Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170613

A very warm welcome to bloomberg daybreak europe. Im anna edwards in westminster. Manus im manus cranny in london. The question is of course, today is a critically important moment for the union. I am talking about the Democratic Union party from Northern Ireland meeting theresa may today. This is the linchpin of forming good government. Anna yes, indeed. Can theresa may get those 10 mps on site . She will need them if she wants to get her more controversial policies through parliament. Northern be seen in ireland as a onceinalifetime opportunity for Northern Ireland to influence the policy agenda, perhaps taxation and investment, and also influence the brexit conversation because they also wanted something that could be seen as a slightly softer brexit in terms of keeping open trade relations and keeping open the border between the north and the republic. We will talk all about that. We have a great guest to talk to us about that. Theresa may, focusing in on this d. U. P. Meeting, after that mea culpa yesterday, where she took responsibility for the mess that was created around the election. Manus, we have seen this tech sell off. It sort of came like a a little bit from the blue. This is the technology fund. The ticker on it is xlk. What you saw here was the worst week of outflows in 18 months. That is the money coming fast and serious. Rattled by the move on friday and the money just literally whips on out, 737 million was drawn last week. 560 million of that went on friday, the most of any of the u. S. Equity lifted products. This is relative to the s p etf. It is the third highest for the etf since the start of 2015. Definitely we have had a moment so,essation and hostility there has been a flight cessation in hostilities on the tech side. Lets move over into the risk radar, because it has had a nice impact in terms of the msci. Just easing back a little bit. The nasdaq had its biggest two day drop since september. Semiconductor also getting a little bit of reprieve, but check out the canadian dollar, extending its gains. One of the strongest performers in the g10, hawkish comments coming from the. Deputy governor. They are going to assess whether all the considerable Monetary Policy stimulus currently in place is still required. Lets have a look at oil. We have a nice chainge around in the oil complex. We are waiting for the inventories today. Oil etf, as the market dumped last week, we some money come into the etfs, nearly 270 million, the largest inflow into the oil etf. And we have the fed meeting today. The gold market is really just on a little bit of a shaky footing at the moment, the longest losing streak in him of three months. That is the state of play on the markets. Juliette saly has your first word news. Reporter thank you. Euro denominated derivatives may be forced to relocate to the European Union after brexit. A person with knowledge of the matters set under the proposals to be rolled out today, some seemed systemically important to the european Financial System and could be subjected to direct oversight by the eu authority. The Trump Administration has laid out its highly anticipated federalich urges overwrite loosening grading rules and tearin back the powers of the watchdog. Donald is planning to scale back his predecessors effort to open cuba to tourism and trade. The the president s advisers says they are preparing options, including new limits on American Travel to the island and restricting partnerships between u. S. Companies and those with ties to the cuban military. Final options have not yet been presented to trump, though he is expected to make a decision on friday. U. S. National Security Agency chief mike rogers met behind closed doors with the Senate Intelligence committee. Senators made clear they want him to answer questions about any possible interference by donald trump with the fbis investigation into russias role in the election. Ist came as Jeff Sessions expected to appear publicly today before the panel to explain his role in the firing of james comey. Qatar has struck a defiant tone as the crisis in the gulf ended a second week with no sign of a diplomatic resolution. The foreign minister expressed his governments frustration at not receiving specific demands from the saudi alliance. The finance minister and the central bank said they could defend the currency and economy, while the head of Qatar Airways accuse the u. S. Of exacerbating global tensions. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. You can find more stories on the bloomberg at top. Reboundsian markets today, those tech heavy indexes, like the hang seng and cospi all doing well. Australias asx 200, leaving the gains by 1. 3 . It does not have many tech stocks, that we have seen good buys coming through. Looking at some of the stocks in hong kong rising the most in two months. There is a lot of speculation this could be the next short target. Lg display coming back 7. 