Monetary policy of the ecb will continue to be extraordinarily accommodative. Anchor a very warm welcome everybody to bloomberg daybreak europe. It is friday morning, our flagship morning show. I am anna edwards. Matt and i am at miller in berlin. Quite a night for markets. Quite a rocky ride. The missile over japan sent a lot of people running first aid haven trades that kind of fizzled out. Ina certainly putting guam range. That did not seem to make the market worry more this time than last time. Just to tell you briefly what is coming up in the program, let us get our viewers up to speed. Jpmorgan spoon founder tim martin joins us for the first interview of the day to talk about earnings and brexit. But matt, you dive into what has been moving markets are not moving markets over the last 24 hours or so. You see the second Missile Launch in japan in as many months, putting guam within range of these missiles. We did see it move the yen. This chart is charting came and the end. And the end. Im we have seen this a few times. Different colored circles. This was shortlived. We saw my going into the yen, this sort of riskoff sentiment, but it is now pretty flat, so it is shortlived. Markets are becoming increasingly accustomed to what we are seeing geopolitical llama Korean Peninsula and over japan. Matt absolutely. I mean, if you take a look at the risk radar, i have the nikkei. You can see the movement on the nikkei shows investors shrugged it off immediately, the concern about the missile. Gold on the other hand, typically a safe haven. They sold off. I dont know if it is a selloff. 29. 69. Unchanged at 13 the 10year, very little change on that level. 2. 18. It is not like investors were pouring into the 10 year for safety anyway. I want to mention the u. K. Twoyear yield. Here is where we Seattle Movement after the bank of england decision yesterday. Nondecision, but still, what they foreshadowed coming up. You can see the rate on the twoyear, just shooting up. It rose to a level we have not seen in over a year, so 0. 38 . The absolute level, not as important as the big moves we saw yesterday. So there are some actual big swings in the market that we still need to talk about his mind. Right now, let us get the bloomberg first word news here at the back, we go to Sophie Kamaruddin. Sophie. Sophie north korea has fired a second missile over japan in as many months. Japan said it did not attempt to shoot down the missile, which flew over the Northern Island of hokkaido before landing 2200 kilometers away in the pacific ocean. An initial assessment indicated range an intermediate ballistic missile. The launch comes after the United Nations approved harsher sanctions against pyongyang. Iran is clearly in default of expectations under the 2013 nuclear deal. Rex tillerson said washington has made no decision yet about irans compliance with the accord as it is required to do every 90 days. The comments, made in london, highlight a risk. The Administration May rule tehran is not complying with the agreement. Donald trump has said he is not has not made a decision on whether he will renominate janet yellen for another term. By reportersellen on air force one on a trip back from florida yesterday, trump said i like her and i respect her. Treasury secretary Steven Mnuchin said yellen was among the lot of fits people being decided to run the central bank after her current term expires in february. The u. K. s Prime Minister will have to listen to those who oppose her legislation according to acknowledging theresa mays akened hand. Faceay have criticism. The founder of alibaba said the giant has played a role in enhancing globalization, which they see as a positive force to a jack ma was speaking exclusively to bloomberg. Us toyears is enough for instead ofbalization killing globalization. I believe, when trade stop, war starts. Sophie and you can catch more of our exclusive access to the Alibaba Group in our special halfhour program later. Alibaba, the global at 7 00 p. M. In london. Than 2700 more journalists and analysts in more than 120 countries, you can find more stories on the bloomberg at top. Here is a check on the Market Action in asia today with another demonstration of how tough equities can be in the face of more publications from pyongyang. As you pointed out earlier, the yen gaining. The nikkei up for a fourth session this week. For thes an about turn hang seng. Tencent powering ahead to get another fresh record. We have property stocks supporting gains in chinese large caps. Shares in sydney being dragged lower for a third day, back below the 5700 mark. The kospi moving around. Kerry blossom along with the seeing more of the same versus an escalation. Equity movers in asia today, kicking off with what is moving in seoul with shopping snapping a threeday drop after announcing Goldman Sachs will be overseeing the sale of its chinese operation. Nomura upgraded that stock to buy on the news, which it deemed positive, given the losses lo tte incurred on the mainland. Fortescue fighting for a third after news the ceo will step down in february. It has been an interesting week for chinese data with showing signs of cooling off. You can see that with the 401. This is what we have now. With 10bonds perking up year yield falling to a sevenweek low. The bond rout in december will fourth quarter. The shanghai conflict in at its best three months. The on this chart here. We are seeing this continue to move higher there. Matt, anna. Matt Sophie Kamaruddin in hong kong. The top story we are following out of asia this morning, north korea has fired a missile over japan. It is the second such launch in as many months. Japanese Prime Minister shinzo abe condemned the move and says a United International response against north korea was needed now more than ever. More than ever, the International Community