Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20171013

The end of slight and the labor market is said to be near. Remember, we are moving close to it and moving their rapidly. To the extent we get there, that should translate into upward pressure on wages. Manus welcome to bloomberg daybreak europe. I am manus cranny. ,nna edwards is out for the day throwing caution to the wind. We are talking about risk. Political wrangling is heating up. What do i do . Believe, it is going to be a bumpy ride. Demand for threemonth options were above. Im giving you a broad chart to emphasize what a butterfly is. We are seeing this bump in this chart. Deadlock was the word yesterday. Set the pound downturn its that the pound down. It set the pound down. It shows you how poisonous and environment it is for sterling. Says the euro could be at 90 by the end of the year. Hows this translating into global risk . I am talking about the squeeze in terms of the flock in United States of america. We are down. 6 this week. Some big option trades betting around the cpi data. Oil, the biggest weekly gain on brents in september. Rebalancing will come. Inventories drop. Opec will clear the glut by the end of the third quarter, adding two oils momentum. Oils momentum. They go on bitcoin. This is the Worlds Largest cryptocurrency. Up she went. I dont know exactly what that is telling us. I dont know if it is we are so worried about the skew index. Either way, that is what you call volatility personified. Lets put it in context for you. We have Juliette Saly standing by. Juliette just president Donald Trumps pine to end key federal is planning to end key federal subsidies under obamacare. Coveredents helped adaptable and other outofpocket costs when low income people used their Affordable Care of insurance plans. It is the administrations most traffic destined drastic move yet to undermine the law after the congress failed to repeal. Meanwhile, donald trump is expected to review that the multinational accord to curb Irans Nuclear program sufficiently serves u. S. Interests. According to officials, he will stop short of abandoning it. We will bring you that live. European central make officials are considering cutting their monthly bond buying by at least half starting in january. Active for a be kept at least nine months. They said reducing quantitative easing to 30 billion euros a month is a feasible option. Members have yet to officially discuss options. The atlanta fed says he is not sure if the fomc will raise rates in december. He pointed to signs of strengthening inflation. I think there is much more to learn about what is happening in terms of inflation dynamics. Inflation is starting to pick up. Juliette a category two hurricane could become dishonest tocould become the strongest hit a country since the 1960s. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. What a week for asian equity markets. We are rounding out the session in australia with a gain their of. 5 on the eight x x 200. The nikkei up by 1 . That will be the highest close for japanese stocks since november 1996. A good bounce for singapore stocks, although the Singapore Dollar is lower. Stocks inook at detail. Fast retailing lifting a lot of momentum in japan. It is up by almost 6 . Kobe steel once again under pressure, and moodys saying the outfall good become costlier than the takata recall. Manus thank you much. Thank you very much. Chief exit negotiator the chief brexit negotiator declare that the talks are debunked are deadlocked. Bernie seeking a twoyear transition deal with the u. K. Here is what it did to the pound. He down she went on the deadlock. She went on the back of a report. Simon derrick is the chief currency strategist at bank of new york. This is always a period of the year when sterling is going to be particularly influenced by politics. We come back from the summer recess. We have the conservative Party Congress conference. Intuit, negotiations with the e. U. And the fact that this was when critical negotiations were supposed to take place. What was interesting about yesterday, looking at the to read, markets wanted as much as they could into the comments, but it felt like a small. A small caret. There was no change in what we already knew. Manus is this just desperation from the british side to . Einterpret a series of events the u. K. Has very little Bargaining Power it would appear. Do you think it is wargaming . Do you think it is generally genuinely strategizing or complete and utter lack of 30 . Utter lack of clarity . Simon i think we have a difficult political situation at essentiallyat is low support. Which realizes a strong position in regards to negotiation, and given the rise of populism over the course of , a strongermonths domestic message is possible. It is very difficult to leave the e. U. We are the easiest way to make that example. Back, ending to go complacency. I was looking at these butterflies. Demandu are seeing is for threemonth out of the money options. We are going to christmas. Ppla ket is quite polaruic. Is the market looking at these . Simon i think the market is looking at these. The data tells you you have these wide ranges. If you look at cftc data, it tells you longer sterling. There is a real divergence of views taking place, and it is understandable