Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170717

A very warm welcome to bloomberg daybreak europe. This is the focus of markets. Much of it has come through better than what was expected by economists. That has highlighted the stabilization of the chinese economy. On your bloomberg, you can pull this chart. Figures year on year numbers coming through, the constant price year on year in green showing the stabilization, in the words of chief economist ,eport china at citigroup saying this is an economy that has stabilized. Away from the growth data, the wobbling in some of the equity markets is the impact we have seen from a closeddoor meeting that took place over the weekend. The smallit have over caps in china . That is something we will discuss later in the program. Lets showed where we are on the Global Equity markets. The msci index is up for a seventh day. We also have a soft sales day, which suggests a study gradual pace from the fed. The japan is closed. The new Zealand Dollar falling. A lower new Zealand Dollar will rebound as growth. We will look at the dollar index more probably. Its the closest levels we have seen since december. On the back of the some of that weakness in the data in the United States and what it does to the fed. Are the mostds embarrassing since 2013. The boj meets thursday, so lots to talk about on the banking fronts. Have aoking as if we flat start to the trading day. Round two of exit talks start in brussels. Inbrexit talks starts brussels. Here is Juliette Saly. Donald trump is planning to shake up his legal team and is evaluating his communications setup. According to those familiar, longtime attorney is likely to the east into a less prominent role within trumps legal team. That comes as the fbi and congressional investigation involves possible ties to russia. U. S. Senate Majority Leader Mitch Mcconnell has delayed plans to vote on a bill to overhaul the Health Care Bill. Thats after john mccain said he would be at home recovering from surgery, leaving republicans short of the votes they need. The New York Times cited mccain condition could be more serious than thought and may delay his return to washington by a week or two. Brexit secretary has urged negotiators to solve issues around citizens in each others jurisdictions. The comments come as the second round of divorce talks start today in russells. Philip hammond said companies are delaying investment because of brexit. Its actually clear that businesses have discussions are doing so and you can understand why. They are waiting for more clarity about what the future relationship with your will look like. The ecb seems to be on track to unwind its Stimulus Program next year, but economists say its likely to drag out the progress process. The unwinding is seen starting in january and taking nine months as opposed to seven months. Resumed military and humanitarian exchanges with the north. They seek to follow through on campaign pleasures Campaign Promises to do dialogue with the north. He voiced skepticism about the prospect for a breakthrough. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. It has been a fairly positive date in asian markets. Upan closed, regional index for a sixth consecutive session. You have the hang 10 looking pretty good at 6 10 of 1 . You are seeing a switch out of some of the chinese stocks on these concerns about regulatory woes. We have the shanghai composite for the month since december, Australian Market weaker despite the china gdp number. Hotel falling in china, down. 58 after coming back from the online break because of concern over scrutiny from details from that group. Macau down 5 and we heard a junket operators saying there could be concerned about leverage in terms of those casino players and we have korea air, one of the worst performances, at about 11 . We have seen the china gdp better as better than accepted. The aussie dollar had been higher than six consecutive sessions. Here, we have not seen the aussie above anyone since made 2015. But technicals suggesting it could push about that Level Holding at 78. 2 cents today. One of our journalists said the ball could be concerned about that considering the last few times it tried to get to that level, it fell significantly lower. Quite interesting in terms of the chinese database. We are seeing a significantly high aussie dollar. Anna Juliette Saly joining us from hong kong. She was mentioning china maintained momentum last quarter. Demandtrade and domestic started to pick up. Second quarter gdp expanded at 6. 9 year on year. Retail sales, investments, and industry output all estimates. Is douglasto discuss morton, head of Asia Research based in london but a frequent visitor to china. , we wake upmorning and have better than expected data out of china. Momentum seems to be building and we see set these meetings in china. Is this coincidence . How much do you believe the data . You watch it year after year, how much do you believe this data . Guest it comes off on the back of some results that we have seen in weeks. The equipment manufacturers both released profit alerts and we are ahead of strong expectations. Albeit fbiis a real, driven. We can believe these numbers and it gives us some comfort, certainly given the fact we had chinese tightening, that growth has still come back strong. A china story, is it a Global Growth story driven by exports . This Shows Chinese Industrial Production in retail sales stabilizing as gdp seems to stabilize. Behind the big driver white we are not worried about finance now as we were as the start of the year at the start of the year . Guest deleveraging is a big word at the moment that some people are concerned about. That shows there has been stabilization, so its not been incrementally credit driven although there was an issue in the economy overall. What is interesting is that the