We are alive. We are live. A very warm welcome, everybody. This is bloomberg daybreak europe, our flagship show. I anna edwards. Manus i am manus cranny. We are waiting for some news to come from phillips but the market is interested in this. Japan. Shinzo abe. Ands medical devices and diagnostic year, we will be doing soon. The market is a little lighter than anticipated. For japans prime ministers sales growth between four. 6 to seven. What is the terms of exposure that . 401s in billion in terms of thirdquarter sales. For a one billion euros in terms of thirdquarter sales. 532 million euros, thats the Third Quarter adjusted evident. Andy. Ebida. We can talk about that. We can also talk about other activities in the u. S. More generally. Lets talk about japan. A gamble by shinzo abe seems to have paid off. Theher this means more of same in terms of stocks and yet is an interesting one. Thes the question is will leader be kept at the bank. Take a look at this. This is roaring away. The nikkei is on a 15 day terror. Into it outperformed by nearly 60 in december. The question you need to ask yourself, are Japanese Equities overextended thus far . Japanese equities have this history of confounding forward investors in their ability to continue. Dollaryen is on a threemonth low. I like Japanese Equities despite all the scandal. Abe is speaking in tokyo. He is saying that he spoke to trump over the phone. That is coming from earlier on this morning. He says he has strong support from the people. He says he got a better result than targeted. Lets put up the risk radar. And the broader equity story. Everything in the Asian Session in and out of positive territory. Japanese stocks at their highest in a decade. But the dollar in there as well. Reforms have put the conversation around the conversation who will be the fed. Treasuries will trade just a minute of 2. 4 . This of the the week in which mario draghi uses language in terms of rates. Is he going to continue to keep rates lower after the quantitative easing. . Triumphant story this morning rather than a Euro Weakness. Closet easing will be reduced from 60 billion 230 billion. Its all about the language. Anna lets get an update on news. N meet leaders meet to formulate their response to the spanish prime minister. This is at the ramallah used his authority to put his stamp on the rebel region. They are set to be ousted by the madrid government within days. His advice saying he can declare independence as soon as this week. Rex tillerson is calling on european allies to support new sanctions on iran. Companies doing business with tehran do so at their own risk. New alliance with saudi arabia and iraq. Rebuffed arabia has his requests to in the isolation of qatar. Theresa may is battling to get her brexit resolution to postman the parliament. This is a cleansing the small victory she got in a summit. Labor issued her an ultimatum. Except changes to your legislation or risk defeat. In the u. K. , a lack of clarity around brexit is undermining confidence around manufacturers and deputy business. According to a report, factories invested six and a half percent in new plants and machinery, down from seven and a half percent in 2016. Only one third set brexit had no impact on their plans. Meanwhile, the u. K. Brexit secretary will have dinner with the french minister in paris this evening. ,hinas homes prices have risen adding to signs of a property slowdown. Prices excluding subsidized housing increase in 44 of 70 cities compared with 46 and august. Prices fell in 18 cities the previous month and were unchanged and eight. Global news 24 hours a day. Powered by more than 2700 journalists and analysts in over 120 countries. You can find more stories on the bloomberg at top. Anna thank you very much at ludlow. Heres an update from toshiba. Toshiba sees 100 and ¥7 billion, a net loss ¥110 billion, a net loss. They can result in negative equity of the unit sales. Japan, we have some comments or abe. Manus a few more comments from abe. He will implement promises from the campaign. Putting more money into education in terms of driving form within the economy, he sees confirming that close cooperation with trump on north korea will allow them to move from the pacifist constitution. They have chosen the man they want to charge. David . Good morning, guys. Ill get to japan in a bit. A bit overextended. The 14 days at 88. Its at the most overbought territory going back to the start of an economics. Thatabout 28 of stocks are part of the nikkei are actually overbought. Were at 60 before. When the nikkei over reform, thats when dollaryen changed. 