Transcripts For BLOOMBERG Countdown 20160815

That is tomorrow. Manus you are welcome. It is monday morning, it is countdown. Pound, are net short the and they have been for many years. We are around 129. 20. We are near a 31 year low. Net position isnt short as short can be. Post brexit, the morning we woke up, 127. 98. 10 sayne dollar 1. 10 is on the way. We have been rising for five straight days, giving a little back. Parity is on the way by the end of 2017. Have a look at the risk radar. Oil on the move, gold on the move. Chinese stocks hitting a sevenmonth high. Not much owned, not much love. 39. 29. Real estate Property Companies are headed for the steepest two day rally in almost a year. We have more from asia. The Saudi Arabian oil minister mentioned last week in a statement action to stabilize the market. 47. Is trading above 50 is on the way, that is what the market is saying. We have had two days of negative positions. Thats a longs on gold have now dropped. A lot to play for in terms of this week. We will have a razorsharp focus on countdown. Lets get you bloomberg first word news. Tom mackenzie is focused in hong kong. Tom japans economy grew less than forecast in the three months to the end of june. Gdp extended expanded by annualized 2. 2 in the second quarter. The news comes as business spending contracted for a Second Straight Quarter and they struggle with a resurgent yen. The u. K. s exit from the European Union could be delayed until late 2019. They may not be ready to start negotiations as early as predicted. The brexit and International Trade ministries are still recruiting staff, making it unlikely that britain will invoke article 50 until late next year. London properties are taking longer to sell this month despite the summer price cuts. Homes in the capital are staying on the market for five days longer than in may. Moveeak to the right director at 9 30 u. K. Time. Of t evacuated after after initial reports that shots were filed. Shots were fired. Theorities have said that facilities have been cleared and no shots were fired. Hasleader of hezbollah cited donald trump for saying barack obama created the islamic state. His remarks revive the claim t from initially declared that trump initially declared being sarcastic. You can find more stories on the bloomberg at top. Manus of course, you are in beijing. Strong yen continues to weigh on the japanese economy. 0. 2 d quarter gdp grew year on year. Joining us now to discuss the data is bloomberg newss editor for japan. The key take away for you in terms of the growth story . Private consumption remained not strong, but remained at a growing pace. Business investment fell for the second quarter. The drag down on the growth number was net exports basically. Exports did not grow strongly over the three months so they undercut the growth. That is weighing on companies. They dont see strong domestic demand and they dont see strong overseas demand so they are cutting back on investment. Every time we see one of these chess pieces of the board come through, everybody immediately runs to what with the policy response be . I know we are in a policy vacuum in japan as long as the review by the bank of japan goes on. What will this chess piece due to that equation . James the thing to remember is preliminary data. The preliminary gdp numbers often get revised in japan up or down quite substantially. I think the bank of japan will wait and see what will happen with the revisions. They are also looking to revising wholesale the way that gdp is calculated. Japan,r the bank of obviously they are going to have their policy in midseptember. The government has already announced a fiscal stimulus package that has been announced by parliament yet. We will see revisions of these numbers and also the government will start spending. If that has the effect that the government claims it will, that will have a bit of a boost for thirdquarter gdp. Most of this data that came out today doesnt include much of the brexit affect. Whatever affect brexit will have on overseas demand is not really going to appear until the next set of numbers, which is due out in november. Will thoseney numbers will take time. Lets get into the markets now. Juliet sally is standing by. Global equities are near oneyear highs. Juliette the asian regional index has been trying to hang onto that one year high, but really that weakness coming through in japan having quite the adverse impact on the overall sentiment in the region. The gdp now missing expectations. We have seen quite a bit of fluctuation coming through today. You can see a lot of the weakness coming through a lot of the iron ore and also the paper manufacturers. We have seen some increase in terms of some of those other export companies and also in computers. Toshiba up. We have seen an increase on the market, its best gain since may of this year. We had some weak Economic Data out of china since friday. We are seeing a very solid upside in terms of equities. That is essentially as investors that theyt to bet will be coordinated Bank Stimulus coming through. In hong kong, stocks at a ninemonth high. That has been lifted by the oil story. Also, the Hong Kong Government reporting that its gdp grew at the fastest pace since 2001. Some very solid upside. The Australian Share market also seeing that boost, up for a Third Session in new york. Southeast asia is a little mixed. The weakness in japan weighing on overall sentiments. There has been a day rally coming through in Chinese Development companies. This is on reports or speculation that there will be a lot more merger tieups in this space. You