Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170830

Sees them delivering on labor reforms despite a drop in the polls. Confident that this is the team we need for france, for the business, for the economic recovery. Anna a warm welcome to bloomberg daybreak europe. Were here in the city of london. Manus the europeans are dealing with one problem which is a strong euro. Whole otherve a problem to deal with, a decline in the value of the euro. , back tot back in time october 2016. This is when mark carney last noted that the bank of england is not indifferent to the Exchange Rate. Weve had a rising clack of voices calling for parity. Saying sterling is looking for catalyst to bring the negative trait value of the pound and as you can see, were gravitating back to this critical level for mark carney and the bank of england. Were not the target of the Exchange Rate mark carney said in october that were not indifferent to the level of Exchange Rate. Putting the move in the market in the pound very much in context. Orther its going to draw alert the bank of england, lets put out the risk radar and show you where we are. Seekingmay says shes to preserve gains with e. U. Trade deal for the u. K. As we said at the start of the program, she is in japan and is commenting on the e. U. Japan trade talks prior to her arrival in japan. Its neither risk on nor resolved. We saw big reverse in u. S. Stocks, a big turnaround from intraday selling, a big move toward retrenching from those losses. Some relief at donald trump more measured response and weve seen previously. Hes talking about reaction to the drills on the north koreasouth korea border. Manus you wonder if theyre trying to look for a silver lining. Weve got a lot of other things that play as well. The calibrated response is reassuring according to some. If you look at the numbers in australia, they just keep tilting houses. The Second Quarter construction work, 9. 3 . The estimate was for 1 . The estimate was for a drop of 5 . Iron or did they did out of the ground at a colossal rate, they just keep yielding. Its very irish. Anna looking at gasoline prices, up 3 . A seven day of gains on gas prices in the United States. We will get an update on Tropical Storm harvey as it , once again threatening to come ashore on the border of texas and louisiana. Juliette u. S. President trump has vowed that the governments response to Tropical Storm harvey will serve as a model for disaster recovery. His comments came in he and the first lady received a briefing in corpus christi, texas. Inleast 15 people have died the wake of harvey while thousands more have been displaced from their homes. Early estimates on economic as 100ange as high billion. In india, buys heaviest rainfall since 2005 has paralyzed the Financial Hub as transport ground to a halt. The city, home to the central the stock exchanges is expected to receive more heavy rainfall in the next 24 hours. Corporate bond l slumping as trading was 13 lower than the threemonth daily average. The u. K. Wants to squeeze in more hours of brexit negotiation as an october deadline to secure a breakthrough looks increasingly unattainable. There are only two more rounds before and you summit that will decide if talks can move to trade. The discussions are scheduled in weeklong blocks, yet most of the team of officials did not arrive in brussels until midmorning newsrday with a concluding conference slated for tomorrow lunchtime. The u. K. Prime ministers in japan today and she starts a threeday Charm Offensive on the worlds thirdlargest economy. Theresa may will attempt to convince the country into a future agreement with britain. It comes amid growing tension over north korea and after our top diplomat Boris Johnson failed to offer the reassurances the key asian ally and trade partner had hoped for when he was there just last month. The loreal ceo has said he is confident and president Emmanuel Macron will push through economy boosting reforms, despite a drop popularity that his popularity and latest polls. Gracie had five years to implement it, so its just the beginning. That this confident is the team we need for france, for the business, for the economic recovery. Am very confident. Juliette 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. Its a much brighter day in asia here today. Investors are focused on fundamentals and away from the north korean tensions which rattled the market yesterday. The nikkei up by. 8 as we see the end get back some of its gains. The hang seng trading back at may 2015 highs as we await key banking earnings there. Pretty flat on the asx 200 but the kospi falling flat down in late trade. The stocks were watching, where the reasons australia so flat today is one of its key players down by 6 after the National Broadband raisek plan to try to 5. 