given what is coming up. We are going to push back the deadline. To push back the point where we do a deal. December, possibly later. We know we have a limited time for the brexit negotiations. Of course people are going to be increasingly concerned. When sterling moves, it moves. We need to protect against what happens at the margins. Should mark carney carry through with his proposition to raise rates in november . Argument wenk the need to worry about inflation right now. The bank of england always said there would be a move up to 3 . Why theynderstand suddenly feel to make a move on that. The only positive argument for making a move now is against the bank of england a little more ammunition maybe later in the cycle, other than that, i dont see why. Use brexit as perhaps justification for stepping back yet again . Simon derrick stays with me for the next hour. If you are traveling to work, you can hop on Bloomberg Radio and listen to us and our team. You a break from on the recent u. S. Bank earnings. Up, working up the Central Banks next move. We will hear from the atlanta fed president , who spoke to bloomberg about jobs, inflation, and winding down the balance sheet. Plus, nationalists could get another boost when austrians had to the polls. The foreign minister is the front runner. We will look ahead to the election. This is bloomberg. Singapore for you there. Msci asiapacific up. 3 . Policymakers need to be cautious in making any dramatic moves. Juliette saly is standing by in singapore with the business flash. Scandal kobe steels has expanded to its core business after the Japanese Company admitted inappropriate actions related to steel produced overseas. It has triggered a slump in its shares and speculation the company may get broken up. Sampson has posted record profits on booming demand for displays and memory chips and announced one of its top executives is to step down. Operating come almost operating income almost tripled, topping estimates. Leaves the south. The chairman leaves the south korean copy. Uniqlo profits topped analyst expectations. Globalization and visitation has changed the way we do business. Borders between Different Industries and countries will appear in order to survive will disappear. In order to survive, we must use technology to provide service to customers. Many companies are leaders in such servicers. And such services. Juliette that is your Bloomberg Business flash. Manus thank you very much. Donald Trumps Administration has taken its most drastic step yet to roll back the Affordable Care act. The white house is to cut off subsidies to insurers after issuing an executive order. Policy front, the u. S. President is expected to unveil his plans regarding the Iran Nuclear Deal leader today. For more, lets get to Jodi Schneider in hong kong. With obamacare. What is the strategy that trump wants to enact on health now in regards to health care . Anna some critics are saying this is a deliberate attempt to try to sabotage the law. He has pushed for congress to repeal it, and that has not happened. The repeal has failed in the senate. Meanwhile, what this would do is basically cut off subsidies that are paid to insurers to help low income people and other kinds of costsharing. ,f it was to be upheld in court that would essentially undermine the law in a major way, because the insurers would either have to dramatically increase the payment costs, the amount of people pay outofpocket, or leave these exchanges. We dont know what will happen right away. Initially, probably it will play out in the court. To undold be a big way a lot of the core of what has become known as obamacare, the Affordable Care act. Manus what about iran . He isis this debate questioning and kicking back against what the germans, french, russians, iranians believe. He is ticking back against the rest of the world potentially in regards to iran. He is kicking back against the rest of the world potentially in regards to iran. Reporter what is he is expected to say is that he doesnt want to leave the deal, but he cant certify it, certify that iran is meeting the requirements of the deal as other countries have. That would kick it back to congress. Days to look at decertifying or imposing sanctions that were ended under the law. The congress may not do that, and the Administration May recommend instead that they will look for some other way. Some analysts say what President Trump was to do is buy some time to try to convince some of these other partners that there needs to be a different way on iran. Whether that would be successful or not is another question. These other countries are certifying that iran is meeting the deal, meeting the requirements of the deal, and the International Atomic Energy Agency has said they are. Trump would be flying in the , thatand appears to be appears to be what he will say in his speech. He will use this speech also to try to find a new forward on new, to come up with some ways of dealing with the situation with what we are hearing from people about this speech. It will kick it back to congress , and that could be a long process, depending on what congress decides they want to see done. Manus indeed. Jodi schneider there with the latest on President Trumps moves domestically and on Foreign Policy. We will bring you his remarks