must now unite. It is clear the u. N. Sanctions must be implemented fully and completely. We must make north korea understand the path it insists on taking will not lead to a bright future. Joining us now from tokyo is bloomberg managing editor chris anstey. Tell us more. Chris perhaps the most interesting response has come from president moon with north korea. He wanted talks with north korea. And his reaction today was perhaps his strongest to date with regard to north korean provocations. He said south korea could pulverize north korea in the case of any conflict. He said there is no basis for diplomatic talks with north korea at this time. So coming a couple months before President Trump is expected to visit south korea, china, and japan. It seems like there is no daylight between the u. S. And south korea on the north korean threat. We also heard from secretary of state tillerson, saying that china and russia should cut off oil supplies to north korea. Of course, they are the ones, especially china, who keep the north korean economy humming. There is no indication from china that its position has changed on that point. China has been silent so far today. Anna some graphic language coming from some quarters. We talked a little bit about how markets have been reacting or not reacting in some cases. Chris yes, well that is interesting to note. You know, we had the yen, which is still seen as a haven in times of geopolitical turmoil despite the fact that japan ofld likely be a victim north korean strikes in the case of any conflict. We did see the yen advanced immediately after the news came out. It was 7 00 this morning here in tokyo. The about a move in against the dollar. The yen retraced two thirds of that move. So what we are seeing is a much more accelerated Response Time for north korean provocations when it comes to markets, an immediate reaction. The past several episodes of north korean acts have shown that nothing further is going to exchangeyond rhetoric between north korea, the u. S. , japan, south korea. Somethings are unless serious happens like a u. S. Or japanese shoot down of a north korean missile, then it is back to where we were on markets. Anna thank you very much. Our bloomberg managing editor joining us from tokyo. Chris ansi. , you wereard listening to what chris was saying. We are back to talking about tail risk, arent we . Some say more substantial on the Korean Peninsula or involving guam or tokyo. Things change enormously. If that does not happen, the market just resumes where it left off. Right. That is about it is very difficult for markets to price in the threat of nuclear war. If it happens, it is all over anyway. If it does not happen, we might as well carry on and not change our position. Maybe if there is a localized strike around the koreans meant a lot, maybe the rest of the world will be ok. South korea is a major supplier of lcd screens and semiconductors. The disruption of supply chains would be enormous. There is not really any point in changing investor position. Mean, to me, it seems like a pretty binary situation, julian. On the one hand, we would continue to have teeth. On the other hand, it would be global thermonuclear war. Isnt that an easy bid to buy . Julian the dip would be enormous. You would not be able to buy up there was total nuclear war. The stock market reacting to this, it would be an interesting purchase. We do not really see much of a risk premium building in in equities. You can see gold and a few other Asset Classes around the edges sort of move around a bit. I suppose the interesting thing would be the stocks down 5 to 10 and global on a mental staying the same. That opportunity is just not arising. Anna that to fundamentals and the data and the things we know about and the bread and butter of investment, we have important data out of the u. S. Lots of commentary from the u. K. A quick word on the united states. Onlation breakeven rates this chart, btv 90 75. Increasing, getting, you know, higher, as if markets are maybe some investors at least coming around to the feds way of thinking that rates do need to go higher. Is that true or is this the difference between hot money and Asset Management . Some people making the distinction between expectations julian . I think expectations have become to pessimistic. It is true they are not moving for a whole host of reasons, but i think things have gone too far. Numbers earlier this week were a little bit better. I think things have got too far. Inflation is probably going to be a little bit higher than previously expected. This is a bit of normalization. The u. S. Is that 2 . A 4 economy. As a 2 economy, that rate seems to low. Anna you see a rate hike in december, do you . Julian we would need to see more evidence of growth. Some of the data has been better, but it still remains mixed. My big issue is what is anna ing with wages and consumption. That is just not happening. Julian howard, head of multiaccident solutions. Coming up, after Alibabas Jack Ma views. Cutive chairmans he is not dressed like this, i should point out on trade and globalization. Map, next. This is bloomberg. Matt good morning. Welcome to bloomberg daybreak europe. It is 7 18 in berlin. Very cloudy day in hong kong over the bay. Bloomberg business flash with Sophie Kamaruddin. Sophie. Into it. Etting right also has helped conversations lyft. Ber competitor, an investment of about 1 billion in lyft may come from google or g. Alphabet and lyft declined to comment. It sure reviewing options for its european Asset Management you unit. The company is considering a merger or joint venture for the business. They said potential partners could include natixis. Representatives declined to comment. The dutch government plans to tell as many as 65 million depositary receipts in amro the equivalent of a stake of 7 . The stock is worth 1. 