Very warm welcome to our flagship morning show in london. Manus a little bit of breaking news coming through on the corporate side. Third largest Mortgage Lender in sweden to deliver numbers. Nice, comfortable feet. The market had penciled in 4. 4, so things are getting better. This runs with the theme from seb, when it comes to you have to go nordic to get it. 24. 6 tier one, well in excess of the market expectation of 24. 3 . Strong capitalization performance. This is an environment you have negative rate but it looks as if the economy is sporting the banking industry. Anna thats get a little more breaking news on the earnings. Other news breaking this hour as well. Capital levels you described in the banking sector, lets talk about asml. Secondquarter numbers coming through. Whats interesting about this chip equipment manufacturer is the outlook for the third order that investors seem to focus on. Were hearing that recorder 2017 net sales are acted to come in at 2. 2 billion euros. That looks to be above what analysts on average had expected as a bellwether of the chip industry. The companys clients include intel, samsung and others. Its all about the focus of the new machine, the extreme ultraviolet lithography systems. They are the size of a bus but they allow you to print chips that are incredibly small. Thats for the focus for analyst is right now. Lets get to some other breaking news. This is the ceo, who will step down with immediate effect. Been in that position. Age and isars of been there 5. 3 years, chairman and ceo. They have also announced a new ceo. Immediates down with effect and the have a new ceo stepping into his place. Hes been there over five years and this takes place with immediate effect. , barclays fascinating saying a day or so ago that the 25, areue on july unlikely to be in focus, playing second fiddle to the looming risk of a rebid and the activist action from elliott. From the impact for seeing activist investors in the market and what the reasoning is . Ceo with athe new management shakeup. It will draw all those things together. Well talk economics, but lets talk about the bond market first of all. Pickup, one basis point from where we are. Picture, areigger we lower for longer in terms of yields . That it go was the cry this morning, that the trump reflation trade grow. They believe in the downside and it was a big treasury trade, the bulls are in control. Crosses. It was golden this is the 50 day and 200 day moving average. It looks as if it has the ability to break through because essentially the market doubts the veracity of the fed to do another big hike for the end of the year. No difficulty in finding the reasons why this might we the case. Lets put up the risk radar and show you how equity markets are digesting the back story around the bond theme. The msci asiapacific of my. 2 . U. S. Stocks eking out a record highs as of late. These drivers fighting for attention this week it seems when it comes to u. S. Equities. The dollar index in there as well. On the subject of the fed and what it does, a 40 chance of injury increase in rates but into this year. Medicationform of versus what mario draghi might be reaching for. The euro dipped back ever so slightly this morning, a cap from the options market. For the last ecb meeting to this one, you have a rally of over 2. 5 . Iron ore, i thought it looks good. This is not what we want to tell you about. Myth that, out a just stand in front of it. How to wipe out a mistake. These are moments of reality tv. Anna lets get the first word news with Juliette Saly. Juliette in the u. S. , the white house has confirmed that President Trump met that a mere pollutant met with Vladimir Putin a second time, donald trump last out pointing out that he was the victim of a fake news story. Top a dinner arranged for 20 members was made to look sinister. Policymakers said to be drawn up plans for after the summer break , according to euro area officials familiar with the matter. Heldymakers have not yet from the discussions on the analysis doesnt mean a stimulus changes in. Ecb spokesman declined to comment. The imf on they amount of debt the country can hold, according to officials familiar with the matter, the debt ceiling is included in the series of documents agreed on between greek authorities and the washingtonbased. The imf is expected to discuss the new credit line for greece tomorrow. Venezuela has rejected president halt atrumps call to rerouting of the constitution that would consolidate the power of its socialist government. Speaking during a lastly tell of meeting,ally televised the president said he was reviewing countries relations with america in response to the threat of sanctions. Brexit negotiators have acknowledge frustration on both sides over the uks divorce from the e. U. But there are signs of progress. Second day of month the sootiations in brussels officials delve into the details of the main issues they want to make headway on. As well as the rise of European National u. K. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg top. The rally continues in equity markets and the bond market here in asia. You have the regional benchmark index higher. 8 consecutive session, holding at levels we have not seen since december 2007. Solid buying coming through from china stocks today. Large cats rebounding from the on monday. Saw you australias asx 200 higher by. 8, the cost be has had a strong session and the rise in iron ore on monday. Helping kick things along as well. Watching china ever grand come back online after the lunch break. We did hear that chinese estates acquired around 5 of the company. Cathay pacific falling according thehe ceo, anz reflecting australian banking space and most analysts think there will be enough time to get the capital in line by 2020, the deadline there. Have a look at this chart that shows you the dividend yield on the shanghai composite is on the rise, getting close to the topics dividend yield, about 1. 