Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170707

Demands. Welcome to bloomberg daybreak europe. I flagship morning show in europe. Im manus cranny. We have a cracking lineup for you today. The much anticipated g20 summit kicks off in germany. Matt miller is on the ground. We are going to break down the fx markets. We are going to be joined by the former u. S. Deputy treasury secretary, robert tinted to put politics and g20 in context. The and besser of the the ambassador of the United States, what better man to put the geopolitics into context . And stock markets, the german bunds market, does it really ignite the bond market around the world . Lets show them at the bottom of this screen. After hours, they hit the highest level since may. This is treasuries and equities, down to more than 1 . Does the bond market trigger liquidation to cover the margin calls from your bond market snap. Thiswas last time you saw kind of combination. That was referred to as a taper tantrum. That was the federal reserve. This time you are looking at a coordinated, or im sorry, a cohort of Central Banks that could be shifting the paradigm of banks. Because of that number back in january. Del rio says stimulus if you break 2. 6 in government bonds, we still have a distance to go, the market rally is over. I talked about stocks having declined, you see a little bit of a reprieve. Nasdaq just get themselves, dow jones referred to them as have a look at the risk radar. Asia is playing catchup in terms of the pickup. If you go on your mliv blog, for those that have the terminal, there is a lovely light at the top of it which is, this years trend is facing a challenge to get to the upside. Do not have a look at dollar yet. Do not fight the bank of japan. That is the message of d. Llaryen, perio they came in and battered the bond market. So you have them dropping to an eight week low as japan comes to the market and sends a very clear signal. 04 at the moment. The u. S. Output has expended by the most since january according to the eia. Thats the only focus of the oil market. Lets get global with the first word news, Juliette Saly standing by. The u. S. Russia is seen as the chief suspect for hackers working for foreign governments, recently breached at least a dozen American Power plants. According to current and former u. S. Officials, the new their facility was among the sites targeted. The warning has sparked concerns that attackers were searching for more abilities in the electrical grid. A u. S. Led effort to broker United Nations Security Council statement condemning north koreas latest missile test has broken down. According to two officials, the u. S. , france, and the u. K. Were unable to overcome objections from russia and china. In the middle east, the qatari government to refusal demonstrates the emirates have links to terrorist groups, according to saudi dress agencies from the alliance. The four countries, saudi arabia, united arab emirates, bahrain, and egypt were surprised that they rejected the demands. In germany, Hamburg Police ordered a water cannon to break up protests against the g20 summit as World Leaders arrived for todays gathering, organized by Angela Merkel. Closely watched events will be a meeting between donald trump and a Vladimir Putin. Has exertedjapan control over the nations bond yield, sending arlington costs lower with the first fixed rates since the global debt fell off. Buycentral bank offered to benchmark 10 year notes at 4. 1 . It dropped after having doubled in the past week. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. On the find more stories brick at top. No surprise, we have seen the bond and equity selloff slow into the asia of course. Significant selling coming through in china as well and the asx 200 was one of the person one of the worst performances because [no audio] manus investors are fleeing the bond market. The policy tightening conditions, the right has determined bond market, bunds at declineth high, only a as the ucb underscores the concerns about stimulus and stimulus tapering. The was bond market also sold and theield services 200 day moving averages. Later today, you will get a big report of them all, the jobs report. What will that do to this story . Foley, jane, ine started the show with this. Done one point 7 , ray dalio is sending warning shots to the world. He is saying stimulus is over. Mock says the present is on the table. How would you describe yesterdays markets move . Putting possibly this is what we are doing right now. Which looking at and ecb next year, could be tapering. We have seen taper tantrums before. This perhaps has got some likeness with respect to that. The market at the end of last year was not thinking that Central Banks such as they ecb, i give canada, etc. , could be tightening and now they are. The market is reevaluating, thinking if the Central Banks are tightening, what does this mean for my portfolio and i to long bonds . And its if i went in that context. From 1515. This is a much longer part of the curve. The market is the most long since two dozen feet and what strikes me as perhaps the , if theissue is this bond markets are so long and so strongly held, then this move yesterday, if it continues, has a propensity to really ship the rest of the risk markets. Guest of course there is an if. There is a lot of pressures to suggest that we have very low inflationary pressures. This is not in normal economic cycle. Because its not a normal economic cycle, this is like there is longer bonds than there have been before. If we go back to the fed with a pc inflation data that was released last friday, it was weaker than expected. If we look at wage inflation, which inflation is still by now. If we look at countries such as australia, the weakest inflation ever even though implement rate was coming down. If we look at the u. K. , again we are not getting wage inflation. 