5 billion by selling some of the income he gets from that screen. Weve been hearing reports that toshiba has met with creditors over sale of the memory chip business. Toshiba down by about 3 tokyo but look at this developer in tokyo, rising the most since 2008 on its growth outlook. Theseion we are waiting earnings from the big for chinese banks and what their nonperforming loan ratio looks like. This chart shows you that even know theres concern about the ngos in china, its nothing compared to what youre seeing out of india. Very much,k you Juliette Saly with the latest from singapore. Kym johnson said the firing of a saidmissile kim jongun he will continue to watch the response from the United States. Anna according to the green central newsagency, he has urged to have more launches in specific dosing in the future. Our north asia correspondent joins us now from tokyo. Great to see this morning. What is being done diplomatically to contain these incidents from escalating . Said, but ofeing course these multiple adversaries are not sitting across the table from each other to resolve their differences. We have the Un Security Council , andmnation, quite strong people responding to that condemnation and debate about what kind of action the Security Council keep in mind you have japan and russia who have veto power. The debate about what kind of action or sanctions, one proposal is sanctions on oil imports to north korea, exports to north korea could be a possible solution. Then the speculation is china would not want to see a further deterioration or even possible collapse of the north korean economy because already china has imposed those sanctions restricting coal exports and iron or and lead or exports to china from north korea. Those sanctions have been working, but not to the end goal. Tot is to get kim jongun stop its nuclear and missile program. Manus the question is to what extent china will be on board for further sanctions. We have the bloomberg first word saying china said its not in favor of unilateral sanctions against north korea. This is the foreign minister in a briefing in beijing. The question is the utter commitment to the process of these sanctions. That is absolutely right. The foreign minister speaking to that dominated about the north korea situation. He said hes not in favor of unilateral sanctions. The chinese are working with the United Nations about how to handle or perhaps pressure north korea to stop these kind of missile tests which the north koreans have said they will continue to do. This is just a prelude to more missile launches or tests, perhaps to as well contain the u. S. Sizable military presence in the middle Pacific Island of long. Of guam. This is the japanese parliament, the diet. We had the Japanese Foreign minister saying even sanctions enforcement could cut 1 billion in foreign funds to north korea. Obviously the japanese and the United States and south korea will be pushing for maximum effect on the multilateral front and who knows what could happen on the unilateral front, whether it will be military strikes you dont trump has said all options are on the table after what happened yesterday with the missile flying over the outten of hokkaido. Usa Stephen Engle bring in the latest. A guest is here with the market view of all of this. Good morning to you. The we look at the commentary in the last one in four hours, are you surprised to see the market having rebounded in the u. S. Session and relaxed in the european session . Kim talking about how this could be a prelude to containing the american territory of guam, and yet the markets are higher. I think there is a sense at the moment that where the world of rhetoric rather than action. Is that we didnt get more fire and fury from President Trump and a slightly more measured response. Its a perfectly reasonable supposition, yes. Manus the one thing everyone has been banging on about is dollaryen, swiss franc, and gold. As an asset manager, do you sit back and reflect, i do want some protection, but i want protection in a liquid form. There is more liquidity and gold. Is there any consciousness about what is being protected . Stephen i think it depends on your attitude toward risk and also how you see events developing over the next 1224 months. I think the instinct to pull the trigger back into gold on a very short term basis is more of an emotional than a fundamental. Manus what changes the dial in terms of geopolitics . Is it just roleplaying from President Trump and kim jongun . What would shift your thinking . Stephen it would be nice to see more detail about the chinese session because it seems to me manus china will oppose violations of sure Security Council restrictions, they just want to go all in with trump. Think thees, i chinese are playing a long game and theres no way they will align themselves with the americans. What about the the one to talk about that are worth looking at . People are saying this is taking on haven status. Stephen i was talking about that with one of my colleagues yesterday. He was making the point that the classic safe havens of the swiss franc in the dollar, you would see the dollar rallying and the but the eurollying is rising even against the swiss franc, and that is fairly surprising. We talked about the way the euro has strengthened this year and it has exceeded expectations. You always have to think about people position very long on the dollar. You see that on the Chicago Board Exchange data. Therefore they are expecting a dollar rally, and that hasnt happened. Were now very underweight the dollar. I think at some point were going to have manus if you were a ticket technician at all, you would say that has brokered a trend. Back in december the extension was very extreme. If you look at the way the positioning changed during that six months between june and september, people went really long the dollar. Now that extended positioning has unwound and on the other way. So tactically i would expect the at some point will see dollar trend. Up, texas braces itself for a long recovery from the devastation of hurricane harvey. How will the u. S. Deal with the economic fallout from the storm . This is bloomberg. Anna welcome back, 1 20 in the afternoon in