5 higher in korea. Focus in resorts is in sydney after the Gaming Company says the employees who have been detained for some time have officially been charged and will face the Shanghai Court on june 26. The pboc has changed the way it has been fixing the yuan. Detailart shows you in how we are seeing the gap close each day. Gap you can see reflected here shows the countercyclical factor has been introduced in the new way the pboc is determining its fix. Anna thank you, Juliette Saly. Lets talk more about the u. K. Toresa may has apologized her own lawmakers, as we said at the start of the program, for last weeks election results. She will stay on only for as as she is wanted and she signaled she is willing to have a meeting, as far as brexit is concerned. She is set to meet with the as e d. U. P. Today to secure the boat votes needed. She will then go difference to meet with president macron. We are now joined by chris wyllie in the studio, with manus on set. I want to ask you a little bit about this rethink on brexit we are reporting today. She is looking for a National Consensus, whatever that might be. Are you excited by this idea that we could have a slightly softer brexit, or do you think a softer brexit is another name for a have your cake and eat it wish list the u. K. Will never say yes to . I think they have cast a pretty clear vote that they would like a softer brexit. Last week, as we were moving toward the election, we saw this narrowing in the polls. Meanuestion, what would it if there was a Hung Parliament . It would mean a much weaker pound, but we were not so sure because we thought people would look to the other side and conclude a softer brexit could be in the cards. I think the markets would like to see that and we certainly see it from the business community. We see unity there, pretty much, as far as there is any unity to be found at the moment. And they are beginning to lobby much more strongly and cohesively than they have in recent months because they feel the door is now open, where it was not before. Manus the other phrases used in the story overnight, i speaking with a National Consensus, to that end, looking at what a softer brexit is is a discussion on its own, but to seek a National Consensus, what does that take to materially shift this above 1. 30 or below 1. 25 . That is what i want to know in terms of the movement of the market. I think what would get the aund above 1. 30 would be reasonably stable conservative government committed to a soft brexit. That is what the market would like to see. Unfortunately, there is significant doubt. Where it gets really complicated is if you start to think of maybe a labour government, which is no longer inconceivable, which would also probably be a soft brexit. It seems to be the policy in the economic area of europe. But the markets would have to grapple with the fiscal side of things, which is a lot less supportive. National unity, sounds great. No doubt over the weekend that that concept has gained grown. Im not sure where that consensus really is, because the ironing of the referendum is we never really staffed these variables of brexit at all. Im not sure where you would find that consensus. Anna on the fiscal side of things, you mentioned a Labour Party Government is no longer inconceivable in the u. K. Even if we dont get one, does it seemed that the debates around austerity have changed . Overnight have been talking about how inflation is on the rise and because of the voting public seemingly turning against austerity policy, we could see more borrowing, and more gilt issuance from the u. K. Government and that could add two reasons not to buy gilts now. What do you make of the austerity debate now, in the context of the vote we saw thursday night . A austerity is probably sound nd back lasted when we initially we the brexit results, felt that at the time, that we had seen the high tide of austerity and we started to get a movement, in terms of the conservative agenda. Now that has been given an almighty shove in the back. Now, we are going to see a lot less austerity and more generous fiscal policy. Because the conservatives were definitely con off guard during the Election Campaign by this ve ry ambitious manifesto from the labour party, certainly ambitious in terms of spending. They were not able to neutralize it. Conservatives will probably dawn a few of those clothes. Manus the emperor would need to find some clothes, some with a at the moment. The eu has plans to force the relocation of euro clearing. Firms that are deemed to be systemically important to the eu Financial System could be required to accept oversight and move. This is the latest european maneuvering. The kite was flown just a month ago. This could raise clearing costs by as much as 20 . This is a strong bargaining chip. It is a very political bargaining chip for the market. Yes, it is. You mean it is a strong bargaining chip manus it is a bargaining chip for the europeans. This has been knocking around, it is one of the first things people thought of when they