Gasoline continues to surge as storm harvey dumps more rain over texas and louisiana disrupting refineries. What impact will the shutting of the Colonial Pipeline have on prices and the u. S. Economy . Brian moynihan tells bloomberg the probability of getting tax reform is high. More on that opposition throughout the program. Matt we are less than half an hour away from the start of european, equity Index Trading and equity trading as well. Take a look at futures, gains across the board, stoxx 50 up. 44 . , continentale cap Index Futures are putting up stronger gains then we see in london. Take a look at bunds, we could see a signal of a risk off day, i have the threeday chart c can see the trend but if i take it down to a oneday chart and zoom a pop can see that we had in yields as investors sold atds and we see the yield. 37. Guy we have been talking about it, is this the eighth day higher . It is. Prices continue to move higher. Unfortunate unless you happen to be one of the european refineries that is making a lot of money out of this trade. It is a derivative of this horrible story that is taking place in texas and louisiana with texas gasoline continues to rally. As we havell today, talked about and we talk about later on, they are shutting the Colonial Pipeline which takes gasoline from the gulf coast up to the east coast. It was already operating at a lower level, now it has been shut down. We will talk about that story throughout the morning. Much of that is in the price and how much is there still to come . We have a lot of u. S. Data today and tomorrow. Lets get it bloomberg first word news update. Heres juliette saly. Juliette u. S. President donald trump has warned congress not to fumble the chance to rewrite the u. S. Tax code and reintegrate the economy. His comments came as he kicked off his effort to sell the plan in public on a tax a rally in springfield, missouri. President trump i am fully committed to working with congress to get this job done and i do not want to be disappointed by congress, do you understand me . Do you understand . Understand. Tropical storm harvey has closed down almost a quarter of u. S. Refining capacity as it made landfall for the second time. Power failures have reduced fuel 4. 2 5 milliony by barrels a day. Futures rose to the highest in two years and the fields or maam to crude is at a 17 month high. The uks per minister theresa may said she intends to lead her conservative 30 and to the next election. That comes after one newspaper claimed over the weekend to note the date in 2019 when she is planning to quit. During her visit to japan she said there was no basis for speculation about her future and ends and insisted she is in it for the last longterm. They lost the tory majority in parliament a key part of french resident Emmanuel Macrons clinical and Economic Strategy for the next five years is due to be unveiled at a News Conference this afternoon. Prime minister Edward Philip wilson at the administrations plans for the major labor reform. The finance minister said the measures are needed to boost the economy. A clear signal we have to reinforce and strengthen our economy. Newe want to face this appreciation of that euro, we have and we need to have a stronger economy and that is the sense of reform we need to introduce. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Bloomberg. Guy and matt. Ceo brianamerica moynihan has repeated an appeal he made days into Donald Trumps presidency that washington should focus on reforming the u. S. Tax code. He said this could help achieve sustained to gdp growth of 3 . In a wide ranging exclusive interview with bloomberg, moynihan spoke about his plans for an eu hub in ireland after brexit. We just moved our operations in europe to dublin. Dublin has a tax rate that is half of the u. S. Tax rate and youre trying to get competitive. Ratetitiveness and on so people do not shift money outside our economy. There was not as much economic activity. There is now. I can get run materials and build whatever it is and i can sell it outside the u. S. 30 years much of that demand was in the u. S. , money will be out there and must make it more equivalent to bring it. Democrats and republicans alike agree on the need for some kind of tax reform. The question is when is it going to happen and perhaps what is it going to look like . Do you have any confidence and in this administration being able to get tax reform done, by the end of this year or by the end of next year, by the end of this term . Of all the issues they face there has been multiyear agreement that this was the issue of the moment. ,e had to get tax reform done going back to the bush administration. There is more energy and understanding, it is still hard work. The devil is in the details and we start making adjustments and fiscal responsibility, all these issues are on the table but of all the issues that have come up this one has more of a unified group of people saying we have to do this because it is so obvious were not competitive. We have to do something on personal rates for people in lower paid areas so they can take more home. Can you make it into your plan . I do not make a lot of external factors in. Probability is high and people are working their tail off and that is good. How would you rate the president s stewardship of the economy . Thet will be driven by what consumers are doing and everything. The economy