could see a lot of these Development Companies hitting that 10 daily target. With an Freight Company 88 fall in fouryear profits. Stess mining, a newcre mining, a fall in its profits, and that is due to weak and gold prices. Joining me is the chief economist and managing director at gplus. Business spending down the second consecutive quarter, private consumption not great, that exports not great. Net exports not great. It has been an off system i think and offseason i think. The math has been kind of out of sync with the underlying growth narrative. I think the data highlights the fact that this is an economy that faces very sharp structural headwinds, which is in sharp contrast with the keynesian consensus. When you look at the publicsector liabilities, we looking seriously at the constraints of what policy can achieve. Public debt in japan, up 230 . When you look at the bank of related toets nominal gdp, more than 90 . An have to become particularly when it is in the middle of a deflating region. Manus you talk about a trifecta. You talk about structural headwinds and you talk about yuan against the japanese currency. If you say that the normal policy did policy response does not work is it helicopter money . The imf saying you need a nixonera response. That is to intervene and raise wages. What do you think of that . Lena we need a rebalancing of balance sheet. Seeing ins what were that this is an economy that is harboring shortterm growth, which is the reflection of longterm structural headwinds. Manus are you an advocate of helicopter money . What are you an advocate of . You need something radical to get japan growing. We should have started with helicopter money. What qualitative easing has done is that it has helped thelyside without supplyside and household balance sheet. Perhaps it is this rejection of Balance Sheets through higher spending power and real wages growth that has got to take us out. Manus we should have started with helicopter money. These are the trading relationships. China, the United States of america are the top participants in terms of the japanese growth story. In your notese were you say that the 18 rally in the value of the yen against the yuan is one of the real headwinds for this economy. Think the yen strength has been a sort of shock absorber for global balances. In the past, concern about the effects of a weaker yuan over a Global Deflation cycle, it is clear with a stronger dollar and the headwinds it represents or with respect to weaker commodity prices, it is clear that, this time around, rather than going to a stronger dollar, 80 of accretion of the yen against the yuan shows the constraints of the bank of japan policy. Manus should i be more preoccupied that shifts preoccupied by shifts in yuan yen more than dollar yen . Lena yuanyen is an important axis to this relationship to the extent that the boj will sit back and watch the yen appreciate without more stimulus as the market have been expecting this year. I think perhaps we really should be looking at the constraints, the time that japan takes strong monetary response. Manus i want to show you the misery index. Not because we are miserable on countdown on a monday morning. But the misery index in japan is near its lowest level since 1995. You begin to understand the real misery of the sales tax hike. It should possibly have a little bit longer. Lasta 33 year high time we had the most miserable level in japan was in 1981. The japanese are happy with deflation. Moderatelyyment, priced bowl of noodles, life is good. That is the mindset that shinzo abe has got to break. Lena to the extent that we are all looking at those concerns about monetary and fiscal policy we had just come out of a debt crisis in the eurozone. It wasnt that long ago that we were concerned about the withive feedback loop sustainable debt levels versus relatively anemic real gdp growth. Japan might look like the future for the rest of the world. Concern here that we really do need to look at more supplyside structural policies across the world in order to bring productivity back. Manus lets see what more stimulus might still come. Tomorrow, we get the first hard data of the u. K. s post Brexit Economy with july inflation figures. Wednesday, the minutes of last month fed ratesetting meetings. Account of the latest ecb policy decision. Saying that it would respond to the brexit recommend a with restraint brexit referendum with restraint. A capital injection for the cashstrapped group. Plus, budget bus stops. How a few with a secretive family how the feud with the secretive family behind the aldi Supermarket Chain is coming into view. Manus it has just gone 6 20 a. M. This monday morning in london. 1 20 in the afternoon in hong kong. ,961. Ang seng trading at 22 along with the Global Equity markets come at or near a one year high. Lets get the business flash. Shares in japanese tv maker sharp continue to search. A purchase of the company was approved in april but was delayed by chinese antitrust proceedings. Sharp shares have risen by about one third over the past few days. Approval from shareholders to buy out his Property Unit for 4. 