contemplated brexit. Because we are getting close to the actual negotiations, it is coming to fruition. I think it is highly likely. It will be hard for the u. K. To retain that role in clearing, which we have had up until now. They will be clear employment implications for the city. And yeah, i think theres not much the u. K. Could do about that right now. What they should probably focus on are other issues surrounding the, which could help to sustain the citys preeminence. This is a lost cause, probably. Manus chris wyllie stays with us, the chief Investment Officer at connor broadley. U. K. Prime minister, well, it is a busy day. She meets the du. U. P. In a bid to shore up her government. The new parliament meets with the election of the commons speaker. The fed starts its two day policy meeting and there is also a Rate Decision out of argentina. Coming up on daybreak. Anna and i discussed tech with our guests. Was it a blip, for a sign of a bigger problem . We discuss. This is bloomberg. Anna welcome back. You are watching bloomberg daybreak europe. Im anna edwards. Manus cranny is in london. We have the markets and the politics covered. The mea culpa of theresa may. That will be followed by the d. U. P. Meeting, more on that later in the program. Lifted up to speed with what is happening in the world of business with Juliette Saly. Reporter thank you. Three former currency traders in britain who were accused by u. S. Prosecutors of conspiring to manipulate markets have reached an agreement to surrender this summer to american officials. Jpmorgan, citigroup, and barclays employees have agreed to be arraigned this summer in a manhattan court. The Irish Government plans to sell shares in irish banks were between 3. 90 and 4. 90 euros each, giving them a capitalization in londons largest ipo this year. The final price will be announced june 23, which starts unconditional trading on the london and stock exchanges four days later. General electric and baker hughes have cleared a second major antitrust hurdle in the effort to create the worlds secondbiggest oil services provider. G. E. Has won approval to combine its oil and gas business with baker hughes. The plants comes two the clearance comes two weeks after a similar decision. The architect will step down as ceo. Dior hasf christian told bloomberg he is optimistic about the new french president. Sydney was beginning exclusively to rachel chang in shanghai. The French Market is important. We have a new president. Be verythis could positive for the economy in france. Start some reforms and bring in some working rules, things like that. That is your Bloomberg Business flash. Manus thank you. Lets talk tech. The global selloff in technology stocks, showing signs of easing. Samsung shares edged up overnight after leading declines in asia. Tencent holdings, which tumbled 2. 5 , also managed to gain. The question is whether the sudden slide was a blip, or represents a more fundamental crack in the u. S. Stock market . Was it a moment of distress . We look at the etfs and the flow of money at the start of the show. We saw 737 million disappear last week. Those are the worst outflows in 18 months. How do you personify the tech moves . Certainly an important moment. You have nailed it in saying, is it a blip or something more important, i. E. An Inflection Point . We have seen this extraordinary leadership from the tech sector in the u. S. , and extraordinary valuations on tech stocks. That has worried investors latent they have had a concern about the level of valuation int h the u. S. There is a possibility that a correction here could be a good thing. If its allied with rallies in other sectors, big sectors of the stock market thinking particularly of the banks and energy sectors, and that has happened in the last few days i would say that plays into the benign script. When you see these shifts in the sands of the market, you have to think, is this the canary in the coal mine . Is this the first one risk aversion is creeping in . Right now, we are seeing other sectors rally as these come down. We will certainly be alert to that possibility. Manus anna . Anna chris, do you worry about the size of some of these Tech Companies . I get concerned when i see descriptions of the tech selloff we have seen going off, when the selloff in the nasdaq comes down to five names. And it is not just the u. S. We look at asia, and they are beholden to their big tech stocks, like tencent. It speaks to that point i made now just about valuations. So, high valuations lead to big market capitalizations. That means these things have become bigger and bigger components of the index and have led the industry. When you look at some of these individual valuations, they give you pause for thought. And we have been here before. Dotmber, 1999 to 2000, the com boom. I dont think we are in that territory, but it is reminiscent of that. That set alarm bells ringing in the minds of investors. The good news, there are other large sectors which are still on low valuations. Even