Progress has been made because of the aggression of iran. Anna and greek deal delayed again. Euro area finance ministers failed to Reach Agreement as the clock ticks down to Debt Repayment in july. We are live in brussels. Welcome to bloombergs daybreak europe, our flagship morning show from london. Im anna edwards. Matt and im matt miller in berlin. Anna, take us through the breaking news. Anna lets get straight to the top story, the last in manchester. At least 19 people were killed in a suspected terror attack. The Greater Manchester city police are treating this as a suspected terrorist attack. It took place at a pop concert in manchester in the northwest of england. It if confirmed as a terrorist incident, its the worst incident since the london bombings that took place there. 50 people are injured, according to the Greater Manchester police. You saw the city police chief giving that televised statement, fairly short, no questions were taken. The incident happened monday night outside the 21,000 seat Manchester Arena at a pop concert of arrietiana grande, unhurt in the blast as she tweeted her sympathy to those who have been affected. We heard from theresa may, the Prime Minister, who says they are working to establish the full details. This is being treated by police as an appalling terrorist attack. The Prime Minister says all thoughts are with the victims and their families. There will be a cobra meeting, which brings together ministers and security officials, 9 00 london time. We will get updates through the morning. Much of the campaigning heading up to u. K. Election is being suspended. But we did see Market Reactions a lets get to that. Matt absolutely. A horrible tragedy in manchester, affecting markets more, though, is the concern that donald trump may have told his intelligence chief to deny, to come out and publicly denied that there was any collusion between the Trump Campaign and russia. Here you see what thats doing to risk assets. A stronger japanese yen, stronger against the dollar because you can buy fewer for 1. A weaker pound on the back of that manchester terror attack. Take a look at oil and gold. Oil has been helping lift the markets the last few days. We do see it down today after a few days, and last week we saw 5 gain, and yesterday we saw 1 gain. Gold may be coming back as investors look to gold as a safe haven asset, only a small gain. Lets get down to bloomberg first word news. For that we go to hong kong and juliette saly. Juliette matt, thank you. U. S. President donald trump and is really Prime MinisterBenjamin Netanyahu has said they see an unprecedented opportunity to achieve an elusive mideast Peace Agreement as formerly hostile arab nations joined the jewish state to confront iran. That comes after a similar pitch to arab leaders in saudi arabia over the weekend. Today trump will pass into bethlehem to meet Palestinian Authority president mahmoud abbas. In the u. S. , President Trump would dramatically reduce the governments role in society, with 3. 6 trillion in spending cuts over the next 10 years. His proposal, to be released today, claims to balance the budget within a decade, but it relies on a tax plan for which the administration has provided precious little detail. The elimination of programs that Many Republican lawmakers former u. S. National security advisor Michael Flynn may have lied in his application for a security clearance. Thats according to elijah cummings, the senior democrat on the House Oversight and government for committee. That comes as flynn declines to be interviewed by the Senate Intelligence community, or to produce documents produced under subpoena or to produce documents under subpoena. To south korea. The former president today, denyingrt crimes of extortion and abuse of power that could keep her behind bars for life. She arrived in handcuffs with her inmates color. She is accused of bribery, coercion, abuse of power, and leaking state secrets. In brussels, euro area finance ministers broke the impasse on delaying thelief, subsequent payment of 8 billion in loans. Athens will need that much to pay its bills in july, as the delay adds to the uncertainty around the economy that slipped back into recession. The French Economy minister says he expects the deal will be done. I am quite confident that in three weeks time, we will find an agreement and compromise among the Member States for this question of the greek debt, and i would like to emphasize that today, the work we have made together was very useful and very constructive. Juliette global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. News of the Manchester Attack happened as asian markets were just starting the days trade. We see that flight to safety, to bonds t, to gold, to the yen. But many have taken this in stride. We have seen so much bad news perhaps investors are getting union. Getting immune. There is buying coming through in china. The asx 200 has turned negative. Kospi still at record highs. Having a look at asian region equities, noble group plunged by 28 after s p said it is very unlikely that we will see a turnaround. Noble could default on its debt over the next year. Rio tinto has come through with the buyback of 2. 5 billion worth of bonds. Moodys says it is credit positive. Sony holding its investor briefing, saying it is still trying to revive that film business. Sony has done well in gaming and electronics, but is lagging behind in film, although its share price is high in late trade in tokyo. Speaking of resilience across asian markets, one index you have to look at is in seoul. S what you arew continuing to see, a white line outperforming the world stock index in terms of market cap. Nomura says it has further to go. This is despite when you are seeing geopolitically and in north korea. Anna thank you very much. Juliette saly in hong kong. A suspected terrorist attack in manchester killed at least 19 people and wounded 50 others. It would be the worst such incident on british soil since the 2005 london bombings. The explosion struck the area on Ariana Grandea grand concert. Lets bring in on the phone charles lichfield. Charles, thank you for joining us this early hour. This as we have heard from the Manchester Police, it is being treated as a terror attack. Give us the context. This would be the worst such attack since 2005. Absolutely. The Security Threat throughout europe has been very high for years now. Far, at least, has escaped the worst of it. Only one deadly terrorist attack, which took place rather recently, in westminster, and that was a very small, isolated event. If this is confirmed to be a terrorist attack, which seems likely, this would be by far the worst. I heard the same information as you, 19 confirmed dead, 50 injured, took place at the end of the Ariana Grande concert when people were leaving. Obviously there will be more reports throughout the day. As far as the political context is concerned, there is a general electing Campaign Going on, which will be suspended for the days to come, and the Prime Minister will chair the cobra committee. About a month ago, i was surprised that the threat level was not taken from critical to severe, and i would assume it would be today, when the Prime Minister makes her speech this morning. Matt charles, i cant recall the terror attack