on iran live at 5 45 p. M. London time. Is still with us. Prevaricate and great ambiguity. And create ambiguity. On obamacare, iran, more of that. What impact does that have globally . Simon when it comes to the proper occasion when it comes to the proper occasion, it will be a struggle to get through, given the fact that the dollars rise late lester was based on the idea that there would be a cutting through on the legislative agenda, that things would get done, but there would be a probusiness agenda coming through. It has lead to disappointment. Perhaps the way that has been expressed has been yield curve that is down and the dollar in the back of that. Manus lets talk about the yield curve. I have a curve up here. You are seeing this progressive flattening. People are going to start running back writing about an inverted yield curve. What is flattening, this telling me right now in regards to politics . Simon what it is telling me about policy is that there is a skepticism about whether the about where the fed is going to go. Even now, despite the strong list messaging you have had the strongest messaging you have , if i step back and look at generally what it tells me, the last time we had a currency dollar that followed the yield curve in this fashion, you have to go back to 2001, 2002. It was the last stages of the dollar bull market. All the market was trying to do at that point was fined yield wherever it could. When that collapsed, the dollar collapsed with it. Here, we have now taken the search for yield to such an extreme that rather than simply connecting be shorter and the shorter end, we have to now go fiveyear, 10year to find any real value. That says to me this is a market that is reaching for yield. That is a concern. Manus we did an interview with charlie evans. One intimated that the Inflation Expectations are broken. The reality is this great debate about whether Central Banks understand the inflation. Right now, perhaps they dont. Manus we will pick up on that theme shortly. Simon derrick stays with me. Tracking guests for you. Cracking guests for you. Larry summers strength the team. It is 6 30 a. M. In london. The dollaryen is on the move. You have a move lower. Nejra cehic has the latest on the markets. We are about 30 minutes from the japanese equity market closing. The nikkei set to close above 21,000 for the First Time Since 1996 during since 1996. Seeing some gains on the topics as well. The msci asiapacific heading higher in this session. Losing momentum is the dollar. This is the bloomberg dollar index. You can see a little bit of faltering at the end of the chart after the recent gains. It is set for a weekly loss. The first weekly loss since midseptember. We are looking at a bit of dollar weakness. Some of this is around the dovish fed we got from the minutes earlier this week, also treasury yields set and the week lower. We are continuing to see flattening on that curve. Looking at sterling, seeing a turnaround. Yesterday we saw a dip in cable and concerns around in concerns around brexit. Then, a recovery in yesterdays session and Sterling Holding those gains. The recovery coming after the report on comments from Michel Barnier about a possible twoyear transition period. Finally, showing you bitcoin. For it go about 5000 for the first time yesterday. Have showed the relative strength index, because interestingly them up bitcoin hasnt been oversold by this measure in two years. Does that to you about the euphoria . Manus thank you very much. The recap on the markets. Breaking news coming in on the bloomberg. Basf to buy parts of a crop science of business. , a 5. 9 a big deal billion euros deal. Sf, the chemical maker based in germany, is to buy parts of the crop science business for just under 6 billion euros. By transaction should close the end of the First Quarter of next year. Asf says the practice to buy a significant part of the bayer seed uni tbusiness. Seed unit business. The transaction to close by the and it ister of 2018 a significant portion of the seed business. That is your breaking news. A new edition of daybreak is available on your bloomberg. Stories making the front of the agenda for markets. Trump verdict is the first one. The Iran Nuclear Deal, in other words, the u. S. Could choose to step back and give 60 days for congress. We have just been talking about this story. Trump is expected to make a declaration in a speech that will outline a broader iran dictating what the administration sees as maligned behavior. Simon derrick is with me. This is the personification of trump policy. Again, america first, america different, america alone. Simon yes. I think that is very must very much the perception the Foreign Exchange market has. What is interesting is that the fx markets become immune in a lot of ways to political and geopolitical stories. Not just the story with iran, but if you think about events in , the korea and elsewhere market isnt that interested in the isolationism. Again, i think, why is that . That is very different to foreign extent markets than the ones i grew up with. Two Foreign Exchange markets than the ones i grew up with. The markets are focused on something different. A dangerous bit. When we ignore big stories like this, that tells you this is a market that may be has gone too far