9 there. It shows if you can withstand the roller coaster ride that is the chinese market, you can get just as good a return right now as you can from Japanese Equities which are always considered a little bit safer. On thethe u. S. Is back offensive over china, saying its time to rebalance trade and level the playing field. Calling for investors and exporters to compete on equal footing. Anna the two sides will hold talks in washington today amid rising tensions. Next the trade surplus has created some money supply excesses in china. A problem thatt one side wants to deal with. This is a problem that both sides would like to deal with. Therefore it is time to rebalance our trade and investment relationship in a more fair and equitable and reciprocal direction. Joining us, achieved economies, great to have you with us this morning. The americans are trying to rebalance the scales of deficit. This is what donald trump obsesses about, we understand, the deficit china. How important is it that this first wager meeting of the new power doesnt go into a political bashing affair in regard to north korea . The more they talk to each other, the better. That is basically all we can say. Is not very much the two sides can do with their trade talks about the deficit. The trade deficit of the u. S. Reflects reflects big macro efforts. The u. S. Is not saving enough, is spending too much and theres nothing they can do about that. The more they talk, the better chance. Anna if it pushed up prices for consumers, would that not stop them spending so much . Holger it would not do anything noticeable in the macroeconomic macroeconomics sent. The entire world with suffer including very much in the u. S. Instill the currency would react to that and probably would not change the deficit all that much, unless they went the only way to stop the deficit is to stop trade. Anna on that note, you talked about how none the key political and economic tailwinds you discussed at the start of 2017 had actually come to fruition. All the worrying about global trade, nothing terrible has happened on that right. Is that because it is yet to come, or are you quite relaxed that sense will prevail . Holger we have to brace ourselves for smallscale protectionism. The good news is, the two sides, the china the china are talking. We were not sure there would be a lot of talking. We were afraid, given what the Trump Administration had started to say that it might the condemnation of china as a currency manipulator in whatever. Things are going fine, we are of the kind of risks that are always around. Manus a new forward, the sino u. S. Relations are beginning to form. They were worried they would be deemed a currency manipulator. Manyng ready for protectionism, this is the euro against the yuan and exports from china to your. This could be the next shoe to drop. How far will the europeans allow the you want to drop before europe hasnt issue . Has an issue . This is the next shoe to drop. We should sure mention that in the context of the u. S. Chinese relations very much. There is one very good thing about your chart. Youre on the first people actually showing that chart. Hardly anybody in europe is paying attention to this Bilateral Exchange rate. Anna they might be picking this up in berlin now. So you think you are not fazed by miniprotectionism . Holger there is some from europe ursus china and bus versus. Theres a bit of titfortat coming from that side but it does not seem to be on a scale that i would be detecting those numbers. Not in the overall growth outlook, or gently. Anna thank you very much. Lots more to discuss, including his views on the european economy. We will get to that later in the program. Manus this time its the bank the elusive inflation. This is bloomberg. Anna welcome back, everybody. These 19 in london. 2 20 in the afternoon over in tokyo. The twoday meeting today so were looking out for the dollar against again, entirely unmoved as it stands at the moment. Here is Juliette Saly with the Bloomberg Business flash. Juliette buying a food business billion in a deal that would add frenchs mustard to the lineup. Transaction is expected to be completed by the Fourth Quarter of 2017 pending regulatory approval. Mccormick said it has contained bridge financing. Discovery communications and by, according to a person with knowledge of the matter. Ricks surged in late trading. Shares of the owner of Animal Planet and tlc also rose. A nobel ceo has stepped down with immediate effect due to health reasons, being replaced by the head of specialty chemicals. The move comes weeks after a robust 29 billion takeover from the u. S. Rival pbg. That is your Bloomberg Business flash. Manus breaking news coming through from volvo. They say the trend is your friend, dont try to be the trend. Trends in the truck market continue with net sales, adjusted operating income also , the market had penciled in 8. 5. We just have to look at the geography of volvo and the truck business. 41 of revenue care to europe and 25 year to north america, and 17 in asia. So volvo second order order intake 22 beats everything in terms of endless numbers. Have risen shares after six of the past eight earnings reports. Bank of japan is hoping its tuesday policy meeting is expected to conclude tomorrow. Investorse call from arguing the central bank is not achieving its most important goal of all, boosting inflation. Manus lets get to our Global Economics and policy editor in tokyo. Good to see you. At the very least the bank of japan has got to acknowledge that cannot hit its target anytime soon. Ive been listening to you talking about the contraction of accepts thatt this inflation is in is something they should do. That remains to be seen. They have been able to, led by the governor, continued to keep the 2 inflation target in the center of their radar screen without wavering in the least, saying maybe we should change our inflation target. This is true, even though currently come after three, actually four years since he took over at the bank of japan, inflation got weaker. Its up to 0. 