hong kong. He hang seng is up by. 9 lets get the Bloomberg Business flash with Juliette Saly. Juliette its official, the new ceo of uber. It concludes a monthlong search kalanick. Travis hes call the new job the opportunity of a lifetime but hes facing a long list of challenges including quarterly losses of hundreds of millions of dollars and two department of justice investigations. Russias slowmotion banking crisis claimed its biggest victims yet them of forcing the central bank to provide support to other lenders to prevent panic from spreading. It was taken over by Government Back find that will place 75 of the bank in state hands. The rescue prompted the central bank to provide funding to other banks to contain the crisis. The ceo of porsche has said no decision has been yet made on whether the company will continue to produce diesel vehicles. Force has always built relatively few diesel vehicles. That was always something the group did. Porsche has used diesel in some models but mostly in countries in which diesel is taxed at a favorable level. In principle, we are not a diesel brand. Juliette and that is your Bloomberg Business flash. Manus thank you very much. With texas still being lashed by rain and rescue still underway, President Trump out that the u. S. Government response to Tropical Storm harvey would serve as a model for disaster recovery. Rangeds early estimates up to 100 million, the president received a briefing at if fire station in the texas town of corpus christi. Been ivect you told how great your representatives have been in working together as a real team. We want to do it better than ever before. We want to be looked at by virginia or now as this is the way to do it. This was of epic proportions. Anna President Trump giving his thoughts on hurricane harvey. Events, 15atic life people are dead, the entire area of texas is suffering. Thatwe try to do is marry level of suffering with the economic impact. We have done a survey of economists, what is the propensity for this to impact the fed . And the consensus seems to be in the third corvette will be a rebirth because of what has to be done to regenerate. When you look at it from the ,rism of markets, here we are in charlottesville, you have another a number of other incidents. Now you have the hurricane. These in isolation might not do a lot, but in conflagration, they might knock out some of the confidence. Stephen we are not seeing any evidence of that yet. If you look back to previous examples, the tragedy of katrina, for example, it has a shortterm impact on the supply chain. Kind of a compensating rebirth in stimulus thereafter. Dispassionate and sometimes cruel prism through which to view these events, its very you say, distressing what is happening down there in texas. My sense is it will not disrupt hugely the progress of the u. S. Economy. Anna you are looking for evidence of fiscal stimulus and in the United States, the response to Something Like harvey and any kind of fiscal , what are your expectations on the fiscal side . Needen clearly, if texas some kind of aid in order to recover from the damage thats been done, it will undoubtedly be provided. Its a great deal is controversial than some of what was being talked about earlier in the year which the Trump Administration has been unsuccessful in delivering. If you are back to what we were saying about the dollar earlier, one of the reason the dollar rallied in the second half last year was precisely because the u. S. Economy was expected to accelerate as the result of fiscal stimulus from the Trump Administration, and that didnt happen. Consumere u. S. Confidence is the second highest since 2000, according to the data we had yesterday. So you have a very Strong America at the heart of it. 3 , is 2 growth, not the thats the issue they have to deliver, or do they have to deliver in terms of tax . Where they started and where they are now are two very different things. Stephen 2 growth is not going to set the world on fire. Inflationbine it with at fairly low levels, that really since the pulse racing. And yet were considerably better off than we were about two years ago when real growth was struggling to recover and i was no impulse for corporate leverage at companies. Anna stephen, thank you very much. Warren buffett joins the team at 4 00 p. M. Anna and were joined by the bank of america chairman and ceo, brian moynihan. Up next we will talk about the u. K. As theresa may arrives in japan for a threeday visit. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre 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. Thats how you outmaneuver. Manus its 2 30 in the afternoon in tokyo. ,ollaryen, a small reprieve but you would hardly call it a dramatic risk off. Lets talk about the markets in a little more detail. Risk onps not dramatic but certainly a bounceback and asian equity markets from the losses we saw yesterday as the perception of geopolitical risks are receding. Its been on a rising trend since february 2016, showing resilience since that date. Attention now turning to economic data, fundamentals this week in asia. Investors keeping a close eye on the bank of japan bond buying operation. The 10 year yield dropped below zero in yesterdays session. Back above that today but something to keep an eye on. That has some impact on bouncing back a little bit today. The dollar at an almost twoweek high against the yen in todays session. Im looking at that one month implied volatility. Also what got a lot of attention yesterday was the