Transcripts For BLOOMBERG Countdown 20160715

The top story, terror returns. Read france has extended a state of emergency and well deploy 10,000 members of the Security Forces after of the still daily tille thea beasas attack killed many. Ois hollande while commitment to fighting terrorism. It is clear we have to do everything in our power to fight display. Manus we have more on this story. Caroline, what is the latest we know . Terrorists war with who want to strike at us at any price, in the words of your president. Caroline even though we dont know whether the truck driver had any accomplices, if he was a a alone wolf, even though there hasnt in claims from the islamic state, the president is qualifying this attack as a terrorist attack. He said the terrorist nature of the event cannot be denied. It does look like a prepared action. We know this big truck, a big white loriy, was rented. It shows there was some preparation of the actions. The leaders around the world are reacting to the attack. The president of burma said, i termsn in the strongest what appears to be a terrorist attack. We stand in solidarity with france. People onousands of the promenade. The english promenade, as we call it. We are in the middle the holiday season. Not only you had the french locals who were on a bank holiday, enjoying me fireworks but a lot of tourists. There could be a lot of children among the dead because you see it was a family event. An id card was found in the truck. It belonged to a french tunisian, 31 years old. There were some and grenades inside the truck to read the investigation will determine whether he was alone. Anna frances state of emergency had to be extended. Caroline during his traditional interview on National Television earlier yesterday, the president had announced the state of emergency that had been implemented since november 13 was to be lifted in the 12 days from now. July 26. After this attack, he said that is not the case anymore. The state of a merchant see is going to be extended. That state of emergency gives special powers to the government so it allows security and Police Forces to put people under house arrest. To carry some errors in terms of investigation. Said 10,000 extra military officers will be deployed again. He is also going to call the reserve soldiers. Those people who have left the army less than five years ago who could be called in order to protect some sites. They will continue to track those who attack france in syria and iraq. It right now, there are 300400 french there. Manus the very timing is significant. Bastille day. Caroline it is a very symbolic time to strike france. People on bank holiday. People enjoy me fireworks. Was on as year, it thursday so many people including me had the day off in order to enjoy the long weekend. A lot of tourists on this waterfront. Beginningf course the of summer. This is also a family event every as the interior minister was saying, there should be a lot of children among the dead. Anna we will continue to monitor the latest of elements and bring you global reaction. Markets. Urn to the we have a few things to talk through. Of course, we have a lot of currency markets. Before that, a week, really Japanese Equities market. A quarter of 1 . The biggest increase since 2009. Dollar yen, 105. Heading for the biggest weekly plunge in 17 years. Manus just think of the action yesterday. Line in our top fx story. Carney having suggested he would do more. Volatility, dropping in the u. S. 50 since reaching a fourmonth high on june 24. Breaking news before we go out. Switcss watchmaker. Swatch. Dropping 5060 . That is the operating profit. They will keep employees and retain their investments. To first world news. Stephen engle has that. chinas economy stabilized in the second quarter. Gdp jumped 6. 7 from a year earlier. Industrial output beat investments. Even as it reaches question about the sustainability of the expansion. Fed officials have laid down the impact of brexit on growth. He expects negative affects. Meantime, he expects a modest impact. The impact to the u. S. Economy will be modest. It is too early to really understand what all the elements of that will be. We will be watching, the u. K. Begins to react to that vote. Stephen the big rally in stocks and bonds has some Money Managers putting up warning signs. They have cautioned that buyers may be ignoring sluggish Economic Growth and the threat of brexit as they look to put their money somewhere amid low interest rates. Global equities have risen since june, 27. On speculation of booted stimulus. Edinburghy will visit in her first appointment outside of london since becoming Prime Minister. To govern onge up behalf of all scots. Shares boosted as much as 52 . A biggest vote of confidence for the biggest tech app of the year. About two thirds of its stock in the u. S. And wants to. Xpand across asia global news, 24 hours a day. Stories ond more top the out. Into theses get markets. What a stunning weaker for these asian markets. The yen move. Really aggressive trading. David i guess it comes down to the prospect of lower rates. It is boosting the lower of rates. Lets have a look at how we are trading. The last time we had a week of gains was in april. 