that targeted almost specifically children. This is unusual, historically, is it not . At least in the western context, in countries that im assuming our viewers will be familiar with. It is unprecedented as far as i know. We have seen attacks on schools, unfortunately, not on a concert that would have been well attended by teenagers. In other countries, i think it has already use events have been targeted quite often, and intention is to create a sense that western lifestyles of celebration and enjoying oneself should no longer be possible. Anna charles, obviously campaigning, as you pointed out, is going to be suspended for many parties in the election today. There will be a period of which there isnt any campaigning. When we returned to the campaign il, will we see things will voters see things differently . Thinkont necessarily Political Parties will try to capitalize on this. It wouldnt be accepted by the british electorate. However, justme, on an objective basis, that this is something that the Prime Minister, theresa may, seen as a safe pair of hands, would appear to be better equipped to deal with than the leader of the opposition, jeremy corbyn. In that sense, i dont think it will change the outcome of the election, which is quite likely to be a conservative victory. A market about reaction . Typically, markets shrug off incidents like this. I dont want to bring it down to the money level, since it is such a tragedy, but we do see Global Markets react and give up losses after these incidents. I think it is certainly the case that since such tragic events are happening rather often in western europe, markets tend not to react very strongly. When suchn the case events have taken place before, say, duringhall we risky elections, markets became a bit jittery. This election will , but it is understandable, predictable that markets havent reacted. However, the repetition of the affect thees it public psychology does effect the public psychology, and therefore the repetition is essentially the problem. Something that markets dont react when they used to, the fact that they happen more often does effect the way people consume. Anna charles, thank you very much. Charles litchfield from eurasia group. Thank you very much for your early thoughts this morning. 7 14 in paris or berlin. The Market Reaction, as we have been discussing, has been fairly muted. The pound down a little bit, but not by any great margin. We are joined by the global head of fx strategy at bank of America Merrill lynch. Good morning. We have seen a little bit of flight to safety in the wake of this, and this is very typical of when we see these dreadful events taking place. We were hearing from charles,s comments around repetition. Do you think that investors are increasingly nervous of these kinds of attacks in europe, or do investors have a good perception of just how frequently, or not, they occur . You hear ofy when subsequent events, they do affect the economy in the longer term, the european economy, the global economy, which would grow more without such events. But the immediate Market Reaction is always a risk off, but does not last for very long. In this case, the markets seem to be long risk assets, so it is investorst likely, will very soon go back to trading fundamentals, trading politics. It should not have a sustained impact. Matt it does leave a bad taste in my mouth to talk about a connection between financial activity and such a horrible terrorist tragedy, or any kind of horrible tragedy like this, but no doubt some investors will make decisions based on this kind of activity. Did you expect the pounds weakness today will be a result of what we heard about in manchester last night . Its quite likely. It increases uncertainty, and the pound has appreciated quite a lot since the election was announced. We see some weakness, but for now i believe this will be temporary. Having said that, we believe that it will be shorting the pound ahead of the brexit negotiations. Anna you will be shorting the pound ahead of we heard on the subject of the brexit that itions, yesterday, would be wrong to see a collapse. This was after it was adjusted that a collapse in talks could be seen. As we put the dreadful events of manchester to one side, if thats possible, and focus on whats happening elsewhere, what is your attitude toward the pound, as you look at the runup to june 19 . Since the election was announced, the pound has appreciated, because the markets have already priced it. Having that transition period is extremely important, but we should not take it as a given. We expect the negotiations to have a difficult and slow start that will waste a lot of time negotiating about the negotiations, than about the budget contributions. It might take up to a year to reestablish talk about a transition and the final by the end of the year, we will go back to be doing 1. 25 versus the dollar. Eventually we are optimistic, and we are going to get but past getting there, it is not going to be small. Matt from bank of America Merrill lynch, he will stay with us on daybreak europe. We have a lot more to get through, including whats going on in the u. S. With donald trump obviously, the president is in israel, that he is still having an effect back home. 7 18 in the morning here in berlin, 1 18 in the morning in hong kong. You can see the fog over hong kong as the sun gets ready to push out the clouds. Lets get the latest Bloomberg News with juliette saly. Juliette matt, thank you. U. K. , at least 19 people have been killed in a suspected terrorist attack at a pop concert. 50 others were injured in the blast outside the Manchester Arena after a concert. No one has yet claimed responsibility for what is the worst such incident on british soil since the london bombings in 2005. We are currently treating this as a terrorist incident until we have further information. Were working closely with the National Counterterrorism networks and u. K. Intelligence partners. This is clearly a very concerning time for everyone. We are doing all that we can, working with local and National Agencies, to support those affected. As we gather information about whats happening. Juliette the European Union has finalized its tough brexit position, we get a rating a hard line on the u. K. s potential divorce bill and refusing to discuss trade ties until the agreement on the departure arrangement. To chief negotiator said accounts must be settled on both sides to build trust. Britains exit bill has been put as high as 100 billion euros based on past financial commitments to the eu. Troubled commodity trader noble afterhas deepened global ratings say it may default on its debt, triggering a slump in shares in singapore and a trading halt ahead of an announcement. Singapore listed noble stocks and bonds have consistently fallen since 2011 on concern the estimated liquidity wont be enough to cover debt by the middle of next year. That your Bloomberg Business flash. Matt thanks very much. Juliette saly in hong kong. Donald trump and the israeli Prime MinisterBenjamin Netanyahu say they see an unprecedented opportunity to achieve an elusive mideast Peace Agreement, as formerly half nationsrly hostile join against iran. The president hopes he will get there eventually. Our corresponded is in jerusalem with the