euro breaking through a key psychological level. Were back below it now but this is a technical chart showing before trimming exposure and this chart also showing how speculators are still net bullish on that dollar. Arrived insa may japan where she will meet with the japanese Prime Minister. Manus she said britain is keen to present the benefit between leaves inr the u. K. 2019. Andy sharp joins us from brussels. Thats get to andy first. What else has she been saying on the plane ahead of this meeting . There are two main threads to what she said. One is about the postbrexit deal. The other of course is north emphasizingally needs to play key role in putting pressure on north korea. She also refused on no less than four occasions to rule out any kind of military option on north korea. Trying tobasically keep up the pressure on pyongyang. What is the u. K. Seeking from japan in terms of trade . We have not had a trade surplus since 1988. Weve got to remember the amount of Japanese Investment in , huge toyota and nissan factories create a lot of jobs there. Also she wants to ride on the back of the e. U. Japan trade all the she wants benefits for the u. K. Of that tradein. Whether she gets that are not, we will have to wait and see. Take us to brussels and the latest from there. Theyveelling bloomberg been accused of not making up , asking for more face time to try and do so, i guess. That is right. This is something the e. U. I think is going to welcome and logistically they will be able to work in extra sessions. They are trying to get some progress made before a key meeting of e. U. Leaders in october. They are more than happy to put in more sessions and they will be up to do that, but they also want more details from the u. K. This is something e. U. Leaders have strongly said this week, that they need more details, especially about kirk elections for the frexit bill before they can really push these talks forward. Manus i read all the position papers, and none of them are satisfactory. It almost sounds like a school report. Those of the words of john paul yunker. Is the risk or is there a real risk of a breakdown . Always going to be that kind of risk. When you have rhetoric like weve seen this week here in then the thinking about that just rises to you have to remember that neither side really wants a no deal situation. They want to avoid this cliffhanger. You have companies on both sides of the channel who are really saying we need to have something for march of 2019. I think theres a lot of impetus to get something done, to get it there. You have these tactics on both sides where theyre trying to get the upper hand on each other. At this point, just have seven or eight weeks until the leaders meet in october and we will have a big decision about whether the talks can go on for the trade negotiations which is what the u. K. Really wants at this point. Anna thank you very much, joining us there from brussels and andy sharp from tokyo. Here onis still with us bloomberg daybreak europe. The risk that the talks break down, could that be of material interest to you as an investor in u. K. Assets . Always negotiations are very tricky to predict. Theres always the likelihood that you will get a breakdown at and thats frankly probably the choreography of what is going on to the point about the paper, i was interested in the description of the opposition of being constructive ambiguity. I believe that was a phrase that was used. From a corporate point of view, companies are saying they have become used to the state of affairs on trade where they can secure the supply chain. They would like assurances as quickly as possible about what those are going to be. The story we wrote up todays that the uks hoping to use perhaps the pro form or of the trade agreement between the mentionedapan, but i , the job factors perhaps more important. Import, or the british doesntship with japan rank as being a game changer. Is this about messaging or is it really about keeping jobs in the u. K. . Stephen i think it is about a lot of things. That there have been individual negotiations with Japanese Companies over the last year and a half with some assurances being given, i wouldve thought the japanese were very interested in that. Talking about the questions that were raised by the outcome of japan is clearly an Interested Party here. If we think about those traits that that you pointed to, japan is the fourth largest it economy in the world. Clearly we been impeded from trading more japan by our position. Anna there is potential their net relationship. Manus every teacher always said to me, youve got a lot of potential, so i believe in that statement a lot. Perhaps theres more work to do to provide concrete assurances to the japanese, but we believe that there. Tracking the brexit fuel decline. This is the bank of englands measure of the pound trade weighted and its looking weaker , down to levels that have made mark carney and the bank of england speak up about this. Out of the bank of england will stand in the way of the currency correction. I think the bank of england actually said they were prepared to let sterling find its own level. Ifl be interested to see they will take those comments but i think the history of central bankers using Monetary Policy and currency levels is mixed, to say the least. I think they will be more interested in the impact its going to have on the u. K. Economy which currently there is not a great deal of reflationary but you might, have expected inflation to rise by