stimulus has been happening to missing late in china. ,wo of the biggest policies number one deleveraging, number two wrote investments, which is fai driven as well. It shows some of that demand is coming from the region as opposed to domestic. Anna what is this data, stabilization in chinese economy amid deleveraging efforts . What does that tell us about how they can afford to continue with these priorities . Guest funny thing is, some of these results have been taken negatively by some of the markets because people think it lays the groundwork for further deleveraging in china. Anna so stability in the economy, therefore he can take on the debt levels . Guest for well owned companies. That remains to be the case and over the longer term, deleveraging should be a good day. Of a closedpact door meeting that took place in china is something people are they want aout and to safeguard the financial system. Changeis suggest a step in the attack on Financial Leverage or just more of the same . Guest more of the same. There were not a huge amount of headlines and this was the main thing. Taking control from the pboc and the different parties that it. Trolled th anna join with the fed story if you could. The chinese have been concerned with what the fed has been doing. This has a direct impact on the currency. And other factors. Where does china go from here as we see the fed tightening gradually . Pboc and the Chinese Government are printed in their tightening effort which is a good thing. They have started to loosen the margin and following the last three months of tightening that we have seen. It shows there have been reactive, which is good, i do not think there will be further tightening. It shows there will not be loosening either. We are on a balance trajectory ahead of the game and that is good. Its now about rebounds, structural rebounds rather than a monetary sense. Anna they have been preemptive as you say, but the fed has been arguably just started their rate hiking cycle. Where does the pboc go in the medium term . Guest they have been good at following the fed ahead of the fed in the past. The concern we have in the moment is far more than expectations ever happened. Everyone is aware of the trajectory of the fed. It depends on what the market expectation is. Who knows . The pboc are comfortable at the moment and we are on a balance trajectory. Anna as the pboc is tightening, has it been successful in reducing outflow pressure . This could be the story of 2017 and it wasnt. Guest we have seen and info pressure, which is a huge switch. Bank else sheets themselves. That will pose a move and coupled with the strength in the rmb and the initially was trying to mitigate speculation between the market three months ago and we have seen continued strengthened currency now. Anna what about internally in china and pressures in the labor market . How much is the Growth Engine managing to keep a lid on demands of population . Guest we need to be clear about this. There are a lot of people connecting which group and consumption and therefore strong sales consumption is not to do with wage pressure. It has been coming through and a concern, but one of the things we are expecting in china is a rise of robotics and automation and factories. Thats what china requires to not only move up this manufacturing supply chain, but also to mitigate wage pressure that has caused them to lose their advantage. Anna an interesting dynamic in the globalization it thank you for your time. Good to get your thoughts. At the week look ahead. The European Union brexit negotiations will meet david davis for the second round of talks in brussels. Baker earnings continue to roll out with bank of america and goldman sachs. Wednesday was the u. S. And chinese officials meet for a dialogue. The ecb policy announcement will be followed by a news conference. Mario draghi resenting that. Withund out the week general electric. Coming up here on the program, health care. Trumps Health Care Bill faces another delay as john mccain recovers from unexpected surgery. That has delayed things. This is bloomberg. Anna welcome back everybody to bloomberg daybreak europe. A little murky in the skies above hong kong. Lets get the Bloomberg Business flash from Juliette Saly. Easyjet will announce its ceo will step down to take up the leadership of rochester idb. According to a person familiar they say she is offered to stay at easyjet while the Company Seeks a successor and the search is expected to begin immediately. K picked up with john valais and three other executives charged fraud. Its the biggest terminal charge since the financial crisis. Month, they this intended to plead not guilty. Toshiba has agreed to hold off on disposal of its chip until july 28. Its being contested by a Company Seeking an injunction. That is your Bloomberg Business flash. Anna . Turn our attention to the United States. Mitch mcconnell is postponing plans to debate the health bill as john mccain recovers from an unexpected unexpected surgery. Even before the delay, the cannot lose a single additional republican in order to pass the senate. The cbo will not release its score today as many had expected. When you look at the United States at the moment, delay after delay it seems on the health of the hundred its delaying all the other things on on the Health Care Bill. Its delaying all the other things on the agenda. Guest you had an important statement from the cbo saying if the Health Care Bill goes through as planned, there will be an excess of 20 million americans who will lose insurance. That is a huge challenge and the central case has to be that we will see further delays and further disruption of the process of the Health Care Bill. That in turn is very important because what happens is fiscal reform. Back to last november, december, investors were motivated. We had the trump rally based on Cutting Corporation tax and increase of 1 trillion in Infrastructure Spending expenditure. They plan to move business from overseas back to the states. All of that is delay. The Trump Administration is being tested. Is it your faith in those policy areas, are you pushing back your expectations for when we see that being delivered . Guest absolutely right. We could easily be having this conversation in a years time. Im waiting for fiscal reform. In the fedflected statement, Janet Yellens statement west week. The fed is now saying the expectation of growth accelerating 3 plus is now very low. If you look aty the imf forecast this year, they 2. 