these big individual companies that is extraordinary about the tech sector. There are big companies, but there are other sectors that also have big companies, like energy and the banks. They are quite lowly valued and they can rally and offset what is going on in tech. Then we have what we call a washing machine market, when we rotate from one market to another. As i said, you have got to be careful here because sometimes this is where it starts. I saw this in march of 2000. It was a different landscape then. Actually, many investors did not do as badly because you had the whole value sector of the economy that came to life between 2000 and 2002. There is always that Silver Lining to the cloud. Manus would you spend money on protections . The touch of the horse, being bolted and it is already gone. This is the option value for anybody out there. That aggressive hiking in protection, buying protection, is that folly or smart . Protection has been pretty cheap in recent months. Volatility has been low. Ise problem, if you do that, to spend the money, of course, but you have that window of opportunity, which you have to nail. You have not only to say that volatility is not going to go up, but then you have to buy protection, and it gets more expensive. Then you get back to, how long will this low volatility stay . Anna chris wyllie stays with us. When we come back, we will talk more about the fed. The central bank is expected to raise rates tomorrow. We will talk about that, and the bond markets. This is bloomberg. Dollaryen trying to find a trajectory. There is a new edition of daybreak reedit you have the tv in addition with anna edwards and myself. It is on your mobile call on bloomberg. The u. K. And the eu failed to agree on a start date for the brexit talk at a meeting in brussels. European officials expressed frustration at the delay of amid uncertainty over theresa mays postelection plans and confusion of what she actually wants after the divorce. The queens speech has been moved forward a bit. What is that about parchment and inking the speech. Anna apparently it is traditionally written on goat skin. You have to work out what youre going to write on it a few days before it is read. That could be a bit of a challenge. Will and gas business with baker hughes. The key sets to creating the secondbiggest oil field. Ceo satter ge says the down. Hughesof the new baker channels a vote on the tie up. That is the way we rule on daybreak. They are not. To offer easy returns. Finance ministers in luxembourg on june 15 to discuss the belief measures. Really measures. Measures. Opportunities there, the fallout from the election in the leader will meet the today as she seeks an agreement for the tenant lawmakers to back the conservative program. Our next guest could be a useful ally to the tories reduce the focus on reporters. A professor of politics at the university of liverpool joins us on the phone. Great to have you on the program. For the market perspective, the key question is what will the du p do around brexit, how much will they soften the on arvative stance you prebrexit party, they want the u. K. To leave the European Union. They are allied with the conservatives. Because they are based in Northern Ireland and northern ,reland does a lot of trade they are the single recipient wants a soft brexit. Hardthey dont want is a order in which they would have customs checks. A crossd have to have of the border because the tariffs on the skids. What the du be an conservative government wants is access to amazing ofion, it is the cake and to eat it. They want the benefits of the European Market without actually being a member formally of that market because the u. K. Government has ruled out membership of the eu market as well as the eu itself. Is a great concept of what a soft brexit actually is. What do you think the du p strongest card is when they sit with theresa may today . What do you think their strongest bargaining chip is . Thehe dup have got all of bargaining chips. The conservatives are friendless otherwise. Theresa may has only one choice of ally and they know that and will expectthe du p millions of pounds to go to the pounds sterling into islands into the structure projects there. Expect the du p to squeeze theresa may in terms of funding Northern Ireland. It is important to stretch that and that is why this commonality you have three decades there. Dividing Northern Ireland and the Irish Republic would potentially be utterly disastrous to one thing that could endanger Northern Ireland. All sides, whether it be the Irish Government, and the European Union, will be anxious of thegate the effects island. Anna what could happen under the belfast agreement, but we stick to the good friday the secretaryn could be from a party that had been in some kind of loose arrangement, one of parties. Does this mean they are no longer independent . Do we need to see some kind of impartial arbitrator in this measures . Impossible tot conceive the government as an honest rubber. The