the transition period goes until the end of 2020, and a time to go through this. this topic will have addressed before and it can give a clue because you cannot have a border and not have it for other issues. that makes the border issue really difficult. mark: if we could move on because time is short, to the

fear of trade wars and the ongoing spat into the u.s. and various countries, how concerned are you right now that what we are seeing is a deep embodiment of heightened protectionism? pierre: well, coming from a wentry open to the world and advocate against protectionism. the imf has just released fingers of gross worldwide with the main arguments that this is happening because trade internationally is finally picking up, so this is the best answer i can give, we have to resist the pressures and also in europe, some advocate we should be more involved outside the european union and we his contribution to it. vonnie: many countries have been fromg to grab a portion

britain, and we don't know how many will be leaving, but luxembourg has been lucky to get many. how do you reconcile your position wanting people to come and settle in luxembourg and bring their salaries with them with your position at the european union, or you are not meant to advocate for that? anrre: luxembourg maybe is position where we have always regretted the united kingdom is leaving the we respect the decision of the united kingdom people. this being said, the issue of access to market has been over dramatized overtime. there are ways and means to circumvent the problem that you are not part of the single market anymore by setting up subsidiaries, what quite a few insurance companies and asset managements based in -- based in london have done. that doesn't mean thousands of people are leaving london but

that you have a different set up and you are closer to your customer and that has proved good for luxembourg. vonnie: can you give me numbers on people or banks or units that have moved or promises of jobs? pierre: in terms of jobs, we are talking over 1000, but still a reasonable number, so what you have to realize is it is a small number compared to the people who work in london so the key here is not people are companies closing in london and opening and luxembourg. it is about getting closer to your customer and taking advantage of using the markets. vonnie: it is a pretty country and thank you for joining us. that is luxembourg's minister of finance. mark: coming up on bloomberg imf chiefhe former economist olivier blanchard joins us. this is bloomberg. ♪

♪ i am live from london, mark barton. vonnie: in new york, i'm vonnie quinn. mark: the imf spring meeting this weekend tom keene is in d.c., standing by with more. tom: thank you. olivier blanchard is a former economic counselor of the international economic fund but more than that, one of our great active academic teachers, who studied under stanley fischer and has had any number of doctoral students, names you know, that have worked with him at the massachusetts institute of technology. wonderful to speak to you. there are too many topics to talk about. i want to go back eight years to work at the imf.

10 commandments in fiscal adjustment in advance economies. that means the united states of america has gone to hell. what do we do with a trillion dollar deficit? france did not do this, we did. olivier: the initial increase in the debt of crisis was justified and we discussed this many times. we are talking about the last one in the forecast that just came out. it is clearly ill-timed in a major way. this really has no macro justification, and the question is whether this is a source of enormous worries or my old worries. my sense is interest rates are very low, so the burden of the debt at this stage is not very high. the interest rates are lower them both rates, so it isn't as if we absolutely need to do something today about it. with the the issue

extension or anything like that, -- weentually, we have to had to reduce the deficit. adverbs like eventually, which most viewers and listeners understand, is the mathematics you have studied is the fancy mathematics you believe in. if we have a debt expansion and rehab chronic trillion dollar deficits, is it a linear and controllable function or does it snap at some point? olivier: i think for the u.s., it is not snapped. debt thatt levels of we are unlikely to reach you and if we misbehave. for some countries, it can. in some countries, you get investors to change their mind and there is a stop. i think for the u.s., that isn't the issue. the more debt you have, the more interest payments, taxes, and eventually you do something.

i do not think that is something that needs to be done now. the mistake was made. in has to be slowly repaired through smaller deficits, sweaty smaller deficits, and as long as monetary policy can accommodate. we are starting to have some room to use it. i think it is a 10 year project. tom: within economics, this is ,omething, the common ground nobody has thought harder about the future of macro economics then you. you have provided leadership from the imf to the peterson institute of saying, we have these models, this is what happened in the crisis. we are 10 years on, what does the new macro look like? visit the old one? or are we searching for -- is it the old one or are we searching for new models? olivier: it is a model, the old macro plus two things, the financial sector -- [indiscernible]

sector -- [indiscernible] and then what we call non-familiarities. tom: what do you mean? olivier: things can go wrong fairly quickly. the vision was things could you terry rate before and what we learn -- could go wrong, and what we learned is something can go very wrong when investors panic and we do not have the means. tom: and that goes into the financial system, as well. olivier: i think it comes largely from the financial which investors can react strongly. when they do, things happen. we have learned that. is there a new macro? no. not in the sense that we all believe it. if you look at the research team being done, it is amazing how much progress there is. we are not there yet. the new macro is in front of us

