U. S. History. Anna a warm welcome, this is bloomberg daybreak europe. From the city of london, on an edwards. Manus and im manus cranny. 45 minutes will have a conversation with the Jaguar Land Rover ceo, with his first conversation of the day. Anna and will talk all things commodity related. What werement, reverted out, deal done on the debt ceiling. Release relief for the debt ceiling, its been extended. Basically, the extra premium you pay for your october tbill, up goes a risk for december. We now have december 15, line in the sand to get the debt ceiling extended. What is trump going to do . Back 17hat, dropping basis points. Less than we thought, the market is pricing in less gridlock in washington at the moment. I dont think anybody really saw it coming. Anna starting with the democrats. Was it what treasury wanted . Maybe not. It moved toward shifting the debate in time to just before Christmas Spirit we will discuss the politics and the Market Reaction as we go through this hour. Lets put up the risk radar. Its all in the mix this session. Wall street was up yesterday with it deal despite the geopolitical tension, leading to a boy session in the asian market, up. 3 . , theollar index resignation of Stanley Fischer in their. And the north korean tension carrying on. That seems to be holding sway in terms of the dollar index. Orientedu have a Trump Federal reserve. Gone, what does it mean . He was one of the stalwarts of the traditional model. The dollar is telling of a different subplot. Another interesting feature will get to with our guest, around just how much one person matters at the fed. Dont underestimate the system was the subtext there but there is a lot to talk about. A little bit of stability for the euro this morning. The governing council has been presented with multiple scenarios around qe. Manus the market is saying regardless of what he says, we want to be long the euro. Its the most expensive in a month. The market does not want to be caught with his proverbial around its ankles. Anna here is Juliette Saly. The ecb twoday meeting concludes with policymakers having discussed various scenarios for winding down asset purchases, according to people familiar with the matter. Mario draghi following through on july pledge to start talks in autumn. The policy announcement comes at 12 45 u. K. Time with mario draghi to speak 45 minutes later. Follow it all live here on bloomberg television. Brexitgship piece of legislation will be debated for the first time today. The plan is same to ensure that into. U. Law is factored legislation before brexit takes place. The socalled second reading debate is next week. Soul warns north korea may launch a new mess a new missile as soon as this weekend. South koreas Prime Minister says the north may time its next launch to coincide with saturday. Hurricane irma has caused devastation on a chain of violence in the caribbean with winds of 180 back Miles Per Hour as it passes puerto rico. The latest forecast suggest it could reach florida by sunday. Potentially get most expensive hurricane in u. S. History. I storm joselowed which is now developed into a hurricane. The longest running six years, todays reference rate means the currency has now appreciated more than 7 from its december low. Its limited on either side of the reference rate. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Find more stories on the bloomberg at top. We take our leave from what we saw on wall street, the extension of the debt ceiling. Investors awaiting the ecb announcement from mario draghi. Shifting the focus away from what weve been focusing on this week and those geopolitical tensions. A much better day ahead. Pretty flat on the Australian Market and from the large cap stocks in china. And hong kong has turned around in the last 10 minutes or so. Flat at the moment, the kospi up by 1. 2 . Were seeing a lot of fine coming through in todays Korean Defense stocks even of the mood has shifted little. Korean aerospace of by a percent. Number of coming through in saying it should be getting into stocks independent have high ocean or to the u. S. With anese developers rebound on the hang seng. Gdp a little bit of a miss yesterday. Froml sales unchanged june. What is helping the australian economy is chinese demand. We have not had a recession in australia since 1991. Strong demand for exports holding the economy above water. You very much. President donald trump sided with the democrats on a three months extension to the u. S. Debt limit and government aid for Hurricane Harvey. 10 year treasury yields rose while rates fell on tbills. Fischerd stanley unexpectedly resigned from the central bank effective next month. His departure as uncertainty to the future of the fed leadership. Michael metcalf joins us. They to have you with us. Lots to talk about, some of which we did not expect to have to talk about this morning. Lets start with the debt ceiling deal. It surprised many in the market are we would not have seen the reactions we have seen. Is this a game changer because it shows some sort of bipartisan activity, or does it just kick the can down the road a few months . Encouraging if the first time they reached across to do the deal. But it deal is being done. We assumed it would go right to the brink and thats how the negotiations go. We have another brink further out but nearterm manus if you think december 15 is going to be a debt limit, it could go right to the wire but thats when the feds are in theory supposed to be raising rates. And the monetary tightening cycle in the u. S. , the debt ceiling will always be near to some kind of timing. Atentially could of been eager impact