is growing. Would people want it to grow faster, absolutely. Theres a lot of debate that the economy looks like it did 3, 6, 9 months ago and it will look that way until something changes. We cannot sit here and say the president does not have a consequence. The decision that the administration makes do have consequences for the economy. Acrosssions are made congress and policy matters. We expect that to continue. Matt that was Brian Moynihan, the ceo of bank of america speaking with erik schatzker. We will share more of the interview throughout the day he of the dive into the markets and cranfield. He is an mliv strategist in zynga or. Talk to us about what was moving the markets, was it trumps comments on tax reform that we or was at the gdp figures . It was the gdp, the numbers were strong acrosstheboard and it is getting people a lot of confidence that the u. S. Is growing not only strongly now but probably for the rest of the year. Seeingrg intelligence the second half of the year will be better than the first half. It looks as it as though it is in a good trajectory. People would like to see some tax reform in the u. S. But there is a lot of debating and discussion to be done before that comes into play. It is a bit early for people to be pulling that into their forecast. In the performance of the stock market which is to and fro, it is not making it clear a clear decision. Tax reform is something for down the road but the gdp was good. Guy i am surprised the market did not respond more to the tax stuff but details kind of lacking yesterday. I am confused. Moment. Ath the the treasury market move index, the volatility index for the treasury market is trading at incredibly low levels. Were going into a september that has the potential to tovide some real catalysts move the markets around. You have the fed talking about rolling its down sheet off, you have the debt ceiling story coming through, s p, possibly a massive event. Why is the treasury market as comfortable as it looks at the moment . Ofk it is more question investors are prepared to wait until they see the whites of the eyes of something before they jump on it. There has been some disappointments with volatility moves, you can see it with the vix index. It did not respond very well to equity markets. What youre seeing in the bond market is similar where people think there is a chance that september could be highly volatile, maybe i should take they wouldtion but rather see it and jump on it and they still have time to do something about it rather than get to hear it in advance for it. Matt what do you see happening with gasoline . The shutdown has pushed Prices Higher so far. Seen days in a row we have gains in gasoline and we are hearing about pipelines shutting down, the put the colonial for getting gas to peoples cars out to the east coast. Are we going to see a crisis mark i am sure 30s are doing your thing they can to avoid such an event but they had in caught out by the sheer size and the duration more than anything of the flooding. On the ground i am sure they are giving all the resources they can and they do not want to have the disruptions go on any longer than necessary. The subject are the weather. As you say exactly when is going to change direction you can see from past experiences in the u. S. , the two previous major hurricanes they have had, the u. S. Steps up quickly and sends all the resources they can to fix these things as quickly as they can. Guy itll be interesting to see if that has an effect in terms of inflation data and fed policy. It could be something more substantial. Aty can get more analysis mliv. Tomorrow is payroll day. Tliv. We will talk about the energy story later. The Colonial Pipeline being shut down is a big deal. Warren buffett highlights the company thats companies he he thinks has value. More from the oracle of omaha. This is bloomberg. Matt welcome back to Bloomberg Markets, the european open. 15 minutes to go until the start of cash trading across the continent and in the u. K. Lets go to singapore for the bloomberg is this flash with juliette saly. Juliette French Energy giant to tell totale has been forced to close some of its operations. The closure of its port arthur refinery is likely to cost the company a film a few million dollars. Im a about the capacity of the u. S. To rebound. The u. S. Is very reactive. Texas is the oil country. It will be a strong mobilization for everybody to be able to u. S. Rt, i trust our colleagues in the industry to be able to recover from that situation. Juliette ubs leans toward frankfurt for its trading headquarters after brexit. According to two people with knowledge, the Investment Bank could move to hundred 50 or more britain. Of it may increase its is this in frankfurt. The bank declined to comment as did the german regulator. Ceo is said to tell staff that the ipo could happen in 18 to 36 months. He said it is my opinion that the company should go public. The meeting was arranged introduce him before he takes up his new role on said timber five area that is your Bloomberg Business flash. Guy thank you. Data inhad french cpi line with expectations. It has ticked up versus the previous month. Accelerationof coming through. Apple is said to have jumped into the battle for to be ford toshibas memory chip business. Competing with the group that includes kkr and western digital. Bloombergs david westin caught up with