4 billion. The approval clears the way for hong kongs biggest ever private deal. According to estimates compiled by bloomberg, the bank of japan is on course to become the number one shareholder in 55 nikkei listed firms by the end of next year. The central bank is already a topfive owner of 81 nikkei firms. It happened after the boj governor almost doubled his buying target last month. It is part of an Unprecedented Campaign to revitalize a stagnant economy. Isvate equity firm kkr reported to be making a play for peppa pig. They are looking to buy entertainment one, which owns the preschool cartoon character. Entertainment one has already rejected an offer from u. K. Broadcaster itv. Manus thank you very that, Tom Mackenzie. This week is going to be the first round of hard data in terms of economic numbers since we had the brexit. It includes inflation, retail sales, and unemployment data. Atnk of england sees the same time he surveys and estimates have mostly pointed to the decision to quit the eu prompting the downturn. A trifecta. I love that word. Inflation, unemployment, and retail sales. How bad is it . Lena brexit has caused the of. s enviable growth format aaa reserve currency, house assets, all of that, to come to a stop. A month and expectations, going to pass through a weaker housing crisis, which is a shock to a consumers balance sheet. A much weaker pound, the doubledigit appreciation to a 31 year low. That will have a knock on effect. The question is, can sterling weakness result that 7 gdp current account deficit. We are not in the 19th century anymore. The 21st century u. K. Economy is services dominated, capitalintensive. It is not as Exchange Rate a lasting as it may have been Exchange Rate elastic as it may have been in the past. Manus they went for bond buying, quantitative easing. What was the right mix in your opinion . It was too much time to talk about the rate cut and quantitative easing. It is all about credit easing. The easing in terms of the liquidity ratio for banks. All of that amounts to a very powerful stimulus. Manus the demandside is there. Lena you hit the nail on the head. When you have that large current account, or external deficit the u. K. Economy, in the words of governor carney, has been relying on foreigners to fund its growth model. This is no longer possible, hence the sterling collapse. The fact is that sterling has been a shock absorber. It wont be enough. They have to do more. Manus so, downside on the pound. People come in here and say 1. 05. Some are saying parity for eurosterling. We are at the beginning of, i think, sterling weakness still. We have been trading speculative data. Now we are starting to see some hard data. The risk of the recession is going to start materializing. That impulse will remain there for the sterling in the market psychology. I think what is important here is, and less we are looking at stronger Global Growth and stronger Global Demand for u. K. Services and goods compared to the period when the uks current account deficit was being built up, when the global trade trend was close to 88 Global Growth today is close to 2 . We have to work that much harder to support Global Demand. And lest we get stronger Global Demand for u. K. Services, we have to look at domestic demand correction. That will mean a recession. The question is how far and how long. Manus how deep will at recession be . The bank oft think england stimulus has been an out. I think it will last at least three quarters. Manus up next, headache for kuroda. Is the bank of japans stealthy takeover of the nikkei just inflating a bubble . Avtk0 gone 6 30has just a. M. In london. 1. 29. Yen, a beautiful shot of the emperors palace. The day begins with daybreak, available on your bloomberg and your mobile. If you want to understand this is a marketing mans dream. This is what olympic gold looks like. Usainas hussein bolt, bolt, the first athlete to win the 100 meters three times. He ran it in 9. 8 seconds. That is the very personification of bringing home the gold. Next story up, back to finance. Back to brexit. This is theresa may. Her ministers looking very happy there. The brexitt won campaign sitting right beside her. Article 50 may not be invoked until 2019. New departments will be set up eu,andle u. K. s exit of the which will not be ready if theresa may invokes article 50 in january of next year. The situation is described as chaotic. Finally, we focus on the pound. Already the worst performing currency this year. It did come under more pressure this week. A trifecta of data. Inflation, retail sales, unemployment. Started,st getting some say, on the downside in the sterling devaluation story. There must be a capitulation for mark carney and the bank of england. Dontrse, Central Banks focus or target currencies. They would never do that. Asia shares are near a oneyear high as Rising Oil Prices are bolstering. If you are glass halfempty, you might look at the mnti and by 0. 2 . S off we are seeing some losses on the topic today. Halffull, are glass you will focus on the fact that we are holding near a oneyear high on the msci asiapacific index. The shanghai composite has actually jumped by the most since may, to a sevenmonth high amid speculation that takeover activity will pick up. Also, of course, there is the oil price. 