15thikkei is up for a straight day matching a record run in 1988. Across the region, its about japan right now. Enough to lift the overall benchmark. We not getting help it comes to hong kong. Australia, hong kong is the best record market. Despite this drop, there is still a little bit of a buffer before he hit the next support level on the hang seng. Overall, up by about 2 10 of 1 . We could get there before the weekend. We could get to an alltime high on the regional benchmark. Quick look at some of the big movers. Tough thing you see there, seven and a half percent drop, that is a Chinese Railway maker. Disappointed. Name, will have earnings in the second day or so. Noble group is out with some guidance and a warning of how much a loss. North of a billion dollars. Thank you very much. Shinzo abes gamble has paid off. His Ruling Coalition retained its two thirds majority. The landslide win pays the way for more ultra easy money policy that has boosted japanese stocks to the highest level in two decades. Lets get info more from stephen engle. Good morning. What is on a likely to do with his new term . We are getting lines coming through. He is delivering this press conference in tokyo. He is saying he wants to implement policy that can hang around. Yeah, thats right. I am monitoring these headlines. Simultaneously, theres some headlines coming from the boj as well and their Financial System report. Nothing shocking but it looks as though it will be steady as she goes. This should not be too much of a surprise. The opposition was fading in the runup to the selection. They were being splits by their disunity, if you want to call it that. Even the party of hope leader was in paris over the weekend during the time of the election. People,cording to some was the last nail in the coffin to the opposition in this election. Showing that even they had given up hope. They could not chip away at this super majority. This 312 seats unofficially. 283 to the ldp. Their Coalition Partner as the rest. That gives them the super majority. Will use it to push forward a number of issues they were talking about, including down the road a consumption tax increase and some fiscal spending to boost social projects, gives some tax relief to households with schoolage children, a number of issues that resonated with the population. More turkey is the revision to the pacifist constitution down the road. The debate is whether he focuses on that versus reforming the economy. Theresno fixed schedule for changing the constitution. He wants to discuss north korea with china. He is confirming close cooperation with trump. Is this the most pressing issue for the japanese . On the ground there . Is that the most important thing to them . Or is the value of the in there pocket. Oftentimes, the household in japan is referred to as mr. And mrs. Watanabe. The economy is doing well. Unemployment below 3 . The stock market at a two decade high. The nikkei 225 and the topex at a 10 year high. Things are going well with the pace of abenomics. But there have been two icbm tesla the North Koreans flowing flying over hokkaido. That has rattled the confidence sf many mr. And mrs. Watanabe across japan. They believe in a more hardline approach to north korea. They need to have a Strong Partnership with United States and donald trump who will be here in tokyo in just a matter of a couple weeks. They believe this. Anna thank you very much. Hes been giving us a great amount of detail in japan. Abe is speaking and information is coming from the boj. The boj says there are no major imbalances in the financial and economic activities. They say low profitability of japan banks is, quote, striking. Theres a lot of questions about negative Interest Rates in regards to the future. Do they stick to the 10 year part of the current . Do they move a little further along . We will bring in sarah hewin. Rom Standard Chartered bank from an economic point of view, what is the most important issue for . Is a continuity and getting mr. Nabe to spend . Sarah i think getting them to spend is key. There has been some success. The economy has gathered momentum. The problem is for the boj that inflation is still too low. Still well below 1 . About 0. 6 this year and our view. The idea that abe is likely to promote fiscal stimulus, that could underpin growth that should eventually drive inflation higher. But its been a slow, long process. Continuity is key. Continuity in boj policy to ensure the stimulus will trigger the eight higher inflation. There has been criticism of the Interest Rates. Nothing to make us believe that boj under abe and this parliament is going to be in that any different. We expect more of the same. More i think we do expect of the same it is question of Financial Stability is crucial. All Central Banks are having economy accommodative policy are keeping interest in Banking Sector profitability. So far, we dont see any real strains. Its positive. Theres a need to stimulate Economic Activity in the west. Japan trying to get growth higher. Trying to get inflation higher. Trying to reform the constitution in order to deal with north korea, japan needs to shape up. Growth for take that six straight quarters. If you want that velocity you have to focus on reform. Is that a Fair Assessment . Its fair. There are structural issues that need to be tackled. Think some of these issues will be addressed in the next term under on a. Abe. Der to spending on education and social welfare. In some cases they may be holding back some of the dynamism in the economy. Anna thank you very much. Her thoughts on what is going on in japan. Lets get a Bloomberg Business flash. Cisco systems is close to acquiring broadsoft. It could be announced today. Broadsoft as a market value of about 1. 