1 growth. Ng we will get a slightly better Second Quarter number, but growth closer to 2 rather than 3 . Expectation is based on a delay in the fiscal reform. The Banking Sector of course crucial here because the Banking Sector has rally in this takes us back down memory lane. Here we see the excitement expectation around changing regulatory environments and also higher rates in the United States. Sort of a june boost last year and then a pause, a rethinking, and we saw a couple banks reporting on the earning season. What we saw last week was clear, overall the Second Quarter numbers were good. That was driven by positive development on lending, corporate lending, the negative obviously was the fixed income, you saw very clear data from j. P. Morgan, down very sharply. Same story for citigroup. The guidance was disappointing. That is why we spoiled the negative reaction in the market. In response to good results. It led to market negative reaction and investors are concerned about the vick staying low, bond Market Conditions staying difficult, liquidity on the bond market remaining poor. If we want to down the expectation of u. S. Treasury yields trending significantly higher and if we are stuck in 2. 2 or 2. 5 for the rest of this year, that again is not a positive for the Banking Sector when businesses are prompted to take profits. We have had a good run. This is from the big for u. S. Banks. Some people suggest the Banking Sector needs progress. On those issues you rightly mentioned. Guest first point is, the Banking Sector in the states looks cheap relative to other sectors, most notably the tech and health care sectors. Are theth care sectors most crowded positions domestically in the United States. Having said that, american Banking Sector looks expensive relative to the european Banking Sector. They take profits from u. S. Price outperformance has been significant over the last year and moved back into European Banks that are looking cheap. If you look at the European Economic recovery, thats supportive to European Banks. We would like to talk about more volatility in markets. What brings volatility back . Is that something that happens in the white house . We have seen so much from the white house and yet policy has been squashed. Typically abeen spike in bond yields. I do not think you are going to get that. Painful process of bond yields ranging higher. Is going to be a major correction in equity markets. Ritually price at the moment and im concerned as to whether we can push higher. Or its an economic or Financial Markets event. At the moment, its difficult to say one reason why the vick would go higher. Anna he stays with us. Up next, we talk about itv. The ceo shuffle. Thats next on 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. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Anna welcome back everybody to bloomberg daybreak europe where the tokyo like shop at the imperial palace, the dollaryen. 66. In tokyo. S are closed back here in europe, daybreak, a new addition is available on your mobile. Mliv is what you type into your device. The cover is growth beat. Fell as theomy gdp increased 6. 9 , beating estimates and mastering expansion. Retail sales also beat estimates. The next story is about brexit round two. Talks get underway in brussels today. One side is unified and the other looks in disarray. U. K. Ministers are disagreeing about tactics as theresa may stumbles to add to the impression of chaos. Grant says the Great Britain machine seems to be all over the place. Finally, daybreak focuses on the qatar crisis. The uae orchestrated hacks of qatari news sites in may. That prompted incendiary false quotes. Rom qatar grexit talks are set to begin against again on wednesday. He is seeking to make progress on Citizens Rights. This happens as the Government Faces pressure. Insists cracks are beginning to show. Some of the noise is generated by people who are not i,py with the agenda that over the last few weeks, have tried to advance, of ensuring that we achieve a brexit which is focused on protecting ever economy, protecting our jobs, and making sure we have continued rising Living Standards in the future. Anna lets get more from the brussels side of things. To of thesend negotiations, round one set up the agenda and where we would start with the talks. What can we expect this week from the negotiations . His Citizens Rights of a priority. . It is. Its the biggest priority. They see a chance of getting consensus. He brought the team with brussels with him to brussels today. They want to get down to business. Time is running out. They did not achieve much last month. There is still uncertainty in london, but they really want to get some Common Ground on Citizens Rights. Still looking lurking in the background is the brexit bill. Work out some kind of tech elation on that. The two sides are still very far apart but both sides realize a have to come to some sort of early provisional agreement by the end of the week. Says hesd davis making his visit at the start of this week. One thing that remains as talks address what are the things that still remain as talks progress . Guest it unusual for folks in the eu to work throughout august