president. Kevin, how realistic does the administration really think a mideast peace deal is . They are trying, i can tell you that there has been a reset in relations with the arab world as well as israel here in the middle east, as President Trump continues onward with his First International trip abroad. He is looking to find Common Ground between some arab nations, including saudi arabia and israel in their joint opposition to the iran deal negotiated under barack obama. I can also tell you that from a business standpoint, Companies Like boeing and Lockheed Martin have. S. Defense Companies Really begin to broker several deals, not only with saudi arabia but also in israel. This is very much an ongoing progress. This is a start, not the finish. President trump has said this is the deal of all deals, and has enlisted his soninlaw, jared kushner, to be one of the key people helping to negotiate. Anna good morning. Back in the united states, the white house will release its budget, which plans to cut trillions over the next few years. What do we know about the budget so far . What expected reaction . Has definite steep cuts to u. S. Entitlement programs. I asked the Senate Majority leader, mitch mcconnell, who controls the senate in the united states, last weekend in an interview, about whether or not it was realistic to pass the budget. He says that, really, any type of budget as outlined by any president is just that, a blueprint. The chances of this passing are minimal. It is mainly used as a source of literature, so to speak, to set the objectives for the white house and signal to congress its objectives as it looks to create a legislative item. Democrats will opposed, and even some republicans will oppose, some of these steep cuts to entitlement programs. Anna kevin, thank you very much. Joining us from jerusalem, on the road with President Trump. Our guest is still with us. Lets turn our attention to u. S. Assets. As we were hearing from kevin, this is reading material rather than a definite plan. Thee not take too seriously 3. 6 trillion of spending cuts over 10 years that we understand will be fleshed out . The only thing we know at this point is that this plan, as it stands, is very unlikely to be the final plan. It is all part of a longterm negotiation, and the real question is will President Trump and the Republican Congress find the votes to eventually share tax reform, Infrastructure Spending . We all remember after the u. S. Election, the market got very excited that trump would be able to get it done. Now i think the consensus is that this will not happen. You can argue that there is room for positive surprise, but it will be a long process. Thate going to have a plan has some chances before the summer recess, and then you have to wait for the Fourth Quarter to see if it will be approved. And there is one more question here what kind of tax reform are we going to get . Will it be revenue neutral, or net fiscal stimulus . If you see fiscal stimulus, it will be possible for the dollar in the shortterm, but not the longterm. Anna a lot of questions around timing, and what kind of tax measures we get. Matt im wondering about the valuations. In the u. S. , i am looking at, as far as the bloomberg estimate, priceearnings ratio on the s p of 18. 5 almost, and here on the stoxx 600, 16 even. Our european stocks still undervalued are european stocks still undervalued compared to u. S. Stocks . Definitely when you look at some valuation, however the flow we have seen to european stocks after the French Election has been very strong. Overall i think, equity flows have been positive across the board. Not because the market is optimistic about tax reform and fiscal policy in the u. S. There are two things the debt has been good, globally, particularly the eurozone. And also, the market is pricing a very slow tightening cycle by the fed. One hike next year. Anna can i ask you about treasuries . This is one you can pull up. There and back again in u. S. Treasuries, u. S. Treasuries going for a record within months. What are your expectations around the treasury market . This is really striking, actually. In the shortterm, i think the market is fairly priced. Its what the market is pricing for next year. Only 30 basis points, and then the market assumes that the fed will just stop, which is really strange. Is the Market Pricing another session . So this is really a bubble. We expect three hikes next year. We believe the dot p we believe the dot clock is right. Anna we will look out for that. Thank you. Our best days with us. Hell be with us here on daybreak europe. Euro area finance ministers failed to break an impasse on debt relief for greece. We will next speak to the finance minister. This is bloomberg. Anna welcome back. Tokyo, 2 30 in the afternoon. Dollaryen trading. Lets bring you uptodate with whats been happening overnight in manchester. We should tell you the headlines of this ongoing story we are covering. At least 19 people have been killed in what is a suspected terrorist attack at a pop concert in manchester, in the northwest of england. It would be the worst such event on british soil since 2005. We understand we will get a statement from the Greater Manchester police at 6 45 u. K. Time, so in 15 minutes perhaps we will get a few more details of what happened. To Manchester Police have so far said they are treating this as a terrorist incident until they have any further information. They are working closely with National Counterterrorism networks. The Prime Minister has said she is working to establish the full details of what is being treated as an appalling terrorist attack. Off us are with victims and families, she says. A lot of the political campaigning has been suspended as we run up to the june 8 vote. We understand that at 9 00 there will be a cobra meeting, the emergency meeting that brings together ministers and security officials. We will look to hear more from the Manchester City police. Lets have a look at whats been happening in markets. A risk off atmosphere in markets, partly to do with these headlines out of manchester, partly other factors. Guy johnson is standing by. Guy it is always difficult to draw a line between these incidents and whats happening in the market. That thisuld dictate is unlikely to last. One area where you may see a slightly longerterm effect, and this is already an area under some strain, is the british consumer. U. K. Consumer confidence has started to fade of light. Inflation has started to push higher. We are trying to figure out what the brexit story is ultimately going to mean. I would argue that the one area where you may see an effects may be retail sales, consumer confidence. Its these kinds of areas. Sentiment is an issue right now in the u. K. , and this is something that i think will probably be a factor in that. Keep an eye on this data. This is a slowmoving story but pretty germane. Lets move on from the u. K. It is hard to draw clear lines between the market and what has happened. Euro,k one area is in the which has been on quite a tear. This is the brexit high for eurodollar, currently trading at 112. 