more than that. You are then wages. Are pressureshere within wages. Manus stephen is the head of European Asset strategy. Anna the brexit story continues on bloomberg radio. Will speak to the former British Ambassador to japan. Manus coming up, president macron the what are his prospects for success . Anna welcome back, its 1 44 in the morning in new york. Mixed session coming through in asia after big turnaround assession over in the u. S. Markets try to put a little perspective around what weve seen from north korea. Lets get the Bloomberg Business flash. Uber,te the new ceo of concluding a monthlong search. Hes calling the new job the opportunity of a lifetime. Hes facing a long list of challenges including orderly losses of hundreds of millions of dollars and new Department Justice investigations. Local welcome google will comply with europes demands on its shopping service. The unit faced the deadline yesterday to tell the European Union how to plan to following order against rival Shopping Services in the region. Thats your Bloomberg Business flash. Porsche haseo of said no decision has been made on whether the company will continue to produce diesel vehicles. Oliver blew made a, during and interviews with bloomberg. Diesel engines overall are very good for the automotive and for the co2 target. Porsche, its not so important, we are 15 diesel. Is designed to have a diesel engine, but we havent decided yet. So the first base model will come out with the gasoline engine and then you have the s model with a more powerful v6. Are going to see a hybrid . Will porsche move more quickly toward hybrid alternative power chain powertrains . We have 340 horsepower and 440 horsepower, and then you can engines. Ut successful we will bring a plugin hybrid. Electric pick it makes you do still have diesel , its likeng sold the german car bible for gearheads. Is diesel still an important part of the german auto industrys goals . Of course it is. Diesel inout 70 of europe and for the whole automotive industry, its very we are more ause Combustion Engine producer in the future and electric car designer. Anna thats bring another exclusive interview, the ceo of lori l says french president have hisll be able to major reforms by the end of the year. We ask them whether he was concerned about the threat to the euro. Know, we are not concerned. Weve seen the euro going up and down. It went up to 150 a few years. Go there are highs and lows, but that is life. Global soss is very we are not concerned. Its still going to have an impact on some of your. Usinesses but still, globally it is perfectly manageable. You talked about Business Confidence in the first 100 days of new president Emmanuel Macron. As you said, its only 100 days since a president has been elected. He is starting now the first real important measure that will be announced on thursday and es five years to implement them. So its just the beginning. , his very confident government is really the team we need for france, for the citizens, for the economic recovery. Im very confident. The most labor reform important reform for a new executive of a Large Company like yours . It is important, because it will be a signal of the change of mindset in france. We have been adapting to the situation, but clearly, globally for the French Economy it will be a very important move. Maybe even more for middle or small companies. Say youre not expecting any major change over the next couple of weeks in france . I think they will understand. Realistic and they understand what the country needs and i think its going to do ok. No trust inhey have macron, popularity is got him more than 20 points over december over the summer. Do not agree with this . Because its not really important. The important thing will be the real measure, the impact of the economy. Im pretty sure we will see a decrease of the unemployment. If people are better off, the economy gets better, if the economy takes off, i think we will forget all that it will be very happy. Are you going to try to renegotiate some agreement . It is too early, we dont even know what the measures will be. So then we will decide. Loreal. E a lot more to come from that conference. Stephen, im to watch the rise of the euro. What impact do you expect that to have on the corporate environment . We have a chart that shows some that have anies High Percentage of revenue coming from elsewhere. Stephen one of the things we clearlysely is were companies have higher exposure there is pressure on earnings in the short term. If we think about the way in which the euro has moved come the scale of the rally has been very accelerated. With think about the average rate of the euro over this year, it is considerably lower and will have to see whether there is competitive pressure. 