1. 49 jobs for had every seeker and yet inflation is 1. 5 year after year. These are structural factors keeping inflation lower and once the market is going through this reevaluation, inflation rates are still lower than they have been in previous economic cycles. Manus but still the fed has intimated that they may be divided on the Balance Sheet and there is still an intimation from the dots that they are on path for hikes next year. What caught my eye yesterday was the dollar. Today is the jobs number report which will give us more information in regards to wages. But the dollar is finding it ethical to get a bid, even on the news. It comes down to this employment number. Guest there is a greater context. If we go back to try 14, since the lower 2014 and the high in january this year, there was Something Like a 30 move in od, the fed was considered to be the only game in town. The market is looking at tapering potential for the ecb next year. If the ecb goes, it gets more room for other Central Banks at the swedish, maybe the swiss, obviously, to move to. There has been a rotation out of the dollar back into the euro, which is probably going to continue for some time. Stopped oron has prevented the dollar from carrying on with this 30 valley we have seen over the years. Manus what is the funds flow like . If the market is very long bonds, what is the flow like into the dollar . The the market feel short dollar to you and what are the flows into the euro . Guest the market has been long dollars for a while and it was short dollars, sorry short euros, and the rotation we have has turned of euro longs. We saw euro longs at the longest level since may 2011. The question is, is the market fluctuated get with the euros or is there more to go . In the last couple weeks, i have seen more banks change the euro dollar forecast, revise them higher. If that is still happening, that is a signal to me that the rotation has not run out of steam. Euro, in terms of eurodollar, where does it have the momentum to go . Guest our forecast is 117, but we have come a long way in the past four months. But we do think it will go higher. That seems that the ecb will take the next year, but we do not think the ecb will be any fester into hiking Interest Rates because of the low inflation rate. Manus ok, so to separate conversations. There is this issue that the ecb is running out of bunds to buy,. Overcompensating on france, italian, etc. They are going to have to adjust qe, which is what steven major said yesterday. Just because of supply and demand. Oldfashioned issue at play. There is no alternative for the central bank. Guest totally agree. From that point of view, its lucky that the Economic Data is coming out. But the same argument could apply to the bank of japan, they are still suggesting at tapering is far too soon. Thats another debate, but we do think tapering will happen next year. Adjustthis is slightly that the bank of japan just go for more stimulus there because its doing us a problem. We are going to talk about the bank of japan area shortly. To0 p. M. , we will be talking bill gross. What does he make of the bond market moves . Daybreak, we are live where the g20 kicks off today. Matt miller is on the ground today. Last night was all about Water Cannons and protests, but today the focus will be on the u. S. President donald trump and his bilateral meeting with russian president Vladimir Putin. The g20 being hosted by Angela Merkel and the germans this year. They want to focus on trade, on immigration, and on climate change, all issues that could cause differences with the west president donald trump. This is bloomberg. Manus welcome back, its bloomberg daybreak europe. Warren Buffetts Berkshire Hathaway Energy units has agreed to buy texasLargest Energy utilizer. They invite in equity value of about 1. 25 billion for 100 of the company. The takeover is key to ending the bankruptcy for Energy Future holdings. Its part of the biggest leveraged buyout in history. Samsung electronics has topped analyst estimates with its best operating profit, income rose 12 billion at the end of june, thats as local demand for semiconductors remains strong and the newest galaxy smartphone one over customers. That is your Bloomberg Business flash. Thank you very much. The World Leaders are gathering in hamburg for the most anticipated and eventually the most turbulent meeting in years. The hostess, Angela Merkel, will problemsg to avoid the that happened at the g7 in may. Matt miller is on the ground. Matt, good to see you this morning. This is a big meeting for trump and put in. What can we expect there . Thats the question that everyone is asking. How will this play out for President Trump . Howlett play out for president putin . Will President Trump confront president putin on allegations that he cyber attack or had Russian Hackers cyber attack the u. S. Elections and now we are hearing reports