8 on the week. The yen help things along. Today, volumes picked up a little bit. Stocks 65 of rugs on their way up. Seeing vietnam pulled back a little bit. Eight get an eight year high. Up 4 from this time last week. A few other things. China,a dump out of mostly positive, indicating stability. When you look at the credit data, policymakers encouraged banks to lend more which is why we are getting stability. You could argue, it is a negative thing. It has boosted things. Point, closer to 77. We have seen it come down slightly. Gives you a better picture of what happened. Dollar yen, we are seeing this come up slightly. The nikkei 225 down. Let me wrap things up with shares of retailing. About 7 orroughly 8 on the stocks. Have a look at the two day chart. Biggest gain in 18 years. Analysts have come out and said, hold the stock. 32 660. Joining us ind hong kong. Good morning, good to see you. We wake up to news of another terror attack in france. Thoughts this morning. Markets, obviously very depressingly, getting used to waking up to these kind of headlines. Guest yes. It is dreadful. Reaction, if you take the view that the point of terrorism is to strike fear and society and that includes markets. The best way markets can respond is with in different spirit to show, they are above that. One of the great things markets have done, right from that first attack in paris, is to show resilience. Showu really want to support for the principles of liberty, the best way is to ignore them and the market has done that. Manus you are right. It is an interesting progression, every time we get hit with these moments of tragedy, and paris or brussels are wer countries, becoming almost immune . The gravity needs to be so great before Financial Markets react . Try toi would hate to calibrate the horror of these different events. I dont know that you can say this is any worse than other events. To we as a society more used them than six months ago . Yes. Anna thank you very much. Manus secondquarter earnings fargo. Ls at the same time, the bank of England Governor Mark carney and canadian environment minister speak at a Climate Change market in toronto. Anna half an hour later, we get u. S. Retail data. And the minneapolis fed president takes on a discussion with his st. Louis counterpart. China consumers and the economy,econdbiggest stabilize. How sustainable is the lending boom . Welcome back. It is 6 18 in london. Lets go to the bloomberg is this flash. Business flash. The french president has and willa state of the deploy and thousand Security Forces after the the steel ba stille attack. Officials say the driver was killed in the shootout with police. The french president and his interior minister say their country is at war with terrorism. That has all the elements to be called a terrorist attack is once again of an incredible violence. It is clear we have to do everything to fight this terrorist plague. Terroristsar with who want to strike us at any price. It demands mobilization by the forces such as i have seen in nice. Bid for has raised its monsanto. The upped their bid to a total of nearly 55 billion cash. Earlier, it was reported they may strike a deal with another company. Investors are skeptical either suiter has what it takes. Asres in line sword as much 52 . The messaging app owned by a korean neighbor raised 1. 3 billion. It sold about two thirds of its stock and wanted to expand across asia and eventually into america. That is your bloomberg is this flash. Business flash. Chinas measures to stabilize the economy may be paying off. Head of China Economy joins us now. These numbers are looking good. Talk us through some of the key points. Guest we had a good numbers. Gdp, coming on. No hard landing. 6. 7 , a little better than what economists were expecting. It was the consumer to the rescue. The growth came from the consumer. The june numbers reflected that. Factory output, also better than expected. Up in june, 6. 2 . Massiveed by this credit surge. Trillionbit over 1. 6 yuan. Wearing that in that is about 240 billion dollars. Orger than greeces economy chiles. Manus it is a question of what kind of stimulus, isnt it . Guest there are headwinds coming. Wage growth off a little bit. Can consumption keep going . Also, widespread flooding in china. That is affecting areas worth about 20 of chinas output. That could be disruptive, especially for the factories. The big question is debt. Well authorities allow these credit caps to remain. It is pretty much every international organization, warning on chinas debt levels. Anna thank you very much. Simon, give us your thoughts on china at the moment. Do you think the situation has stabilized because of monetary and fiscal support . Simon on the face of it yes. That is taken place, is at a state level rather than private level. I think that remains an issue. Fascinating,t is compared to 11 months ago, a great concern in Financial Markets. Vicks went up to high level. You saw a huge strain on fx reserves. Is0 billion read china devaluing its currency. That is having no negative impacts. Without actually having to do it with reserve. Manus the reserves actually balanced a little bit. One of the things we have is talking about the chinese stock market before 5 billion was knocked