4. But the target is 2 . Where can the boj claim success . Gdp, ive consecutive quarters of growth. That has not happened in 11 years in japan. Wages are starting to rise. Could they alter their gdp forecast . Its a Monetary Policy report meeting that happened four times a year. Could they lower their 2017 forecast just a bit, because it probably wont make it by the end of the year. One thing they are not expected to do is drop the time when they could hit their target of 2 . Right now they are looking for some time fiscal year 2018. Anna great to have you on the program, kathleen. A quick word on the boj, what they say about the estimates of gdp inflation, that seems to be the focus this time around. Holger they should admit they will not hit the 2 inflation target. The japanese economy is actually doing fairly well. It would take an absolutely reckless Monetary Policy to get japanese inflation to 2 within two to three years. It would take either a major currency depreciation, which japan does not heated up need at all, or germanic increase in money supply. We should not have any such disruption, japan is in the front of the experience. Can up decent growth nowadays without that much inflation. Manus are we so desperate for extreme policy reactions that that is what the market wants to see . Do they just do more of the same , continue on with negative rates . The interesting thing is that japan is a test case for other central banks. Japan we see they have been doing unusual policies for quite a while. As that led to run away inflation . Not at all. Has it left bad trades in the real economy . We dont really detect them in japan. The japanese experience shows us in h where consumers are reluctant to go overboard on credit and where we dont want massive currency moves to disrupt the market, in that age you can really have recent growth which is what japan is having, without the risk of economics overheating and generating inflation. Japan ton examples in support the limitations of centralbank policy. Onwill pick that up next bloomberg daybreak europe. The ecbell talk about and qe, what are the prospects . 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. The hang seng up by just shy of. 5 . Lets have a look at some of the stories that have made it into todays edition. Qe is reallyb and what is up for debate, or is it . That is the mood in the market. You have euro area officials saying there is little chance of a change until after the summer. Policymakers not held formal talks on the indepth bond buying. We will see what mario draghi reveals in the meeting tomorrow. The next story is earnings season. Morgan stanley reports, it will be keenly watched to see if it can build on its sleeve over Goldman Sachs in the equity business as well as commodities. Resultsuarter trading may face a higher bond after several orders of beating expectations. Relatives surprises coming through from Goldman Sachs and bank of america, what it tells us about what to look for in morgan stanley. Income side was also a little bit of a thorn in their side. Favorite,his is your viacom held talks to combine of of hdtvs, the owner and the food network, according to a person familiar with the matter. Discussions were separate, 15 pps surged as much as and viacom was unchanged. Anna and mccormick buying of food unit for 15 and viacom was . 2 billion. 6 32 and weon will consider the ecb. Staff are working ahead of the Government Council decision expected in september. Us european lawmakers are theres little chance the policy will change before the fall as councilmembers are in agreement that they need to move carefully. Lets bring us nationalist on this. Its focus on europe. First of all, lets talk about goldilocks. We have been talking about her all week. She left the building on monday, we found her guest today. Why is goldilocks rooted in europe . What does that mean . Holger that means the european economy is in a long phase of good Economic Growth with very little inflation risk. Its the classic not too hot, not too cold. Its different from the u. K. The risk that the euro zone economy may overheat and generate more inflation than we than like is much smaller what light happen in the u. S. Where it is pretty unlikely as well. Goldilocks will stay on the european continent likely for quite a while. One of the reasons for that, where does that leave the ecb . I was reading some research that said the real show comes in september, we will not hear much this week. Is that your expectation . Holger yes, of course. Over the last two weeks see be say nothingins to significant in july. They will likely want to calm nerves. Decisions will come late and the ecb will continue to tiptoe, to move very slowly. Its about as interesting as watching paint dry. Manus i cant remember the analogy, essentially a replication of a temper tantrum. I zoomed in on the bottom of your note. You talk about a reduction in qe starting in january 2018, although a rate hike remains a possibility in december, but we may have to wait until later on 2018 for that. Why do you think there could be a rate hike before the end of qe , and are the bond markets remotely prepared for that . Holger first of all, its fairly unlikely that the ecb does anything on rate this year or early next year. If you think about the