50 oil insight. We are looking above 44 a barrel on wti. This, after wti posted its biggest weekly increase since april last week, amid speculation that we might see some kind of stabilization of markets at informal opec discussions next month. Money managers as well increasing their bets on rising crude prices by the most since january. Looking at sterling, i know you have been talking about it this morning. One of the bestperforming g 10 currencies today, although one of the worst performing this year. It reached a onemonth low earlier. Evidence were going to get on how the british economy has performed postbrexit. The next positions in blue. Hedge funds and other speculators have raised their net bearish wagers on the town. This is the most on record. Manus lets get to tokyo now. We have had a disappointing set of gdp data. How does that transfer into the equity story for you . I think the story is really that the economists got it wrong rather than the numbers were disappointing. Three months ago, we were talking about the numbers. I said that the growth was coming predominantly from the fact that it was a leap year and the numbers were failing to adjust for that. It seems to me that people have failed to adjust for the fact that the leap year effect is not coming in every quarter. If you then remember that what we had in the june quarter was a large earthquake, and actually we have done quite well bearing that in mind. The First Quarter numbers were an evenup, producing higher place to compare them against. They warned bad numbers, and if you look at the profits of the quarter, they were pretty good. Manus with that in mind, less of a need for additional stimulus . Economics says we should have started with helicopter money. Nicholas i think there is very little chance that the japanese government is going to do helicopter money by the time talked about by bernanke. They have done it before in 1931 and the results were horrific. They are producing money at the rate that Government Debt is increasing. They are already monetizing pretty fast. But, the straight helicopter money, i dont think it is a go. We just had a decent sized fiscal package. I remind people that fiscal packages in japan are like london buses, they like to travel in convoy. Manus 0. 2 growth, currency which is not responding in the direction that abe would like, pretty sanguine picture there. Thatlas i would say things are not looking at all bad. If this same quarter, the june quarter of 2007, profits were exactly the same as they are now just before the Global Financial crisis. But in that quarter, the yen was now we are ¥14 stronger, at 109. Manus and the appreciation obviously, in the yen, with the , isese renminbi, the yuan also a demonstrable headwind, shortly . Nicholas i dont think the chinese are particularly large competitors for the japanese. The secondlargest trading relationship with the japanese, no . It is the secondbiggest trading relationship on a global basis. Nicholas and the vast majority of that, the chinese cant afford so they bolted together and send it across to people who can afford it. It all dropped out of the numbers in the end. There is very little correlation between the currency rate and japans relationship with china. Obviouslyt is something to consider. Lets think about this then. Not a bad set of data in your opinion. The last time round, we saw the profits at these levels, that was 2007. How much of japan equity do you want to take on board . Nicholas i think that, if you bear in mind that, in all likelihood, global trade has been going absolutely sideways since about this time in 2014. Japan is usually a good play on global trade. I wouldnt suggest you want to go into any of the exporters at the moment, but i would suggest you want to go into stable profitgrowers, companies that pay out a loud dividends and continue to pay the amount . Pay them out. I am taking some pain on the construction companies, but i believe this fiscal stimulus will be followed by another fiscal stimulus. A lot in telecoms and pharmaceuticals also. Manus thank you very much for sharing your thoughts this morning. Holas smith with clso in clsa in japan. U. S. Producers have added rigs for 14 weeks in a row. We are incrementally rising. Strikingwithin distance of 50. Wti is on the move higher. This chart of the hour looks pretty stunning. There is so much attention being given to the informal opec talks that are imminent. Saudi arabia signaling that it is willing to support prices. Arguably, they are saying it is unrealistic to pin hopes on any move by opec to support prices. That is possibly why you should be looking at this chart. Fleets the u. S. Rig building once again. 396, up 15. 66 more since june 24. We also put up the line in yellow. That is the reference line for wti. You can see, levels we are at that we have not seen since march. It is indicating that u. S. Producers are comfortable in the current price environment. What this could mean is, as they come back online, this could have implications for u. S. Oil production, which could added to the overall supply glut. Manus thank you very much. The chief economist and managing director at g economics. Ash btv this is the rate count the rig count rising. 47. 51. Ades that lena from a topdown macroeconomic perspective, the Energy Markets in particular have become the academy of global imbalance. Of globaltome imbalance. This inventory overhang has really become reflective of market concerns about the anemic Global Demands, particularly given highly leveraged emerging markets, declining productivity, lower return on investment in the global economy. On the financial side, week oil prices have come with a long period of lowflation. We are in a world of huge imbalances, imbalances between high financial inflation versus low real economy inflation. High velocity of money in financial markets, low velocity of money in the real markets. That creates systemic imbalance in the global economy. And lest we get some kind of lever in terms of growth, then it willation, remain a fixture of Global Financial markets. I have another chart which i want to get your opinion on. This is chinas production of oil. This is chinas production of coal. Oil production is down 8 . Coal production is down 10 year to date. But i am fascinated to know is, is this a signal of the imbalances that you were referring to . Chinas production of oil