one way. Manus can i slightly challenge that . Dollaryen did behave i would say reasonably well as a protector, a suitor in times of crisis. This is yen. Did is the operative word. About manus that is what i missed . Simon absolutely. When you look at the initial reaction to the north korea the drop in dollaryen, it still wasnt as big as some of the dow moves you have seen in dollaryen on more domestic issues over the course of the year. It is the relative lack of reaction taking place. It should have been and could have been bigger. Evans earlier in the week. The next up is the fed story. A hike in december is ropriate and expirations and expectations for three more hikes and 2018. When you look at the debate, there is a lovely line used in copy. The Federal Reserve is almost predicating the market to prove that i cant do this rate hike. , we did a tv interview, and his point was that the fed is going to be indicate is going to be able to indicate that 2 is what they want to get to. This rate, let it run hot, run up to 2. 5 . Show your intent. Theyre not willing doing that. They are not really doing that. If you look atn the evidence from other Central Banks, told us inflation is going to get to a 2 target, it has never got there. That tells you there is a different dynamic. The inflation story is about localization about globalization. Here is the thing, the fed i think had a little bit of a credibility problem over the last few years. It had to deliver this. Here is the other thing, it isnt just about inflation. They have to have something for when the next down cycle comes. To cut,d to be will because of they dont, what are they can of people to do . What are they going to be able to do . They dont want to go down that route. Hiking is the best thing they can do. Manus we will talk more about that in a moment. The final story is about the austrian election and the impact of a far right party will have on europes bestperforming stock market. Matt miller joins me. Day two. Good day to you. Kind of government are they proposing . Matt we are talking about sebastian curis Sebastian Kurz. If he wins, as polls indicate he is going to, the youngest leader , really begin this world leader alive today for developed country. He is only 31 years old. He is leading the polls and have 34 right now. He is a foreign minister. Is therent chancellor head of the social democrats, and he has led a haphazard campaign that has dropped him down to 25 in the polls. Distant third, because in between those two at 27 , the freedom party. That is the radical right officerby a former ss party that has concerned markets. He could become a Junior Coalition partner. Manus what do you think it means for the rest of europe . Matt if the freedom party, which is this far right partys moniker, comes into government, it could be concerning for the rest of europe. In 2010, a leader of that party said he wanted to shove off the mediterranean countries and take them out of the e. U. Recently in a debate, Sebastian Kurz says he is proeurope is a way to pave the path to come back to power, but he had some very antieuropean concerns. He is a very proeurope and says his conservative Peoples Party wont align with anybody who flirts with an exit from the a fling far tos the right because of the immigration issue and austria. In austria. It will not be a happy marriage if they to come to brussels if the two come to brussels. Ok, matt. Matt miller there in berlin force. Miller there in berlin for us. Reducing quantity easing, 30 billion euros a month is said to be considered an option. Simon derrick is with me. 60 billion euros to 30 billion euros. Does that sound reasonable, deliverable . Lower for longer seems to be the ecb standard modus operandi. It is certainly doable. We need to get on with getting back qe program roundup. Thatroblem the ecb has is they are consistently concerned about currency strength. They emphasize it with the words currency volatility. They were expressing that nervousness. It has been the case for a decade and a half now. They are going to be concerned. If they tighten to quickly, that could feedback into euro strength. That message that they are going to make this as dovish and cautious and as long as possible in the hopes it doesnt is going to be the key. Isus part of affecting that what mario draghi had to say yesterday at the imf meeting. Tied to our guidance in Interest Rates, which will stay at their is a levels for an extended period of time. Very, very important in anchoring Interest Rate expectations. Manus well past is very important. This is a counterbalance to european sating of the central bank. Well past is very important. That tells me negative rates or even for quite a while. Simon possibly forever. [laughter] an optimistic view of the world. Does anthe ecb astonishingly good job, given the given what the constituency has to deal with. The problem is it is always incredibly slow to move. Remember, this is the central bank that hike rates in the summer of 2008. You are seeing an example of a central bank that ultimately is moving slower than is required. Of, weback to the issue know inflation. Inflation isnt really moving. The reality is, what do you do when you need to start easing policy from here . We talked about keeping negative territory for a long time. Are we not in the foothills of substantial recovery in europe . We are in a different position than the u. S. Simon that may be true. These things have a certain cycle to them. It seems to be a bit optimistic. Manus simon, you stay with us. How bullish are you on euro . Simon i am not bullish on euro at all. I think it is very down because people have misread the dollar story. When it comes to europe, people are interested in the political story. Populism is back. People are concerned about it. That i think is going to weigh on the euro. Manus simon derrick. 