of hearings of attacks of u. S. Power plants as well. What will Vladimir Putin want from President Trump . The two ci to eye on a couple things, notably, President Trump held a speech in warsaw focusing on the western values as religion and family and less on democracy and freedom of speech. It will be interesting to see what comes out of this meeting to see how this meeting is held. I think thats what most people are interested even though it is not the most important meeting for geopolitical troubles right now. You have obviously got the problems of north korea, the problem with syria, you have a lot of other issues turkey, for example. Maybe more important right now as far as safety of the global community. There are more tensions in terms ge and trump in terms of merkel. This is where it can get murky. To the extent that trump doesnt need china to help him execute some kind of temperance on north korea. As the days go on, as the tweets come out, its almost as if he is focused on a unilateral solution, his own solution for north korea. Absolutely. Thats the most important point is that the world is focused on but thepputin meeting, other meetings are much more important. Indeed, donald trump held meetings yesterday with japan, and south korea, to try and put a little bit more pressure on china in order to the escalate the situation in north korea. And as far as erdogan is concerned, he says if he is not allowed to speak at rallies, it would be german suicide. Take from that what you will. Manus matt, thank you very much. J foley is on the ground here, currency strategist at robert bank. 54 hours ina punchy terms of news flow. G7s,ou go into g20 and how do you go in with risk . Is that just to bunch at the moment to carry into a big meeting like this . Guest its been so used to political risk, which this is all about. With respect to risk, i expect you get to the yen and north korea and that situation, but underlying that in the g20, there is lots of potential discussions in regards to trade. We have merkel and abe and possibly xi in china. We had the announcements a couple days ago and at the eu and in japan, it was deliberate trade, climate, all very important, but it will be north korea, with respect to risk, that the market will be watching diligently. Manus lets break them down quickly. This is the Morgan Stanley traded. This is a worrying sign, isnt it . This is the biggest concern for the world. It was set up to build trade in the eye of crisis. That was the risk to the world. Guest if we look at defense budgets, that tells the story in itself. We have trump telling other nato countries that they need to expand their nato budget. If they expect their 2 gdp edges, maybe they should. Japan, the last five years, they have been expanding their defense budget. They are reinterpreting their constitution with respect for their pacifist constitution. That tells you enough about the state of the world, the state of tensions within a Global Economy. The yen. Ts talk about the juxtaposition between the bank of japan sending a clear message to the markets. Do not mess with the bank of japan. But the juxtaposition is the global, geopolitical risk. How did the boys and girls look at it . Guest these are two opposing forces. We have had this position about ecb tapering, the bank of canada, bank of anglin, etc. Manus none of that from boj. Guest absolutely not. If you think about the carry trade, that should disadvantage again. However, the yen will be bought as long as there are signs of satan and that keeps the dollaryen quite content. Manus we will pick this up after the break. We will be speaking to the ceo of unicredit. That is at 9 00 a. M. Italian banks have been a huge focus. Next toive to qatar discuss the gulf issues. It is a Beautiful Day in tokyo. It is 2 30 in the afternoon. That is a live shot. Dollaryen is on the move. The bank of japan has a clear message for the market, do not think about fighting with us. We have a target in mind. The dollar up. The yen down. Lets put the bank of japan context. Cehic gets to the heart of the matter. The bank of japan stepping in with yield curve control after we have seen this selloff in bonds globally. The lackluster french auction, and after the ecb accounts, we go above 50re jump basis points. The selloff in the u. S. Have continued in asia. The bank of japan stepping in. That has pushed the 10year jgb yield lower. We thought drop below nine basis points. Jgbve this for you on the 10year yield. We are keeping a close eye on that. The impact has been seen in treasuries as well. We are seeing the 10year yields climb higher today. This is the 30year yield. We thought breach the 50 day moving average. It did go above the 200 day as well. We are watching to see whether it goes about that 100 day moving average. If it gets, there could be more losses to come. What we have seen a some curve steepening, certainly in yesterdays session. There are signs there might be liquidation of those long positions. Is there more pain to come is the big question. We saw the selloff in bonds and into equities as well. Pressures precious metals. Silver hitting a 15 month low in the session. We are singled dropping him heading for its fourth weekly loss. The biggest drop since early may. Youre looking at 1000 manus new edition of daybreak. Have a look at this. I love a cartoon. This is it. This is the cover story. Oruda. Nk of japan, ko