for the bond market. It does mean there will be a lot of focus on the december meeting and whether the debate about the debt he will disrupt the feds. Anna weve moved the brink from september to december, the bit further off. What about the resignation of Stanley Fischer at the fed . All the talk coming together at a similar time because Janet Yellens term expires early next year as well. How much does personnel change matter at the fed . Under normal circumstances you would say its just one person in the committee. It just increases uncertainty, i think. Whether quite sure yellen continues, its just more uncertainty. In part, it potentially begins to explain some of the market pricing. The puzzle for me on the fed is has lived up to its stock but the market is still very skeptical to price in where in 2018. Ots are in part thats because we dont know whos going to be leading the fed in 2018. Manus bearish analysts have said it accelerates the time in which trump can reshape the fed. Fisher was in theory one of the antagonists that believed in lower employment and higher inflation rate. Risk is you end up with a more dovish fed. The wall street journal says might not be on that list. Its difficult to speculate. Thats the one thing we do know. Fisher was a centrist. Certainly the nearterm, it will lower the median, so we know that for sure. In terms of the potential being , i know its bloomberg survey, behind it was kevin watchman and some of the comments he makes, it talks about the fed being on autopilot, trying to get rates up to neutral as quick as they can. Thats what the fed has been doing, it has been on autopilot. Its not necessarily dovish but its a steady tightening of the policy you would get. Anna the piece on the bloomberg saying that fishers departure wont shake up the fed. Youre suggesting you should not shakeup the institutions here. Its the economic environment. With that in mind, talking about limited wage pressure, what did the fundamentals look like when we think about the december rate hike . I think the fundamentals look at a good. You have full employment. I dont think there is as much debate around that. The level of the Unemployment Rate is where the fed use the natural rate to be. That part of their mandate is done. And it raises the question about inflation. Clearly weve had a soft spot in inflation and what were seeing right now, its very much energy driven. U. S. Headline inflation will be back above 2 by september. Continueon the fed to normalizing policy is still there. Anna will they have met their target by september, do you think . Michael its about core inflation, which is not quite there. There is a relationship between headline in court. Inont think the lull inflation weve seen over the summer is likely to continue. Its still about normalizing policy. We saw it yesterday, when output gaps close, there isnt the need to have the super confident policy that we have. Manus does this mean stock markets have dodged a bullet for the next three months . In the dollar is telling us something else. It still projecting down. Michael the big puzzle within that, markets have diverse a little bit. The equity market right now is looking at the good growth news and so for this year the dollar has he coupled a little bit from Interest Rates. Remember the dollar is a relative price and part of it is because the expectation is about improving conditions in europe. Anna thank you very much, michael metcalf. He stays with us for the first hour of the program. Questions from lawmakers about the withdrawal of brexit talks. Thats followed by the first debate on the socalled repeal bill. Anna and the ecb gets its rate decision. Manus and we hear from a couple of fed officials, and economic outlook. Up, we will break down what investors expect from todays policy statement. The council has been looking at their options, peertopeer this is bloomberg. Manus what a beautiful shot of singapore. The asia up, with relief on debt ceiling for now in the usa. Automakers and Electronics Companies leading the rally. Juliet, how are you doing . Facebook has found 100,000 of ad spending due to fake accounts probably leading to russia. They were connected to 470 fake accounts and pages on the social network. The company said it is sharing its findings with u. S. Investigators. Opposition politicians say theres a latest example of jobs leaving the scandinavian country putting the bank inside the eurozone, estimating the faces much as 1. 3 billion in regulatory costs. Anna ecb policymakers wrap up their meeting later today after getting a first look at potential stimulus plans for next year, according to officials familiar with the matter. They were presented documents outlining multiple scenarios for adjusting the qe program in 2018. Manus the documents are not intended as a form of policy proposal. Ours get to frankfurt with reporter who is standing by. Great to see you this morning. Last time i saw you, you were in dublin. Here we are, we have arrived. The discussion is starting. What can we expect today . For the going to outline something, or is it just not of the head from mario draghi . Were probably not expecting much. They will keep rates unchanged because thats guidance the have. They will probably continuing continue buying bonds until the end of this year. , we are of that probably not expecting much. However there is an option they might remove the socalled easing bias on asset purchases which currently states that have an option to increase them in case the economy turns for the worst. So that is possibility but also a minority view. Most expect the decision will come in october. To start mario draghi