leader of the community in Northern Ireland, the British Government is not neutral. The clue is in the title. Thats obviously a worry for nationalists in Northern Ireland. Ireland ise northern in effect suspended. Secondly, brexit undermines aspects of the agreement. Predicated upon Northern Ireland and the Irish Republican republican being in the European Union. It was signed way back in 1998. Frankly, a du p deal makes things that much more difficult. Am not saying it is dead but trouble it is in deep trouble. Negotiationant since i was the age of one. Do you expect a deal today . It is not the style to pop again, have a chat, and do a deal. They want to squeeze it. This is their political moment in the sun. Dup will squeeze and squeeze and squeeze. The conservatives will never have seen anything like this. Very very tough negotiators. They know what they want and they are going to get it. Fact drinking and eight political free bar. Dp was not to give the conservatives their support. And even then, the deal were talking about this that the du p will back conservatives only off key votes. It would only need a key conservative rebels to bring the whole show down. A stable minority British Government. The gop say they will do something, they tended to deliver you once the deal is done, at least we can reasonably expect it to stick for a wild. We might have to find a nonalcohol based metaphor. What are the demands they are going to make in terms of the investment in ireland . Wheres that likely to be targeted . Is it going to focus on a Corporation Tax reduction or something . Any specifics . The du p laid out what it wanted in two dozen 15 with the expectation for a, parliament. 2017 the view be is already laid out. Cuts Corporation Taxes in ireland to make the economy more competitive. Must that is coming anyway. Is to getu p want more people to Northern Ireland for the tourism industry. Normally for schools, hospitals, normally to raise education amongst the working class. Du p voters who tend to underperform educationally. Of this asll resent a huge massive set of economic goodies. The du p place of the economic agenda. That is where it becomes controversial and the Shopping List could include amnesty for british soldiers. That will be massively contentious. Could improve operating rights and Northern Ireland. I dont think that will be anywhere near the Shopping List. The primary Shopping List will be economic. The economy is still a lack of private sector in it Northern Ireland. This gives the du p the best chance to publicize private sector investments. Manus thank you very much. Anddu p will be drinking eight political free bar. In a political free bar. Jonathan, professor of politics at the university of liverpool. Lets talk about the other big agenda which is the federal reserve. Consumerork feds inflation at a record low in may. 2. 47 in threeng years time. This fits above the lowest level ever recorded in the four year and it is on the for your role. It is only four years old. Traumatized by 2. 46 . The expectation of inflation in two years time. The fed have got to acknowledge that they are on shifty ground in terms of their statement tomorrow. Expectations are fading. Yes, right, ok, that is true. We are in this topsyturvy world where inflation is good. Which is why i paused for a moment there. You expectations is getting lower. Exactly. Raises pressure to Interest Rates as a result of that and by extension also we want slightly higher Interest Rates as a sign of health and reflation so the economy is finding its true footing. Absolutely. I think we are still the Economic Statistics of the moment, in a reasonably good place. When we were a few years ago when we were in qfii, i will never get out of that. That has not happened. We have to raise Interest Rates when they have. Theyre going to have more trouble to reduce the Balance Sheet. It we will see. We have got if you rises in the bag. I think theyre getting close to a point where he could see quite a loft a lot. One or two to sustain credibility. 2. 5 i think. It reads really well right now. It is almost there, goldilocks. You want a bit of inflation but it is not a snowball effect. I think the fed are going to be pretty happy. Where does that leave the further out expectations . Is one of them a rate rise and one a conversation about the Balance Sheet . The market is expected a progression in Interest Rates going into next year. Them, the sport that script. My suspicion is i think they are getting to a midterm votto. To raise Interest Rates. I think this is really about all the way through Monetary Policy. I think at this point, these are not normal Interest Rates. They are feeling a little bit more normal. They will want to turn some attention to moderating the fed Balance Sheet. There will be a subtle shift in terms of the emphasis of Monetary Policy. I dont think they will be to worried from here. Manus 10 year is 2. 