but they are doing that throughout the brexit negotiations. Its the moment where they want to reach sufficient progress on the two things we talked about, Citizens Rights, and the bill, and also on the thorny issue of the border of ireland and northern ireland. Far toy know there is so go and these things could collapse at any moment. And they wantpen to get a deal as soon as possible. Anna thank you very much, ian. Lets dive into the details here. I know from your notes, the government remains vulnerable to failure. We need to bear in mind when they talk about a brexit. Guest that statement is based on the results from the election where the government expectations were completely failed. We have seen just in the last two or three days, a certain degree of infighting between various cabinet members. The most significant political statement came from Michel Barnier a when he said one challenge they face in the moment was what the british negotiating position is. Intense pressure on david davis and his team to demonstrate that clarity. The three key issues this week and over the next month are what will happen with the border of ireland and northern ireland, thats very difficult. What will happen with Citizens Rights, something terribly important because it addresses the right of 4 Million People in the eu and and the u. K. And then the debate about the exit bill is very is very problematic. Its as high as 100 million euro. Whatever the number is, the British Government is accepting their is going accepting that there is going to be a bill. Anna interesting that the committee has given their support on an ongoing basis. Despite the rumors we heard over the weekend and the leaks from cabinet meetings. Possibly very mindful of polling. The Opposition Labor Party is two points ahead despite the infighting with the conservative party, thats something they are aware of. Guest one of the most important statement and from tony blair. He said he accepted that if there was a general election, and he is not a fan of corbyn, that corbyn could become prime minister. The conservative party is determined to avoid a leadership hich in turn could lead to a general election because they have no confidence they would win that. Anna where do you stand on u. K. Assets . That shows theic underperformance of the gilt markets. Recently the bank of england hawkish commentary wade on the eighed on this. What is it your attitude toward guilt at this point . Guest lets turn away from brexit at the moment and focus on the fundamentals of the u. K. Weak, consumer consumption has slowed down. I dont see much of a rebound over the balance of this year. Bea result, at best it will 1. 6 . The second point is that we 3 ll have the debt of over to overcome. Background by any definition is weak. Background, weak have the hawkish talk from the bank of england. It will move to unwind qe over a long. Time, but like the fed, it will move very slowly indeed. We had a big selloff in the gilt market, but now we probably stabilized. The gilt market will track. Anna the resilience this perhaps a surprise to some. Guest look at it two ways. First way is that with the fed ing slowly and investors then investors had thought in month, i think the. Of u. S. Dollar weakness will be slow. Cable could benefit from that u. S. Dollar weakness, that i would want to be short the pound against the euro. Anna bob sais with us. A bit more detail on one specific sector of the u. K. According to a person familiar with the matter, Carolyn Mccall has told easyjets board of the decision yesterday. The brexit vote has driven a europewide slump in ticket prices. What are your thoughts on mccall, who previously had a background in media . She is now moving back to media. Of her trackms record, i think one has to give her a positive score. If you were a member of the mess that easyjet was in in 2010, there were huge problems with customer dissatisfaction. The management of easyjet back in 2010 needed a restructuring and shes done it. They have the benefit of low fuel prices with oil trading under 50 a barrel, thats positive for the airline as a whole. Customer satisfaction has improved, they have successfully attacked business markets. Their market share has done reasonably well. Brexit is a problem but they are addressing that. Anna i pulled this up. Itv to putyjet and the performance of both of these companies. They both had new ceos in 2010. Easyjet is in the white. Thes surprised to see turmoil around brexit what have written off the gains she made, but not the case of it the share price was weaker than this. Its just some fundamentals. Things, thisde of business did very well for a long time. There are concerns about the Advertising Market. That is the cyclical thing. The Advertising Market is very challenging indy because you have to answer the question, where is the future of advertising revenue . I think its going to be under pressure on tv. Internet obviously and internet engine. That is problem number one. The fundamental issue for any tv company is content. One interesting statistic which its aast week, is now, minority of people under the age of 40 who actually watched television because of what they are doing. They are seeing their content over the internet. The whole focus is, have you got the content which people want to watch . If you have that content, you are fine. Anna thank you very much, bob. He stays with us here on the program. If you are a bloomberg customer, you can watch this show and the content using the tv function as well as the media stream, you get the charts and functions and you can follow along with the conversation. You can also click on the button that says, ask the guest a question. We are going to talk about the worst june for oil in six years. Be bears could finally making their way support summer optimism. We discussed the outlook for