111, timeframe . Simon First Quarter next year. , chiefsimon derrick global strategist from bank of new york mellon. A chief economist joins surveillance a sign of strength. Import data from china. We will break down the numbers. Officials are said to be considering cutting monthly bond purchases at least 50 in january. We will discuss. This is bloomberg. Is 1 50 a. M. In new york city. Cpi data today. We have a few more fed speeches hinting at the probability of a rate hike. Lets get to china as one of our main stories. We have the data. Shipments rose from a year earlier, narrowly missing estimates. The imports started the equation, exceeding expectations. Lets get to our China Economy editor. When i look at this, should i be more heartened by the imports in terms of the greatest demand within china relative to the export number . [laughter] reporter you pick. They are both good. The domestic demand clearly looks intact from these numbers coming in stronger than estimates and stronger than the prior reading. There is that, and exports also a little bit softer than projections, but still that is good. The broader picture in asia is that there has been good trade numbers lately. Just about everybodys it is trading partner is in china. We had record exports out of south korea a couple days ago. Out of taiwan. There is september data. We also had good numbers out of malaysia, singapore, and thailand. Most will be out again for next week for september. It looks like a strong trade picture in asia right now. Also, china is looking at the best export year since 2013. That is another positive. Manus jeff, thank you very much. Our economy editor in beijing. , all bolts are rising. China data is good. Im going to go with the optimistic side. Productsd for chinese is proving robust. This is a good story, a good global story ahead of the 19 congress. Simon it is. One of the things china will want to do is to dispel any kind of possibility that they are going to be thrown back, manipulating their currency to achieve this. That is one of the more interesting stories this year is that best there is domestic reasons for doing that. There is also the fact that those accusations that they were pulating these numbers will only encourage that increased movement. Stepping back and having a currency that moves more like the yen next perfect sense. I look at what is happened this year. There is a history of china making policy shifts on foreignexchange and is what we have done again. What would that mean . Lets put that into context. We put up the chart of last year to prepare. We will come back to the currency in a moment. This is what the projection is going forward. You were going to see a growth in the chinese economy by 2019. Still, the u. S. Is going to be in the number one spot. This is the china, euro, and japan. You are still looking at a trajectory. ,he liberalization of the yuan does that mean more demand for the currency . Simon yes. That is exactly what happens. You start with the move two , setting, august 2015 them up to become part of the sdr. Legitimizingvely the yuan as a currency. , great demand coming from elsewhere in the world. For me, it is not necessarily about whether it goes up. It is more about whether it starts to move in a more volatile fashion, starts to move like other currencies. That is the real story. It is slowly and steadily starting to behave in the same way youd expect more mainstream currencies two. That story is going to continue to increase over the next couple years. Lets move our minds to japan. We are running into the election. This is the nikkei pushing ahead. Bolstered story being by the currency. As we go to this election, are we under pricing of the torah risk . Under pricing electoral risk . Simon election risk has proved to be a real story on the course of the last 18 months. If you were talking about what looks like a two thirds majority coalition, it looks like a minor risk. What are they going to do what are they going to do on Monetary Policy . Manus there is one to ponder. Simon derrick has been my guest host for the past hour. We are going to talk more about brexit in Global Equity markets. Brexite market to break deadlocks versus confessions. The u. K. Pincer comes on finding allies among europes leaders. All talk and no action. President trump is expected to stop short of abandoning the Iran Nuclear Deal today. His administration moves to weaken obamacare. A nod to normalization. Ecb is said to be considering having its Bond Buying Program cutting it by 50 . Of thereed to buy part season herbicide business, the 7 billion deal seeds and herbicide business, the 7 billion deal. Youre welcome to Bloomberg Markets european open. You are welcome to bloomberg daybreak europe. I am manus cranny. This is cpi. It comes in at one point 8 . The market had expected 1. 