2007 the euro was trading around 150 or 160 and yet youre still able to grow. There is a very important point here when you reflect on the history of countries like germany and switzerland, they have been able to cope with the strengthening currencies and do very well because there are other benefits from the strengthening currency in terms of cost of capital and lower inflation. It forces companies to focus on quality rather than on price. That has been the history of the most successful Business Models weve seen in europe in the last 30 or 40 years. It certainly noteworthy. Talk to me about bunds. We made it all the way up to. 6 . Weve given all that back and were back to. 3 . You have a fairly meaty call on financials. You like european financials, the earnings revision, but there is a shift in these curves at the moment. Stephen the characteristics of the first chapter 2017 in the itsd half of last year, more to rotation in the market. We feel that financials on something of a sweet spot. It comes back to the recovery in nominal growth. We know that your companies in the last five or six years have struggled a lot to deliver growth. Theyve been incredibly good at managing their cost basis. From the financials point of view, were seeing the benefits of all the policies that were put in place to clear up banking balance sheets. A lot of banks produced pretty impressive profits at the moment. Anna you look across the eurozone, i know youve made a point in talking about the synchronize companies were now seeing. New, strengthing at the core but not necessarily that periphery. Stephen with all the fiscal reform policies that a been put at thee, if you look performance of european stock markets within the eurozone, the top performers are spain and italy. A lot of it is down to recovery in the financial sectors. The recapitalization of the italian banking sector. My sense is that growth is on a much firmer footing across the and will see continued growth in consumer confidence. Manus stephen, thank you for being with us this morning. Callsup next, kim jongun the latest testfiring of a missile over japan yesterday a meaningful prelude. What next for tensions in the region . This is bloomberg. Manus a meaningful prelude. Missilejong un said the firing was a step toward containing the american territory of juan. Guam. Costs. Merica counts the have epicat what happened. It happened in texas and texas can handle anything. Mays Charm Offensive. Visiting japan n a search for postexit trade deals. Backing macron. The french president macron is delivering on later reform despite a drop in the polls. This is what we need for the business, for the economic recovery. You are welcome to bloomberg daybreak europe. In00 and 8one germany. Yesterday was a fascinating session. We saw steep losses and we saw a rally in the u. S. Session later on in the day as the markets tried to put more perspective, tried to react more called like to what they heard from north korea. We saw that move away from risk aversion in the u. S. Session and that is slightly evident in asia. Look at the have a risk radar. Firing was said the guam. Empt to control trumps calibrated response is a reassurance according to uni bank. That is the session in asia. Technology is better. There seems to be this monetary sigh of relief. The australian Prime Minister lets keepsaying talking. There is a shift in the ground to a discussion rather than aggression. Anna that seems to be the way markets are interpreting it. This is the way that the asian markets are performing, up by. 2 of 1 . As we said at the top of the last hour partly because of the more risk on approach were seeing in markets and because of the housing data. We should not overdo the risk on element. We still have gold going higher. That, gold was flat, it was higher and our ago and manus flat. Lets have a look at the market. Equities are getting that reprieve. You have cigna drop in the futures prices. Have seen a drop in the futures prices. What was macrons vision for france look like question mark the euro is flat on the day. Coming back through that 120 level and that is the important point for markets. Ceo tellss bloomberg, i am not worried about the strength of the euro. Lets get a bloomberg first word update from Juliette Saly. Trumpte u. S. President has found the governments response to Tropical Storm harvey would serve as a model for disaster recovery. His comments said he came as the end of the first lady were in texas. Been displaced from their homes. In a, mumbais heaviest rainfall 2005 has paralyzed the Financial Hub. The city, home to the central bank and the nations to stock exchanges is expected to receive heavy rain in the for hours. And tradinglumped than the 13 then that threemonth daily average. There are two more rounds before an eu summit that would decide if talks can move to trade. The discussion is scheduled in week long blocks. Most british officials did not arrive until midmorning yesterday. Conferencenews slated for lunchtime. Theresa may will attend two use the trade deal for a future basis of agreement. It comes amid tensions with north korea and Boris Johnson failed to offer the reassurances asian ally and trade partner had hoped for. Is confident that french president macron will push through economy listing reforms despite a drop in his popularity. He made the comments during an exclusive interview with bloomberg. Years toave five implement them so it is a beginning. This is the team we need for france, for the business, for the economic recovery, i am very confident. Juliette william hill says one gambler and 242,000 on the Floyd Mayweather versus Conor Mcgregor fight. Mayweather won the bout highway of a tense round of technical knockouts. 