the most famous appleshare owner, Warren Buffett. He asked about tech and the reduction in his ibm holdings. That is part of the game, there is no way, summary says you never made a mistake, check them out. There was a fairly large commitment. Theuld say that competition, what is fascinating to me is what amazon did with the cloud. Here is a company that you do not inc. Of as being in that business six or seven years ago. And jeff bezos has taken something, you would not think they would be doing that and from a standing start and he has said on charlie rose it was amazing how much runway he was given but here are a bunch of smart people around him, not just ibm but microsoft and google, you name it. The people. They all let him have a big lead. Never let a smart fellow have a big lead. What does that tell your about the tech sector when it comes to investing . It may be more susceptible to massive disruption than other runofthemill is this is. War were not going to wake up tomorrow and find [inaudible] groupu have a very a of smart people who have access to resources and they are trying to figure out how to bring out a better product than you have. , may be carrying this around this was the hottest item around. They are coming out with a new iphone, you might want to think about it. Talk about your investment, you have close to 100 billion of cash and cash equivalent waiting to be invested. You might not want to invest all that but a chunk. But 20 billion. What does it say that they cannot find sensible investments . Warren it was shooting fish in a barrel in late 2008 and 2009. Stocks have been going up march of 2009 was a low early early in march. Stocks are not going to earn much more, just because you pay more for them. They have gotten less attractive as they have run along. Gone along. Matt still to come, it is a 150 billion industry, one of the biggest investing plays of the year, the Digital Currency market is gaining attention from highprofile investors and the biggest institutions around the globe area join Bloomberg Technology tonight at 10 00 p. M. Et time for a special on cryptocurrencies. A special on bitcoin which is at an alltime high. We are minutes away from the open. We take a look at movers in todays trading including , the opening is a mans way. Matt welcome back to Bloomberg Markets. This is the european open. Five minutes away from the open. Carports first half was worse than feared and that is according to the analyst jeffreys which cut its rating to a hold from a buy. Drop in the first half of the fiscal year. It also has sales that missed the streets estimates. Getting cut by a number of analysts, jpmorgan as well neutralit to a hold or and jeffries coming cutting it from up i to a hold area you will see the stock move at the open. Guy a massive debate happening as to whether north american supermarkets are better than europe in supermarkets. Matt they are much bigger. Guy figure is not necessarily better. Bigger is not necessarily better. Matt not the case in the eyes of an american. Are going exs dividend, you can find them on your bloomberg. Can see them listed right there. The other stock i want to mention is novartis. Thewill see this morning news that the fda has cleared a new leukemia drug. Originally the university of pennsylvania, quite a breakthrough in terms of the treatment of cancer. The open is four minutes away. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Minutes ago until cash opens in europe. Lets hug about where we expect that open to take us. Market positive. Fair value calculations up to around. 4 . The dax outperformed a little bit. Going on thetocks stoxx 600. London stocks on the ftse go dividend on a thursday to make life nice and neat. I wanted to show, first off a chart that illustrates how much more traders are willing to pay for october futures and they are for november gasoline futures. Gasoline a huge topic because of the shutdown in refineries in the houston area. The shutdown of the Colonial Pipeline getting that gasoline up to the east coast. The trade the gas futures, that stands for reformulated blend stocks for oxygen eight blending. Guy lets talk about where we are for markets. Ftse 100 out of the gate in positive territory trading up. We are expecting it to open up much better. European continental markets are expected to open a little stronger, expect the dax to open up. 5 . France. Very big day in we are expecting within the next 45 minutes the french government to start briefing the unions on the labor reform ban. That. Out for lets find out what else we are watching. Manus a very good morning to you. The data is king. That is what it seems to be. Macron justifying the drop in this popular derating saying he is ready to bring it on its stocks are higher. U. S. Is growing. Is that sustainable . The china factory data showing robust economic growth. I love what Warren Buffett has said. Stocks might be less attractive but it is still beating the bond market. I love what he says. Picking stocks in 2008 is like shooting fish in a barrel. Not be good if you are buying lehmans. Finance are up just financials are up. Financials are up. Consumers are doing well p Confidence Test doing well. Confidence is riding high. Had the french data, the german was stronger yesterday. This is the output dax. The gap is closing. That is good news for mario draghi. Nomura believes the guidance on tapering in europe will slip from september into december. Tapering is not fully priced into the euro. Ilt market, lets cross over christmas futures, 27 christmas futures, 127. 