discussion on tapering, on potential winding down or the adjustment of the asset buying program in the fall. We assume thats where they will Start Talking about this issue. Obviously the decision itself is rather expected. In october, some say it might the latest force december. Another issue that will be on the agenda is whether mario draghi will address the strength of the euro, which has been going up very much this year. Anna yes, indeed. Will he address the strength of the euro . For that conversation. Michael metcalf is still with us. Your expectation around the ecb, i was reading aligned that came from a guess. Saying currency strength undermined return to our inflation target and we will be watching it closely and responding appropriately to make sure it does not endanger our progress. He says it is one way he could do it and it would not raise the hackles of the g20 because its not explicitly targeting the currency. Michael thats a great line from stephen, he used to work at the fed. I think it is an important point that sometimes gets lost in these discussions. The ecb was presented with various stimulus plans. What we are talking about is less easing of Monetary Policy, but still easing. Its talking about fewer asset purchases. Timing ofbated the when they will announce the change. They will likely announce the change for the future. Even if they announce it in october, it probably will not begin until january or march next year. Veryall about forwardlooking, flagging as much as we can tapering that will calm. From theit is learning fed taper tantrum. We are trying to avoid that. Manus the whole point about it is his use of language about patience and persistence. He wants to avoid having another moment that he had it. Since the june meeting the Bloomberg Euro is up 5 since the last june meeting. You begin to understand conditions have begun to tighten. These are quite important headwinds that he faces. I dont think he will be that aggressive today really. Michael he doesnt need to be. Better thanoking expected. Inflation is benign. They are left with these super accommodating set names. Divergence, you rightly point out the euro dollar has strengthened significantly. Manus you have come all the way back. Michael rate markets price in very little on terri tightening from the ecb at all. Not at any point at all. The euro is getting a little bit ahead of itself relative to rate markets. Thats a little bit of a concern today. One thing we know is that ecb this piece saying the wants to keep flexibility and keep its options open. He was saying the risk is that the market continues low volatility. At some point he has to say something. Michael the one interesting weighing and were learning from how the fed did the taper, and the options that were put on the table, a lot of them involve some kind of auto pilot where the buying of assets wind down automatically unless something bad happens. You have to remember that Monetary Policy used to be and should be boring. Metcalf isael staying with us. We have full coverage of the ecb program. Followed by the mario draghi press, its at 1 30 london time. Anna welcome back to bloomberg daybreak europe. President moon has been asking for russias support to resolve the north korean situation. Various leaders from that region speaking to us at that for a. The north Korean Nuclear test threat is to northeast asia. A number of bilateral meetings taking place between leaders at this event. The japanese Prime Minister also meeting there. Manus lets get into the markets now. Weve had a relief in equities but the dollar is still under pressure. Following the u. S. Stocks higher, if you look at japanese stocks, the nikkei to 25 rising for the first time in four days. Volatility falling for the first time in six days. A little bit of calm coming through a little bit of Risk Appetite and south korean stocks leading the ancient asia but none of the mean geopolitical risk is being priced in anymore. Cds a pass and that of the philippines for the First Time Since 2009 you know the philippines is six rates below south korea in terms of Credit Rating risk. Thats something to keep an eye on. Stock,ly we saw in u. S. The Dollar Strength we saw yesterday brought about by some relief over the debt ceiling agreement to push that out to december. Weve seen the tbill curve steepening and the 10year gilts rise five basis points yesterday, coming down one basis point today. Above the key technical level on the fibonacci that i showed yesterday. Brent want to show you crude because weve seen a little bit of relief in oil prices. Some refineries have come back online after the Hurricane Harvey disruption but this technical chart shows a signal that rent gained may soon be overdone. President donald trump has sided with democrats over a deal on the u. S. Debt ceiling. It comes with a relief package in the aftermath of Hurricane Harvey. Manus lets drill a little deeper into the politics of the deal. Metcalf, thank you for joining us this morning. What is the political significance of this deal . He yieldedn extent yesterday. Nobody really expected this. Run us through the political theater of this. There will be a lot of republicans scratching their heads trying to figure out exactly what happened yesterday. It was quite a surprising development, really. Republicans were very intent on doing a debt limit increase that would carry them through the midterm so they would not have to do with it again before they face voters next year. Hours before donald trump sided with democrats to support a threemonth extension of the debt limit, hours before that paul ryan is calling it a ridiculous and unworkable