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. It is a cliche but what a difference a day makes. We have seen a great rally come through in asian equities, more calm comes through calling following the launch of the north korean missile. You have a weaker yen, the nikkei closing higher by. 71 . Stocks in hong kong as we await the key banking earnings are at the closet is flat on of day and australia. The kospi also fairly flat. Was rejected by the broadband network, this was by 5 billione five aussie dollars. Closing down 6 in sydney. Toshiba under pressure. There is news it has met with creditors to discuss the sale of its emery chip business. Memory chip business. Postiive positive first half earnings. Showing you that overall Property Developer if youre in hong kong. We are awaiting the key banking earnings out of china. The big for, were waiting to see what their nonperforming loans will look like. Are nonperforming loans and in comparison to India Chinese doing a lot better but thats been concern about whether or not the Dividend Payments to shareholders might be a little on the light side. We will find out shortly. Manus thank you. The latest from singapore and the markets. Kim jong un said the test firing of a missile over japan yesterday was a prelude to containing the american territory of guam. He will continue to watch the response before deciding on any further action. He urged his military to conduct more launches. From tokyo about this but what is being done diplomatically to contain this incident, to stop it from loiting question mark escalating . Are speaking to a lot of World Leaders and how to put some teeth into this condemnation that came from the Un Security Council and to maybe perhaps add some sanctions to that which two of the permanent members on the Un Security Council, china and russia, could have veto power. There have been suggestions that perhaps the u. S. And japan would jointly urge perhaps an oil embargo of some sort or Oil Sanctions to further cripple the north korean economy as punishment. That is something perhaps the chinese would not want. They have restricted coal imports also, iron or and lead or my into china from north korea. 50 of the exports from north korea to china are coal. Any sanctions on oil imports to that country by the global economy, that could seriously cripple the north korean economy. Keep in mind sanctions have not worked. They might be hurting the north korean economy but they have not any closer jong un to the bargaining or negotiating table. Manus she calls on china, they have a key role in putting your north korea. Refused to rule out military action. This is about bringing global pressure on china to do more, isnt it simme . Stephen she was due to arrive an hour ago down south. She will be here in tokyo tomorrow. There are british flags, the union jack are flying above me along with the japanese flag. We are standing in front of parliament so she will be coming here on the trade mission but north korea has dominated many of the questions she was peppered with on the plane over from the u. K. There has been a lot of diplomatic efforts, shinzo abe got the phone with malcolm turnbull, the australian Prime Minister. Also they are reaffirming their allegiance to further pressure north korea to stop missile tests. Am jong un said this is prelude for more tests and guam will be in its sights in the pacific to contain a sizable military presence. There is a very large military contingent there, that will be hard to contain, believe me. Anna thank you. Our north Asian Correspondent with relevant experience living on guam. When you look at geopolitical tensions as reflected in markets yesterday, does it make sense for breath, or do we continue to be preoccupied by this because markets are quite calm in the face of this geopolitical crisis. Guest the term we have used in many others have used is keep calm and carry on not necessarily just from an anestor perspective but Economic Activity perspective as well. The world accompanies World Companies and individuals are maintaining a normal way of living and investment continues to occur. Spending is occurring, borrowing is occurring. The market has quite rightly paused. We have no idea as these events rollout on a realtime basis how significant or seriously could end up being. In terms of the reset we conducted in terms of whether related events, actual wars, and geopolitical events, there is not any significant back in market valuation at Risk Appetite but what follows is a time of assessment and recovery. Manus this is similar to the conversation we had with royal london yesterday. Only on a couple of occasions do you get these big contrary and indicators saying i should get into this market. Ospi, and this is about saving the move. This are the missile launches in this is the kospi essentially shrugging them off. This drawdown in markets are you tempted to add more cash from the sidelines on any drawdown . Guest the easy answer is yes. What we have tried to ensure is that youderstand can use volatility for you, not against you. So do not be afraid of volatility. Sometimes it gives you opportunities to not only htbalance and reweig portfolios, you can make the decision based on fundamental price moveyou need a to trigger that allocation shift. You do not necessarily just because you had made a decision to move into a market and pull the trigger. Asents like this could act trigger events. You have been waiting to increase outpatient our move into certain markets. Manus has anything unsettled in the past . Yesterdays move was netnet, reasonably benign. There is nothing to say that is. Wrong that occurs and provides liquidity but from a longterm investors perspective, we have our positions well entrenched, we understand the rationale and reasoning. Always looking for opportunities. Anna are there havens you are moving into my you see the rationale getting into gold or manusf the currencies, has the gold chart create are you interested in getting into those . Is, the onene haven area we have put in