22. They raise their guidance for the year. Guy, i am off. Guy i am sure you will enjoy the. Lets go to the new screen. Novartis, our thoughts on index points, up by 1. 2 . Leukemia,of treating immunotherapy treatment out of the university of pencil pennsylvania, i think. 1. 2 . E got stock rising, i got the universities mixed up. It is dividend data. Let me show you what is going on on the downside. You can see casino is the biggest loser. Theres a whole bunch of ex dividend stocks. Matt . I want to talk about this exclusive interview that we had with the ceo of bank of america america, Brian Moynihan saying u. S. Tax reform could help the u. S. Achieve the. Ame text growth of 3 in gdp speaking with erik schatzker, he also cautioned that it would be a struggle to hit that target. If you think about the period of time in the 1990s and 2000s when you had economic growth, you had a publishing growth of 1. 5 a year. Now it is about. 75 . That is a lot of difference. Economy it solid with that publishing growth at a faster rate, you are going to see this thing grow between 2 to 3 . Matt joining me is derek halpenny. Let me ask about your expectation for the possibility of tax reform in the u. S. It seems to have alluded every president since ronald reagan. Yet everyone is optimistic. What are your expectations . Derek we talk about tax reform, you get this impression of some Major Overhaul of the tax system. I am not so sure about that. There is going to be the impetus for some form of tax cuts on the individual and corporate side. From Financial Markets perspective, i think that is the focus. Potential of some form of stimulus to hit the economy in 2018. If so, what are the implications for rates . In terms of an overhaul of the tax system, like what President Trump was talking about yesterday, i am not convinced. I think the period since he has become president , it is certainly good reason for being skeptical at this point. Out, car forpoint credit on the backside of these numbers. It is also affecting the rest of the french sector as you can see. Derek, the u. S. Curve underpricing the possibility of the fed being more aggressive . Derek in terms of the nearterm debate, it is about whether or not they go in december. On the perspective, the market iran, 30 . Ced and the data we had yesterday and the data we get tomorrow, even with inflation softening, we make it evidence of that again today. The most important piece of information during the month of august was in the cpi reports. Some of the components as explaining this transitory weakness have actually start to rebound. Therefore, the fed are looking like they could be correct in their interpretation of this softness in inflation. Cell phone prices, prescription drugs have started to rebound. Those were two elements that were mentioned. There is a fundamental story behind the fact that inflation has not risen to the target, but in terms of explaining the recent weakness, the fed might be reassured that it is transitory. That puts them in a place to go in december three hikes in 2018, that is the risk. Temptation toa soften the profile for 2018. Matt the markets on expecting i think we have a great tool for investors to use to see what the fed is looking at. Here. S the dots screen you can see the three hikes for. 018 that derek referred to the market is only expecting one hike between now and january 2019. How do you think that is going to work itself out . Do two orthey were to one for next year, the markets persistently have been well behind what the fed has been telling us. The market has been more right than the feds. That is going to continue. The only dynamic that would change that is if Wage Inflation started to pick up. That would reconfirm the feds view. Profile for the dollar in 2018, but we expect the fed to act. It is all about the relevant story, and i would agree with the reference that was made earlier in terms of at the ecb is doing. That is not fully priced yet. As that becomes confirmed, this story in terms of what will have to be priced at 70 u. S. Is greater than one has to be priced in the u. S. Guy u. S. Dollars turning a bit. Derek halpenny will stick around. Up next, discussing a huge runup in gasoline prices do to harvey. Do you to harvey. This is bloomberg. Guy 11 minutes into the trading session. This is the european open. Gasoline accident gains for the 2017. T run in 2016 in harvey making landfall a second time dumping rain across louisiana. Total has been forced to close some of its biggest u. S. Refinery operations. The ceo told bloomberg that the closure of its port arthur refinery is likely to cost the company. The capacity of u. S. To revamp the ecosystem. U. S. Is very reactive. Pollution is going up. Country. Oil there will be a strong mobilization to be able to restart. I trust my u. S. Colleagues. Guy ceo of total joining us. Joining us some more is javier blas. Lets talk about the pipeline. It takes gasoline from the gulf coast of the east coast. It is called the you pipeline. It is called the Colonial Pipeline. There isnt enough capacity going to this pipeline. How big of a deal is this . Javier it is the main pipeline along the east coast. Thatylvania, new york so region depends on supply. Aided by the Colonial