idea. So it was a little bit of a surprise to congress and washington watchers and to a fair number of republicans. The it was described as pelosischumertrump deal, which would have sounded unlikely, i suppose. What is the motivation here . Is this about expediency . Somethingry wanted longerterm. It just punts the uncertainty down the road and comes back in december. The Treasury Department wanted a longerterm extension, i think. The problem is that when you get to december, there will be a lot of rusher just inevitably. Congressman like to wrap things up at the end of the year and get home and see their families for the holidays. Theres a sense that republicans have given up some leverage in the deal and that they will not have the same ability to try to convince the members to vote for something that is beneficial in december as they would have this month to do that. Manus the bond traders will be nervous as well. We have a chart that encapsulate political intention. This is called the partisan conflict index. Conflict ontisan capitol hill. Its not going away. This was not some benevolent. Oment for trump it is strategy, or am i being over generous . Michael what it reflects is that the market is taking a benign view of all the all this. Right at the front end of the curve, the market priced in the risk of something happening. Outside of that, the equity markets are incredibly relaxed for everything. Its not just about the diversions with political risk. That makes me more nervous. I think its a more general concern. Harold a new time of collaboration between these parties, or is it a sort of one off . Think its more of a oneoff. I take is that trump once a victory and felt like he needed of it really, and this was the easiest way to get one. The white house is spinning it as a way to free up time to focus on tax reform. The reality is that three months is not really that much time to get tax reform done. Maybe it clears the decks on some things for a couple of weeks, but realistically, not much longer than that. I think what it does show is that trump is willing to deal with whoever is most expedient for him to deal with on capitol hill at a particular moment. Manus Kathleen Hunter is our political reporter and michael cap stays with the show michael metcalf. Turn s. Refiners return from shutdowns caused by Hurricane Harvey. We continue to watch hurricanes, but the ones in the atlantic at the moment are currently wreaking havoc over the caribbean, not destined to hit the infrastructure in the same way that harvey did. Onsef of course we are hurricane watch and you just mentioned rv, and now hurricane derma in focus Hurricane Irma in focus. You can see the trajectory of the storm and the active and not. Ctive refineries as well those are the dots in red and green as well. Goldman sachs pointing out that 1. 4 million gallons expected to stay shuttered past the middle of the moment of the month. Its not just a story about crude oil, its also a story about orange juice and sugar and other commodities. The Dominican Republic is a key producer of salt. When you look at florida, thats the number two in fruit and vegetables in terms of growers in the united states. Beene juice futures have rising, trading at the highest level since may. Sugar has rally to the highest since july. Quite a few moving bits and pieces in all of this and well just have to wait and see as we get more information about the that trajectory of the storm. We behen will be will able to assess potential damages. Ofus 1. 2 billion worth crops in florida are potentially at risk. Katia has found her way onto the charts as well. Drifting in the southwest gulf of mexico but permit is of course the big threat. Irma is the big threat. The governments main task will be keeping potential conservative dissenters in line. Manus seven tory rebels could be enough to defeat the draft law. Michael metcalf is with us this morning. I was looking at what david davis is saying. Hes got to try to steer this through the house today. Is is trying to ensure there is no dissent from the back enters and that this bill goes through, the european built withdrawal goes through. This is one of those moments in the house of parliament where Everybody Needs to galvanize together if the government is going to survive. Michael absolutely. This is one of the first legislative hurdles process needs to get over. We have been watching the negotiations and so far they have not been going that well. The interesting thing about that is that even though the negotiations will be drawn out over a long time, markets are reacting to the fact that they are not going well. Recent underperformance in part is attributed to that that. Bills, they are potentially market moving events. Anna one story talks about the pound shaking all economic woes and they have set the bar quite high. And you look at the pound u. K. Assets, is that how it seems to you . Michael i dont think sterling looks oversold. There have been times in the postbrexit environment where investors were wellhead on their sterling position and there was a big underweight there in the market. Over the summer, the bank of england has thrown a curve all into this where youre thinking the bank of england might need to tighten. People got drawn back into it. If you have an undervalued not many and there are of those around, it looks like an attractive investment. Ball over that curve the summer, i dont agree it is oversold at all. The bank of england is between a rock and a hard place. Its only an emergency withdrawal, but it would send all the wrong signals to the markets, wouldnt it . Michael the bank of canada tried to do that yesterday