off. We are moving to this, overbought. The rsi. I want to take you back to february. This is where the markets have ome sense of a we have these equity markets, a rally built on not the best of foundations. You can make this argument. It is about easy money. Either aing to get cheap currency or low interest rates. Are we overbought right now . Compared to where we were in the earlier part of last year, we went to higher levels. Theret certain we are yet. Should we be worried about it . Yeah. Anna better communication, coming from the chinese. That is something we talked about. Where the communication, certainly the message they thought they were getting across. Simon the message was dreadful last summer. The fact that they had to spend to stop that happening, stop that will till it he, china hates being the cause of financial uncertainty. They go for stability over everything else. Right now, they are doing a allowing of quietly the currency to go and it is not impacting markets. Manus lets recap some of the major points. These dreadful attacks we have bastille day. We are in a war with terrorists. Are the words of the French Interior minister. We are in a war with terrorists who want to strike at any price to the details we have so far, 80 people have been killed overnight. Police have killed the driver. This is a truck which mounted the pavement. Killing up to 80 people in nice. Seventhis is the terrorist attack we have seen in france in the last 18 months, going back to the Charlie Hebdo killing. Caroline connan taking us through some of the comments. Some updates. We will bring you the details as it develops. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. The southis 7 30 in of france. The daybreak edition captures the sentiment in the south of france which is of course carnage. This is a picture where this attack has taken place. What we have seen is a truck mounting the pavement along the boulevard in nice. Ran over people. It was a long trip, a phrase used by officials. One witness said there was carnage on the road. Bodies everywhere. The driver emerged with a gun and started shooting. That is the latest. Anna we are getting an update. 84 dead. 18 critically hurt read coming to us from asp. Seventh terrorist attack in france in 18 months. We have an extended state of emergency. Thousands of reserve troops being called up by hollande. A total of 147 people have lost their lives. Now, the former associate counsel for the u. S. President and expert in counterterrorism. Good to have you on the program. Thank you for joining us on countdown. We dont have a claim of responsibility to read from what you have seen so far, give us your assessment of what we have seen take place. Thank you for having me. It is hard to know exactly what we have going on. Clearly, it appears to be some sort of terrorist attack. Signs, suggest that. Given the explosives or weapons, the trevor getting out and firing, the casualties. Advisor inwere an the bush administration. What kind of advice do you think going to be taking . He has called additional soldiers to patrol. This scaling up of the terror, the very immediate 24 hour reaction. Was the most important advice he has given in this time . Thing, you want to make sure this is not a beginning of a series of attacks. What the president has done is put troops on the border, trying to continue their efforts to protect people or prevent them from getting into the country. Once they are there, to conduct counterterror operations. As they did in brussels. We dont know whether this is somebody from the area or from the outside. Counter radicalization programs, i know that is something you have talked about. What is the latest advice you have in terms of trying to stop the spread of the radicalization that sometimes leads to these events . Fax it is a difficult problem. Eastern nations have struggled with this problem, preventing people from going to the cause of jihad. It is a challenging problem. How you prevent your citizens prey, the surest make them less successful is to go right at them. Make them less attractive an option for people to lean toward. We have had a hard time taking the fight to isis. Isis has had a lot of success recently and that is a challenge. It allows them to recruit and gain more. This is the seventh terrorist attack in 18 months. This is the biggest challenge of all, dealing potentially with individuals in your own country who have been radicalized. Is that the biggest risk for europe . Risk fork it is a big europe. For the United States, too. Anyoesnt mean we dont get information about these folks. It is a risk. For both eu member nations as well as the United States, the freedom which is so beneficial is also one of the challenges these threats posed today. I know donald has commented on the events. How will this feed into the president ial contest . Anytime you have a terrorist attack, whether domestic or abroad, it is going to be of concern to people involved in politics. Inther running for office or office. This race has been about security. Who has the most stable, capable hands to deal with threats that face the u. S. We will see it continue forward. A paneuropean response, specifically in france, do you think europe with its challenges