Pipeline, another one called plantation. Colonial is the main one and he cannot run half empty so the moment you dont have refinery supply, they need to reduce rates and at some point they shut down. The two parallel pipelines, the first one shut down yesterday, it carries diesel for airplanes. The second one, the big one is the gasoline one, it is going to shut down this morning. Look like it is going to be possible. At this moment, drivers in the new york area, florida, alabama, carolina, they are going to start suffering those consequences because they are going to start running out of gasoline. Guy we see a big move in gasoline prices overnight. Is that reflected in this echo javier reflected in this . Javier it depends on where we have been already in the gasoline market. We have a chart. That is the october november gasoline spread. There is a massive rally that we have seen. I think we are going to see more now that we are going to begin to see that gasoline inventory in the new york area is going to come under pressure. They are going to be drove down. We are going to see more rice increases. It is the wholesale market that will be cascaded down. Matt how much do you see prices at the pump rising . I am assuming it is going to hit them hardest first in the u. S. Before we have any implications over here. Javier i think it is going to be a global phenomenon. We are beginning to see that harvey is becoming a global story for energy markets. We had katrina. U. S. Is supporting a lot more Refined Products to the war. Just to the world. To the world. We are beginning to see impacts. Asia, they depend on a lot of exports from texas. We are beginning see prices of diesel in europe. We rely on supplies from texas. For sure, the most important impact is going to be on the u. S. East coast were prices could increase between 5 and 10 . The main problem is those refineries have not been accessed. Dramatic orng more more permanent the needs repair . We are going to know that in the next two to three days, perhaps over the weekend. Matt whenever we have these big disasters, derek, theres always talk about how damaging it is going to be for certain sectors. It could also be a boon for other sectors. A lot of cars will be destroyed in houston, they will have to be replaced so you can see car sales pick up in the near term. They could be punished again for that. What he you expect the market effects for harvey to be . Derek the fact that the markets will focus perhaps mostly on what we have been talking about, that kind of retail price increase in gasoline. Looking at the chart before i came on, the low point was around the beginning of july north of 7. 5 , incorporating the initial jump from hurricane harvey. It could be talking over that period of time going forward, perhaps a 50 increase. That has an impact on consumption. I think the most logical conclusion to make that it is temporary. That is what the fed will view this and therefore, it will not be too concerned over this potential temporary modest hit to personal consumption due to the drop because of retail giese this retail gas increases retail gas pricing creases. Matt javier blas, he is off to Bloomberg Radio to do some work for us. Just type in radio go and you will build to get into that stream. Derek halpenny is going to stay with us. Leaders before have tried and failed but could macron be the man to get french labor reforms over the line. We will preview todays press conference and discuss. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Take a look at where stocks are trading as far as the major equity indexes. We are seeing gains. Stronger gains here on the continent then you see in london. You see that cac not gaining as much as the dax. Maybe affected by the french supermarket operator which is down 11 after missing sales and earnings targets and being downgraded by jpmorgan, hsbc, jeffries among others. Lets cross over to nejra cehic. She has more of your midcap movers. Saipan uprting with up 1. 8 . Percent, that action could close by the end of the year. They open they announced a number of orders acquisitions. This is a statement from the company and so we are seeing the stock one of the best gainers on the stoxx 600 earlier. Still heading higher. On the downside, i am looking at casino. You looked at those profit numbers missing the profit falling short. The downgrade as well. That seems to be what is happening here. We are seeing casino as the second worst performer on the stoxx 600 and among the midcaps 5. 2 . Ming poorly, down looking at melrose industries. There was in headline there was a headline saying one of the businesses brushed a review of one of the operations. Overall, investors seeing this is negative down 3. 