49. Are we going to push back to that 114 level, or will there be resistance . I think the level will be quite important. One area i would highlight is whats happening with the risk pretty evenly balanced right now. We talked about this yesterday, but we havent seen this for quite some time, on the way back to 2008 four 2009. It is quite neutral right now, which is quite important, and the momentum is definitely very strongly to the upside. Later on today we look at some data out, the pmi data in aggregate. This is a flagship number so it is calculating the entire euro zone but it will be an important indicator. The numbers are sensationally high. Survey data leaving it by a considerable margin. You are beginning to wonder at this point whether or not you will see some sort of fade on the data. That is unlikely to remain as strong as it is for that much longer, so at what point does it roll over, and at what point does the market start to wake up and Pay Attention . I also want to mention bitcoin. Im going to take a derivative of this. Most people conclude the reason why bitcoin is trading as it is is that its one vehicle by which the chinese can access Global Markets with a currency that is actually reasonably tradable. One of the points we make a lot about the fed is that it doesnt have the issue of instability of the renminbi to factor in, and maybe one reason for that is that the chinese have locked down the currency as tightly as they has. This is just an area of leakage from that. I think its worth paying attention to show that there is some stress in the system, and the chinese arent able to keep a complete control on sentiment, but nevertheless, from the fed point of view, it means a great deal of stability, which probably means that the fed is on rails. Anna thank you very much. Guy johnson, an update on many things to keep an eye on. Lets return to our top story. The new edition of daybreak is available on your mobile. Lets have a look at some of the stories that have made it into todays edition. Explosionory, the that killed 19 people at a concert in manchester and wounded about 50 others. Police are treating it as a terror incident until it can be ruled out. The blast came at the end of an Ariana Grande concert. We expect to hear from the Greater Manchester police in about 10 minutes. Theres a cobra meeting at 9 00 a. M. U. K. Time. We heard from you cap that they are from ukip that they are suspending their campaign. Matt the next story is President Trumps troubles at home. He asked the director of National Intelligence and nsa director in march to deny publicly any evidence of collusion between his campaign and the russian government, this according to the washington post, which cited people that werent identified. Both men refused to comply, deeming it inappropriate. Anna finally, we focus on the budget plan. To cut 3. 6 trillion over 10 years by shrinking the safety net for many of the poorest in the united states, recent college graduates, and farmers. Now, where brussels we are focusing in on what has been happening with regard to greek negotiations. After nearly eight hours of talks in brussels, euro area finance ministers failed to reach a deal on greek debt relief. This. The completion of the countrys bailout review, and delay payments of fresh loans at athens needs to meet its obligations in july. Joining us now is nejra cehic. Matt. Thank you, anna, i am joined by cypruss finance minister. Thank you for joining us on bloomberg tv. Good morning. I wanted to start by asking you, because i know you are aware of the tragic attack inthank you f, to get your reaction. My thoughtsked, and to the people of manchester and britain. I just got the news a short while ago this morning. What i can say is that they strong, and know that we stand by them, that we are in this together. Nejra indeed. Not to make any of these connections too soon, but i do want to ask about the eu, and the fact that a big part of that is Security Cooperation. You see this having any impact at all on brexit negotiations, in terms of weakening the u. K. s start in any way . Not really. We have seen that terror is an issue in the eu, in major eu capitals. Something, its we reachto ensure that the negotiation of the exit, Security Cooperation will remain strong and efficient, because this is a very serious, common challenge which we are facing, and we should ensure that all worries and cooperation between us isnt affected. Nejra absolutely. I want to turn to the reason why we are in brussels. For talks on greek debt, eurozone ministers failing to reach an overall agreement yesterday. You said in february that no one wants to wait until june or july before a final deal is reached, yet here we are. What happened . The maine are reason we had was to confirm the greek review. The greek review is completed. It has essentially been completed. Most of the counter actions have been done. I dont want to portray and negative future. Good work has happened. The disbursement is actually imminent. This is a very clear message that i would like to convey. This is a good this is good news actually. I am also very clear on the need to make a next step, to convey with clarity and with a very satisfactory manner that the parameters for debt. Here also progress has been made, and we have been able to reach an agreement. I repeat, i believe that we should be able to agree, and we should be able to agree in the satisfactory, clear manner, which will convey clarity to the markets, and to all of us. Nejra so you are confident there could be a final agreement in three weeks time, at the next year group. Next euro group. But obviously there are a number of options on the table. As a country which successfully exited its bailout, any of those options for greece, favorable . Which will facilitate the establishment of market access. I am equipped with the decision of the cabinet, and i have a clear mandate to support any arrangement on greek debt. A strong,positive to clear framework and clarity, and i do hope that next week it will actually happen, which will enable us to seal to deal, come next euro group. Nejra great. I want to ask you said a few days ago that cyprus will start talks with the imf for the early repayment of part of the loan that you received as part of the 2013 bailout. How exactly will you do this . First of all, this shows that we have come a long way in just a few years that we were not able to go when we had to rely on imf financing. Not only have we established market access, but we are able to finance our needs with very good yield. It is starting to make sense, and we have started the process. We need to secure the consent of the ins to repay the imf to repay part of the imf loan. We are able to secure cheaper financing, so it makes perfect sense. This is a reflection of the Strong Performance of the cyprus economy, the fact that it is setting a high growth rate of 3. 