8 . This is the final reading, i should say. He picked a pip higher. 1. 8 . Thosethose are your numbers for germany for consumer prices. We are waiting on the u. S. Consumer prices today as well, which is not the core number for the americans, but it is up there in terms of being relevant to the overall inflationary story in the United States of america. Let us check out your equity futures. You have got rising asian markets. You have got u. S. Equity futures just tipping higher as well. His donald trump is set to end subsidies under obamacare. The costsharing reduction payment helped cover deductibles and other outofpocket costs when they used the insurance plans. It is the Trump Administrations most drastic move yet to undermine the Health Care Law after republicans in congress failed to replace the signature legislative accomplishment. Donald trump is expected to refuse to certify the multinational accord to curb Irans Nuclear program sufficiently serve u. S. Interests. However, according to two senior officials, he will stop short of abandoning it. We will bring you that announcement from the u. S. President at 5 45 p. M. U. K. Time. Officialsentral bank are considering cutting their monthly bond buying by at least half, starting in january. According to officials familiar with the debate, the program may be kept for nine months. They say reducing quantitative easing to 30 billion euros per is a feasible option. Council members have yet to officially discuss options. Ecb spokesman declined to comment. The president of the atlanta fed says he is not sure if the fomc will raise rates in december. Rafaela is not a Voting Member currently, but will be next year. He did point to signs of strengthening inflation. I think that there is much more to learn about what is happening in terms of inflation dynamics. I would say that inflation is starting to pick up across the world. In the u. K. , opponents of brexit say they will through the British Government if it fails to release internal reports on the impact of leaving the european union. The project has written to the asking for 57 studies that cover 85 of the economy to be released within 14 days through that comes as the talks averaged a deadlock, increasing the risk of a deal. News, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. The nikkei closing out the session above 21,000 points. The first time we have seen that since late november. 1996. We also had some pretty strong data coming through out of china today, showing exports still remains very resilient. 1 . Si 300 up a strong meet on singapores thirdquarter gdp. It is up i. 1 . So the regional index, still at this decade high. Let us have a look at the stocks. A have been in focus all week, falling once again. Moodys thing this data scandal could be costlier than the takata recall. You have an indian telco going to take over the group and its 40 million customers in a merger. Seeing korean cosmetic stocks rally in seoul after we saw korea and china continued their currency swap deal. A sign that relationships between those countries might be on the improve. Manus. Manus julia, thank you very much. Juliette saly in singapore. Mixed messages came out of the e. U. The brexit negotiator, Michel Barnier, standing next to his counterpart, david davis, declared the talks were deadloc ked. Michelle barnier seeking a transition deal with in the u. K. Here is what it did with the pound. You saw the moment of deadlock knocked the pound, and then you had the moment of reprieve overnight with the suggestion that maybe it was possible that barnier should could prefer a transition deal. Me now is a fund manager. Welcome. Good morning. Good morning. Manus so, up we go by half a percent. Knocked and rolled around. This is going to be a long and bumpy road to whatever kind of deal we get. Deal, i should say. How do you look at brexit right now . Brexiteers rising . Sterling is volatile . What does it mean . Ofit means a lot in terms u. K. Assets. It is quite difficult to take a longterm view on u. K. Assets. What we are focused on is the areas where there is value, and that exists within the u. K. , so there is an divergence. With regard to the pound, we have reached a new regime, so last year, the pound really did trade on brexit fears. At the moment, sterling is quite cheap. So i expect this volatility to continue for a while, so sterling is at the mercy of the at the moment, sterling isnegot. Everything we hear will cause sterling to be quite volatile. I do not think we will have a clear trend. Last year, we had a clear trend on the downside. Everyone is anticipating a clear trend on the upside far too early. I think we will continue to bump along. Atus we started our show 6 00 a. M. With this. This is the political wrangling. 