7 billion and has been working with jefferies groups to seek suitors. Struggling commodity Trader Noble Group is selling its u. S. Oil liquids business. It expects to report a loss of more than a billion u. S. Dollars in the Third Quarter. The stock has lost more than three quarters of its value this year. An ad hoc pilots group at ryanair has demanded double the pay offered by management. A standoff between pilots and executives since the Budget Airline was forced to cancel more than 20,000 flights toecting many customers due a mess up that left it lacking enough crew to maintain its schedule. Jpmorgan is bringing an Artificial Intelligence to give traders a picture of the Trading Floor and predict where markets are going. The Machine Learning program is being deployed. It will compile data from orders to give sales people a clear picture in realtime. Hello fresh is starting a market valuation of as much as 1. 5 billion euros as a kicks off an initial Public Offering this week. Meal kick start off startup is looking to raise children 43 million to 200 311illion euros tpo million euros. Thats your business flash. Thank you very much. Catalan separatists are meeting today to consider the response the spanish prime minister. Anna catalan president is set to be outed by the member by the madrid government today but he vows to fight on. His allies are claiming he could declare independence. Murray is barely standing by. Adeo is standing by. Saturday,ced some on but what has been done already . Maria what we know is that they dismiss the entire Regional Government. They will be replaced by ministers in madrid. The government in madrid will get a veto right over the cap led parliament. That is to stop anything moving towards secession plans. Madrid wants to hold a new Regional Election within six months. Not give a concrete date. Under normal circumstances . That will be interesting to debate normal circumstances. Will it be effective . When we see the monster the execution of this plan . That is a good question because we had wondered what it is going to get implemented. We have clarity on that. We know the senate is going to reconvene today. It is going to take a whole week. On friday. Ll happen i saturday, the government will start to make use of this new power. What madrid officials are telling us is that you have to be realistic about this. It will be implemented on a gradual basis. What we need to keep in mind is that 155 has never been used before. It will depend on the resources from the Catalan Government which is defined as ever. Anna thank you. Dred in in the madrid. Thoughts. E us your spains economy has been doing quite well for the eurozone. But this has to be a distraction. A large part of the spanish economic engine. Sarah its the most important part in economic terms. A strong region which has grown very well. We have seen a lot of significant companies. Until recently. I think this is key. We have seen the economy doing incredibly well. Signs are starting to see that businesses are getting nervous. Some relocating their headquarters. Region, forfor the the euro area as a whole, is will this strong engine of growth start to fade . Growth expected to be around 3 this year. 2. 2 last year. If we start to see a slowdown because confidence is damaged, that could have a drag on the overall euro area growth. Manus we go to the polls that politico did. Win 70essionist would 273 of new elections were called as opposed to 72 in 2015. Its pauls. It doesnt look at the moment that they have a substantial lead in the polls it was called today. Sarah that could change in the coming week. Its almost certain the vote at the end of the week will go in favor of rajoy and so there will be a real change in the Regional Government in catalonia. The question is, how long is this going to drag on . It going to escalate . Those are the starts of issues that get markets nervous. The ecb decision this week on thursday, it suggests that no one will see the amount of and suggests that will see the cut inof bond buying half. What is the expectation you have . I think we have to listen to the signals we have had from the cb. Last week we had some reasonably good guidance on what to expect. , thehaving of bond buying question is how long does that continue. I think the expectation of our own view is that we will see a continuing until september of next year at least. Untilially carrying on september. For markets, one of the most important factors is going to be what is say about Interest Rates. When is the first rise in Interest Rates. T might not be until night 2019 q1. Maybe later. Words wells the past the horizon. That significant. Real concern is, going back to japan, inflation is too low. They are not going to tighten policy in a hurry. They dont want to offset the accommodative policy. Anna thank you so much. Sarah hewin, Standard Chartered bank. Ofwill be keeping to the cio prime partners at 645 london time. Coming up next, we will talk to the ceo of philips. This is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Here in london. 