3 in the last quarter. Smoothing of debt maturity, fully eliminating the budget deficit. We are registering a budget surplus, so this has a very positive risk selection in the market, which enables us to make this first that in repaying this part of the imf loan. Nejra briefly, you mentioned growth. That was above projection in the first quarter, a nonperforming loans are still high. Are they affecting banks ability to lend . It is a problem, its a legacy problem. There is still high unemployment. It is declining, but it is still high. It dictates that we should not become complacent, that we should maintain the reform efforts, the momentum, the fiscal discipline, that we should continue supporting growth in a manner which will enable us to fully alleviate this legacy problem. Minister,rus finance speaking to me here in brussels after the meeting of eurozone finance ministers. Anna nejra cehic in brussels. Lets get back to our guest from bank of America Merrill lynch. Interesting listening to the finance minister, talking about how they hope to seal the deal on greece in june. They failed to reach one last night, but the danger is that greece has slipped back into recession, and all of this delays various things it delays greek getting on with life, it delays returning to the bond market. Definitely the delay we have seen is already affected the economy. At. 7 expecting growth this year. Most likely we will get at least. 1 . I think what we will have in the next euro group, alternative is much worse. But its not easy. Germany needs a deal on the debt because this will bring them back to the program. But they need to agree on the parameters of the target, and given that we are talking about the extension of maturities in the debt, and there is a disagree on they the growth rate in the very longterm. And theyhat disagree to have sustainable debt, you need to six the Interest Rate at very low levels, which would suggest losses for european taxpayers down the road. Matt you completely discount a grexciit, a greek exit, from the eu . I think this is unlikely at this stage, especially ahead of the german election, that the euro zone economy is recovering. Lets not forget that greece has met most of the prior actions. However the most likely scenario leaving lots of open questions which will not be participatereece to in the security program, which is where the market is focusing. Anna and yet the ecbs qe program will the rally extend . Here,s we have euro for anyone who wants to pull it out. The euro strengthening. What are your expectations for the euro . Well, there are two driving forces this year. One the expectation sometime this fall. This is a given with the constraints and the fact that the ecb is not willing to relax. The second the widening of the streets. Looking forward, we like euroyen. This was one of our february trades, it has done very well. Target,ticking to the and it should support euroyen. Eurodollar is next. Is mixed. It depends on what the fed is going to do, if the fed hikes are consistent with the dot plot, and the charges for tax reform. It is very hard to position in eurodollar. We prefer eurojan. Yeyen. Matt italy still has to deal with the three problem banks, but even if they say only tens of billions in npl, they have a real problem on their hands. In the long term is definitely the weak link for the eurozone. For now we are not very concerned, because most likely earlyl avoid scenarios next year. We also expect the ecb to start exiting from qe. We believe it is most likely by the end of next year. But in the longterm, we believe it will increase, and that debt could become unsustainable. As he said, the problem in the Banking Sector remains, and unfortunately we have not seen the reforms that will lead to faster growth. Anna a a lot of questions this week about what we learned from the fed. Will begin clues around the Balance Sheet . But in terms of this euro conversation, we are looking for clues in june, arent we, about where the qe program goes next. How quickly do we see the amount of money they are spending, with the Interest Rates. What are your expectations for june and beyond . I think we will get a rate in september, but most likely that will change the Forward Guidance to remove the option of cutting rates further to negative territory. This is all about semantics. We dont expect under any scenario for it to cut even further anna but it would be significant it would move the language in the Forward Guidance. Draghi, is he ever going to want to give it up . Is he ever going to centcom, or uccumb, or do you think we need someone else to unwind what we have here . Definitely the ecb is in a very difficult position, because they will be announcing headline inflation will be falling. It will be hard to argue that inflation has improved, and it would be revising inflation projections downward. Option,he has no other they cannot relax. This means that he has to stop at some point in 2018. Candidacy suggested, whoever places draghi in 2019 will most likely be more hawkish. The besttion in case scenario, we see Forward Guidance to higher interest we canand that is where say we will do it with policy rates, only if inflation is at 2 . Matt all right. Our guest will stay with us here on daybreak europe. We still have a lot to talk about, so much going on around the world, including the issues brazil faces, also effecting fx markets. Lets get to the Bloomberg Business flash with julia valley. Juliette saly. Juliette in the u. K. , at least 19 people have been killed in a suspected terrorist attack at a pop concert packed with young people. 50 others were injured in the blast outside the 21,000 seat Manchester Arena after a concert. No one has yet claimed responsibility for what is the worst such incident on british soil since the london bombings of 2005. We are currently treating this as a terrorist incident until we have further information. We are working closely with National Counterterrorism policing network and u. K. Intelligence partners. This is clearly a very concerning time for everyone. We are doing all that we can, working with local and National Agencies to support those affected as we gather information about what has happened last night. Juliette the European Union has finalized its tough brexit position, reiterating a hard line on the potential divorce bill and refusing to discuss trade ties until there is agreement on departure arrangements. The negotiator said accounts must be settled on both sides to build trust. Britains exit bill haslam put as high as 100 billion euros based on past financial commitments to the eu. In singapore, troubled commodity trader noble groups prices have steepened after there was a risk of default on its debt, that triggered a slump in shares and a trading halt ahead of an announcement. Consistently been falling since 2011 on concern the company toss estimated liquidity wont be enough for the middle of next year. Saudi has said the level of urgency to improve its movies business will take time for results to improve because of the nature of the business model. Speaking at its annual investors day, the ceo said Sony Pictures remains an important part of the group. That is your Bloomberg Business flash. Anna thank you very much. Opecs secondlargest producer, in iraq, has backed a proposal from saudi arabia and russia to extend output cuts. It removes one of the last remaining obstacles to an agreement at the opec meeting in vienna, but the country frequently cheats when it comes to hitting the target to cut outputs, bumping out around 80,000 more barrels of oil per day and committed. Our guest is still with us on set. When we look at the latest out of opec, we are focusing on this as we get to the end of this week where we will be in vienna with the meeting. What are you expecting from opec, and what impact does this have on the Commodity Currencies you follow . Most likely, they will extend the production cuts, but they are low oil prices that we have seen in the last couple months. In the longterm, this does not really address the problem, given that production costs are but for now we believe it will support oil prices. I think this is already priced in. The position ahead of the buying becausee they are very weak for different reasons. They have more potential to appreciate if opec stays the course. Matt i am looking at a chart here of oil. I have brent crude up top, wti down below. I dont see any reaction in the oil prices, still down on yesterdays close. Are we hovering around levels that you think are fair value, 50 per barrel . I think so. Oil prices have not been a Key Driving Force for markets this year. The markets expect more down the road, with oil prices staying relatively narrow. I think particularly emerging markets, the demand is a much more important driver. ,f we didnt get any surprises we will see a drop off in emerging markets, consensus commodity prices. Close likely that will be a buying opportunity. Anna i want to talk about emerging markets, and move the conversation there. Emergingmarket currencies against the dollar. It doesnt tell you much about the end story, but it tells you a big dollar story. Actually, this has been one of the best rates this year, if not the best. Nobody was expecting this after the selloff across the u. S. Elections. We have to say that the markets at this point, particularly last not evenlonger em, compared to the u. S. Election, but compared to what happened mid2015. However, demand is still strong. What happened last week was very interesting. We saw that graceful selloff, clearly indicating that the market was long. For a number of reasons, demand is still very strong. Matt we see the mexican peso weakening here on concern about the downgrade in brazil. Why does the peso react when we look at movement in other big emerging markets . We are starting the year with the market being underweight on a short position, so not surprisingly, positions have completely bent around. I think it is driven much more by positioning in oil. When we look at the potential position on the markets, positioning is not that long, because the markets are still short in china and korea. Anna you mentioned what we saw last week with the brazilian real. I had a similar conversation with the trump conversation on capitol hill last week, that some people were saying, quite soon after we saw nervousness around the trump and fbi situation, does this really changer fundamental view of the u. S. Economy . So either in brazil more on the u. S. Politics, did everything fundamentally change or is it too soon to say . Not yet, but we are concerned about emerging markets. We believe they are priced to perfection. Some of it is unsustainable em has done well. In a good case scenario, em will continue to do well, but the yen continues to weaken. Positionter what, this will have to diverge. It is very low right now and will most likely remain low over the summer months, but starting this fall, it is packed with risks, and it will make emerging markets more challenging. Matt the yen at 111, 110. Do you see any more strength in that, and how does that effect global trade . Well, the mediumterm to longterm would be long dollaryen. Positioning now is completely clean. If we look at the last month of the market, it is long yen. Tricky,aryen is because a lot depends on whether the fed will hike in december or september, and a lot depends on the timing for tax reform. Then we see a lot of headline risk. A tradewhy euroyen is for diverging monetary policies. Anna this is the onemonth emerging markets, just to bring into the conversation what happened with the brazilian real. Monthlearly in the past has been a big story it is week against the dollar. What are your expectations. Political risks will remain effects it will denefit from ecb, an positioning may not be as stretched. Thanks so much, talking us through all the action on this tuesday morning. Matt a blast at a pop concert in manchester kills 19. Prime minister theresa may called a toplevel security meeting as Political Parties suspend their election campaigns. They are treating this as a terrorist incident actually have further information. We are working closely with National Counterterrorism policing network and intelligence partners. He sees anrump says unprecedented opportunity to achieve peace to peace in the middle east. Tremendous progress has been made. A lot of the progress has been made because of iran. Greek deal delayed again. Euro area finance ministers failed to Reach Agreement as the clock ticks down to Debt Repayments in july. We are live in brussels. Welcome to bloomberg daybreak europe, our reflection morning show. Wherewe get to manchester the police chief in hopkins is updating of the events of last night. Being treated at eight hospitals across Greater Manchester. This is a fastmoving investigation and we have sick significant resources deployed. Patrolsill see visible as they wake up to the news. More than 400 officers were deployed for this operation throughout the night. To remind you, we were called at of anp. M. To reports expulsion at the Manchester Arena. This was the conclusion of the Ariana Grande concert. 240 calls and Emergency Services responded quickly. Emergency numbers have been established for anyone who is concerned. 1618numbers are zero 569400. 01618569900. We have been treating this as a terrorist incident create we believe at this stage the attack last night was conducted by one man. The priority is to establish whether he was acting alone or as part of a network. The attacker i can confirm died at the arena. We believe the attacker was carrying an improvised explosive device which detonated, causing the atrocity. We would ask people not to or share on details names. This is a complex and wideranging investigation. Our priority is to work with national counterterrorist policing networks and u. K. Intelligence sources to establish more details about the individual who carried out this attack. We have received tremendous service, ours the Partner Agencies throughout the night. We regularly carry out exercise to test our ability to respond to such incidents and this has ensured a very Swift Response for local and National Agencies. I want to thank all members of those Emergency Services and other agencies who have worked tirelessly throughout the night and very difficult circumstances. There is sponsored been quite outstanding. The remains of the large cordon in place around Manchester Arena and the victoria check train station which will be in place for some time. The station will remain closed while the detailed forensic search is underway. People should find their way to work and philo transport routes for updates. Terrorists will attempt to disrupt our lives and create distress and fear in our communities. We have a long history of our Community Standing together during difficult times. In the coming days we will be working very closely with trinity leaders to address concerns or issues. It is important will continue to remain a jaunt, that we go about our daily lives. We would ask members of the public to be alert and report any suspicious activity to the zeroe and terror hotline, 800 or ring 