is at the lowest level since 2011. If chinas production is slowing down, oil cant get above 50 per barrel, we are in fundamentally a much lower, longer bandwidth. Lena it is indeed the contrast between the contraction of real Economic Statistics and the new higher highs in financial valuations of financial credit spreads, which shows that there is a clear constraint here to policy. It shows that it is perhaps the changes of liquidity driven by Central Banks as opposed to real economy fundamentals. Financial valuations are getting out of sync with the real Economic Statistics, such perhapsrsupply the even more important story of the debt deleveraging. China doesnt have a growth problem, it has a debt problem. It is a Corporate Bond market which is double the size of the u. S. Economy. That cleanup process still has to start. Is,other thing to remember 2016 is extraordinary for the fact that it has brought down two core growth models in the global economy. The u. K. Currentaccount imbalances, financial aspect financial asset inflation versus the chinese model, the weak currency trade imbalances. These are the ingredients the fact that the yen is stronger against both the dollar this is not a sustainable environment. Manus japan is importing the deflation. Thank you very much. Komileva, you stay with us. How a few with a secret family behind the aldi Supermarket Chain is spilling into public view. A surging yen has pressure on the doj. A big week for fed watchers. Fomc minutes will give further clues as to whether the central bank really is data dependent. Manus it has gone 6 48 in london. 1 49 a. M. In new york. The weekend never ends until you are waking up on monday morning. Stocks up 0. 8 . A business flash. Firsthalf profit more than doubled as a higher gold price boosted revenue and a lower rand and a weekend rand lowered costs. Japanese tv maker sharp have continued to climb in tokyo after foxconn completed the purchase in the state of the company. The deal was completed in april but was delayed by chinese antitrust proceedings. Lionaire ones and you and and billionaire has received approval from shareholders to buy out his Property Units for 4. 4 billion. It clears the way for hong kongs biggest ever privatization deal. They will move to Mainland China where companies are high are fetching higher valuations. Manus the german Supermarket Chain aldi has always reveled in austerity. But, that hasnt stopped a widening scandal about the extravagant spending. The ongoing feud between the secretive family behind the budget brand has upended decades of excessive discretion. David, tell me about aldi. What is going on behind the scenes with this fairly successful retailer . A tawdry affair has gone public. David this is a family that has been so private for so many years. They are the children of one of the founders. We dont even know their names. They are 26 and 24. There is a fight between the sisterinlaw and the son of the founder. The son of the founder, his brother dies and his sisterinlaw has taken over that share of the familys trust. , why areing son says you living such an extravagant lifestyle . Extravagant lifestyle . By billionaire standards, it is not that extravagant, really. Manus how has it been received in germany since they are such a private family. David the german public has been loving it because they had no information about this family forever. Albrecht jr. , the son of one of the founders, he has actually talked to the press , done a couple of interviews, talked about how his sisterinlaw is doing things that are impugning the reputation of the family. It is unprecedented really for this family. If at impact on aldi, all . David the two sides are fighting more or less for control of the company. Sisterinlaws side of the family, they are pushing somewhat more upscale. To understand aldi, there are two aldis, aldi nord in the north of the country and aldi sur in the south. D has really kept with this austerity. The least pleasant Consumer Experience you could imagine. If this continues, you might see a slowing of that move upscale which a lot of people are telling us is really needed for this company. Austerity just doesnt sell like 1985, 1975. 95, manus one billionaires and their kids actually get up to. Story. Senior editor there for us in berlin with the latest on the aldi. Feud behind it is fair this week. Will issuen and co minutes for the july policy meeting when officials left Interest Rates unchanged. The market is currently pricing in at 42 probability of a rate hike by the end of the year. G economics is with me now. I want to get right to the rob up the rub of the issue. Gdp, bash. The dollar is getting battered. What can the minutes due to change the dollar story . That the fed has been extremely cautious given the stories from the u. S. Labor market and job figures, but also from the gdp figures in terms of the supplydemand of the economy , and also the housing figures. The story here is one of a capacity, late cycle but your recovery economy. Yes, the fed has been extremely in the vein of the fact that Global Financial stability looked quite shaky when the fed stopped quantitative easing and started talking about the first rate hike. It has been like eight months now since the fed did the one back in december. At this point, i think the markets are clearly concerned, the fed is clearly concerned about this. I think that we should be near. The probability of a rate hike this year is stronger than the markets are pricing in. We have much stronger demand. 