needs a more substantial policy response . I think there is no doubt this is not a problem to be solved by one nation acting alone. Youve got to take a paneuropean, frankly a western United States and allies in europe approach to this problem. , taking theto take fight to the ground against isis problem and iraq, is a the u. S. And european nations have shied away from. A we are going to gain successful victory against isis, it is going to take troops on the ground and that makes a serious effort. Thank you very much. The former associate counsel to the u. S. President , and joining us to discuss these events. We will continue to monitor that bastille day attack and bring updates to you. To some of thew other stories where covering. The global economy. The bank of england, mark carney and his officials have surprised interestciding to cut rates. Manus the Monetary Committee suggested they might act in august instead. Lets bring in simon. Argument is carney suggested he is prepared to, ready to act. People say this is reflective of what was a 2014, when he was unreliableoniker, boyfriend. Markets toward an expectation and did not deliver. Is he an unreliable boyfriend . Perhaps we have read into his comments. If we go back to what he said, he said we have to look at what is going to happen over the next two meetings. I was wrong. He did say, look at them as a package. To me, looking at in retrospect, there is a lot of sense to what he did. Of politicalt. Hange we are not just reacting to what happened over the next few days. Everybody was so negative. And think they will go august . It allows him to keep his powder dry. Anna they are still suggesting they are going to move in august. They said they are pleased with the way the policies have gone down. Not much time had passed. We were working on new Financial Market information. Course of thee last two or three weeks, u. K. Markets have performed as they should. 92 is a great example of this. Markets were cushioned to an extent. You saw the way the ftse worked. 250 has started to come back. You saw things, markets overall have functioned any well. That is the key here. You have seen nothing that would look like major panic. Otherwise, why would you be making such strong signals . That is it is interesting when you look at the performance of dollar sterling. We ended the day up 1. 5 . That momentum continues. 134. Almost post brexit highs. My question to you is this. His 25 basis points priced into this . Have a this momentum cap . Simon i think it will cap. Aat is fantastic, there is degree of calibration. We were trading below 130 when we had the news. Therese may was going to become the new Prime Minister. That was the removal of Political Uncertainty over leadership. That is how much of the decline you can take out for that. We have seen a to send rally pushing back when we are going to hike rates. Me, it means the remainder of the decline, the 150, that is the thing that reflects the uncertainty about the outcome of the negotiations of that eu exit. That is the big cap are here more than anything else. We still get the uncertainty, 1015 cents for sterling. Maybe we get to more than that but not much more. Anna stay with us. Manus more headlines on the latest on the treasury and nice. Where we understand 84 people have lost their lives with the french regional head of security says security measures were not enough. This is the initial reaction we are getting from the french regional head. As we get more details, we will bring them to you. Anna following the european football championships, that was a time of heightened terror attacks. We were reassured about the extent of the preparedness. That will be going into those conversations as well. 6 43 in london. Up next, we will talk about japan. Japanese exporters could be partying like 1999. The yen heads for its biggest weekly drop in over 17 years. U. S. Futures, siskel and 40 7 a. M. Here in london. The french president has extended the state of emergency and will the boy Security Forces after the bastille day attack. A truck drove for more than a mile along the boulevard pact with holiday revelers, killing at least 84. Officials say the driver was killed in a shootout with police. The french president and his interior minister say their country is at war with terrorism. Ask this attack that has this attack that has all the elements to be called a terrorist attack is of an incredible violence and it is clear we have to do everything to fight this terrorist plague. Terrorismin a war of that want to strike us at any price. Such as the ones i have seen in nice. The European Council president added his voice of support. He was speaking at a summit in mongolia. Foror france, for europe, all of us here. Our friends here in mongolia. It is tragic. The subject of the attack, people celebrating liberty, equality, and fraternity. We all stand united with the families of the victims buried with the french people. The government in the fight against violence and isis. Bayer has raised its bid for monsanto. The German Company upped its offer to a total of nearly 500 55 billion in cash. Theyer, it was reported may strike a deal with another german chemical giant. Investors are skeptical either has what it takes to