seat, if the economy were to do so well that cb would get really restless, which is a risk given the numbers on confidence in growth, that what would the the easiest compromise for the ecb, and that is probably doing from 04 from minus zero 25. They dont like negative interest rates, to put it mildly. And that is something that inually would not slow down any way the euro zone economy. You could argue that it the slightly less negative deposit rate might be good or many banks, the financial sector. It would mean the economy doesnt show any reaction to that. Bond andany serious currency Market Reaction you would need a clever communication strategy and emphasize that other parts of policy would stay where they are. Once again, it is unlikely they will do anything on the deposit rate for the time being, but if the economy continues to improve a lot, that is something that could come back into play. Anna has goldilocks found any evidence of phillips curve . That part of the recovery story may be behind the western curve. What kind of movement on unemployment do you expect and how much is that the missing ingredient for inflation in the eurozone . Holger we dont have a serious bike in wage and collation and other matters in germany were arguably we have had full employment for a number of years. Bigexperienced host the lehman financial crisis is simply that Wage Inflation and overall nation no longer react as much to the state of the economy. Consumers are not ready to go work and demand pull inflation, to really go wild shopping. They are not taking a credit a lot to drive the market into excess, and workers are reluctant to press their invention the labor market. One reason might be that workers are afraid of robots. If we think of the tightness of the labor, could workers be hence,d by robots, and Wage Inflation is moderate. The mystically generation generated inflation in politically, somebody wants schulz versus angela merkel. Macron is going to meet the challenger tomorrow in paris. What do you make of that meeting, is it a smart move right macron . Politics is a funny old game, isnt it . Holger i think it is a smart move. Its may play a role in german politics, probably not as chancellor, but maybe as vice chancellor in the coming government, so why not talk to him . Anna what was his attitude be towards working with . Germany is he going to be pushing on an open door with schulz . Holger he will probably be pushing on a very open door which will. Are wel issue is not spending more for infrastructure. The real issue is, does that country have enough Shovel Ready Projects and that is something where schulz cannot make any promises. Either germany is ready to spend more or is still looking for good things to do the actual spending on an as a result spending is rising, but only as a moderate at a moderate pace on such projects. Up armoreday take will position within the new government after the election. Could you make a comeback . ,hen you look at the outlook its good for merkel, the polls are favorable. What could happen to reset the schulz position . Holger its pretty difficult to see what could happen to fundamentally change the election trajectory. About 30 or 40 Percentage Points behind angela merkel. Thisquite possible that gap may narrow, but it may actually overtake centerright. Notr say never, but it does look very likely at this stage. There is no big issue lurking at the moment. Thees nothing to disrupt Election Campaign for the time being. Anna i know youve done a lot of work on the reforms the eurozone needs to put through. Is the eurozone going to seize the opportunity of this goldilocks scenario to do those reforms around labor market . Holger first of all, i do expect rents to deliver its labor market reforms by set number as macron has promised. I think it will make a serious difference and after the german elections in october or november, they will sit down to discuss your. Warm and i think well get some significant changes, not as much as some idle idealists may like, but we will see a strengthening of eurozone governments and more money for joint project in the eurozone. Quite the tone you use is bullish in regard to reform by september without any protest on the street. Holger i didnt say that. Manus the Euro Currency is also in fine form. , ithat juncture, if at all could be a risk to mario draghi, how much of a risk is a strong euro to draghi . Holger it is not a serious risk. The higher it goes, the more we have to think about it. However, indicators of domestic demand are fairly strong. An externalhaving surplus. What were seen at the moment is that the rebound of the emerging markets, to some extent includes china, it more than offsets a little damage done by the Exchange Rate of the eurozone export outlook. Anna thank you for your time this morning. Daimler is recalling more than 3 million mercedesbenz in your. Anna it could help the company avoid the massive penalties set for volkswagen. Whos bring in chad thomas joins us now. What led to this recall that broke after trading hours last night . Chad this has been bubbling below the surface or daimler since earlier this year. German prosecutors and investigators started an investigation into daimler and possible emissions cheating in march of this year. It really was boiling before the below the surface and last week it that speed when some of the details leaked out in german media, prompting the german transport media to call daimler to berlin on very short notice. They said they would start investigating him of the dialer vehicles. Yesterday we had this announcement after the market tosed saying they were going move forward with his voluntary recall. You look at this story versus the volkswagen story, one has to say is this daimler trying to get out ahead of