the bank of japan back in the market for the third time in a number of months. Thats bringing jane foley. Lets bring in jane foley. You said, i think dollaryen is cap. The simple question is, where . Is this a Strong Enough message . Do you think we will see more of this . Jane yes. Japan does not want to let go of those sites. It wasbeen adamant that too soon to consider a tapering. It still had a long way to go. That inflation target is 2 , inflation rates we have now are below. There is speculation that at the next meeting the they will have to revise lower the reflation forecast. That is not something they want to do, but it seems tactical that they would have to do. Manus there is a certain amount of pragmatism. For me once, for me once, only twice. They dont want to be caught short. Talk about the next story. Lets talk about the next story. Dalio says,our responsibility is to keep dancing closer to the exit under their sharp eye on the tea leaves. They are so wellpositioned, arent they . Is open. Ing that time i put it to you in a slightly different way. I put it to you that these markets were doing healthy adjustment. Move in the bund market is a realization of practicalities from the European Central bank. It is a mindset readjustment, but has it up homework of a deepseated shifting gears . Jane i think there is a shift in gears. Whether or not it is deepseated remains to be seen. Whether or not we have a more deepseated correction depends on medication from Central Banks. Medication from Central Banks. The minutes we had yesterday from the ecb, none of these Central Banks have been hawkish. They have been a little less dovish. That is the message they want to get across to the markets. Here is an adjustment here we are moving towards the exit, but we are not in a stampede towards it. It is a marginal move. At u. S. Ets have a look equity futures. Liftave a little bit of a in nasdaq and smp. P. And s there is a bounce to be had there. The story focuses on hamburg. We talked to matt miller. Im is said to meet with Vladimir Putin. Urged putin to stop supporting hostile regimes. Saudi arabia believes that qatars refusal to acceptable medic demands the grammatic demands indicates the country has links to terrorist groups. In a statement from the alliance, which expressed deep surprised at the rejection. Meanwhile, the msci emerging market currency index is snapping a fiveday losing streak. Emerging market assets have come under pressure amid speculation that hawkish Central Banks shudder across the globe could curb the allure of riskier investments. , is still with us. Lets have a look at it. Mid and truth. These are the tightening cycles from the federal reserve. Markets, 90 return in emerging markets during these historic cycles. It is the slowest cycle on earth that we have had, and still we have this reprieve from emerging markets. Telling the truth about emergingmarket currencies and fed tightening. Jane if Global Growth is strong, that is good for emerging market. That is all we need to bear in mind. If the fed is tightening because we do is economy is so bad about that . If we look at Global Growth this year, we have had upside surprises from the eurozone, japan. The Global Growth numbers have been revised a couple times. Global growth is good. That is generally pretty good for emerging markets. If the fed is tightening for the right reasons, you have underlying demand pushing higher , than among is that is indicated will, that should be something that emerging markets should be able to absorb. Manus lets drill deeper. We set emerging markets appear you to date up here year today. It doesnt take much to unseat to doesnt take much the invective doesnt have to change much to put delta back into the downside. Perhaps this is the definition of emerging markets. The sensitivity to political events. The rally this year is on the idea that perhaps there isnt going to be this breakdown. It will be renegotiated, but perhaps it will be too. That could change. Manus lets go top to bottom. Thats have a look at the turkish lira. You said this is something to keep an eye on. You say there lurks a deepish a deeper story. Jane there is. The performance has been negative. Since the referendum, a. Its opal of political, has come. Since the referendum, a period of political has come. There are negative signals. There has been money coming back in since referendum. Position isbanks supportive of the currency. On the technicals, that chart has warning signs. There was a protest march in turkey organized by the opposition. There are some political concerns, but we are retaining a more positive view for the moment. We are aware there are negative signals building in the technical charts. Manus when we look at the north korean situation, the south korean currency, do you see more relative toasian fx sub european . Jane at the moment, yes. There are very much turned to euro. European growth is good. That is supportive for those Eastern European currencies. If we consider asia, we have the situation in north korea. Growth in the region has been good, driven by japan. China has been better than forecast. The taiwanese dollar, indeed rupee, south korean won, all quite strong. If i turned that over from year to date and turn it into a month, it tells a different story. Risksthere are chinese building. More recently, it has been north korea. This is a considerable potential