read monsanto shares rose 3 in new york. Soared as much as 52 committed the biggest vote of confidence for the biggest tech app of the year. Expand across asia and eventually to america. That is your Bloomberg Business flash. Anna thank you. Weekly heading for a big drop. The weaker currency has helped boost trade. The index is on course for its best week in seven years. More, the fx strategist joins us. Remind us what is behind the big yen moves we have seen. Guest there are High Expectations sense prime abe got a victory, he is going to use that Political Capital to do a stimulus. You can see people are expecting something very positive and large coming soon. Manus that is in reference to the bank of japan and stimulus. Put some numbers around that. What do we expect . Guest one of the stimulus package is being talked about is ¥10 trillion. Obviously, there are hopes the bank of japan meeting will add to that with more quantitative , some other thing we havent seen so far. Anna thank you for joining us. The executive director. Give us your thoughts on the drivers we have seen. Ben bernanke in japan. More talk of fiscal stimulus. Guest the biggest driver has been the european situation. Particularly the u. K. Falls back. Sterling and yen are at opposite ends. Many have referred to the yen as being almost bipolar. The biggest weekly drop since 1999. Volatility is reflective of what happens if you go back over to the far side of the curve. Are you expecting more volatility as this the new as the stimulus is lateraled on . Guest another big stimulus is not going to make a lot of difference. The key for the yen is what has happened with asset markets. And what happens to the global bond bubble which is dominating everything. Anna we have seen these events taking place in the south of france overnight. Saying, this is making europe look even weaker at a time when europe does not know what it stands for. You have made the reference between what is happening with the yen and what happens in europe. With geopolitics looking so fragile, that that longerterm drive people to the japanese currency . Dont think anybody is coming into the japanese currency except the japanese themselves. They yen is much more driven by risk sentiment and the closing of carry trades which are large between the yen and european currencies. Any sort of terror event or anxiety about europe will cause to yen twoyear euro yen yoyo. Manus interesting the yen has not reacted to the tragedy. There are warnings from lack rock that Global Equity markets, you said a bubble in terms of the bond markets. Fink, the was larry index is rocking at home. Are we at the bubbles . Guest the bond market has been the driver the last few weeks. Yields coming down to low levels. Globale for markets. The biggest question for investors is what causes this bubble to burst . Fx. Ock on effects. Profitould be a wave of taking. Investors sitting on giant profits. When do they take that profit . That could happen at any time. It could be a casual trigger. A blood in u. S. Data. Blip in u. S. Data. These are the sort of trigger factors i would look at. We have seen ben bernanke in japan this week, and that has people talking about helicopter money. It has been suggested and then denied. Depending on how you define it, helicopter money is already with us. Guess it is with us in japan. We have had fiscal deficits where japan buys the bonds before they get to a secondary market. Skeptical about whether there is another experiment that is going to do anything for the japanese economy. Againsthe backlash negative yields seems to be entrenched. The bank of japan unlikely to go deeper into negative territory . Dont see them doing a lot more on negative rates. The bond market in bubble territory. They must be concerned about a big reversal. The emphasis will be on the fiscal side. Anna thank you very much for joining us. Brendan brown. We started, telling the latest on the terror attack in france. Coming back, we will return to that. We will bring you the news as it develops. The latest death toll, 84 people. Many more injured by this attack that took place on the south coast of france. E manus terror returns to france. 84 dead as a truck loaded with into a crowdhs celebrant bastille day. Francois called of military Francois Hollande calls up military reserves. This attack that has all the elements to be called a terror attack is of incredible violence and it is clear that we have to do everything in our power to fight this terror plague. The eu president calls the event a tragic paradox as people were killed so the burning of a, as people were killed celebrating liberty, equality, and fraternity. President obama called it an act of terror. Manus welcome to countdown. Anna a very warm welcome to the program. France has extended a state of emergency and will deploy 10,000 members of Security Forces after a estoril day attack in nice killed 84 people. A truck loaded with weapons including hand grenades drove for more than a mile. Withcountry is at war terrorism. War with in a terrorists will strike us at any price and in a very violently. Security totrong avoid things such as the night such as the one i saw tonight in nice. Anna dreadful things overnight. Tell us what is the