but it isn't like the old one and it will be better. tom: chairman greenspan joined us this morning and he did not speak about fed officials. you can speak about the new vice-chairman. what incredible shoes to fill trying to replace stanley fischer as the vice-chairman of monetary theory. dynamics hasda of a new humility about those fancy models that you and others came up with. what is the character of the humility of monetary phd's as they advise someone like chairman powell? olivier: i think it has a lot to do with having -- as a grandfather, i think an intellectual sense -- i am actually the father of physicist writing, but i think what is pushed strongly is unity. basically, they know a lot but there is a lot we don't know. we came out of m.i.t. with

humility. the feeling that we understood something and we could push ahead but we did not understand everything. when you are in the real world, you become much more realistic as to what works. tom: really? , academics in the real world change, is that what happens? olivier: they adapt, they do not change. tom: very quickly, i want to talk about a theory dear to your heart, which is how our central banks unwind. times. optimal they are optimistic the balance sheets can unwind. olivier: i think it can be done. i do not see any enormous difficulty in doing it but it will be delicate eyeing tuning. billy -- delicate fine tuning. the way i think about it, we are

in a race and we don't know what the finish line is and what speed you are going. but not go to finish too far after.all the central banks of advanced economies are in the situation. in the u.s., we had a sense of the finish line but how much we have to increase our speed or put on the brakes is difficult. and jay powell will have to basically find out. he can do it with his team. in europe, it is different. the finish line is much further out. the speed is not quite as strong as the u.s., so it will be trying to adjust. the important message is it will be contingent and i cannot tell you today and jay powell and mario draghi cannot tell you. i can tell you as a function of the numbers, this is what we will do. both of them are extremely good with good teams. it is impossible to do.

if they fail one way or the other, but they learn. tom: i must have you comment on this thing, mr. macron of france. it is a new france, isn't it? olivier: mr. macron is the new france but you still see that there is a lot of the old france still there with occupy buildings and anger. he is going through a tough time. i think what he wants to do is franceal for france, but is in a difficult political place. the weather is nice amongst trading. the students like to be outside rather than inside. there are converging tensions. i think we have to watch the next month. n does notf mr. macro

succeed, it is terrible news for france and really terrible for europe. macron is a good answer to the populist alternative. if heif he fails, i worry very h we could see trouble. tom: i have to leave it there, olivier blanchard, thank you. vonnie: tom keene with olivier blanchard. we have more to come from the spring meeting with imf in washington, d c over the next days. let's get a check on u.s. majors. the stoxx 600 in europe in its steep earning season. the dow is down nine points. the s&p 500 is up .25. ibm is down more than 7% in the index. the nasdaq is up about .1, as is the stoxx 600. this is bloomberg. ♪

♪ for our stocktime

of the hour. it is ibm, the worst performer in the s&p 500 right now. shares are down after the company reported worst quarter earnings -- first quarter earnings. abigail: the fact that sales growth was flat, when you include the currency up 5% but when you back that out with flat sales growth, and they had decent sales growth in the first call, in hopes that a turnover was underway but that seems like a one quarter wonder. also a drag, gross margins fell more than expected, down about 500 basis points. a positive, dow list in the first quarter the previous year. so morgan stanley is defending the shares as they invest for the future. mark: what about the cloud business? bright spot or not so much? abigail: a dark cloud. it only grew 14%, compared to 27% of growth last year.

overall, we look at the stock and there is a 3.6% dividend yield. valuation is attractive. down today, trading between the range of 130 and 175. four large-cap value investor, shares of ibm might make sense but right now, dinged on the day in the lack of sales growth. vonnie: abigail doolittle, thank you. mark: check it out what is happening ahead of the close. it is next. we are less than 35 minutes away from the end of the wednesday session. it is quickly jumping as the level of sterling declines. the close is next. this is bloomberg. ♪ .

mark: 11:00 a.m. in new york and 4:00 p.m. in london. 30 minutes left in the trading day in europe. from our european headquarters, i am mark barton. vonnie: from new york, i am vonnie quinn and this is the

european close on bloomberg markets. ♪ mark: here are the stories we are covering from the bloomberg and around the world, geopolitics softening today as president trump reveals the cia director mark -- mike pompeo travel to north korea to meet kim jong-un. russian president vladimir putin is seeking to dial down tensions with the west, ordering officials to curb their anti-u.s. rhetoric. u.k. prime minister theresa may faces a new brexit challenge. ready to defeat her flagship brexit bill. have a look at european equities, rising by the smallest of amounts with the highest day since february 27.