threat for south korea, but also other countries in that region. Manus jane, you stay with us. She is senior currency strategist at rabobank. Lets focus on tech. We have a major theme for today with the leading smartphone rivals. Samsung, best ever quarterly are putting profit thanks to Strong Demand for semi conductors. Facing a lawsuit from qualcomm over an alleged patent infringement. Lets kick it off with samsung. What is behind the better results . Anything to do with the battery lasting longer . I dont think that is the core issue. Is the robust semiconductors business. In terms of the battery fiasco, it is a cloud hanging over samsung, but is it is one that is dissipating. There has always been builtin tension there. What you have seen yesterday in ,erms of qualcomm suing apple is actually just a chapter in a legal battle that stretches back months. The two have already filed lawsuits and countersuits in california courts. Manus this is bloomberg. Manus welcome back. It is daybreak europe. We will take a green printer from wherever it comes. The bond market shifted down yesterday along with global equities. U. S. One put 7 in value. We are seeing a small moment of what i would call shortcoming. Lets get to the business flash. Juliette Warren Buffett Berkshire Hathaway energy unit has agreed to buy texass Largest Energy transmission operator. The all caps offer all caps offer is 9 billion. Endingeover is key to the bankruptcy of Energy Future holdings, foreign by kkr and Goldman Sachs as part of the biggest leveraged buyout in history. Since on has topped samsung has topped estimates with operating profits. Global demand for semi conductors remains strong, and the new galaxy phone one over customers. Qualcomm is suing apple for patent infringement. Latest volley in and in in an increasingly battle. Claims there are six patent infringements. Terra firma Capital Partners will reportedly begin talks next week with prospective investors for raising 3 billion euros for a buyout fund. A spokesman declined to comment, but we will be putting that to attin king when he joins us nine calling him u. K. Time. That is your Bloomberg Business flash. The chief brexit negotiator has signaled that even a partial withdrawal from the block could carry costs for britain. A frictionless trade relationship is not feasible, delivering a blow to members of the u. K. Government who are seeking to retain close links with the you. Meanwhile, several british big shots from business are going to the countryside this weekend. They will deliver their views on how to navigate brexit. Is withey from rabobank us. Say to theyou minister in regards to brexit . Ofe we have had these sorts abuse from the cbi just this of views fromt the cbi just this weekend. This is about u. K. Coming out of the Single Market. Amount ofbeen a huge doubt about the relationship between the u. K. Economy and the e. U. We have had the cbi suggesting that there should be transition phase. Manus britain should seek to stay in the Single Market until a final deal. Jane you can understand that. Uncertainty is beginning to chip away at investment, employment, etc. Chancellor hammond has a similar view. David davis does not appear to be on the same page. Hopefully, what will come out of this weekends events is some sort of coordination, some consensus between what the industry once and which we the government will go. We have government patterson, douglas flint, david , and google, rollsroyce, blueberry blueberry. In the Market Access costs. It is a core part of the pillars of the european union. A spoken english yesterday and he used the word frictionless. They are utterly incompatible. If the British Government simply not listening . Where the consequences for your world what are the consequences for your world . I want to take a look at euros sterling. This is, as you said, fat finger that. Are we tethered to that range until something provocative comes out of brexit . Jane probably. There are two events. Sterling, there is a hawkish stance from the bank of england. That is reduced downside potential, but sterling has bad news in the pricing perspective. This is about a minority government to sterling. If the market considers the direction of the brexit potentially be disadvantaging the u. K. Economy, that would be reflected in a weaker pan. Were watching the inflation data. It is suggesting things did recover after the initial move lower. Saying, actually, investment is tapering off again because of this uncertainty about what is going to happen in a year and a half. Of thethis is a rerun financial crisis in terms of time lags, leadtimes to the reality in the data. I have asked everybody this week fromgards to their take the bank of england. They are going to be macro prudential road. The data is unlikely to sway mark carney to the camp of three, the three people who voted for a rate hike. The data isnt that robust or strong, therefore, perhaps i should move away from the discount i applied to sterling. Peoplene of those three is from forbes. She warned us when she said people are not able to find jobs as quickly. Jane what we have in the u. K. Is a slowing economy. We know that. Look at the consumer side. We have real wages turning negative. We have retail sales under pressure. The consumer is under pressure. We know that. What mark carney said is that if the slowdown coming for the consumer side was offset by