999. As people are waking up to the andic news, the officers other Emergency Services and our partners will continue to do all we can to help us get through the difficult days ahead. I would like to appeal to any members of the public and may have images of the footage from last night that they believe can assist in our investigation, if they could upload them to u. K. Imageappeal. Uk or. Com. I have time for a couple of questions. Have the victims been identified . At this stage i cannot give that sort of level of detail but when i can confirm if is there are children. Can you confirm [inaudible] this is a fastmoving investigation. I cannot give any further details. This stage i cannot give further details. Thank you very much. The greateras Manchester Police in hopkins speaking about the attack that took place last night. The work that has been done overnight saying they got their first call it 10 30 p. M. Last night and received 240 calls. One man believed to be behind the attack, was he alone or working in a network, they do not know the answer. You heard him being quite tightlipped about details but the concern confirmed he died at the scene and he detonated an ied. Lets get the latest on this, the manchester last that we are ringing viewers uptodate with. Is our executive editor for International Government joining us from Bloomberg News. Good to see a this morning. A dreadful story, dreadful development and getting the latest from in hopkins. They have a lot of work to do. Significant more Commission Information after last nights horrific attacks. It does sound like it was the work of a suicide bomber. He did not say anything to rule that out. Things seem to be pointing that way. For thema lot of work to be done. As he said, the big question right now is was the perpetrator acting alone and if not, how many more people are out there was working with that police need to track down. Matt do they expect someone to come forward and claim responsibility for the same . Looking back at terror attacks in the u. K. , in paris, in within 24did we get hours someone coming forward and cleaning responsibility . There is so much we still do not know. On the one hand if this was an orchestrated planned attack directed from Islamic State territory in syria, we are speculating. You would expect Islamic State to claim responsibility. We do not know if they are responsible but there was a lot horrific ason, as that might sound, on some of the jihadist social media and twitter accounts. If this was more of a lone wolf attack, we might not get any claims of responsibility from anybody. It is very early days to be speculating too much about that. Anna the death toll from tochester has been increased 22 people, this according to the Manchester Police. We are hearing from the u. S. As more International Voices are being thrown in here. Sean spicer, the press secretary for the white house am a National Security team is providing updates to the president on the situation. We heard some early comments coming from the department of Homeland Security about how they are monitoring this and do not first perceive it to be a credible threat to venues in the u. S. We heard from a french spokesperson that they are monitoring the threat level, all security teams will be analyzing what happened last night. John that is right. Bear in mind we have this nato summit later where donald trump has been criticizing european governments heavily for not putting nato foremost on the front line of fighting of terrorism. There is an international angle. The focus in london is on who did this and this is taking place in a general election as articlein the the environment has been shocked and all parties have said they will suspend their campaigning at least for today and possibly longer than that. For today, for tuesday, no campaigning from any of the Political Parties and the the expectation we will not hear about the election until wednesday or thursday. John that is what i would expect. Jo coxs the case when was killed. There was a spend a suspension for a day and a half. An even greater magnitude. In terms of how this plays out, it is impossible to say. It does seem like we are going to, the campaign will be suspended perhaps for a significant time. Anna thank you and we will keep you uptodate with everything as it crosses the bloomberg and her thing we learn here. Philip hammond saying he would like to pay tribute to the Emergency Services. He will return to the u. K. After , the meetings that are taking place in europe. It is 11 minutes past seven here in london, 11 minutes past eight if you are watching in paris or berlin or many other places. Lets broaden our conversation fromalk to our guest [inaudible] we covered this tragic story, very sad headlines coming through about what happened in manchester. , investors arey used to seeing these dreadful events take place. They shock and investors have to pull themselves together just like anybody else. Impact onhave any markets, we have seen a bit of a flight to safety in terms of the yen buying, we saw the powdered pound weaker. First, my thoughts and prayers to everyone who has been affected by last nights events. The market quite rightly takes apposite has some reflection. Reading up on johns earlier comment, as the news develops, is it an isolated incident or part of a concerted significant change in terms of the Terror Threat that we have seen, so the news flow today will be externally important, one based on the awful news and the sadness that this creates, but also the potential impact from a political response perspective but also business and individual sentiment perspective as well. This pauseu expect to last a on today . Clearly there will be no political campaigning today. Do you think Market Participants step back, said down at their desks and stop trading for moment . Guest they do. We have seen unfortunately in this position many times in the last decade and it is always an awful start of the day for lots of different people. Kind of positive reflection is not just out of respect but for some assessment. The news headlines, the news flow is really important to watch very closely. The research we have done in the most recent years when we have analyzed a number of significant events both geopolitical shocks and physical , weatherrelated issues and or market Financial Stress related impact to the market, what you tend to find is in a very short space of time, 10 or 15 days, if if there is a pullback you do get a recovery to precrisis or preevent level. We are used to going on in these types of events. Anna frequently on the agenda, are they, arent they, for us to talk about. And across europe and nationally with President Trump taking his trip to the middle east. He is in israel. This is very high on the agenda. Guest it is and one of the things we are doing research on at the moment is the populist impact of corporate. How do Companies Deal with this as well . Explore arenated to they changing the Corporate Strategy to pander or promote more of the populist view so or are they maintaining a globalized view of the world . In terms of the Market Impact which is an aggregation of lots of different companies, it is something we are spending time on trying to assess and it is different against some of the big bellwethers, the operations you can see out there have changed strategy and view based on what we have seen from the electorate. Is an interesting observation to make and a potential market change in coming years in terms of how the vertical landscape is changing Corporate Strategy. Political landscape is changing Corporate Strategy. Matt when bowers will stay with us here. Makes a bid for peace. Livell bring you that from jerusalem. This is bloomberg. Anna welcome back. This is bloomberg daybreak europe. A live shot this morning. 