crude next. This is bloomberg. Anna welcome back everybody. Flat start to the trading day once we get to it in the United States. Sector has been bullion. Lets go to Bloomberg Business flash with Juliette Saly. Juliette easyjet will announce that its ceo will step down to take leadership of itv. According to someone familiar, turn mccall told the board her decision yesterday. She has offered to stay while they seek a successor and a search firm begins the hunt immediately. The barclays case speaks up in london with the ceo and other executives charged with fraud. The biggest criminal charges since the financial crisis. Month, they this intend to plead not guilty. They may press charges related to qatar from the series rod office. Toshiba has agreed to hold off on the disposal of its flash memory chip unit until a hearing on july 28. Its being contested by a partner which is seeking an injection. It has to offset multibilliondollar losses. That is your Bloomberg Business flash. Above 46helped gains a veil a barrel. Bloomberg markets middle east anchor yousef gamal again joins us yousef gamal eldin joins us. Yousef quite a few things driving the equation. According to a person familiar with the matter, it shows opec increasing the outfits by 200,000 barrels. For those bound by the agreement, 11 members. Also interesting to point out the compliance level that drop to 92 in june. 96 . It dropped you have the other side of this which is what is happening with you was inventories. We dont a chart for client to bring up on bloomberg. Again,s you that once the index shows the rigs targeting crude increased by another 2 . It slowed just a little bit. The current range is no longer as attractive for some of these customers and needs to get back to work. Cbt energy coming out and saying, if you look at what is happening with the rig town, much more needs to happen. Rig count, much more needs to happen. The bankave you what weighed in on this conversation. They are seeing averages of 38 a barrel by First Quarter of 2017. Again, still a very bearish view. Yousef gamal eldin setting up the conversation nicely. Listening to what he was saying, the real question is over complaints and opec over production levels increasing rigs seen over at the United States. It sounds like a bearish fixture over oil. Guest thats after a significant decline we have seen over the last six weeks. Over the next two to three months, we will probably see a floor on wtis. There is a high probability we could see a rally back to 50. We are seeing a pickup in demand. That is driven by a good gdp out of europeeing and most notably, out of asia, as well. Its been with the chinese data we have seen today. The demand side of the equation is improving. Im assuming that any excess production by opec will be very minor. The numbers yousef just mentioned are failing to meet the target. They are very small indeed. In addition, one of the reasons why oil prices the client over the last month was that lydia came back on straight. That is discounted in the market. The demand and supply equation are german more by demand than the supplyside, it will result in cpi testing 50 over the next few months. Anna you are pretty bearish before. Guest my view was negative on the oil market and i thought the increase in the rig count would drive the drop drive the price lower. Are we going back to 60 a barrel . Absolutely not. But we could stabilize on 50 cpi. Anna lets move on to another matt another map. Bloombergcording to a survey that says the ecb is expecting to hold fire this week and wait until september to slow its bond buying power. Thursday, setting the tone for a rollback. When we look ahead to what the ecb is expected to do, no change from our bloomberg survey. You are on board with that. Investors are pushing back slightly when they will see change from the ecb. They are expecting that unwinding to take a longer. Period than they originally thought. Guest i think there is a high probability that the monthly qe eat will go from the current rate of 60 billion to 40 billion per month in september or october. It will be at 40 billion a month until february, march next year. We then go down to 20 billion a 42018. And the second half of 2018, quantitative reasoning easing would have ended. What im saying is that it would take another year to 15 months to end the qe process. With the ecb is particularly concerned about his they want more assuredly that inflation will pick up to its target to just under 2 . That will be a slow process. The next few months, we will see Inflation Numbers covering around 1. 5 getting toward 2 will be a slow process. They dont want a major move in the euro. If we have a gradual move in the 1. 20 inmy forecast of the next year, that is fine. But what they dont want is a jump. Is a big jump. Anna it shows whats been happening to euro area cpi. In the context of this, has quantitative easing run its course . That too many dots . Guest one factor is the impact of qe on bank lending. The European Bank lending is trending higher. There is evidence the qe has been positive. The second factor is the impact of qe on the cost to corporate and individuals borrowing from banks. We have seen that compression in the cost of borrowing. Also, very importantly, the diverging costs between italian borrowing and german borrowers, which back in 2011, the difference was extreme. That has converged significantly. All of that, qe has been successful. If we ask if it translates to higher inflation, that is a tough call. Anna is the problem the Unemployment Rate . Is that one of the main issues . Maybe that sets forward macron. Whole graph of a factors that drive unemployment. The good news is, unemployment in a number of countries, notably germany and austria and netherlands, is low. The high levels of unemployment we saw in countries like italy and france slowly coming down. Anna moving in the right direction. Good to see you. Watch,stocks you need to a few stocks you need to , the, easyjet in the news fate of carol mccall we will talk about. Anna beijing the worlds economy. Rgest industrial output exceeds estimates. Chinese equities waiver on regulatory concerns. Brexit brown to round two. Citizens rights are directed to top the agenda. Shake up your the u. S. President is said to be planning a reshuffle of his Communications Team amid the russian investigation. The Health Care Vote faces another delay. Anna welcome back to the program, bloomberg daybreak europe, our flagship show from the city of london. It is 7 00 in london. 