7 30 a. M. In the netherlands. Phillips has reported that they missed estimates in the Third Quarter. Lowest analysts forecast. Lets get a next nation. Ofns van houte is the ceo phillips. You missed the lowest of the estimates. Where was the blip . Good morning. Frans hi. Good morning. Of the analyst expectation was around 4. 1 and we came in at four. I would not call that a miss. Saw strong order growth at 5 and a very good Profit Improvement at 140 basis points. Overall, we believe we are on track to deliver on our year guidance of or 26 growth. 4 to 6 growth. Personal health continued to grow well. , among whichkets india, indonesia, china, had strong doubledigit growth. We are on track to deliver all of our plan is performed. Anna can i ask about the competitive environment . Ge, operaterivals in another of areas you are not active. What ge is going to have to deal with, is that a in opportunity for you . Phillips has made a massive transformation over the last five years and we have focused on being a Health Technology company. We are not distracted by underperforming businesses in other sectors. We can just focus on our customers and consumers who want to improve lives in the area of health. Our technology is driven by clout an Artificial Intelligence. Its very much in demand. Lakeland health or advocate largest in illinois, are taking our parities to improve patient care and safety. They are working with predictive algorithms to support doctors and nurses to improve health care. We feel with this strategic positioning we are well placed to support the world and its needs. We dont have these issues about portfolios that are no longer tracking well. One of the markets are you have a big position is the u. S. Of thes at the end second quarter. The Affordable Care act is something we debate on the weekly basis in terms of what trump does. What is the sentiment from customers . How can we benchmark that . What is the level of concern in the u. S. . I think we are all rights to debate its because it is a concern. Our customers are talking about it. The response to this uncertainty customers tont by drive Better Outcomes and better productivity. Philips, our Business Model teams up with customers around productivity at outcomes. That is why we can continue to strike multiyear deals and why are Technology Structures in patient care are in demand. If you treat a patient right the first time and the patient can go home faster, then the hospital will be in better shape. That is our pitch to our customers. It resonates very well in the United States but also in other largesties like the private diagnostics chain in china which have selected our diagnostic imaging to diagnose thousands and thousands of chinese patients who need better care. As you pointed out, youve gone through this big transformation and are focused on health care. Which pieces are still missing . Youve done some big work in this field. What are the pieces you still need to fit into the phillips house . We are on exciting journey where we support both the consumers with their private health and hospitals with their health care needs. The portfolio is in good shape. We have primarily an organic growth premise in our strategy. 6 on our own to strength. In midday does play a role in our strategy. To integratetart specter minutes into our etics into spectron our portfolio. Their drug Coated Balloon is an innovative item that will suit to apply drugs inside a calcified vessel. We are excited about that addition to the portfolio. Complete lineups of software, products, and services. Are you selling and buying businesses . Anyone would see that you are avoiding an activist investor. Can you update us on this . Have you heard from download . Lowe . N i read the same article as you did. I do believe the best strategies to be in control of your own performance. Path, the focus of Health Technology, the growth, the annual Profit Improvement, we believe we have a great proposition. Its very clear. Weve seen that in the share top ofhere we are in the our Health Technology peers. To drive the car ourselves and we are confident about a strategy. Anna you have about 40 of the liking business. , areu need that for m a you going to sell that down . We are eventually going to sell down. We are not in a hurry. We will pick are moments. Our moments. Lighting is a good company. It has growth for the First Time Since 2013. They saw a good Profit Improvement. Announced he is confident about fourth quarter. T is a good investment he will take our time to sell down in the future. We will, eventually, as we focus on Health Technology. Youre a patient ceo. Anna thank you very much. Of philips joining us from amsterdam. We are looking at asian equities first. Were seeing them high overall the particularly in japan following the victory of shinzo abe. The nikkei 225 set for a 16 straight day of gains. That is a record winning streak. This is showing that the nikkei now is the most overbought in year. Weakness. E yet seeing some Euro Weakness against the dollar. This is concern against n. Youre seeing dollar hold on. Dollar holding above its average. Below on this chart, you can see the cs read index. Does move into the green. Whats driving Dollar Strength is optimism around tax reform and speculation around the next fed chair. We are tracking a yield close to 2. 