21 . I love this line from bank of america. The bond market has a moment manic depressive view of policy after june. That is more or less what you see and then you have september and december. What do think of 2. 21 is manically depressed in terms of yield and where that could go to on the trajectory you have just outlined . It is an interesting situation and a bit of a conundrum in this. There are they are raising shortterm Interest Rates. You would expect the markets to set higher longterm Interest Rates. It is not really happening. Something investors do not like to see, a yield curve to the policy mistake. I wonder whether or not bond markets are really pricing u. S. Growth or whether what is happening is that we have continuing globally to anchor because the European Central bank is buying european bunds. Less distorting the price of bond yields. If and when we need the ecb ringing in a qe reigning in qe. I think you will see market price more realistically. Manus begin to deliver differences. Thank you so much. Qe. If you are a bloomberg customer you can watch the show on tv ,go. There is a producer done. Thanks anna. I think she has taken very well to westminster. I miss her in the studio. Ecb thinks thee euro inflation is becoming less reliant on tv. Qe. This is bloomberg. Anna welcome back. This is bloomberg daybreak Europe Theresa may meets the du p a later after the miracle it is up to her to get the conservative party out of the mess she created yesterday. That is the politics. Let me talk about the markets. In business flash with Juliette Saly former currency traders in britain were accused by u. S. Prosecutors have conspiring to manipulate markets have reached an agreement to surrender the sum of two american officials. The Irish Government plans to sell shares in nationalized sh francs for between 3. 49 a market capitalization of londons largest ipo this year. The final price will be announced around june 23, with hshares starting unconditional trading on the allotted and irish talk exchanges around four days later. Manus lets talk about what is going on in the ecb. Lets get to that. European Central Bank Stimulus according to the ecb executive board member. He spoke exclusively to francine to an exiting slowly from the bond buying program. The discussion was very about the rise in the economy, the stock of the progress that will , and that is a discussion that will happen again and again. That is going to continue. Anna speaking to francine chris miley still with with manus. Udio what is your timeline for the ecb and how it exits its stimulus. Chris probably next year sometime we are going to start to see some action. It is quite interesting to see that report. It sounds to me as if the ecb is flying a bit of a kite. On the one hand they are saying the academy is less dependent on the ecb buying bonds, but on the other we are saying it is too early to discuss. I think that means they are flying a kite to they want to see how markets respond. Bestme point in the civil 612 months, the ecb will have to get off events and start to frame something in terms of policy and the markets are awaiting to hear. When we going to get that tapering . You stabilize Interest Rates and you start to address qe and and then and only then you start to take about raising Interest Rates. It feels to me they are inching towards that point. Get out of europe at the moment, there is a much stronger case to be made on steadier ground but not necessarily study ground just yet. If you take the yellow line on this chart it is the Bloomberg Intelligence super court. That is highlighted in the yellow. That has not budged a square inch. To europeanrush equities, the money flowing into european equities, the ability to reduce prices is not translated yes. How did that translate into the equity story . The markets have been looking at a lot of the ghetto. He surveyed data out of europe has been very good. Record ofery good seeing through to the hard data. A bigs certainly been thing fueling the stock market. Particularly the fast the that the oil prices have come off the boil. Right now the ecb once to see a reasonably firm foundation. Feedt necessarily inflation, that is a good thing. We dont want to the other headache which is how you put the inflation genie back in the bottle. Just like in the states it will not stop them moving toward a some normalization of policy. Anna are you still worried about italy . Over the weekend they had a disappointing local election performance from their perspective. The imf has raised its forecast. Does this worry you . Is a wildcard and that has been the case throw the last 612 months. We try to stay out of this because theysses are only guesses. Think there would be that big shocks aside from potentially an italian election. , thank you very much for being with anna and myself. An exclusive interview is here. The german finance minister joins the Bloomberg Team at 12 00 noon today. Lawmakers ando taking full responsibility for the election debacle. Today, in the middle of getting the votes to shore up the government. Show just a lip and they thes of stocks