8 00 in paris or berlin. Let me dive into the bloomberg and bring you breaking news. Round the ceo of easyjet headed to the south bank. It seems as if we have the news on that. She is to joy in the board as chief executive. Carolyn of herinformed them decision to leave. No point inhis coming through. It was heavily trailed over the weekend. Reporting late last night that it was expected we would get this move. Ceo from her a january. Carolyn mccall would stay until the end of the year at easyjet. Theyard on friday that were taking actions to shore up the business in wake of the brexit negotiations and brexit event that loomed large in march, trying to get the aoc from the austrians. That seems to be the focus of their activity at the moment. Let us leave that story to the side for a moment. We will return to it and get announcements from one of our colleagues on what this means for the aviation sector. Let us talk about where we are on the broader market. The futures higher at the start of trade. Looking at the function on the bloomberg, up by. 3 on the euro 50. K the asian stock was decent. We saw the chinese gdp number coming in above estimates along with a host of other data around globalhelping to lift sentiments on the msci world index, heading for an alltime high. Coupling that with the data in retail sales, all pointing towards a study, gradual s teady, gradual fed. We have the new Zealand Dollar in on the back foot after the lower new Zealand Dollar will rebalance growth. That is where we are on those couple of stories. Let us show you the fx markets. We are close to the lowest since september. Hedge funds are at their most bearish on the dollar since 2013. We have a host of central bank meetings, ecb and boj among them. A pretty flat start to trade. A look at the broader earnings story this week, round two of brexit talks to kick off in brexit. You where of that as well. Let us role things over and have a look at where we are on the bond market. This is the picture on the bond market, bund futures. We will keep an eye on the ecb, meeting on thursday. That is the next big item on the agenda in terms of that central banking story. Bloomberg first word news with Juliette Saly. Juliette thank you. Donald trump is planning to shake up his legal team and is evaluating options for his communications. According to a person familiar with the president must thinking, the longtime attorney is likely to be eased into a less prominent role within trumps outside legal team as the fbi congressional investigation into his campaigns possible ties to russia Mitch Mcconnell has delayed plans to vote on a bill to overhaul the Nations Health care system this week after senator john mccain said he would eat at home, recovering from surgery, leaving republicans short of the votes they need. Citing york times medical experts to report mccains condition could be more thought, and may delay his return to washington by a week or two. The brexit secretary has push for progress on resolving saudi issues. David daviss comments, as the second round of divorce talks begun in brussels. Philip hammond has said companies are delaying investment because of brexit. Clear thatsolutely businesses, where they have discretion over investment, where they can hold off, are doing so. You can understand why. They are waiting for more clarity about the future relationship of europe and what it will look like. Juliette the ecb is seen to be on track to unwind its Stimulus Program next year, but economists say it is likely to drag out the process. Most will hold fire at their meetings and wait until september before slowing the pace of bond buying. They are taking nine months from these sevenmonth previously forecast. Proposedea has resuming some military and humanitarian exchanges with the north. That is president moon jaein seeks to follow through on campaign pledges. The announcement came after north korea signaled a willingness to day,l news, 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. It has been a pretty positive session here in asia. Albania, an interesting lb it, an interesting one. If you have a look at the hang seng, it is doing well. Largecap stocks have been fluctuating, down 6 10 of 1 . Australia closing fairly flat. Weakness from the aussie today, but china gdp numbers were a beat. Having a look at stocks in detail, significant downside coming through from a hotel. There has been a bit of a report about scrutiny and some of its deals. They are off by 5 . This is after we heard the operator warning of a liquidity risk. Below the35 bloomberg consensus for a oneyear target price, and this is falling on the back of analyst downgrades. I mentioned the aussie dollar. Gp out of china, very much in focus. The aussie has been very resilient of late. Btv 4349 shows level ofretracement 81. We have not seen the aussie dollar at this level since may 2015, but technicals are showing, if it pushes past 78 point five, it could get to the level of the rba is not going to be very happy with. We have seen the aussie rise in six out of the past seven sessions, although there is some suggestions that aussie boards could be in for this appointment if we see a retake at that