a rise in investment, maybe that would provide a condition for him to hike Interest Rates if wages were turning higher, which they are not. We can assume that he is on to be negative in that. I dont think that we are going to get that Interest Rate hike from the bank of england, unless sterling took another bigger dive to the downside, because what we have in the u. K. Is a emerging market story. And there is a danger of a downside spiral where you have a punch in the pound leading to higher inflation, weaker consumer, lower growth, downside in the pound, therefore we get this cycle. That is the bank of england will probably want to cut out. Manus very well explained. , think you for being a good sport and joining us. She is with rabobank. Just an hour to go to the trading day. Elliott management said to have built up there stake in the drugmaker. We will have a look at some of some other names. This is bloomberg. So bonds andors stocks as Central Banks talk tighter policy. Dalio says it is the end of the Central Bank Stimulus era. G20 summit kicks off. The u. S. President said russia could have meddled in the 2016 election. Now casting wider blame. The russians are said to be suspected of hacking at least a dozen u. S. Power plants. No and void. The saudi led block pledges new measures against qatar after the gulf nation rejects its demands. Manus welcome to bloomberg daybreak europe. It is friday. Have a stacked up show for you. It is about the bonds selloff. Kully samra puts in his context of what is happening in markets ahead of the g20 summit in hamburg. We will be joined by Robert Kimmitt. In terms of data, 1. 2 Industrial Production in germany. Hasnt he market had an estimate of 2 10 of 1 . If you want to understand recovery in europe, germany is the bulwark. You have rising for the fifth month in a row. A solid upswing output. Manufacturing, 1. 3 versus the previous month, and they are talking about a lively demand, both domestic and international. There is a strong dynamic to the orders. It has translated into a brisk it according to the industry. In theas a combined loss bond and equity markets of 1. 7 . You havent seen that since 2013. The question is, is this a sufficient market moved to cause contagion . Im talking about the bond market yield versus the equity market. The u. S. Equity market moved by 1 yesterday. We are seeing equities in asia to the carryover from the u. S. Trade. Europe is opening a little bit lower. Lets look at the risk radar. We have a report saying that 3 is where the real issue is for the bond market. Dalio saying beast in the last time is over. Time ing the stimulus the bond market is over. We have a target of 0 on yield. The bank of japan says youre not going to mess with us. You have nymex crude dropping. Pumping more oil, expanding their output by the most since january. Lets have a look at some of the closers. You have the bank of japan topics down. Down. Ix ix down. Lets have a look at the bond markets. This is where we are perhaps most focused. The book market is down. You have yields rising to. 58 . This is the key issue, which is there is a shift in global Central Banks being speak. You have to keep dancing, according to ray dalio. The oit is down by 12 tips. There was an option that some say of ceded the market. Lets get to Juliette Saly. Russia is seen at the is seen as the chief suspect amid hackers that breached a dozen American Power plants. According to u. S. Officials, the Wolf Creek Nuclear facility was among the sites targeted. The warning has sparked concerns that the attackers were searching for vulnerabilities in the electrical grid. A u. S. Led effort to broker a United Nations Security Council statement to condemn north koreas latest missile test has broken down. The u. S. , france, and the u. K. Were unable to overcome objections from russia and china. The development is a setback for the trump administrations top Foreign Policy priorities. In the middle east, the qatari governments refusal to accept the diplomatic demands of the four nation saudi black demonstrates the nation has links to terrorist groups, according to a saudi owned press agency. Before countries the four countries expressed their deep surprise that qatar rejected their demands and pledged new members against the gulf nation. In germany, Hamburg Police have deployed a water cannon and spray to break up thousands protesting against the g20 summit. Arrived im aders protest organizers have pledged various and unpredictable mass resistance. One of the most closely watched events will be a meeting between donald trump and Vladimir Putin. The bank of japan has asserted control over the nations bond yields, sending borrowing costs lower with its first fixed rate bond purchase operation since february. Yields dropped to 0. 085 after having more than doubled in the past week, while begin has monthly loss. Yen has swung to a loss. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Have seen that bond and equity selloff continue into asia. The yen still under pressure. The nikkei closing down by a third of 1 . They are both lower. The hang seng also weaker by a third of 1 . It is the worst weekly have seen for regional stocks since early march. Having a look at stocks, Cosco Shipping looking good. Cocacola a mental going the other way in sydney. Orion under pressure in seoul. Nomura not helping things out, saying it expects a 26 drop in sales this year. One stock we have been watching is samsung beating its own forecasts with its related latest quarterly profit. The wetland shows us sense of share price over the last two years. The blue line is apple. Samsung has radically outperformed apple, even though both have had a great dirt to 2017. Great start to 2017. We have seen samsung shares of 32 so far in 2017. Manus thank you very much. Early story of the day, global selloff. They have been selling bonds. Central bank changed the narrative. U. S. Treasury sold off the 30year yields. Later today, we have the jobs report in the United States of america. A stronger than expected number. Maybe for the reason to push the selloff. Lets get sobriety back into this. Maybe i should contain myself. It is a 1. 7 combined drop in equities and bonds. You havent seen that since 2013. There is a shift in Central Banks. Do you feel unnerved by it . Are we being overly aggressive and demonstrative . Kully it is never nice to see a move of this magnitude. The words taper tantrum on the screen. We have been here before. We can work through this. Although the Central Banks are stepping up rhetoric, i wonder how much they can follow through. While we have seen the 20 largest economies grow at the same time, the underlying economy is not a strong paste as the u. S. Was. I wonder how much of this is talk and how much will be followed there. Dalio to that extent, ray made the point. He is saying this is the end of central bank giving its money. Lets have a look at the board. He is saying the direction of policies are reversing. Our responsibility is now to keep on dancing, but closer to the exit. Keep our eyes on the tea leaves. I think you summed it up, which is you know have several warning that their free money is coming to an end. Kully we have been here before. When the fed started down this path, we thought they left its too late. Isnt this a great time for most of the central bank to go down the street . The top economies are growing at the same time. This is a great time to remove some of the stimulus. When those economies do eventually turn, they have other instruments in their back to deal with it. Manus the issue and conundrum is this. Unemployment, average Hourly Earnings. This is a global phenomenon. It is not just the fed. The average Hourly Earnings is one measure of wage growth. If you look at the wage growth tracker, which of the report 4 wage growth, i wonder if that number is showing too low. What we want to see is wage growth improving, Consumer Spending going up. The numbers last week showed Consumer Spending annualized four quarter to is up 3. 2 versus 1. 1 in quarter one. We are starting to see Consumer Spending pickup in the states. Weight growth is increased Consumer Spending. Wage growth is increased Consumer Spending. Manus you said goodbye to the just tumultuous but reporting. The fed betting the reduction of the Balance Sheet. Monetary policy mistakes is one of the biggest risks to the downside. We have had just over 8 gain for the first half. It isnt bad, really. The secondrcent for half might be difficult. We dont think this bull market will turn trey burke bear market anytime soon. Are you rumbled at all by tech . Kully no. When it was career being expanded, and it felt different. Were beinges that brought to ipo were different. It is a different environment. Manus thank you very much, kully samra, for sharing your thoughts with us. What we are watching today. We had this g20 summit. It is kicking off in hamburg. The jobs report is at 1 30 p. M. U. K. Time. Then we get the Monetary Policy report. We are going to leave you with a live shot of hamburg. These are some of the peaceful protesters. It was not those scenes last night where there were Water Cannons on the street. This is a city on lock down with a great deal of protesting going on outside this is bloomberg. The gates of the g20 summit. Is 7 16 a. M. In the city of london. The World Leaders are gathering in hamburg today for the most anticipated and potential leading meeting. Opportunities for clashes are plentiful. Joining us from hamburg, matt miller on the ground. The meeting today is focused on trump and putin. What can we expect . Putin is the one most people are going to be paying close attention to. It could be important historically. Meeting with president s from jfk to Ronald Reagan with the russian counterparts for the first time typically make real history, and that can be the case now. Will donald trump actually confront Vladimir Putin when it comes to allegations of hacking into the 2016 elections . Now we are hearing of cyberattacks on u. S. Power plants. Will they avoid the subjects and try to talk terrorism, to join forces and greatest on the front against those problems spots drop the world . Ignoring issues like the minx agreement and crimea. Manus there are other tensions as well. Xi and trump as well as merkel and erdogan. This could get ugly. This could get lively. Bilaterale other meetings are probably more important for the shortterm. President trump yesterday had dinner with shinzo abe and also president moon. The three of them are trying to pressure on china to help deescalate the north korean situation. There has been murmurings out of the white house that the u. S. Could go at it unilaterally. That is an important hot point in the world. Erdogan areith getting worse. In germany, he said it would be suicide