4 annualized consumption growth versus diminishing supply growth and a huge inventory drank in the second quarter. Clearly, we have to see stronger investment in the Third Quarter of this year. You obviously have a spot lunch over the weekend. Treasury markets underpricing. Thank you for having your thoughts. Leva, chief economist and managing director at g economics. Dozens referred to the share price. A key post on brexit earnings. That is coming up next. Exactly what is it . A bright and Beautiful Day in london in the middle of the summer. Manus japan disappoints. The economy grows less than forecast as spending contracts. Stocks are lower. 50 oil is insight. Brent prices for a third day as opec rekindles hope of an output freeze. London properties are taking longer to sell this month despite summer price cuts. We will bring you the results in just a moment. Brexit gloom. The pound weakness prevails before the hard data this week. First to come, inflation on the board tomorrow. Just on 7 00 a. M. In london. Good morning. Im manus cranny. New homes from bovis homes. First half revenue, 408 million pounds. They did say it was going to be a tough first half. The average selling price on legal completions comes in at 254,000 pounds. We just had the survey overnight talking about the difficulty here in the capital per se in terms of properties remaining on the market about five days longer. People are on holiday, hence the reason things are a little bit difficult to assess. First average price of selling a , 254,500. Bovis homes they remain confident in the strategy that they will deliver longterm growth. Those are the banner headlines from bovis homes. As we get more, we will bring that to you. Global equities are near a oneyear high. Chinese equities also rallying. This is the European Equity stock market. Euro stoxx 50 up. Oil is never far from the momentum. Euro stoxx 50 up 0. 25 . Light energy heavy, pound. Keep an eye on that. Heres your risk radar. Shanghai composite really roaring ahead. Youve got potential m a in the property sector taking your market higher on the shanghai composite, headed for the steepest twoday rally in almost a year. Saudis, by the potentially talking about the ability to have an agreement to stabilize the oil market. 44. 88 one nymex crude. Gold had seen two days of drops. As we go into thin week. Will give the fed minutes this week. 47. 13. Eck on brent, looking back across the bovis, we are focused on anything they say in regards to brexit. They are saying it is too early for the market to get a handle on the impact of the brexit referendum. Achievedes chief 90 of its sales volume target at the august watermark. Lets get to Tom Mackenzie standing by in beijing with the bloomberg first word news. Tom japans economy grew less than forecast in three months to the end of june. Dvd extended 0. 2 gdp expanded 0. 2 . The data comes as business spending contracted for a Second Straight Quarter can exporters struggled with the resurgent yen. The u. K. Exit from the European Union could be delayed until 2019 according to the sunday times, which said they may not be ready to start negotiations. The paper also reported that brexit and International Trade ministries are still recruiting staff, making it unlikely britain will invoke article 50 until late next year. London properties are taking longer to sell. According to a property website, homes in the capital are staying on the market five days longer than in may, the month before the u. K. Voted to leave the eu. We speak to the director had 9 30 u. K. Time. Two terminals at new yorks jfk airport were evacuated after reports shots were fired. The new York City Police department tweeted that ball terminals have been searched and cleared and no shots were iron. Were fired. The leader of lebanons Hezbollah Group has cited donald trump in accusing the u. S. And president obama of creating islamic state. The shiite leader is the latest american adversary to quote or praise the republican the many. Dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg had top. Im Tom Mackenzie. This is bloomberg. Manus thank you very much. When it comes to putting the great beast of betting together, value is key. William hill rejects a proposal. This is a combined bid from rank and ace ace ace. One of the things that is pervasive in putting this deal together, in the press over the weekend, with the prospect of a monsterould be relative to the other peers. William hill rejecting a bid of 352, closed at 333. 7 friday evening. Fromprojected a 352 bid the consortium. Proposal, theyve rejected that proposal. Stump up, i suppose is the message from william hill, or perhaps there might be a white knight in the corridors. That is the headline on the william hill deal. Lets get more detail on that. Lets get into the markets now. Juliette saly is standing by. Disappointing japanese growth data. I guess it was a miss and that has since some weakness through the nikkei today, but if you want to look at the broader picture, it has not been too van of a monday. The regional Index Holding onto the near oneyear high, mostly driven by this very strong surge biggest, up 2. 7 , the jump weve seen since may. Chinese stocks at a sevenmonth high. We did have some week lending data, but there is a takeover speculation lifting the property developers, and also these reports that the shenzhenhong kong link which has been anticipated could be given the green light as early as this week. Stocks in shenzhen and shanghai lift quite significantly today among those developer stocks. Here in hong kong, stocks at about a ninemonth high. Gdp in hong kong growing at its fastest pace since 2001. In australia, the Energy Stocks doing quite well. In terms of the annualized number, 0. 