4 . That highest since march. Speculators are the most that short on record against fiveyear treasury futures. That at its highest since march. Anna thank you very much. Lets look at what is going on politically the u. K. Theresa may is battling to get her brexit information through parliament. The Opposition Party is threatening to unite the tory rebels for minutes to the bill. The trade secretary said he is not scared of a no deal scenario but in exclusive interview the scottish foreign minister says he doesnt agree. We are giving and that no deal would be devastating for the scottish economy and the wider u. K. Economy. Its unthinkable that can be allowed to happen. She is saying it would be does it even economy if there would be no deal. A lot of political chatter. Deal or no deal. If there isgaming no deal . Are you going with this option something with it not . The assumption has to be that there will be a resolution. The matter is time. Thats the real concern. In transition arrangement is needed once we get to march 2019. But we dont seem to be making much progress. The question is now being raised to how easy it will be to get the transition arranged at how quickly that can be agreed. The benefit of a transition arrangement stocks if its not kept waiting until the last minute. Survey, thiswas a is about investment, they surveyed 328 people companies. This is the reality. Reality of a slowing economy. We get gdp this week. This is a real problem with brexit. There is no surprise that businesses want to have certainty. Its not a question of getting uncertainty early in 2019. Is this is our planning 12 months at least i have time. Some said friday that vision of a tenyear transition. A lot of business lobby say we need at least three years. Maybe they have modified their expectations. Shes talking about two years. Whats the time you look or . Andh two years minimum three years or more would be good. How do we get to that. What is the eventual deal . What is the eventual retreat going to be with the eu beyond the transition deal . So much to the arranged. Economy is showing signs of struggling under this uncertainty. Q2 of this year was flat. Businesseso sign of in vitalizing vitalizing new investment. The pound is in the middle. Where do you stand as an that the pound is supposed to be the ballast to brexit. The gdp numbers and come through this week. It doesnt look like the pound getting battered has really affected the economy. It may be that it takes time to see it through. Eventually, that might deliver a boost. But we are seeing is that businesses are taking the profit spread rather than increasing export volumes. When it comes to the pound, there is some support for an expectation of a rate hike from the bank of england. That is largely break into the market. But markets are expecting that will be the first of several rate hikes area we are not so sure. Struggling that the bank of england will be very cautious. Is it difficult to make any longer term around the u. K. Economy . We didnt seal the negatives in the short term. Could there be negatives predicted by projects until we get clarity on brexit . Sarah if we think about what happened immediately after a referendum, it was a vote, the majority of the people who supported the brexit. That unityprise state strong. Consumers are now facing a squeeze on their income. Thats aligned with the caution by business that is being reflected in the economic data. Might be reflected later this week. For the longerterm, the good news is we are not facing the saw in thentime we great financial crisis. That was a 6 loss of gdp. The longerterm projections more around gdp lost over a tenyear. Sarah hewin is chief economist at philips and at Standard Chartered bank and she stays with us. Tillersonng up, rex rebuffed. We are in dubai. We will discuss the implications of hobbies election. The nikkei hit more than a decade high this morning. This is bloomberg. Anna it is 1 50 in the morning over new york. Lets get a number business flash. Cisco systems is close to a deal to acquire broadsoft. It could be announced today. Broadsoft has a market value of about 1. 7 billion. It has been working to seek suitors. In attracting interest from buyout firms. Toshiba forecast and annual net loss of 968 million on the tax impact of silliness chip division. That compares with the previous forecast of a profit. To achieve investors are due to meet this week to vote on the chip unit sale. Noble group is selling its u. S. Oil business. It needs cash urgently would debt repayments due this week. It expects to report a loss of more than 1 billion. The stock has lost more than three quarters of its value this year. Thats your Bloomberg Business flash. You very much. Rex tillerson said saudi arabia rebuffed its request to in the isolation of qatar. He was in saudi arabia as part of his efforts to break this deadlock. Lets get the details now. How likely is a breakthrough . At this point it is unlikely. Tillerson told us at this point is unlikely. Tillerson told us they rebuffed him. Perhaps more importantly, we have been close to the behindthescenes negotiations the between mediators and the two sides. Thats