with their statement. Its difficult for them because right now there is so little yield any way that anyone that looks like they are tightening is going to attract investment flows. Thats the big challenge, to remove the brexit easing but it might be difficult to get that across. With u. K. Do we do stocks in the meantime . Be . Would your strategy you can hedge the currency risk. Manus we got numbers from berkeley yesterday. It drop the most in three months. Guidance,irmed their but they say they are leaving it better than it was last year but its worse than two or three years ago. This is when it begins to chip away at the data. Dissipation ista enough to promote the year of politicians, or and i just having a dream . I think it will. The data would have to be far worse than it has currently been. We forecast a recession straight after brexit. Look at what happened to growth expectations for 2017. The shock has not happened. Lags that i get wrong. ,if youre on the move listen to bloomberg radio. Down witht will sit the radio team. Jaguar landcharged, rover unveils its electric car. This is bloomberg. Manus welcome back, live pictures from the vladivostok for him. Saying there is an immediate threat, abe saying we must make north korea fully compliant with you in resolutions, reflecting what mr. Putin said yesterday. Those are the latest headlines from mr. Abe. We will keep monitoring those lines as they come through. Heres Juliette Saly with the Bloomberg Business flash. Itstte Facebook Says found about 100,000 of ad spending connected to fake accounts that were probably run from russia. 470 were connected from fake accounts and pages on the social network. The company said it is sharing its findings with u. S. Investigators. The decision to relocate headquarters out of sweden has been seized on by opposition politicians, saying its of the latest example of jobs leaving the scandinavian countries. They estimate that decision will save as much as 1. 3 billion in regulatory costs. United airlines is expanding at earlier order for the airbus jetliner, handing them a critical win in its battle with boeing for the widebody jet work it. The deal for 45 of the planes which is valued at 14 billion before discounts replaces an earlier daughter for the bigger plane. Apple will have to wait until at least 2019 to move beyond nextgeneration screens for its iphone, according to people familiar with the matter. Apple has been hampered by limited availability. Koreas samsung is the dominant main competitor in the market. Thats your bloomberg is this flash. Manus the Jaguar Land Rover unveils its first full electric concept car today. It comes at a time when automakers are looking beyond traditional diesel and gasoline yield engines. Us forompany ceo joins his first interview today. Take you very much for joining us. As your business continues to make move further into electrification, tell us how far you think this can go. How big are your plans at the moment . The future in the Automotive Industry will be electric. In Jaguar Land Rover, we going hybridser a variety of and batteryoperated vehicles. From 2020 on, all of our vehicles by the choice for the customer to choose electric vehicle. Manus its interesting you said provides a choice. What does the demand side looked like and what are the concerns of customers when they talk about making that choice . Ralf at the moment we see a higher demand. Car,nstance, for our new we already have 25,000 orders in our order bank. I also have to say that the petrol and diesel engines are very important and we will see these for many years to come. Anna what is the market for the new vehicle then . Are you targeting other luxury brands, other suvs . What is the target audience . At the end oflf the day, its just another car with a different propulsion system. Its for the commuting areas. For prepared to contribute that are air pollution to cleaner air. At the end of the day its another step in the new connected autonomous world of modern mobility. Manus i love the line that theorylaunched a concept of sharing rather than necessarily owning a vehicle. I have not had the good fortune to own the jaguar it yet in my career, but i always sort of thoughtt your brand and i really want to own that utterly unique brand. Is that less important to your brand Going Forward . Michael ralf at the end of the day im convinced everybody wants to have a land rover and wants to coin the vehicle. Wants to own the vehicle. To make his new car, its a new home. Is the third home next to the office and his own home. Therefore we have interest in this kind of concept. It will be a very intelligent are to help you. How that rubs up against the sharing economy. On the brexit front, what preparations are you making it terms of the supply chain at the moment . We could see it disrupted by whatever deal is made between the u k and e u at the end of the process. Are you making efforts to sort opponents differently now . Ralf no, at the end of the day we are British Companies and we want to stay in the u. K. I really believe and hope that the politicians on both sides have in mind the best for their employees, the best for society, and come to a Mutual Benefit agreement. Anna but are you trying to source more of your components from the u. K. Then also . At the moment we source a high degree of components from Continental Europe and at the very moment, the technology is not in the u. K. , so there is not another choice at the end of the in than to source Continental Europe. It is crucially important that we have free and fair trade wars in the future. Manus have you had any assurances from this government in regard