6 billion euros. It will be offered in an accelerated and reduce the countrys stake in the bank by 56 . The bank shares have risen about 14 this year. That is your Bloomberg Business flash. Anna, manus. Anna and matt this morning, sophie. Thank you very much, Sophie Kamaruddin. Already dominating at the market in china. Alibaba looking at ways to extend its business internationally. The companys chairs have doubled this year by shortsellers like shortsellers saying it is poised for a fall. Jack ma said he does not expect another tech bubble burst. Stephen engle caught up with him in china. I think the next 18 years, the globalization will be much better because of the internet. This is our mission, which i , electronic World Trading platform. Young people can benefit from that. I think 18 years is enough for us to improve globalization and set of killing globalization. I believe, when trade stops, war starts. Stephen what is your strategy . Mr. Ma we never changed our strategy. Stephen so to china . Mr. Ma we dont want to be the so many nice and interesting Ecommerce Companies are already over the usa. Stephen you dont want to take on amazon doing what they are doing . Mr. Ma no, no. Stephen how about entertainment . Hollywood, you had a partnership steven spielberg. You have been a tortoise, not the hare. What is your strategy . Mr. Ma we prepared all the entertainment. We have seven years to go. The importance is not going Movie Company or to buy this or by that. When you buy stuff, it is not yours. You have to learn from them. Partner with them. I think a lot of things china entertainment can learn from should partner with them. Should not think this is good, lets buy that. Stephen you talked about the coming winter in 2007 when you listed alibaba. Com, and sure enough, the winter came pretty quickly with the collapse of lehman brothers. We also of course, i was watching your progress to the tech bubble and that bursting. Wipedhese that are we seeing a tech bubble now with the billiondollar unicorns and the inflated tech scene . Mr. Ma no, not that much. I think the challenge at that time a lot of people did not understand how powerful the internet is. Way ando the internet whether the internet could be sustained. People were jumping to start to do it. I found a lot of people with crazy ideas but did not know how to operate it. And does not know how to make their dream come true. They, Everybody Knows internet is powerful, will change human history, and also, i think the infrastructure of the internet, the infrastructure of the technology, is much 10 to 15 years ago. If you are not that greedy, if you are not that stupid and crazy, it is easy to survive today than yesterday. Anna jack ma speaking with stephen engle. You can catch more in a special halfhour program. Alibaba the global disruptor. You can see that in europe at 7 00 p. M. London time. It 00 p. M. If you are in paris or berlin. Julian howard still with us, head of multiasset solutions. When you listen to that story, alibaba has been incubating bricks and Mortar Retail for a couple of years. We saw amazon moving into bricks and Mortar Retail of late. Which part of the retail story are you bought into globally . Julian the internet side. I think a lot of retail bricks and mortar are suffering grievously. There are some exceptions if you look at best buy and the u. S. They managed to turn it around. Everyone had written it off. They cut costs, improved customer service. That is a very steep challenge for a lot of the traditional retailers in the u. S. Matt what do you think about the chinese situation offshore . Onsure . Hore . It is at very high levels. It on thisstrated chart. G btv 7806. I think it is interesting because this is a longterm view going back to the 1990s. Although people make a lot of slowing loan growth, it is at very high levels. Go . He economy raring to julian we might be entering into a period were the chinese authorities try to slow things down, temporal things, and kick the heat up. We saw numbers coming out in july were slower. We have seen retail sales a little slower. Some of the figures have been generally more downturned in the recent weeks. We could beginning into a period were the authority is just tried to calm things down, but it may not get into full swing until later in the year. We have to get this october planner, the political meeting out of the way, first. Just to try to temper the economy. Anna do you think capital controls have worked in china . How does that fit with the Global Investment community . Julian some of the innovations have been quite interesting in curtailing credit card growth amongst consumers going overseas. Isi think as long as it gradual and tempered, i think it can work. Investors arel fearful of is the sudden yanking of the handbrake. We will have to watch into the euro. Anna the community would like to see and if the chinese want their currencies to be the it suggests it should be, you want to see a more open economy. These capital controls have served a purpose. Julian i think it has managed to control the rate of growth so that inflation is not run away. The chinese are becoming quite good at this, the sort of currency management we saw in june 3 50 billion of u. S. Treasuries bought by the chinese even though the currency was depreciating, so they are careful on the management side. Anna julian howard, head of multiethnic solutions. Matt. Matt we have got more big guests on Bloomberg Television this week and a conversation with ray dalio, the billionaire founder and cochairman of Bridgewater Association on sunday at 10 00 p. M. U. K. Time. Set your alarms. That is what you do not to miss. Up next, the bundesbank president has issued a warning to the ecb on its policy. This is bloomberg
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