of the authorities do not let him speak at his own demonstrations on the sidelines of the g20 summit. He holds millions of immigrants back from bursting through the gates into europe right now. The europeans and Angela Merkel have to appease him and press for human rights issues that many are protesting about here. Manus thank you very much. We have live shot there. These are shot in hamburg. There is a substantial police and security presence all the way around this g20 meeting in hamburg. There have been if you scuffle here and there. There have been a few scuffles herein there. Me take you into markets. We have seen a ratcheting higher in terms of the bund yield yesterday morning. This is this morning straight so far. Is direction for travel tapering off at. 566 . There is a complacency in the bond market according to steven major. That has seen quite a few month editions gone. Lets will come our guest, Robert Kimmitt. Here were nice the first summit in 2008. He organized the first summit in 2008. As we go into this g20, i have read many stories. The bottom line for Angela Merkel, she described the divisions at the last meeting. Poland,0 gets off with trump doing deals and poland. It isnt in a spacious backdrop, isnt it . Robert im not sure it is. Anytime we go into these multilateral summits, the important thing to recognize is that work at the g20 is important. The work in the bilaterals tends to focus on the urgent. Leaders have to do with urgent and important issues. I dont think there would be much difference in the room if is the to Global Growth free flow of capital across borders based on open investment policy. If we take that is the foundation of successful Global Economy, we might have differences on how to approach it, but there is a common interest in trying to jumpstart the Global Economy to move it to higher levels of growth both in the u. S. And abroad. Manus do you think that President Trumps ambition is global . He has told us it is america first. That is different to global ambitions. The e. U. Ready to do a deal with japan. Angela merkel along with shinzo abe and xi the voices of free trade. Is trump really a global ambitions to terms of free trade . He has that america first, but it does not mean america only. Whether it be tpp, the pierce agreement, he has problems with how they were negotiated, but he has said he is ready to reengage on those. With his first meeting with Angela Merkel, she came away believing he was open to continuing with negotiations on ttip. He is going to go into these with a tough position. He has made it clear he will put america first, but doesnt every world leader have a first responsibility to their own country . By engaging globally, they do well for their country and the world. Manus from the european perspective, and by the way, we saw his defense of the west yesterday. A strong defense, and some would say his tone and intonation was quite religious. It wasnt necessarily the kind of language you would expect from we world leader in regards to be gosh democracy. A fight be more religious inflection. Himself tondeared the leaders of the other 19 thats far. Thus far. A casebycasen basis. Some of these lenders yes met in washington. Lay a foundation for that bilateral relationship. Others he is meeting for the first time, like Vladimir Putin. The fact that he is there, engaging, says he recognizes that america, to be prosperous, must be strong and engaged abroad. To be strong and engaged abroad, we have to have a healthy economy at home. Anus this is Robert Kimmitt we are looking at live shots of hamburg. North korea is probably the most significant geopolitical issue at the moment. As a former u. S. Ambassador into germany, how important is it that trump and xi jinping have a constructive meeting today . Does the United States need china to bring more pressure to bear on north korea . Robert the meeting is a vital. China needs to play an Important Role with regard to north korea, given they are both political and commercial relationship. , the unitedussia states, japan, and others were part of the talks that have fallen apart now because north korea does not want to engage. The effort is going to try to be to go through the yuan. It was blockage last night. The you when statement has to be front and center in the discussions. We to a warlose are situation with north korea . Videos i will let some make that judgment. If you look at what the commander said and officials have said, they have basically made clear that the direction that north korea is heading is unacceptable. They prefer a diplomatic produce thatelp solution, but they are not taking the military option off the table. Manus trump meets putin. Who has the upper hand in that meeting . Our writers say trump. Robert i think you have to strong personalities going into that meeting. Putin has his background. Trump has his own background. What i would say is there are bilateral issues, but right now we have u. S. And russian airplanes flying over syria. We need 2d conflict to dconflict those situations. There is a wide array of issues from the two of them to discuss. They have to get the bilateral relationship right first. Manus thank you very much. Robert kimmitt, the former u. S. Ambassador to germany. We have ceos aplenty on bloomberg today. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. 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