latest and what do we know about what happened . We can definitely call this a terrorist attack. That is what the french president alone hollande said. All the leaders around the world are reacting to these. President obama offered thestance for investigation. He said, i condemn what appears to be a horrific terrorist attack. We stand in solidarity and partnership with france. The attack happened around 10 30 p. M. French time last night, in the middle of the best deal day set bastille Day Celebration. A big white truck, apparently the kind used to deliver frozen products or fresh products, that was rented, which indicates th indicates that the event was prepared in advance by the driver. The attack was happening around 10 30 p. M. There were thousands watching the fireworks, looking at the sky rather than the street. The truck first drove on the beach and then ended on the waterfront street. Ingles. Enade des according to witnesses des anglais. Going to witnesses, it drove more than two kilometers on this waterfront. Authenticateding by the french authorities at the moment. Supposedly belongs to a french tunisian, 31 years old, born in 1985. The truck was also loaded with weapons and hand grenades. This is very significant terrorist attack. If you are member, 80 people died at the bataclan. Manus we have a few more headlines coming through now. We have the russian Prime Minister saying europe and asia must unite against terrorism. More than one dozen children have been killed in this incident in nice. A state of emergency, caroline, wasnt said to be lifted in a matter of weeks. That has now been extended. The mayor of nice for several decades has recently become the regional head of the southeast of france. He was speaking on the radio a few minutes ago and he said he felt security measures around the firewalls and the bastille Day Celebration were not sufficient. The state of emergency was supposed to be lifted july 26. Llandes what president ho had announced earlier on bastille day. The state of emergency will be extended another three months which gives the government housel powers to discuss arrest. Extraesident said an 10,000 military officers will be deployed across the country. The reserve forces of the military will be called. The reserve forces are the people who have left the army in the past five years. Obviously, the volunteers will come first and help. This is not only for the volunteers, this is required by law but if you have left it around me for less than five years ago you are supposed to be a part of the reserve military forces. That franceone said will continue to carry out airstrikes in syria. Caroline joining us from france. Weg us on set, david, are hearing from caroline about the possible identity of the person who carried out the attack. Nobody has claimed responsibility for this attack. What does it look like . The language that president francois hollde have been using in their public appearances suggests a parallel with earlier attacks in france. As you say, too early to say for certain. Bernard kasanov, the interior lower with a group that will strike at any price. The seventh terror attack in 18 months. France is the center of focus in terms of the european terror attacks. That only seems to be escalating. This has been the case for several years now. France has all those conditions to remain the center of european terrorism, the european terrorist threat. Its going to critical mass. People who are vulnerable to radicalization to attack france. The conditions for that are not likely to change. It doesnt mean they could not be attacked elsewhere. As we saw in brussels, we have seen a number of false attacks in germany. Anna all of this in a time when populace pressure is increasing in europe, and europe is asking itself what it is, the political construct. That is a dangerous combination. One of the aims of terrorism is to sow political instability. That is something that europe already has at the moment. It is a combination and a feedback loop. The people who will further enrage minority manus caroline was just updating us. Calling up the reserves. The head of security from the southwest suggesting security was not as tight as it should tournamentotball that we have just seen. It needs a much more heightened sense of vigilance . Is it just that france is in isolation relative to its peers . I would not say that france is in isolation. Manus i used the phrase that they are doing everything that they can. I mean, they are left in a moderately isolated position and Everyone Needs to do more to support them. I think the threat in france is incrementally greater than other places in europe. It has to be a europewide initiative. Thingan be a crossborder just as easily as it can be a story of the french urban disaffected youth. The policy response has to be on the european level. It is difficult to get that response when it is a very asymmetric kind. Anna president lund has already set president hollande has already said that the french actions in syria will continue. Directly after that event he made that point. Can you help us understand the links there . That does suggest clearly president hollande believes this to be linked to the islamic state. He cannot say we will ease off