level. Certainly on the up despite downside in todays session. Anna. Anna thank you, Juliette Saly. We are talking about let me give you a few headlines across the bloomberg to china is set to punish wanda for breaching investment rules. This is the story we will keep an eye on. We will get juliette back with more details on that. China planning to punish wanda nations breaching the restrictions on overseas investments in six of its deals by denying necessary regulatory approval. This is according to people familiar with the matter talking to bloomberg. It is 7 08 in london. Let us talk about easyjet. The ceo of beef airline of the airline said she will step up for leadership at the itv from the eighth of january next year. This as easyjet struggles with the impact of the brexit vote. Joining us now from berlin, managing editor for global business, benedikt kammel. What sort of company is Carolyn Mccall leaving behind that easyjet . Announcement on friday around their operations highlighting the structural challenges ahead. Benedikt that is right. She is leading a company with a lot of challenges. Brexit is the principal one. The ability to move freely, to be able to operate, particularly within continental europe, as one number to highlight backthat, planes highlight that. For the company to keep operating as they do now. They took one step last week with the operating certificate of austria. That gives them some breathing space. They can keep operating that. That is something that has weighed on the company for a long time, since the brexit vote. It will be interesting to see bringey ring in as ceo who can bringeone across the concerned that face the industry. The other big challenge is terrorism that still is a lingering threat for the industry. Jet has a massive eighth in nice that was affected your base in nice that was affected years ago. That is something many city address. Anna they say they are looking search for her successor. We will wait to hear who is on the list and who is selected. Carolyn mccall did come from a media background before joining easyjet, but she will face a number of challenges when she arrives at itv. Benedikt that is right. It looks weird on the face of it for an aviation executive to go to a media company, but that is sort of her original career. Guardian. Years at the she is an advertising executive. That is her speciality. In some ways, aviation and media are not that different, both consumerfacing industries. Both timesensitive industries. The Advertising Industry is being disrupted right now. She is going from a company where she was the disruptor to a company where they face a lot of disruption. The amazons, facebooks, and googles are coming in and they cake. Slice of that it will be interesting to see how she navigates that. M a, another component that does not feature prominently in her current job, but probably will in her current job. It in her new job. It will be interesting to see how she navigates that. She will have john malone as a major shareholder. It will be interesting to see how she works with that. Has a big shareholder, the founder of easyjet. She knows a bit how to navigate around that. Still, some disruption that faces that she faces up a new company at itv, and lots of challenges there as well. , thank you. Kt brexit talks are set to get underway once again in brussels. David davis is seeking to make progress on Citizens Rights. This comes as the british Government Faces increasing pressure. Joining us now is the global head of Asset Allocations. Draw myrexit front, you attention to the Strong Performance of some u. K. Assets in the wake of brexit, notably stocks, those with substantial earnings of course. How much of a distraction is all of the infighting amongst not just the conservative party, but the u. K. Political establishment at the moment . Guest the wheels of this process, it is a massive element of improvisation in the way this is proceeding, isnt it . I am encouraged by the kind of shift in the governments position. It looks like a room for compromise might arrive. Citizens rights, there are clearly some differences, but it does not strike me as something that should be a real bar to an agreement ultimately. I am quite positive about certainly this week. I think the key task ahead is to avoid that terrible cliff edge in march 2019. Not a lot of time to anna once the u. K. Government appears open to conversation in perhaps a way they were not about the aisle of brexit the style of brexit, what is your device . Is it that the transition must be long . What would your key message be . Tapan a bad brexit with a cliff edge would be quite, quite traumatic for the u. K. Economy and for u. K. Assets. Gross assets would struggle with aat and sterling would have tough time on it. We are working on the idea that brexit still means brexit, that we actually avoid the worst case scenario. That is what we are working on. Is an element of hope in that rather than conviction. We are certainly working on that scenario. The worst is avoided. Anna i read even the Labour Party Giving us the brexit phrasing. It is clearly catching. Tapan catching. Panelthis is the spot going back to the end of all of 2017. The resurgent how much of this is strength in the u. K. Story or how much is just the opposite . Tapan you have got the wrong exchange rate. We should be looking at sterling. Anna this is a dollar story, is it . Tapan the dollar euro story is superseding the cable story. If the worstcase happens, and below cable we might 130. Given the fluid nature of negotiations, we should be watching sterling euro, and there, i suspect there might be a little bit more downside to come simply because the region is doing well. Friendly u. S. Euro rate policies being pushed back a bit. We need to look at sterling euro and it is the relative story of the u. K. Lagging the european region