not taking place anymore. Thats been shut down. There is no conversation. Nothing is happening. Behindthescenes nothing is happening. Its a big problem for the u. S. At the beginning they were firmly in saudi arabias cap. They are trying to get the two sides to come together. Pandoras box has been open. This thing is not taken on a life of its own. He warned that doing business with iran is at its own risk. Is there a threat that . Its a real threat. If youre in a random thinking if you areran in iran or thinking of going to iran, what potential laws are we running afoul of . It makes things riskier for companies as they think to shift to a ran. Trump refused to recertify the iran deal. He didnt rip it up. This is another part of it. Thank you very much. Stay tuned to bloomberg this week for live coverage. We have many guests coming up. Who will run at the Federal Reserve . Who was in the chair. Is chief economic strategist for Standard Chartered bank. Will taylor or powell, i dont know if the search has narrowed, what are you thinking . In terms of a powell versus taylor Federal Reserve . We are looking at two different outcomes. Powell, i think would be more of. He same more in line with yellens way of operating. Very supportive of Balance Sheet expansion. Probably would be prepared to slow the reduction in the Balance Sheet and to pause on rate hikes if the economy showed signs of weakening. Taylor, we know clearly what his views are. He is more hawkish. Theink he would more steer fed to rulesbased policy. Would it be around the pace at which the Balance Sheet can track the fed . With take us on a much higher rate path . Sarah thats an interesting question. The fed is signaling anyway several rate hikes next year with the longerterm rates up higher than we are currently. In my view would be more market perception. , the market is looking at a rate hike in december and 122 rate hikes one or two rate hikes next year. Market. Or the bond lets see the results. Election clinches the while keeping hold of his majority. Japan has had a higher stocks and a weaker yen. Does that continue . A lot relies on boj leader. We are live with analysis with what the victory for abe means. This is bloomberg. Manus others landslide victory. Abes landslide victory. Japanese stocks rise. Anna they formulate their response to spain after mariano oust nounced plans to manus theresa mays battle to get brexit legislation through parliament. Mission. Dle east Rex Tillerson says saudi arabia ripped off his request to cut off qatars isolation. We are live in dubai. Manus you are welcome to bloomberg daybreak europe. Cranny. Us anna i am an edwards. Just got onto i am anna edwards. Just got onto 7 01. Terms of theame in impact we are seeing on stocks and japanese currencies. Lets talk about stock stories. The nikkei 225 rising force 15th day in his longest run on record. Manus what does this new administration from abe mean for easing in stimulus. He rolled the dice and went a year earlier than expected. Unemployment is below 3 . You are seeing the role of the , well kuroda still be in charge will kuroda still be in charge . London is set for slightly higher opening. You have a nice rising story around the equity market. The ibex, we are waiting to see what happens next in the catalan region between Mariano Rajoy and puigdemont. Go for will puigdemont independence . How will that translate on the ground jacob on the ground . Anna will the base be able to generate Natural Energy . They produce metals and solar energy. The news coming through from them. Ipo rice range a 17. 4 to the offering is expected to be at one. 5 billion u. S. Dollars including a 1 billion and primary stage. They see an offering at 15 point 18. 8 in terms of the amount of free flow we are going to see on this business. Manus keep in mind, the by a name thated is very familiar to bloomberg. Anna another redhead crossing bloomberg. The provide private health care drop the United States. [no audio] undervalued. Manus lets talk about risk. Abe is back in power. He rolled the dice. Msci asia is up. The nikkei, the longest winning streak on record. He Asian Session is a rallying the question is, do you favor japan over the rest of asia. Credit suisse certainly does. The dollar index coming back down. If youre moving higher, yields in the u. S. , 2. 4 . Will donald trump choose his leader of the fed between powell and taylor . Abenomics, one of the features of strong growth in japan. The big week in terms of the ecb story. What are we going to hear in terms of bond buying . Lets put up the bond story in europe. What the ecb is going to do, are we going to see them their monthly bond purchasing going to flash their monthly bond purchasing . Manus will be referred will he prefer Interest Rates not remain low . Will that be the trigger for the penultimate dish for the benevolent for the Benevolent Bank . The spanish leader announced measures to step his authority on the region. Is set to bemont is set to be ousted within days. [no audio] iran. Anctions on he is wanting that countries doing business with tehran do so at their own risk. Fostering a new reliance a new alliance. Tillerson said Saudi Arabian leaders would rebuff his request to in the isolation of qatar. The Opposition Leader party eclipse the small victory cheap brought home from a summit of european leaders. Theresa mays fragility was on the line yesterday when she was issued an ultimatum, expect major changes or risk defeat. In the u. K. , lack of clarity around brexit is undermining confidence among manufactories and dampening business investment. 