7 on melrose. Spokehe french president about an Economic Strategy could depend on the reaction to a press conference happening at noon french time. Government is expected to lay out plans for labor reform. Minister Eduard Philippe will brief unions at 8 45 a. M. , that process will start french time. , the european story has been on the front burner. Money has been pouring in. The currency has been rising at that started after the election over Emmanuel Macron at how big is a day macron. How big of a day is today . Derek this is an important starting point in terms of where we need to go. Were looking at the data and we flows, harassed and unhedged. The hedged and unhedged. Investors are definitely priced for something meaningful to change in france. Today is the starting point. His honeymoon period did last too long. He still has a very strong mandate. When we look at recent political history and france, there hasnt been a better up at in france, there hasnt been a better opportunity for something more meaningful to happen that i think could have real implications over the longer term for europe. In terms of european assets, you can see it very clearly, european equities have started to stutter because we are starting to see euro strength beginning to eat away at that story. The french government, the single currency is going to have an effect in terms of performance. If the euro continues to go from strength to strength, we are bullet we are a bit below 120. How big of an impediment is that going to be . Derek what is driving eurodollar . Until around 115 area, a lot of that was the acknowledgment among investors and the pricing in of the much better macroeconomic news that we were getting from europe and the changing expectations. The last leg higher has been more related to the United States on developments other than the european fundamentals. That is when the equity market perhaps started to wobble. That is when the ecb start to express more concern. If the euro is advancing because of the strong fundament as of europe, you are not going to get too much ecb complaints from that. This final leg which was specific about the washington uncertainty that lies ahead in september, that is when you get investors paying attention and that is when you get the underperformance of european equities. Matt thanks very much for your time, derek halpenny. He is going to join guy and myself on Bloomberg Radios daybreak europe live from london. You can catch us on Bloomberg Radio. Com. You can type in radio go on the bloomberg terminal. Pay for research in a postmythic world according to Brian Moynihan. More from his exclusive interview. Matt make or break for macron. The french government will start briefing the union on its Labor Reform Party plans shortly. Prime minister philippe will hold a press conference in paris. T noon to reveal the details gasoline continues to surge as storm harvey umps more rain over texas and louisiana disrupting refineries. What impact will the shutdown of the Colonial Pipeline have on prices at the pump . Bankamerica ceo Brian Moynihan tells an exclusive interview that the probability of getting tax reforms through is high. More from that conversation brought the program. Welcome to Bloomberg Markets european open. I am matt miller alongside guy johnson. Guy 30 minutes into the trading day. Lets look at how the equity markets are performing. We are generally higher. There is a little underperformance from dax to cac. 100, there are a bunch of exdividends this morning. Is thursday, the stoxx youre seeing the hit coming through. I wanted to take up what is happening in cardiff right now. Michael saunders is making some comment indicating that the boe is not indifferent to the pound s depreciation that we are seeing. The u. K. Gdp data will be revised higher. Brexit will be bumpy for the u. K. Eric shatzer caught up with Brian Moynihan for an exclusive interview. One of his topics, the regulatory landscape and how prepared egg america is how prepared bankamerica is. It will be good. I dont have a number. It will be good for america. When you think about, theres three or four things that are important. Number one, the leadership the agencies have been proposed. The second, rules we are going on that have been pulled back. There are rules that be changed and there is legislation. If you look across all of those, what the secretary did is get input from analysts, from companies, from advocates, professors and said here is a set of principles we have to fix. The key ones would be capital, liquidity requirements, some Technical Rules and allowing more access to our capital account when we have 20 billion dollars excess. Lets put that back into the markets so someone else can use the capital. Capital, liquidity and things like that. Two other people, it might be something different. Is too complex by everybodys admission. That is probably a good idea because right now you have five or six agencies working on different sets of principles and they all know it is different. The question is how are we going to go about it. Now we have to figure out what we mean and yet keep the pretzels and pace keep the principles in place. The buyu probably know, side is beginning to freak out about these new european financial rules. How big of a deal is this . It is a rule change. It costs us money to implement it. If you think about it, we have the number one Resource Bank in the world. Us sure that people will pay for that. 80,000 a year . I assume they will because of that is how they are going to have to get it. It is not the biggest issue. Im worried about what is going on in the hurricane. It will be fine. It is disruptive and im not sure if we agree with all of it but it is a role. You put it in and you go on with life. That was bank of america ceo, Brian Moynihan, speaking to our own eric shatzer. You can catch a new program about the everchanging regulatory landscape. Markets rules and returns explores the implications and opportunities of regulatory change by drawing on our in house expertise and industry figures on the front