to your business in the u. K. . Ralf no, because im not interested. At the end of the day there is an individual assurance for individual companies. Industry. Plete export it would be interesting for society to have very good negotiations and very good contracts at the end of the day so that it is beneficial for both sides. Anna thanks for your time this morning. Looking ahead, tomorrow we will have some great guests from the Moscow Financial Forum for you. We will speak to the russian theral Bank Governor and countrys finance minister. Anna president strikes a shortterm bargain on the debt ceiling. Well break it down for you from here in london. This is bloomberg. Manus President Trump signs sides with the democrats. Ecb decision day. Mario draghi delivers centralbank policy statement as investors look for clues on the future of qe. Anna early on with puerto rico. Worst theg the most expensive storm in u. S. History. Manus youre welcome to daybreak europe, our flagship morning show. Breaking,a few lines we are waiting for the corporate earnings. July industrial. A rise of. 51 . You have a stagnation in terms of output. The estimate was for a rise of one 5 . Factory orders signal a weaker spent weaker expansion. Inflation was unchanged. In june it jumped 1. 1 . Anna the eye of the category movedurricane has northward and this is the National Hurricane center with an update on where it is heading. [inaudible] another occupation is around geopolitics. Goodness saying that russia sees the desire to ease the situation. Shinzo been hearing from abe and all of them gathered in vladivostok for this event. He went on to say that it is impossible to scare north korea. Have them trying to come up with the way forward. Markets think there is a political way forward rather than another way forward. Youre getting a special dividend of 180 Million Pounds be paid to the next few years. Next the asian equity session was void a little bit ice love these factors we talk about in the head lines, it is shortterm. That seems to be lifting markets and we had the Stanley Fischer news, some of it wait on the dollar. We saw that in the u. S. And that carried on into asia and europe. Have a look, you risk radar in which is that rally in asia coming into the european market. Are taking as breather from geopolitics. You have the msci asia and the dollar index although it is down by 0. 9 . Day of lossesx and the dollars telling you something different. The market expects it will be another north Korean Missile launch head of september ninth. There is some extend the fx market. North Korea Holding sway over the fx market. It is ecb day, a governing council has been presented with multiple scenarios of how they move away from accommodative policy. We talked about that last hour. Manus you have bond futures are trading, it is ecb day. You have the bond markets down, will mario draghi spin out the bund market. Down 33. Anna here is Juliette Saly. Juliette fed vice chairman Stanley Fischer has resigned citing personal reasons and will step down in midoctober. He was appointed by president obama in 2014 to a term that would have extended until next june. His departure may give president thep a start to reshape central bank. He is unlikely to nominate gary cohn as the fed chair. Meeting concludes with policymakers having discussed various scenarios for winding down asset purchases according to people familiar with the matter. Draghi is following through on a july pledge tos dart talks this autumn. Ecbs policy announcement comes at 12 45 p. M. U. K. Time and you can follow it all live here. sime minister theresa may begship legislation will debated. The plan aims to ensure that all is copied and pasted into legislation before brexit takes place. The Labour Party City will vote against against the the second reading debate. The spanish Prime Minister is promising Legal Proceedings against the separatist. Thely court to invalidate referendum law and consider terminal charges against those who call for it. If the governor does not halted the referendum is said to be held at the beginning of october. Hurricane irma has caused devastation on a chain of islands in the caribbean with winds of 185 Miles Per Hour. The latest forecast suggests it could reach the florida coast i sunday. It is potentially the most expensive hurricane in u. S. History. It may be followed by another storm, jose, which has developed into a hurricane. Four launches for a u. S. Missile shield have arrived in a military a said south korea. Base at south korea. It is being deployed at the military base. The prime investor said the north me time its next launch to coincide with foundation day. The yuan is strengthened, extending the longest run in six years, the reference rate means the currency has appreciated more than 7 from its december low. To a maximumited 2 on either side of the reference rate. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Check in and markets in asia. Were seeing some solid moves coming through in the nikkei, up by. 2 of 1 on the close. We see a little bit of young yen fluctuation, one around 109. The hang seng index has given back some of its gains down by. 251 . Australia is closing weaker by one third of 1 . Having a great run, investors focusing on some of the fundamentals rather than the geopolitical concerns but if we switch it over and have a look at stock movers, youre saying a lot of fine coming through in korean stocks. Toyota also looking good in the tokyo session, we had numerous coming to save the japanese stocks with high exposure. And the developer hitting a record high of by [inaudible] an august contract sales coming through, a solid from developers in hong kong. The hang seng index has switched into negative territory. A lot of data out of australia and the Interest Rate decision, retail sales unchanged, the trade surplus coming in less than economists had expected. It can be argued that australias current fortune, they have not seen a recession since 1991 22 what you see from china. Exports area dipping but still incredibly strong keeping that countrys economy afloat. Manus and anna. Manus thank you. President donald trump has signed excited with the democrats over a deal on the u. S. Gets healing. The threemonth extension also covers the relief package in the aftermath of Hurricane Harvey. Anna also with us on set for this halfhour, the Portfolio Manager at blackrock talking all things related to markets. Interesting to see where this goes. Lets ring kathleen in. Tell us more about the deal we have seen, doing a deal with the democrats, something that was not expected. It was horribly not expected either probably not expected i the democrats. Republicans are probably scratching. Deal before he struck the for an extension, paul ryan was calling that a ridiculous notion saying it was unworkable. From trumps perspective hes kind of desperate for a winning. Something he can pitch as a win. He has not had a lot of legislative success in this gives them something to crow about. Can down the road to december and does not make things any easier. It makes it harder in december 2 caps on monthly agreement. Manus there is the art of the deal. His this and expediency by trump or is this some kind of new rep freshman moment. Trump isshowing that going to make a deal that he views as beneficial to himself with democrats or republicans, however on capitol hill is most that he views his himself able to work with. If i was advising the president which i am not i might mention buildt is important to ties with members of your own party. He does have an advantage by having the house and the senate controlled i can. Things like this that are being viewed as a finger in the eye to them over this, i do not think will help him down the road. He is talking about this is clearing the decks and an opportunity to focus on tax reform. That is not a lot of time to get tax reform done or make substantial progress in the way issue to hunted the congress. It is not like they will come up with their own proposal. Anna thank you very much. Cap lane hunter. That is the state of lay in u. S. Politics, concerns over the debt ceiling may be quelled that the are lingering over north Koreas Nuclear ambitions and impacts of natural disasters. Links theat weversation to our next one pulled up this chart which is to pull of with which is to do with the dollar and we have seen in the dollar. All of this geopolitical risk and white house tension keeps everyone on tender hooks. Guest absolutely. The dollar has always had a longterm relationship with commodities, take gold as an example. The weak dollar has translated into a stronger hold price and the opposite. The dominant factors in our space today are not necessarily they might be shortterm but the more dominant pressures were seeing and these are positive pressures which is a huge relief after the downturn we had from 2011, we have a Stronger Economic background to the World Economy and the fears of the second half of 2015 where we had that massive collapse related to sentiment on china. It was premeditated. It was driven by fear of total collapse in china. West in the economy. You had the canceling and the short the domestic market and people expressing negative views. It took us to levels we would never imagine getting too. That was the cleansing moment for a lot of these companies forced to deliver change. Manus when we talk about china we talk about president xi jin ping. Itking about throwing against the wall. From what you understand, give us your perspective, your blackrock perspective in terms of this growth trajectory. Have we had our catharsis and we are seeing a sustained level of growth . Guest there are a number of factors going on. We are lucky enough to be inside blackrock and have a Large Organization and all the information we are able to pull together especially from our asian colleagues are you the most of her and thing specific to us is the reform agenda. We have seen the cancellation and mothballing of huge amounts of inefficient polluting capacity in their Raw Materials space weather it is in the colson coal sector or steel and the aluminum sector. The removal has increased profitability for the ones who are going to remain and it has taken out that inefficient group that may have been trading at the french who have been damaging the economy and adding additional tons of supplies to the market that have caused the rising pressure. Half an industry that is incredibly profitable. One of the most profitable times it has enjoyed. Than focusing on whether china is going to go up or down in the economy, china has proved to have the ability to manage its economy for many years and trying to secondguess what it is going to do will wrongfooted you with regards to positioning. Anna comics does the reserve we have seen in the yuan and the safe asian safe haven status, in conjunction with your concerns about the growth story, it looks like it is under considerable pressure. Things look a little bit different on the currency front. How does that play in . Huge part to a play. Yourave a strong it makes materials cheaper and exports more expensive. Finding the balance is one of the most important things for the peoples bank of china. Manus more about iron ore and cop or and the electric car. Guests and wesome thes we will speak to central governor and the countries finance minister. Manus a little bit more with blackrock. This is bloomberg. Anna welcome back, everybody. Bloomberg daybreak europe. Donald trump and the democrats in the u. S. The german bonds at. 36 and the markets in the middle east down. Manus Juliette Saly has your business flash. He decision to relocate its Head Quarters out of sweden has been [inaudible] who say it is the latest example of jobs leaving the scandinavian country. It is the only imported tank inside the eurozone. Nordea estimates it will save 1. 