1245 is the charge on this. This is demand out of the money option. I am at culling cable or saying cable is going to be 150. Greater minds like you can make those calls, but there is a push and pull in the market. The market is very, very unsure. From what you hear and read, does it sound as if were you begin to talk about a harder brexit forming . All reporting that the european sounds almost attractive. Before any trade deal can be talked. Remi i agree with teresa. We need to start planning. Although we do not want to think about a hard brexit, we need to plan towards it. Anyone investing needs to have a strategy in place that consider is what the implications of a hard brexit are. At this stage of the negotiations, it is probably too early. I think all parties need to show their stance. That is what happens in a negotiation, so you do have the hardliners pushing through. It is still early to move towards the hard brexit. You do new to start incorporating it into your investment decision. Manus let me move you to something a little bit more bullish and optimistic. I was listening to juliette, and i read some of the stats, the topix and the nikkei heading to top eyes. 22,000 on the nikkei. That is based on the assumption of dollar yen. This is the msci asiapacific. How much asia risk do you want to take on if you have to balance the portfolio for growth . Synchronize growth, the imf told us do you play it this way . Remi asia is attractive because it is cheaper than parts of other equity markets. Certainly asian equities are a lot cheaper than the u. S. Equities right now. Asia gives you growth. It has that cyclicality so markets like korea, taiwan, you have got the exporters, the the semiconductors. It is natural to favor asia. Plus, if you can buy that cyclicality cheaper, it makes sense. Manus i will leave you there. We will talk more with remi olupitan stays with me. We have a little bit more to get through. Coming up on the show, weakening obamacare. Ensure antrump to executive order on health care. This is bloomberg. Manus ok. Corporate story of the day. 8 15 a. M. In germany. Bsf has indicated a little bit lower this morning. Probably down by about one point 1 . That is what is going through on trade gates. Up 14 quick nod to that, point 5 to the closed last night at 8131. Dss is to buy parts of the bio bas isscience business to buy parts of the bio corp. Science business. Breaking News Headlines coming sf. Ough from the ba crop and herbicide business will be by 2020. The earnings per share accretion by 2020. Well bring you these headlines. The euro stoxx 50 and the s p futures. You saw a little bit of a dip in the cash market in the u. S. Euro stocks and bouldering sentiment a little bit. S p futures eking out into the green, up. 2 . Let us talk about the u. S. In detail. Donald Trump Administration has drastic step yet to rollback the Affordable Care act. The white house is said to have cut off a subsidy to insurers, issuing an executive order to draw people away from the health cares coverage markets. On the Foreign Policy front, plans regarding the run nuclear deal. Let us talk about obamacare and iran. Jody joins us from hong kong. The strategy behind President Trumps moves on health, i mean, he really is going after obamacare time and time again. Yeah, some saying it is a deliberate attempt to sabotage obamacare after he had really called for it to be repealed on the campaign trail as a candidate and repeatedly since he has become president. That obviously has not happened. They have not been able to pass a repeal through the senate. It looks like he is trying to use executive orders to really , coreut a lot of the main parts of obamacare. For instance, what this would do with the subsidies is it would not send the subsidies to the insurers that use them to be low income people and others share the cost of this. So what they would have to do is they would have to either raise their premiums, or they would pull out of, most likely, a lot of these date exchanges that are how obamacare is really delivered. Unless this plays out in the courts, which it may be read we do not know what is going to happen right away. This could really be a way to undo a significant part of the plan. Whatll see in coming weeks happens. Some states have already filed it is likely, and to play out in the courts. This is a significant move to try to undercut obamacare by President Trump. Briefly, we are expecting to outline his position in regards to iran. So this is not stepping out of the deal, but it is proffering an alternative. Remi that is right jodi that is right. He is expecting to give a speech on iran in which he is going to say that he is not going to decertify he is not going to pull out of the deal. He will not agree to certify that iran is in compliance with the agreement. That will send it back to the u. S. Congress, which will have 60 days to decide whether to impose sanctions that are not part of the law, that they had that from. Congress may or may not do that. The president , we expect, is going to ask congress to come up with some other way, it essentially, to try to buy some time to convince the u. S. s partners that this agreement is not the way to go. That is going to be a bit tricky. Many of the other countries, know, the french president , was very vocal at the you about their support of the agreement and that they thought yvonne was acting in compliance with the agreement. Would be anistration bit out on their own from some key allies on this, but they are hoping to buy some time to convince them, which is going to be a tough trip. Manus thank you very much, Jodi Schneider. Remi olupitan is a fund manager. We listen to this political debate in regard three ron, in regard to obamacare. From