and quite a pronounced fashion that potentially has room to take sterling lower. Meets this week of course. Looking at the august meeting at the bank of england, tapan it is fascinating, this discussion. It seems like an odd time to be raising interest rates. The Economic Data has weakened in the last few months equally from the bank of englands point of view. Rates are stuck at a quarter percent. This looks like a massive amount of stimulus even with a postbrexit economy. Does it really need more stimulus . From the bank of englands point of view, you could argue they have used because inflation has gone up. Most people will not see it that way. The bank probably does. From that point of view, ground as some sort of modest rate rise over the next 12 months. It is a case of wait and see to see how the economy starts. Anna thank you very much. Datta data tapan stays with us. Global growth. This is bloomberg. Anna welcome back, everybody. Bloomberg daybreak europe, this monday. Little bit of sun creeping through the clouds. Mario draghi, very mindful of anything he says on thursday, what that does to the euro, how that might strengthen it. We look ahead to the ecb meeting with that in mind. Let us get the Bloomberg Business flash. Here is Juliette Saly. Juliette thank you. Easyjet confirmed its ceo is stepping down to take up the leadership of itv. Carolyn mccall will take up the role of itv ceo. The search for her successor has already started. The barclays case picks up in london today with the exceo. And the other men charged with fraud. To payments and loans to qatar. At a hearing this month, the four said they intended to plead not guilty. The bank may face fresh charges related to qatar. Toshiba has agreed to hold off on the disposal of of its flash memory chip unit until a Court Hearing on july 20. Western digital is seeking an injunction. That is your Bloomberg Business flash. Anna. Very much, Juliette Saly in hong kong. Let us stick with the region and talk about what has happened in china because china may change theeconomic omentum as messick demands further pickup at the nation prospect of a spirit secondquarter gdp expanded at 6. 9 year on year, matching the previous period. Output albeitstry estimates. The global head of Asset Allocation still with us. One economist i was listening to was talking about this, stabilization in the chinese story. Given we were nervous in january about where china might go, this seems like a positive. Tapan the economy is badly maintaining its momentum. If you look at the longterm focus, it should not be long, because Growth Continues to slow. As china has gotten a whole lot richer, and wages are higher, it is right to believe growth can continue at 7 to 10 . That is a good thing. You have to hand it to the authorities, they have managed to soft land the economy successfully. A lot of things are actually working decently well. Anna i have got this chart here, btv 3761. It shows the year on your numbers we have got for each quarter in the green. We have the money supply measure of gdp. Actually, that stabilize the little bit as well. I was talking to another guest and he said the strong data leads people to conclude more from theeverage chinese authorities. That will be the priority. Tapan i think that has to be the priority. The concern is that they need to ween corporate off of the type of debt finance, Capital Spending patterns we have seen a bit too much of. That remains. Variety is doing something aggressive around data enterprises. Many of which continue to exist as zombie companies, and arguably, it is needed. We have to push hard on that. 7 ,rowth holds around 6 , it can do that. The transition should get a new lease on life in terms of what they do structurally to the economy. This gives them the window to do that. Does that matter to your Global Growth outlook . We are heading towards a Congress Later on this year and in the runup to that, we have all this data beating estimates. Some might question the data. Tapan the way i think about the data is that there is a bit that goes on to it when growth is howng, the data understated strong growth was. As growth slowed, arguably, the data overstates where growth actually is. Inont think this is particularly large proportions. I think we can live with that. As investors, there would be some level. Issues in a lot of other markets. Anna not just for chinese. As we see the msci world index heading for alltime highs once day, strong seventh performance from equities but little volatility at the moment, where is all agility going to come from . Will it be something the white house does . Something we see from china . Where is the big surprise coming from . Tapan it is a potentially large list. The biggest candidate for volatility would be some exhilaration in interestrate movements from the fed or ecb. The Central Banks would be candidate number one. Anna are you ever surprised by the impact the conversations had a couple of weeks ago, softening that rhetoric a little bit . Tapan yeah, i think they were, because clearly, it was more a coincidence that different Central Banks were talking about the stimulus rather than the to make markets sit up and take not notice. It had that effect, but it tells you something about the way Central Banks may not quite still have it. Not all central bankers have the same level of markets to manage the conversation with the bond market. The big challenge is with how you to mitigate. Anna thank you very much, tapan datta. That is it for daybreak europe. Bloomberg markets european open is up next. Guy monday morning. Good morning. You are watching bloomberg markets. This is the european open. I am guy johnson in london. Matt miller off this week. What are we watching . Round two in brussels. Davis and borneo going toe to tell. Toetotoe. Domestic demand drives pickup, beating expectations