place and we see other investors doing is diversification. Maintaining Risk Appetite and a risk approach but diversifying portfolios. I graph is interesting. How many investors have exposed her, lets take our exposure out of that area modest the end twoonone a more regional play. Lets maintain a risk approach but lets have a more modest allocation into europe, into the u. K. That is the haven would be the use of diversification to maintain risk across the world. About were talking theresa may, maybe that is the sub plot of risk. With with that the arrest . Guest it certainly is a risk. One of the elements of what is from a geopolitical perspective is you have seen this nationalistic approach from many quarters but from a corporate perspective it does not seem to be affecting corporate activity in business. With seen companies become more global nature, looking to of and takeover bids at with market from one country to another which counters what we are seeing from a nationalistic populist political trend. There is divisions in terms of the economy. And politics. Anna globetrotting global elite has been cited. Well come back to you. Manus theres a raft of conversations you will to want to hear. Are joined by brian moynihan. Manus the eu calls for frexit. The deadline to secure this is bloomberg. Frexit approaches to this is bloomberg. The deadline to secure is the brexit approaches. This is bloomberg. Anna welcome back. 821 in paris. Thats have a quick look at the markets. We are expecting the equity markets to go higher. A turnaround during the session in the u. S. Yesterday and the Asian Session looks more risk on than it did this time yesterday. We are expected to be of by 1 at the state of european trading and seeing the opposite moves from that, the reverse of that in the bond markets, that would be the expectation at least. The dubai market showing a little bit of life. Manus Juliette Saly is standing by with your Bloomberg Business flash. Juliette it is official. Uber. W ceo of concluding a monthlong search to replace the ceo. He called his job the opportunity of a lifetime. He is facing a long list of challenges, clearly losses of hundreds of millions of dollars and two women of justice investigations. Russias slowmotion banking crisis claimed its biggest it was hit overtaken by a Government Back fund. Replacing 70 placing 75 of the bank in state hands. The rescue prompted the central bank to provide funding to other banks to contain the crisis and that is your Bloomberg Business flash. Anna thank you. The u. K. Prime minister theresa may has touchdown in japan in search of a postbrexit trade deal. U. K. Government is asking for more negotiating time as of march 2000 the march deadline looms. I suppose this is simple, they are a big investor into the u. K. But there is some irony here. She is asking the japanese to consider using the roadmap of a projapan trade deal as forma for one between the u. K. And japan. S this irony or is this life . Pain there is nothing and ask. With you get something is another point. Japan has a very healthy relationship with the u. K. And has had some clever and lucrative investments over the years. My assessment and i visit and on a regular basis, is that that will continue. They like the way the market, the way we innovate, we design so there is an attractiveness there. Anna speaking of things that might have driven that a lot, the pound a little bit weak and we started the program talking about this, nearing levels that prompted comment last year. The last time we saw the trade weighted pound at these levels mark carmi mark carney commented. Indifferent, he said. Wayne it is a difficult situation for mark carney and the bank of england. Currency hase provided is a cushion from a Growth Perspective from an export point of view. It promotes discount for anything that you are looking at around the world they can get from the u. K. And that is not just physical goods but professional services as well. And think we have andthis move in sterling you keep it where it is for several quarters because it reduces the Risk Appetite, the risk you have by holding sterling assets in a global portfolio. That is the message we hear from investors all the time. Its note loreal ceo overly worried about the value of the euro and if you look at big moves and the euro and our the guest made the point, with the stop but what you have is a replacement, the euro is trading on first half of its losses going back to 2014. Does that change anything that you look at in terms of the companies that have big exposure with the euro . When we use the euro as much as other people do as well. A sign of Investor Confidence or potential confidence. You cannot look at currencies in isolation. What wea validation of are seeing from europe so far. A good trade numbers. A lot of gdp in europe is made within about. Anna it is very up exposed. Wayne even the companies that are investing outside selling product, good quality products, good quality and services. If you have an appreciation euro at 145, 130, anna thank you. A reassuring conversation of the past hour and a half. They got to wayne will defend the radio team. We will do it all again tomorrow. Guy good morning and welcome. This is the european open. Cash is about to open for equities in europe. I am guy johnson in london. Matt miller in stuttgart. What are we watching . President trump is expected to kick off his campaign to overhaul u. S. Tax policy in a big speech in missouri later today. Will the markets be listening