2 compared to estimates of 0. 7 growth. A miss, but positive movement coming through in some of the export companies today, the tech stocks and the computer space, toshiba up 6. 3 , the nikkei closing down 0. 3 . Looking at the data out of china on friday showing that lending slowed, that has since that has sent the yen, the yuan i should say, down 0. 2 . That is its biggest fall in around six weeks. Significant weakness in the renminbi. Manus thank you very much. Great roundup from Juliette Saly kicking off your day from hong kong. Weve got a strong yen. Secondquarter gdp, weve had the numbers. 0. 2 . The expectations, 0. 7 . Jodi schneider is our Bloomberg Asia north economy leader. Japan, notbers from what the market was estimating four. How sluggish is it . Numbers aresiness of real concern. It was a contraction. The strong yen is continuing. That is worrying the exporters. They are not seeking a month on the horizon that is going to change. Even though the personal consumption number was an increase, it was a very slight increase. There doesnt seem to be a big driver to really change that number. Weve seen the economy oscillate between this very slow growth, the slight growth, and contraction for the past several years. Manus what does it mean for abe in terms of more stimulus . Since the numbers came out, Prime Minister abe has announced a new stimulus program. Some people are saying that is still not enough and the real question comes on the bank of japan, which will be meeting september 2021. They disappointed in the eyes of many last month by just doing some slight easing around the edges as some called it. Theres going to be great pressure to see if this picture can be changed. There is no real driver in the economy has economists were telling us today to change this picture. Manus thank you very breaking the numbers down. Jodi schneider in tokyo. Beesley,ng in matthew head of Global Equities at henderson. Great to have you with us. Jodi isg to what saying, trying to put it together, a weaker gdp reading, we are in a state of vacuum in terms of the bank of japan and arbe. What we have here is the yen against the dollar and the topix. Even this market, it is all about the etf program from the bank of japan. You would maintain that you are underweight japan in your Global Equities spectrum. Been a japan hasnt great place to be investing. Experimentmost the that we are experiencing globally in terms of distortion from equity markets driven by centralbank action and with currency volatility overlaid. The story in japan has been this very strong yen and what it has meant in terms of the impact on the export sector and the economy. Underlying that is the chart that you pulled up which shows this tremendous distortion between the nikkei and the topix. Manus this is the differential between the two. I would maintain this is topix is the purple and the blue is is nikkei that distortion the highest in 18 years. How much more of the equity market, the bond market, are we about to hit the buffers in terms of the bank of japans ability to run dirty markets . Matthew the story is that the bank of japan is now a topfive shareholder in almost one third of the nikkei companies, which is a tremendous [indiscernible] still, you are having this buying power distorting markets. The strength of the yen weakening the economy. The underlying data is still moribund. It is hard to see what the central bank doesnt to stimulate does next to stimulate growth. When we see companies in japan, talking to managers in japan, we dont see them being particularly optimistic when they talk about growth into 2017. Their expectations are more muted than they were a year ago, not helped by the weaker global economy. Manus that question is more a question of global slowdown. Is that what you are hearing in terms of growth, in terms of concerns on a global scale . Matthew yes we are, in japan and globally. We are seeing ceos, corporate, less confident than they were. There are more risks abounding. Equity market managers are higher. M adriventraining animal spirit. It is an offsetting factor. Lower bond yields. The cost of borrowing is creating some distortions in peoples desire to maybe think about m a. Manus there is some snapback in bond yields, most decidedly in the japanese Government Bond yields, and pimco saying markets are underestimating the ability of the fed. The propensity of the feds desire to get another hike on board, that is a huge factor, isnt it . If we did get a hike, in terms of what happens in the bond markets, how unsettling would then be . Matthew i think it is crucial. Equity markets have rallied in the last two months. Bond yields have come down. When it comes to valuing companies, they are valued higher by equity markets. A snapback in bond yields, a rise in Interest Rates, especially if the data is not there to support that rise in the view of most investors, will be damaging to equity markets. Manus theres 10year Government Bond yields. The snapback, is the market preparing, that is the question . Say they have loaded up in terms of treasury exposure. One hike, would it really move the treasury market . Matthew this is what investors have got their head around. Weve moved away from being focused on the short term to be very focused on the 10year note. That continual grind out of the 10year note has been crucial to the equity market moving. Continued to go lower. Nexteplies this year, two year, that is largely irrelevant while the long end of the curve remains anchored at these levels. Manus we have more to get to. Matthew beesley stays with us. Will a week of post fi brexit data points add to the misery of the pound . Very good day to you. It is a bright and beautiful summers day in london. This is bloomberg. Manus survey good day to here. Eryen trading at dollaryen trading at one a 1. 