on a tax in syria and ease off attacks in syria and iraq. He is determined to see this through. Manus what you make in the shift of the nature of this attack . The carnage that we saw with machine guns in paris. Here we are with a much more aggressive attack, getting a truck and driving it straight down a boulevard. There is Something Different about the nature of this attack. A lot of the jihad propaganda has focused on, use what you can. Improvised explosives. Going back 10 years to attacks in london and madrid. They have become harder to get a hold of, harder to plan. You need big groups so they are vulnerable to infiltration. Firearms came into a place but there have been a number of vehicle as weapon attacks in the years before. One in the netherlands before christmas. Message we have seen before but on a much bigger scale. We will continue to bring you the breaking news that we get. Manus time to reset. In light of everything that has rance,ed in the south of fa lets take a look at how the markets are set to open. And a. M. In paris frankfurt. Every market has indicated that is a little bit lower at the moment. You are seeing a moment of pause for breathe. Lets look at the risk radar. That puts a little bit more risk around it. We had a conversation about, not the immunity of markets, but if you look at the topix headed for its best week since 2009. Stimulus is driving the markets. Dollaryen headed for its biggest weekly drop since 1999. Anna the market is certainly moving on that story. 1. 4421 is where we are on the pound versus the dollar. We have the volatility index, the vix, in there as well. Down by 1. 7 at last reading. Manus the big rally in stocks and bonds have some of the top Money Managers putting up warning signs. Harold marx joining the course along with bill gross and others. Anna the threat of brexit on the horizon as well. Lets talk about Global Equities which is written by 4 trillion. On speculation that Central Banks will boost stimulus. Lisa mcdonald is the cio and she joins us now on set. Lucy, good morning to you. It seems that the markets are the story this week has been that markets are rising on expectations of stimulus. Faith,pectation or that is it well placed . Rise, thether we greater the risk. That said, the corporate environment that is t the fundamentals behind it is not that bad at the moment. Where coming through a period of down earnings. Gt looks like its gettin slightly better because you are taking out the negative from energy. Also, i think the outlook statements will be very cautious. In this environment of uncertainty. Be cautious would as a ceo. There is some fundamental support, but we know the biggest driver of all has been liquidity and will continue to be. With bond yields as low as they are, valuations will stay as high as they are. Manus lets talk about the world. If shifting policy dynamics around the world. The United States potentially looking at rate hikes. Valuations in the staes, 20 states, 20 times reported earnings. On the left side we have topix ramping away. My question is, one about an fx trade, the other about a rates trade. How do you look at the two biggest blocks in terms of allocation . We look at stocks. We are investing come present investing, we are in companies and getting our markets a lower than the rest of the world. It is very broad and diversified. Gain interest in times of uncertainty. We have seen that move toward a morech has kept expensive than elsewhere. That is the case. As far as japan is concerned, the strength we saw in the yen again which is a move toward safety post brexit, that is going the other way now. That will determine how the japanese market performs. Always that negative correlation. The yen is the most important thing. Anna what is your interest in japan . Thing that ihe one did today. Very negative a impact because the yen is so strong. Bizarre, butittle it has worked. The reaction that the market should be most hit by brexit seemed strange. Manus the reaction and markets is interesting. The relief rally in sterling. Midcaps so seen the return. Try to crawl up the hill, so to speak. From that perspective, argue less worried about brexit, or are you thinking, we are being moderately lulled into a false sense of security . I was not that worried about brexit that day. It seemed we had no idea what would happen next and i think that is still going to take a long time to sort out. I think that the concern you would have is if the consumers and companies are too worried to spend and that is what we are watching, you are looking at the advertising agencies coming out. Is there any change in the expectations of Company Spending on advertising . That is a good early indicator. Its not that clear. In the u. K. , yes. It was slowing down before. Elsewhere, it is early days. We are not seeing any sharp slowdown in advertising. Serviceat the i. T. Companies. On the margin, there is a little bit of a slowdown, but it is mostly confidence at this stage. Theyre worried about that this morning, worried about how verbatim what you just said. X on an outlook point of view, its all going to be negative because they are looking at uncertainty, brexit, terrorism and wondering about the future. As far as the absolute impact