easing after big decline. The next move. The feds started amid the investor concerns. Policy are expected to raise the rates tomorrow. Welcome to bloomberg. This is the flagship morning show. I am here in the studio. Westminster and it is the word of the Prime Minister of the united kingdom. That is what she kicked to the rank and file. There was a question and answer session she held and it does seem that she secured the position and maintain the role as the leader of the party. How long that will be will be worked out in the days ahead. Have the professor saying that all the negotiating cards are held here around the freeflowing nature of that any investments into Northern Ireland. Then, the Prime Minister goes from here to paris and there is a leader who has a political back story that looks little bit different. Inhave the markets checking on how the tech stocks are these days. The professor said they will freeinking in a political bar. These are the boys and the girls that you go to. They said that the fed has the weres remaining good and andg to have a situation will be joined at 7. 15. Hat is the conversation was it a moment of madness . Was it something more substantial that we should take note of . And ais a global selloff reprieve. Have said, she goes out of it biggest twoday decline since september. Dollar shifts and they are assessing whether all the considerable monetary stimulus is required. Oil and theat the data today. Oil is up i half of a percent there are nearly 200 and the market drops and the money flows. This is the longest losing streak in months. The stocks are up. What are the bonds doing . Andclose is a reprieve there is something more subliminal. Dont even flinch. Do they. French know which direction they want to go. Good morning. Thank you. Euro terms may be forced to relocate. They could be required to accept direct oversight. The bankers have frequently complained about this since the passage of the doddfrank act. As a watchdog that polices the finances. No sign of the diplomatic resolution. Expressedter frustration at not receiving the specific demands me a line. The finance minister in the central ranks as that they can defend the currency and the head of the airways accused the United States of regional tension. Global news powered by 2700 journalists and analysts. At the find more stories bloomberg terminal. We have seen many indexes do much better. Her that it was close and it did not have any stocks and financial players listed the index. Lets look at some of what is ofus and this is on the back yesterday and there is speculation it could be the next short target. Also, thanks to the upgrade in halftments and they closed percent higher at to the fluctuation and the Company Confirms that they have been officially charged and would boce been hearing about the p and the way they fix the reference rate. Dip with theu the reference rate and it has been narrowing. That has been speculation will work and the cyclical factor will be introduced. Thank you very much. Lets turn our attention back to the politics story. Says she will stay on for as long as she wants and signals she is going to rethink her approach. Democratic Unionist Party theresa may will head to france to meet with macron. Were joined now from the headquarters in zurich. Great to have you on the program. Lets get the initial thoughts on that. Have you changed your approach and what as a result are you looking for in the days ahead . It is a pace of june and it weunder the equities and think that the sterling could go below 125 and continue the trend. Basis, on a mediumterm a coalition will be formed and we see the pound and there are hints in our tactical asset allocation. A good morning to you. This is a conversation we have had about a potential outcome. Professor says that they will be in a free bar and they can be reliable. Ben they squeeze, this will reliable. Morethat give you a little confidence on the story if there was a demonstration over the last couple of months in parliament . Contextve to keep in how rare the Hung Parliament is. And we had ane democratswith liberal in the recent election and it is that trivial Coalition Theresa may has to go through and we do think that the coalition will he reached. Is that thison there is aficult and sweeping mandate that theresa may was looking for. And ais the momentums stark contrast and it is a pretty safe that. Pound we think that the would go lower. This is a buying opportunity. We will see what comes. Conversationt the and theresa may is going to have a rethink and a National Consensus on brexit. Excite you . Does it feel like having your cake and eating it . What are your thoughts on this idea . There is a Party Negotiating is amazing to talk about the politics in a stable and positive force that had three Regional Elections going on and september looks like she will be voted back in. In president was put it back and they suggested a sweeping change, should the next weekend go according to plan. Offelection will be put until next