lines. You can catch the First Episode from 8 00 p. M. London time friday, highly recommend it, especially if youre in the industry. Coming up, stocks versus bonds. Warren buffett gives us his insight next. This is bloomberg. Guy 37 minutes into the open market session. Lets get an update with sebastian salek. Sebastian trump warned congress have to follow the chance to reinvigorate the economy. He wants to sell the amerco public. Just sell the american public. Im fully committed to working with congress to get this job on. I dont want to be disappointed by congress, do you understand . Understand. Sebastian Tropical Storm harvey has closed down almost a quarter of u. S. Oil refinery capacity. It has reduced americas dealmaking capacity the lowest since 2010 pick gasoline futures rose to the highest in two years and fuel premiums crude at a 17 month high. The u. K. Prime minister theresa lead hershe can conservative party into the next election. During her visit to japan, she said it was no aces to speculation about her future and insists she is in it for the long term. Lead. Ew a 20 point poll global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt sebastian, thank you very much. Speaking to david west and, book Warren Buffett said stocks are not very attractive but theyre still more appealing than bonds. In 2008 2009, stocks have been settling and going up now lull. Rch of 2009 was a so it is eight plus years and stocks are not going to earn much more just because you pay more for them. They have gotten less attractive. Theyre still very attractive compared to bonds. If you look at a 10 year government at 215, that means you are paying 20 paying 45 times earnings and the earnings are not want to go up. If you put wanted thousand dollars in a twoyear test tenyear bond 10 year bond, stocks still look attractive compared to that. If Interest Rates go up, the comparison becomes parlous dramatic. Just becomes far less dramatic becomes far less dramatic. Have they injected trillions of dollars of euro and yen into a system which are driven prices up . Rates are tost stock prices what gravity is to matter. If Interest Rates were nothing, and they are going to be nothing forever . Be eyeingou might real estate or stock. If Interest Rate are 21 like they were in 1982, you can look at earnings. Interest rates, that is what drives valuations. We have had these very low Interest Rates now for some time a lot longer than i thought we would have them. At the same time we had the Federal Reserve coming off a laying there letting their Balance Sheet rolloff some. What effect might that have on stock prices . They have to be careful about how they do it. The Federal Reserve has 4. 5 trillion in assets now. Can do it by majority. If they were to roll back to the trillion, that would be 3 trillion of securities they would not be taking up in somebody else would have to do it. They will be very careful. Has quantitative easing worked . It has saved us but it seems like there was a trickledown theory that if we increase asset prices, that some of it would get the economy going and yet the hourly rates is not going up as fast. It did wonders for us coming out of 2008 p. M. Without it, 2008. Without it, we wouldve gone back to the economics of 100 years ago. If the fed had not been there to ease, we wouldve had a far different recovery. It has overwhelmingly done the right thing. We have never gone through a the os like this. How gone through a period like this, they have never played this game yet. Of chairman and ceo berkshire hathaway. Lets continue the conversation around stocks. Just. Lafargue on i want to talk about the chart. This is the euro strength in the stoxx 600 so the white line is the euro going up toward 120. This is the stoxx 100 tests stoxx 600 stoxx 600. Gettingphase the world uptodate . Where does that leave us in the second half of the chart in terms of the relationship between the euro and those european equities . Julien the first phase was before realizing the eurozone have become themed. Underweight, european equities, there were 20 euro. Since then we have seen a tight relationship between european equities and the euro going higher until the French Election. When the French Election came, people suddenly had moved away from the other part of the equity market into euro. People started to ask the question, what does a stronger euro mean for the economy . Going into the second part of this year, clearly this concern is out there, our take is we have to acknowledge the fact that the domestic economy is doing better than expected. The strength of the euro is explained that we should not be too worried. The euro is not expensive. What we have just seen is catch up with undervalued going into this year. We have closed that gap. Guy what is cheaper right now . I am watching french supermarkets today taking somewhat of a hit. Where do i look for the next leg on the european story . Do i focus on the domestic stocks . Those with exposure to the european exposure that are going to do best . Julien i think you have an opportunity to deal in both. You would focus more on the domestic and you want to have exposure to these acceleration we are seeing domestically. The european market, we have the audience being penalized. If you look at the global future, with seen the u. S. Gdp number yesterday with chinese pmi this morning, very encouraging. Those companies with global