6. 5 ofs invested turnover in new plants in the past two years, down from 7. 5 in 2016. Only one third said brexit was. Aving no impact on their plans the of brexit secretary, david davis will have dinner with the French Foreign minister this evening. Chinas home prices have risen since january 2016 adding to signs of a property slow down the curves on buyers bites. Comparedcompared with 46 in aug. Prices fell [no audio] you can find more stories on the bloomberg at top. Manus great to have you with us. David ingles is standing by. , oh to beer record investing in japanese investments. David what is important to know when you look in the japanese markets, we are sandwiched in andeen all this businesses, the earnings season which is kicking off very soon. We are going to get into high gear there. If you look at early indications 2017in japan, fiscal year one to 2018, we are shaping up to see the best earnings season in japan in terms of the upgrade and earnings guidance. Up 1. 1 , the highest since 1996. If you look at the 14 day, i may be a little overheated. The people that we talked to, a question of when to get in. The rest of asia is not so ideal. When 6 of a drop over here in hong kong. 6 of a drop over here in hong kong. When you put everything together, that comes down to what has been happening over in japan. That is the macro picture. Asian equities, have a look at the movers where following. These Railway Stocks here in hong kong. Two hours left in trade. Under a little bit of pressure. [no audio]. 2 down. Warning that it is expecting to u. S. Dollars. Lion on a couple anna shinzo abes gamble on an early election paid off. Manus it was a landslide win. Does it lead the way to more monetary easing policy . Stephen engle is outside the Stock Exchange in tokyo. Good to see you. We heard some comments from abe. The thing for the market is what does it mean for policy . What is he likely to do in this new term that will take the headline . Has a mandate. He took the gamble some say it wasnt much of a gamble given the opposition was in such disarray. The economy has been doing so well. As you and david ingles mentioned, the stock market doing so well, 15 consecutive days. The last time they had that record of 14 straight sessions of gains was back it started december 21, 1960. More than 60 years ago. There is an unprecedented run in the stock market. The economy is doing well. Six straight quarters of gdp growth and unemployment under 3 . The people cannot vote it and said, why change right now . We think things are going all right. What are going to be the headlines . Shinzo abe has to come through on all of his promises, including doing some social reform. He is going to be giving economic stimulus and he is going to carry through on abenomics. We heard from the chief cabinet secretary this morning saying they need to accelerate out economics accelerate abenomics. [no audio] anna we look for what this means for abenomics. What about the geopolitical side . Heard about conversations with president trump. We heard from abe about what he wants to talk to the chinese about. What does this mean for Foreign Policy . Absolutely. No three is going to be a key point. North korea is going to be a key point. How much more of north korea will pyongyang [no audio] hes got the tree, power, what does it mean for markets . Is it all about kuroda and the next leg of quantitative easing . Stephen i think it is because of his focus isnt going to radical. I think that is a little bit of Wishful Thinking on the part of the market. He is going to be focused on constitutional changes, the political agenda. What it does mean is policy, continuity, kuroda stays in place for the bank of japan. The Monetary Policy stays in place. What does that mean for broader markets . We are going to continue to get a strong japanese bid for european and u. S. Fixed income. We are seeing a pretty relentless bid from largent large japanese investors. We will see some of that coming through. Anna they are trying to apply why no focus on the Economic Reforms . Is it because of no burning negative platform . You have the growth story from japan which has been pretty good. The market is higher and the wages and inflation might not be there. The man and woman on the street in japan, perhaps he needs to improve too much on the economic front. David japan benefits from that take a we saw an economic from in global trade cut we saw in Economic Activity and global trade. [no audio] policy,inued economic but it is about the bank of japan, more than anything else. Manus there is a conference here. The longest run on record. Dollar yen is at a threemonth low. The question squarely goes to the shape of the curve. Better. Thing manus the shape of japanese yield curve, the governor suggesting that