7 19 a. M. In london. 8 19 a. M. In berlin. Juliette in the u. K. , 22 people including children have been killed in a suspected terrorist attack at a pop concert. 59 others were injured in the blast outside the Manchester Arena after a concert by Ariana Grande. The attack was carried out by one man who died at the scene. No one has claimed responsibility for what is the worst incident on british soil since the london bombings in 2005. The eu has finalized its top brexit position, reiterating a hard line on the uks potential divorce bill and refusing to discuss trade ties until there is degree met agreement on departure. Accounts must be settled on both sides to build trust area britains exit bill has been put as high as 100 billion euros based on its past financial commence to the eu. That is your Bloomberg Business flash. Very muchright for that. President trump and Benjamin Netanyahu say they see and unprecedented opportunity to achieve an elusive mideast hes agreement as to seeks to bring arab nations together with israel to confront their common rival in iran. The u. S. President said it is one of the toughest deals of all but he hopes they would you there eventually. In jerusalem on with michael arnold. At me ask you how realistic peace deal in the middle east is. The president is hoping this will reset their relations and i want to bring in the bureau chief of israel for Bloomberg News and ask him the same question. What i amis has been gathering a sense among israelis that this president is unpredictable but this has been a very predictable visit so far. So far it has been by the book. He is that she has hewn closely to traditional u. S. Positions. His aides have refused to say whether the western wall is part of jerusalem or not. Some things that would hearten the government here is has taken a hard line on iran and he is trying to build this Regional Coalition between israel and the Sunni Arab States to confront them on. That is what president netanyahu has been pushing for sarah pushingcoalition between israel. We were just in riyadh. Newe to 400 billion in deals with the saudis. What is the feeling against among israeli politicians about this arm just im still the has gone on . I would say they have mixed feelings. There is a feeling of greater openness towards the saudis and the gulf states. There is quite a lot of under the table cooperation on security issues. Open. F this is in the still, these are hostile states. These are hostile states which until now have vigorously resisted any kind of normalization with israel. We saw the energy and esther come out with a strong statement saying these are still enemy states, what is going on here question mark we need some kind of explanation. I would say mixed feelings. President trump will be meeting with palestinian leaders. What are you looking for . Yesterdays visit was filled with platitudes. We will get to the nittygritty. We will see if he makes any statements about settlements, palestinian statehood, and if he mentioned a resumption of negotiations or anything like that. , well start see to get a glimpse of what the trump administrations peace plan might look like. I know this is a very busy couple of days for you. Thanks or taking the time to talk to us. Back to you. Anna thank you. Kevin cirilli injures them with michael arnold, the Israel Bureau chief for Bloomberg News. Is still with us. Weekwe started out this and before that during the weekend talking about President Trump visit to the middle east, a great number of deals were signed, whether that was an energy or defense. A great deal of money was based in Infrastructure Investment into the u. S. Does trumps visit happen to soften the geopolitical concerns which are on everybodys agenda, investment into the schemes you happen playing of . What we have seen as a broadening of globalization of growth. At the same time we have had this nationalistic populist political reaction. It is interesting how you can ourgrowth moving away from way less concerned about g2 risks or we take comfort that the growth platform for the world is truly broadly diversified. It is interesting from an overall macro perspective how companies are reacting to this push and pull, the pull being should we create and change Corporate Strategy to pander to the political change that we have seen or should we continue to grow and export and utilize the Manufacturing Service sector outside of their country . Matt are you concerned about the issue that President Trump has domestically right now, were hearing reports from the washington post, unidentified people that trump may have told Intelligence Leaders to publicly deny any connection between his campaign and russia. Again raiseainly some significant concerns from any later that has potential to be implicated in something that needs to be investigated fully andcould take many months many courses to get to the bottom of. What were focused on especially from the u. S. Perspective, is the transmission mechanism of tweet to executive order to legislative change. We do take some comfort that there are significant checks and balances in place in terms of the implementation of any significant change in law or tax or overall Business Environment through both houses. There is an appropriate level of positive reflection but also challenge to any tweet or executive order. It puts us a little bit more at ease. Anna we are hearing more detail about the spending cut over 10 years. They are expected that are expected from this administration. We were reminded that we should not know on the, we do what kind of tax cuts can be passed. What are your expectations of tax cuts . If you do look at Corporate Tax rates they need to play catchup. That is the first headline. Corporate tax rates in the u. S. Seem to be extremely high relative to the rest of the world but the way that those taxes are collected both from a corporate and individual perspective seemed to be to thebly stale relative rest of the world so any change in tax rate and the ability to collect based on where you sit, where you live is important. Anna thank you very much for coming to cs. From Northern Trust management. The european open is next. They will be speaking to the ubs chairman, that will be an interesting conversation to be had right here. They will keep you uptodate what is happening in manchester. Guy good morning. This is the european open. I am guy johnson in london. Matt diller is in berlin. What are we watching, clearly the story in manchester. 22 people killed, Dozens Injured at a pop concert attended by teens and children. We will talk about that throughout the program and bring you analysis. Hes in the middle east. President trump uses a threat from iran as leverage to bring israel and the palestinians together. Can he get the rivals to the