exposure will also benefit. We will have a blend looking at both sides of the equation. Not trying to take a view on the euro which we believe is stable from here. Matt merkel mentioned the strength of the euro in her Summer Press Conference saying that it could bring down the trade surplus a little bit. What do you think when you look at, say, european carmakers and the strength of the euro . Is that going to hurt them . Julien i think it will have an impact. This is a sector that is exposed to Global Trading therefore it affects moves. Probably a fewre quarters later on. If you look at the Second Quarter earnings, a few of those german automakers have been reported tests have reported positive impact from currency. Have reported positive impact from currency because they have hedges in place. You are seeing the impact on the sentiment and how those stocks are trading. Not to mention i think there is a sentiment impact coming from the issues around zero and electric vehicles. I think the picture for this group is not one that we find compelling in the current environment. It is not just based on the euro. It is based on structural change. Matt what industries do you find compelling . Which european sectors do you like . Julien in terms of sector, my preference remains for eurozone banks. The expectation when it comes to the ecb rate cycle, they are probably too cautious. The market is pricing and 40 basis points of hikes in the next three years. When we look at the economic picture in europe, we believe there is an opportunity their code seeing rates moving faster than what the market currently expects. Sector as i was mentioning before, this is a sector that has than well. It has seen some sort of pullback. The euro is partially to blame. One thing we havent seen in this recovery is a recovery in Capital Expenditure expenditure capex. That is what i think theres an opportunity. Guy you can see it is highlighted on the bloomberg. Over here on the righthand 14. 3 in euros, it is done. In dollars, it has done 22 . If you are a noneuro investor, how differently are you going to be looking at the story throughout europe . Julien you will be pleased. Is the what it tells me story in europe is not working. That the the pullback we have seen doesnt appear as big when you look at europe relative to the world in dollar terms. It is purely currency based. Where do i see the euro going from here . In the appreciation recent past, do you see another 10 , 11 in the next three months . Painful. E probably the euro has peaked for now. We have seen very good data from the u. S. You could immediately see the reaction in the eurodollar. A lot of optimism was priced in in europe. Those two things are balancing each other. Lessnk the story now will be about currency, more about how the ecb engages in tapering. Showing that europe is doing just fine. Guy julien, thank you for joining us this morning. Previous leaders have tried and failed but is macron the man to get labor reform over the line . This is bloomberg. Matt welcome back to Bloomberg Markets european open. I am matt miller alongside guy johnson in london. In france, Emmanuel Macrons political and Economic Strategy for the next five years could depend on the reaction to a News Conference at noon today. His government is expected to lay out plans for labor reform handing more power to French Companies to negotiate working hours and pay. The Prime Minister is currently briefing the unions. Caroline connan has more from paris. What are the key measures expected to be announced . Maybe we will get some links from the union. What are they trying to achieve . Caroline the details have been cap by the government over the past few days. The labor minister has not spoken. The unions have been quiet between the goal of macron is to end this idea that it is difficult to hire and fire in france. These are key measures we are looking for. Make it easier for companies to hire by lowering social contributions and make it easier to fire with this cap on compensation in case of unfair dismissal. Some negotiations at the Company Level rather than the National Industry level. That means in some cases, bypassing the unions. This is the key measure according to the latest. Up with the french finance minister and i asked him whether this meant better a check to the for france. I think this is a clear signal that we have to enforce and strengthen our economy. Newou want to face this value of the euro, we have and we need to have a stronger economy. That is exactly the since we want to introduce. Guy that press conference at 12 00 noon french time. Thank you for leaving us ahead of it. Thank you for briefing us ahead of it. Matt up next, we are going to broadcast bloomberg surveillance on television but if you like, you can switch over to radio and joint guy johnson and myself on daybreak europe. Using your bloomberg, type radio go on your terminal. This is bloomberg. 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. Francine dont disappoint me. Congress asing to he kicks off his tax reform tour of america. Im fully committed to working with congress to get this job done and i dont want to be disappointed by congress. Francine meanwhile, u. S. Economic growth hits 3 , but bank of americas boss says keeping it there could be a struggle. Weve got a solid economy. Without population growth at a faster rate, you are going to see this fight to get