maybe their attention on where they might target. Theres a whole debate. The rest of the Central Banks are the different some sure. If they move their focus along the yield curve, do you think markets are prepared for that . David i dont think the markets are prepared. It is very interesting when you should a chart. It should be five years, by the way. You can see in terms of the maturity of the 10 year, is incredibly fat flat. Bank of japan has been very innovative. They are going to target the yield on the 10 year at zero. The first one to go explicitly we are going to target a price and it has worked. It has been solidly anchored at that level. Cannot target price and have a quantity target as well. Oying ofllowed the bu purchases. If they start to ship along with the curve just start to shift along with that curve, the point from the 10 year to the 30 year. Try and smooth that out. It is a little micromanagement. Anna we have not seen the ecb go down that path. What are we expecting this week from the ecb . We get an update on the survey from economists that suggests they will cut their monthly outlook from 30 billion euros. What are your expectations . David expecting them to go down explicitly. We will get the 30 billion or 40 billion monthly bond purchases. It is all about what is the tradeoff between the buoying of monthly purchases. If they are able to say that we are going to scale back our asset purchases, but that is going to be extended out of september out to september beyond, that is sending out a powerful statement that we dont getting the potential for a rate increase coming out of the ecb into we hit 2019. When you have it anchored in negative territory, that is a powerful easing. One of the challenges they are like to face is the ecb keep their optionality. What they are going to try and do, we will keep on doing these if inflation were to pick up and that is a difficult messaging. , 6230 e market issue 60 to 30. Inare going to see the shift september, the end of qe and then a deposit on the benchmark going into 2019. Do you agree with that timeline . How important is it that draghi merges his message with rates will not remain low . You are in play after this end of september next year. David hat is right that is right there doing the duration using the duration of unstated easing duration of quantitative easing. In terms of the inflation for the euro, if they think they its hiking stay on path and take out potentially some of the upside risks of a much stronger euro. The other thing to bear in mind is we are talking about the net purchases coming from ecb down to 30 billion but there are a lot of reinvest is coming through. Talking and looking for the ecb data, you cannot work out exactly the and the investments. Between 100 and 120 billion or euros of investing material. Manus we are assuming find david the ascension is they will reinvest the assumption is we will reinvest. They are going to play that up quite a bit. Anna they were providing more detail and manage their te stocks. Economists are split whether an announcement will be made this year and give us the leverage. David, thank you very much. David riley stays with us. Manus sums that choice says he ide the Central Banks anna separatists me today and plan in response to spains countdown. We are live in madrid. This is bloomberg. Manus stocks are up. 8 23 a. M. In europe. Record thein longest run on record the 15th day in a row. Anna lets talk of the United States. President trump is considering john taylor and powell as fed chair. Trump also indicated that the current fed chair remains in the running for nomination for a second fouryear term. David riley of Bluebay Asset Management is still with us. Who leads the fed . David who leads it . Manus have a go. Putting myself in Donald Trumps shoes, heaven for bid. It would be surprising if janet yellen is be appointed. It has gone with the party in power. The issue is power versus [no audio] just about the discretion and the whole sort of forecasting Forward Guidance part of fed policy. Be willingwould also to take on his colleagues. Manus you talked with the disruption. He disrupted the fiveyear market. I dont know if it is directly because of him. Fiveyearpositions on paper are at a record last week. The market in the u. S. , 33. 4 , the market seems more prepared for a disruptor that it does for continuity. David yes. I cant disagree with that. What is also happening is the markets which are pricing in texas form. In tax reform. Anna certainly on friday. David youve got two things going on here. Leadership, john taylor, then it inc. The short and is going to be then i think the short end is going to be higher. Anna thank you so much, david riley. Manus that is it for bloomberg daybreak europe. The market open is up next. E. M. Plus group is going further to 17. Guy monday morning and welcome to Bloomberg Markets europe open. Firstrate trade of the cash equity session coming up. Will bring you that first trade. I am guy johnson. Matt miller over in berlin. Madrid makes its move. We are waiting for separatist response. Oy back his plan . Of his gamble pays off sending stocks surging could will change in the countrys pacifist