year. The relative strengthening of eurozone withe politics, it misses the fact that this is a strong position in these negotiations. That was assisting fleet summed up. Andext, getting loose sliding over the coming months. We are looking at the rates next. This is bloomberg. You are watching daybreak. The International Equipment has beaten estimates on the revenue. I am being join now for an exclusive interview on the performance. In of the business is done fits. Talk me through the recovery in the United States of america. The market is strong and has been for a number of years. They are predominantly operating at full employment. The u. S. Economy remains very strong. What is the challenge . Is it managing the pace of growth . The pace of growth is strong and there is over a billion pounds on capital. Issue is getting around the operational challenges of the employment environment and retaining staff and finding highquality step is a major challenge. You have the wage pressure. You are being squeezed to pay higher wages. We are generating good profits and we are rewarding our staff. This is a way to differentiate ourselves and i think this is a great up to. Drivenmuch are you being by cyclical factors and how much is this cyclical . This factor. Over the last five or six years, there is two thirds of that remaining structural. As part of the sharing economy in the reality is that people are looking to rent more and ownership is no longer flexible. People do not want to make Capital Commitments and we provide the flexible alternative. Promise was for 1 trillion in infrastructure spending. What would this mean to the and are we so simple about this, in terms of the economy. We put this in perspective. Nd the Infrastructure Project i think there are the focus over the shortterm and anyone who travels the world knows that the infrastructure comes. How much and when, that is in the the future. These are the Infrastructure Projects we should get excited about. Is it airports or roads . Everybody has been using the it isready projects and the communication strategy and airport and communication strategy. Those investments support the longterm infrastructure of the country, in terms of airports and power. They would be longterm benefits to infrastructure in america. They are the projects you should get excited about and there are parties making that happen. Is it real . How real is it for you in the u. K. . You look around you in london and i look across the building being built every single day and there is a market that is strong and there is greater certainty. For the markets, it is good. Thank you for joining us. Skews the pun, but we were in the rental market. Data expectations are falling in may. This is just above the lowest level in the fouryear survey. Morning, wethis have the Wealth Management team. And you read that data listen to the conversation we you are in a full employment economy and paying more wages, that is an interesting dichotomy. Argument about the usefulness of the Economic Indicators and what i found interesting is how similar this is. We talked to the entrepreneurs about the Industry Leader networks and we are getting the same feed. It is good in the United States matching the expectations. We have a forwardlooking sentiment data. There is the current metrics in the United States and this is the backdrop of the Global Growth pickup. You see the increase on wednesday and four december. Pressureabout the wage and the pressure of full employment in that economy. The rate hike on wednesday and later in the year. We dont see widespread wage there is aoming and Company Level coming through and we dont expect to see Wage Inflation coming through at an accelerated pace. That would force more aggressive Interest Rates. We think that that would be slow and steady. Slow and steady. I am going to take you into a chart and you are going to guess where you are going. And theing about tech index. Im talking about the nasdaq and where this comes from. In the officeou insert should you be about the market move . It has been a strong itformance until friday and is not so good. This negative tech stock, this goes through last week and it is a Strong Performance and it is a crowded positioning. Ande is a more broad growth it is sharply unwound on friday. The Energy Stocks form today and it is quite interesting. You saw the energy and the financials outperform. There is the volatility in tech and that is clearly not normal. We think that the outlook continues to be robust. Ande is a decent valuation a lower than longterm average. Lets follow the money. Thank you for joining us. Now, that is it. This is the interview you want to tune in for. It is noon. The markets are next. Guy good morning and welcome. You are watching bloomberg market the european open. I am guy johnson in london. Matt miller is in berlin. What are we watching this Tuesday Morning . The selloff fades in asian trading as attention turns to the fed. In, will thericed great Balance Sheet unwind . Faces s theresa may