3 billion in regulatory costs. Facebook said it found 100,000 connected to fake accounts which were probably run from russia. It stirred political controversy ahead of the election and connected to 470 fake accounts and pages. The company said it is sharing its findings with u. S. Investigators. That is your bloombergs Bloomberg Business flash. Manus we are continuing our conversation. You here so lets dig in deeper. Lets get into some of these markets. Copper, you said in the break, forget everything in the past, i want to focus on these two pe riods of time. Guest we have had a pretty positive view on the Copper Market based on supply and demand analysis and we have been wrong. We have been expecting the deficits to appear a little bit earlier and they have started to show themselves. Our positioning was a little bit too early with regards to that. The thing that is interesting as we have had this flattening of the copper price going back into the 2015 and through 15 and 16. We have seen the breakout in q4 and when we look into what has happened recently, this spike back about three dollars a pound. Months to two years ago when everyone was commenting that we would never see three dollars a pound again in copper and now we are through that. The copperng about equities the prices that are being reflected in those ofities is to some degree function of a variety of different risk factors and an assumption on longterm pricing. If people had expected prices to be lower than they are trading now, that could show the value. This is a theme that is incredibly well reflected. Anna how sustainable is the rallies and how much is speculative . Guest it is always speculative. We have the traders in the weekt and i was at lme last week where the price started to break higher. Producers,rs and the there was a reality coming up with these deficits about to emerge. Manus the other big thing we have covered is activism. It is more prescient than ever. And the feelings from most of our guests is that is going to increase. To a certain extent, that has pushed the dividend story as well and buybacks. Is lots of parts to that. In 2015 it was a horrendous time. The market bottomed and the cycle bottomed in q1 16. The actions of the companies they took to restore health and selling assets and paying down debt, taking out cost and management change, all of that has driven this resurgence in recovery in 16, 100 went through in that time period and part of 15 there was a reflection in 15 that the businesses had righted their ship and are Going Forward. The emergency of activism is a push for further change. It is what can these businesses do now and also from the conversations we have had it is putting pressure on management not to revert back to the old ways. The mistakes that have been made. The overinvestment into new capacity, the buying of assets and overinflated prices. Manus the biggest iron ore producers are spending money on new mines and. Guest you have to be careful. Are they spending it on new of existingups men capacity that is being depleted by the underinvestment we have had since 2012 . Paved in 2012 and is down by two thirds in terms of run rate. That is inflation. Part of that is catch up and part of that is keeping production flat. There is middle very little going into net new supply. Anna can i ask about electric vehicles . Have exposure to the relevant commodity. A a lot of these Companies Still have exposures to coal or iron and they want to talk about the new stuff. What is the best way to get exposure to that story . Guest in the last two years we have been building up a sleeve of Commodity Exposure by the companies and i preferred those two were recalled battery materials. It is these commodities we can see structural demand growth for for many years into the future. Given the inability for supply to respond quick enough to meet some of that demand is likely to be some price action that could be positive for some of these companies. We have been backing a variety of different companies, some extent was established and some new ones. We are trying to capture exposure to lithium and cobalt. We have not found anything we want to delve into in the graphite space which is often talked about. The biggest theme in the next 10 or 15 years investing will be the transition away from the Combustion Engine toward the battery vehicles. At likeeading the team rock. Thank you for joining us this morning. Anna were going to be at the Moscow Financial Forum and plenty of and interviews. That is it for us this morning on daybreak the co that market open is next. 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. 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 you are welcome to bloomberg markets, the european open. We bring you the first trade of the day across asset classes. Matt miller is in new york and here is what we are watching. To a close area the ecb may finally start to taper talk. Euro prolongnger the program . Deal with democrats. President trump reaches a shortterm debt ceiling agreement with the opposition that provides help for the harvey victims