the Administration Part point of view, how important is tax . These are political issues. Tax is not in there. How important is tax to you to buy u. S. Exposure . Remi it is very important. It is good because it provides the icing on the cake for u. S. Growth, so right now, growth momentum is strong in the u. S. , having some credible tax reform. Tax cuts will help that along the way. So i think, you know, in terms of obamacare, the only worry is what happens in terms of the tax package that is being discussed. I think this act from trump will cause the democrats it will probably annoy a number of democrats. We heard that this morning. So, it might make it very difficult to get the tax package to go through congress. Manus one of the big curtain raisers was jpmorgan and citigroup yesterday. We learned a couple of Different Things to one, how did they get to their numbers . They both beat analyst expectations in terms of the bottom line. Jpmorgan amending i thought that was interesting. Margins. Nd citigroup, squeezing costs. Part of the u. S. American banks. This is something you favor, that you like, and what you think the coal exposure should think cyclical exposure should be looking at. Cyclical upturn. Remi the banks are in strong momentum at the moment as well, because it is consistent with the improvement in u. S. Growth. I guess, the market does not react favorably to the news. I think a lot of that has to do with the situation in washington right now, a lot of uncertainty in terms of what is going to happen going forward, and also, the banks are being hurt by the insurers. We have got the hurricane purity whole Financial Sector is going through a little bit of a malaise. Growth staying strong, fed raising rates, prospects of tax reform, fiscal policy, deregulation, it makes sense for the banks to continue to perform. Manus if you put it over to the other major story, quantitative mario draghi is still there. If i look at the synchronized growth story and the European Equity story, we just touched on asia and the u. K. Where does europe fit into that if they go for this level of reduction of quantitative easing . Or can the markets pass away the paper . Remi parts of europe are exposed to global growth. You have a lot of large exporters, industrials, in europe. Forntinuation is good european equities, however, the only issue is that euro. One of the reasons european equities in local terms has not really performed quite well relative to the lives of asia is because of that strong euro. It can be a headwind. Manus a guest was in this seat for the past hour, and these are the options on the euro, the risk reversals. They are the most bullish in eight years. This is a headwind. He would say the euro is going to top out, when 11. 111. Euro momentum is done on the upside. When you invest, obviously, you look at a variety of areas. To what extent does currency weigh on your decision . Currencyn use can be used as a way of Risk Management and a way of generating returns. Currency, i think, is critical for our decisions. It had been critical beyond the u. K. And it is critical for hours in europe. Best things about emerging markets has been the outperformance of emergingmarket currencies. I agreeck to the euro, that consensus is bullish on euro. And that bullishness has been reflected on the euro, but one thing we do have in europe today is growth that did not exist five years ago. Well, questionable. Andso, that gives so, that makes sense. As we go through the end of the year and next year, Political Risk can come back. We have still got issues in italy, spain, etc. Manus great to have you with mean, remi olupitan, the fund manager from schroders, joining me this morning. Let us talk about our lead corporate stories this morning. 7 25 in london. 8 25 a. M. In berlin. The deal is 7 billion. It could clear the way by a 66 million billion acquisition. Soon can we expect the monsanto deal clearing the way . Still an opens question how long that is going to take. We had a story last week that said the e. U. Stopped the clock. They do not have on the information they need. You know, they are bayer is saying they can close the deal in 2018. This announcement is a step forward for them in that regard. This takes care of one issue they needed to resolve to get antitrust approval. I think investors are skeptical the deal will go through as quickly as bayer is saying. This news today certainly helps. Manus it is something they have been reluctant to do. They have long resisted getting into the seed business. This gets the consciousness briefly on that. Phil that is true, yeah. Basf has had a broad portfolio nothemicals, but they have been in the seed part of it. They have resisted over the years, but there have been three big chemical deals. Monsanto, dupont, and adds that has happened, the assets have come out in the market. This one turned out to be too good for basf to pass up. This is a step for them and to the market where they had not been previously. Manus thank you very much. Afeno. Ar more to come. \ manus welcome to vodafone Bloomberg Markets european open. I am manus cranny alongside matt miller in berlin. To pull theeatening plug on subsidies to insurers. At odds the president could this put the president at odds with the republicans and democrats . The ecb c