of brexit itself, that will be different. Lets go to the Bloomberg Business flash, david ingles is with us. Just an update here that french president has extended a state of emergency and will deploy 10,000 members of Security Forces after the best deal they attack in nice. A truck loaded with weapons and hand grenades trophy more than a mile pact with holiday travelers. Injuring hundreds more. Officials say the driver was killed. Francois hollande and his interior minister said their country is at war with terrorists. That has all the elements to be called a terror once again of an incredible violence and it is clear we have to do everything in our power to fight this terror lake. We are in a war of terrorists who want to strike us that any price and in a very violent way that demand strong mobilization of the Security Forces such as the ones ive seen in nice. The european president added his voice of support in the wake of the attack. Its a sad day for france and europe and all of us here and its a tragic part. , we have people celebrating liberty, equality, and fraternity. Firsthalf profit fell by as much as 60 in asia. Sales are forecast to decline about 12 . European car sales growth slowed in june as the brexit weight on business and consumer confidence. The first half market share has continued to linger. Renaults registration jumped the most among the top 10 carmakers. More reactionng from around the world and around europe to the attack in nice overnight. The german chancellor uncle a merkel speaking at the au summit in mongolia. Uncle a merkel saying that germany is standing at frances side against terrorism. Still with us is Lucy Mcdonald who is the cio for Global Equities and elians allianz global investors. June risear sales in by 6. 5 . That is slowing in the u. K. Banks are a very idiosyncratic story on their own but this is all about the consumer industry. That is perhaps the biggest worry for you, how does that play out. Consumer confidence in corporate confidence. Normally corporate confidence can be very sharp and have a big impact. As far as the car industry is concerned car sales are at a high level across the world. Its not surprising that they would be slowing from here. Elsewhere, the swatch data has more to do with the luxury space and in asia in particular weather has been a lot of over expansion in luxury. Pullback, seeing it expectations for demand are too high. Industry levels are being adjusted. Its more to do with the luxury space. Its that biggest drop in profit for 15 years in swatch and they are talking about that slowing. That has been going on for about two years. We thought we would see the trough of it, but it doesnt look like we have. Anna you mentioned corporate confidence. Business executives are having to manage concerns about brexit, constant terror headlines. Does all of that at up to anything that you have seen already in terms of corporate confidence . Is it dipping already in europe. In the u. K. , it was certainly falling before the referendum. Stabilizedprobably no have a government that cannot do any harm. The actual results that we will be seeing out of the u. S. Are not bad. On that point you made about the government, will that be enough in the u. K. Context to get some businesses back in the mindset of spending . Even though we have so many things we dont have certainty on with europe and brexit negotiation still ahead, do you think the fact that we still have the government in place is enough to get spending . Doesnt do any harm for confidence. Its on a bad thing but also sterling as far as the u. K. Is concerned will help on the margins for some of the corporates. Thereabouts. Ably thank you very much. Lets recap some of the major headlines are have coming from france overnight 84 people have lost their lives. Merkel condemns the attacks and nice and france should call them mass murder. Thats the german chancellors reaction to the very latest in terms of that tragedy overnight. The interior minister says we are at war with terrorists who want to strike at us with any price. We are in an extended state of emergency in the second terror attack in 18 months in france. The french have been applying extra Security Forces. We know that a vehicle loaded with weapons and 10 gross was telling us earlier along the beach. Those who were assembled are watching a fireworks display to commemorate the storming of the bastille with more than 80 dead had the truck driven into that crowded area. The driver was killed by police after what seemed to be a gunbattle. Have reports at this stage that it is a tunisian french Identity Card that was found but that is unconfirmed. Morning thatnice security was not sufficient. We get more of the story throughout the day on bloomberg and we will bring that to you. It can be like finding a needle in a haystack. You can be sure that the university educated professionals are looking for serious relationships. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. It is 7 30 in london, a already in nice, france. I am guy johnson alongside Caroline Hyde in berlin. Here is what we are watching. Terrorism returns to france. 80 people are dead in nice. The french authorities have extended the countrys state of emergency for three mohs