21. Lets get the Bloomberg Business flash from hong kong. Juliette saly is standing by. Juliette thank you. Anglogold ashanti firsthalf profit more than doubled as the higher gold price boosted revenue. The worlds thirdlargest gold miner reported adjusted earnings of 159 million. It maintained fullyear forecasts to output, cost, and spending. Shares in sharp continued to climb in tokyo after foxconn completed the purchase of its stake in the company. The deal was approved in april but was delayed by chinese antitrust proceedings. Jiang lin hawsg won approval from shareholders to buy out his property holding. This clears the way for hong kongs biggest ever property deal. Companies are fetching higher valuations than in hong kong. Isvate equity firm kkr thinking about making a play for ever paid. For pepper pig. No final decision has been made. Entertainment one has already rejected an offer from a u. K. Broadcaster. The bank of japan is on course to become the number one shareholder in 55 nikkeilisted firms. That is according to estimates compiled by bloomberg. The central bank is already a topfive owner of 81 nikkei firms. The increase is expected after governor kuroda almost doubled his buying targets last month. That is your Bloomberg Business flash. Manus where would we be without peppa pig . This week, you get some hard data. Inflation retail sales and unemployment, the data come hard and fast. Bank of england sees weaker demand. All in the wake of the referendum. The surveys and the estimates have mostly pointed to a decision to quit the eu prompting the downturn. Matthew beesley is with me now. Down, down, down we go on the pound. They cannot get enough of the bearish bets. The positions are the shortest in generations, since the early 1990s. You are seeing the pound under. Remendous pressure what does that pound devaluation story mean to you . Matthew there are a lot of companies that you do not want to be invested in. You are going to be caught up in what investors are anticipating will be negative for the u. K. Economy. This week is very important. The first chance to see what it is we think the bank of england are expecting or have seen. There are some companies that will benefit from a weaker sterling. While they may be underway the u. K. , there are some companies that are perhaps interesting as a result of the weaker sterling. Those come a theyve got a host of entertainment venues. Matthew an operator of theme ,arks and what they call midway parks to visit with your family, not just in the u. K. , but across the world, they are diversifying away from london where they have a significant presence. Aboutave talked already how sensitive their business is to sterling declining. Obviously attracting overseas europeanbased tourists to these attractions in london. They should benefit from what is going on with sterling. Manus everybodys trying to get a bit of perspective. Bovis homes still doesnt really understand what the repercussion of brexit is. If we look at the european stocks, and we know that investors have been reticent in terms of their proclivity to invest in europe, euro stoxx 50 hit its moving average last week and it is really, really tough for europe to get up and break above that pattern. It has failed on a number of occasions before. How much love are you showing europe . Matthew it is very easy to look topdown at markets. The u. S. , rising, markets are expensive, slowing. See theeurope to travails of europe impacted by the u. K. And brexit. Look across to japan and see weakness we just talked about driven not just by the domestic economy but by asia. Where does that leave you as a Global Investor . Markets,x emerging after three or four years of beenacted funk, theyve very geographically specific drivers. Manus this is all about the flow of money. What weve got here is msci e. M. In the currency basket. Both are shifting higher. This has to do with fed, with the flow of money. U. S. Domestic equity funds are seeing money flow out. Matthew this is where money is going. Three years ago, the taper tantrum, rates rising, bad for e. M. , they were when there were large current account deficits. That problem has largely been addressed, which leaves us with some cheaper markets and independent growth sources. Manus in terms of flow of money for you into e. M. , where are the best opportunities . Matthew we would look at latin america. Despite the change of politics in brazil, a Rising Oil Prices positive. I wouldnt discount certain geographies across asia, thailand, indonesia, and certain parts of Eastern Europe too. Weve been considering some assets in russia. Of aiciaries, we think, stable, perhaps even rising oil price. Manus we are 47 on brent. Matthew we think oil could be in the 60s next year. Manus thank you very much. Matthew beesley there, the head of Global Equities at henderson global. That is it for countdown. On the move coming up next. Caroline hyde, Beautiful Day in berlin. The dax is trading unchanged. Guy johnson and caroline are up next. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Good morning. You are watching on the move. We are counting down to the european open. Caroline is in germany. Tokyo drift, japan mrs. Growth estimates as it battles a strong en. What will it take to revive japanese growth . Data,ial week for u. K. What does the Brexit Economy look like . A take over