the crisis . What are you trying to accomplish here . Good point. A very its an interesting pivot by daimler. They said they would fight the accusations with all legal means , the accusations that were surfacing. In pivot it and said that there would voluntarily recall 3 million vehicles. Last week the discussion was around one million vehicles and then daimler came forward and said 3 million. It seems theyre trying to get in front of this and say we will do this voluntarily. Prosecutorstion by does not end in germany. There is also an investigation going on in the u. S. We will have to wait and see what happens but from a pr point of view, daimler wants to say we are taking action and will make decisions ourselves. What does this tell us about the future of diesel . European cities are rejigging their policies around this in some cases. What do we know about the future or diesel . Diesel will be around for a while, but clearly all of the headlines move forward the end of diesel, if you will. You have so many cities talking about bands because of cleanair issues. Stood guard is one of those cities talking about a band. Stuttgart is one of the cities talking about a ban stu. You have a manufacturer like volvo coming out in saying they will shift toward electric. Clearly that is a trend, we are moving toward electric vehicles. It is a question of time, how long the transition will take place. Then you have the bmws eeo saying diesel has to be part of the answer in this transitional phase. Bit of aeres a distance to go before week all go electric. Thanks for joining us early this morning, chad thomas in berlin. Anna remember if youre a bloomberg customer, you can watch the show using the tv function. You also get access to all the charts, the summaries of what the guests are telling us and the opportunity to put questions to the guests and asked questions, thats at the bottom of the screen. The second earnings season gets underway, europe is the locus. We will tell you the segments that are hot and which are not. This is bloomberg. Anna welcome back, everybody. S p futures a little higher at the start of trading in new york. Lots to talk about on the corporate front. Here is the bloomberg is this flash with julia sally. Addette a deal would frenchs mustard and rank red half sauce to the mccormick lineup. Red hot sauce. Pending regulatory approval. Mccormick lands to fund the deal with the combination of equity and debt and says it has obtained bridge financing. Do too has stepped down health reasons. Afterve comes weeks rebuffing a takeover from u. S. Rival ppg. Discovery communications and five, have held separate talks to combine with Scripps Network interactive, according to a person with knowledge of the matter. Ofipps with the market value 8. 7 billion surged in late trading. Shares also rose. Bp considering forming a limited partnership and holding and ipo u. S. , including crude, natural gas, and refined the gulf ofm mexico. The potential ipo could be held in the second half of this year if the company decides to pursue it. Aimler seeking to head off growing crisis over potential emissions cheating voluntarily recalling more than 3 million for sadies benz vehicles in europe. They will extend an upgrade of compact cars and then to nearly every modern mercedes diesel on the road. It will cost about 220 million euros. It could help daimler avoid the massive penalties that hit volkswagen. The Airbus Campaign to sell longhaul campaigns has suffered another set that. United airlines has become the third u. S. Carrier to postpone delivery of the plane. It wants to take four of the aircraft into service next year but will accept comparable planes it ordered last month. Delta and american have also postpone deliveries. That is your bloombergs nest flash. Business flash. Manus we will get updates from , so lets pull some Second Quarter earnings. The director of research at Bloomberg Intelligence joins us now. We knew look at this earnings season, what are the expectations for rope . For growth . Take it away. On a median basis, sector by sector, materials are leading the hit parade. Part of that is simply recovery from last years trough levels, and easy comparison. The key for these guys Going Forward is china, on the supply side, Global Infrastructure through,es china come things along those lines. Its not a clearcut story. Semiconductors are strong, software is plowing through with all sorts of stuff. Expectations up 16 on the quarter. In the have oldfashioned cyclicals. Autos, machinery, things along inse lines, and expectations Consumer Discretionary are robust. Anna what about the fact out with the European Growth story . The upswing is less mature than other parts of the world. Does that set the stage for continuation of better earnings out of europe . If i want to be bullish and look at the u. S. Earnings picture, we have barely scratched the surface on the growth of the bottom in 2010. That said, if i want to be a little on the bearish side, i can think about two aspects. One is how quickly does the ecb tighten rates, and is that just enough to tap the brakes and give financials support . 600,were 20 of the stoxx which is a good thing. Does it turn into a headwind for the u. K. , which is 25 of the index . A little less cautionary in terms of the divide. 23 billion has come into your quite quickly. You make an interesting point, you talk about valuations back at 2010 levels. Sadly its back at 2010 levels. Velocity is gotten from zero to hero, it only took six months. There has been the trump trade which we all knew about, which is tax and infrastructure, and both of those are in question. Now you have the macron trade. There was geopolitical concern across europe with the hope of revival with the europewide unified germany and france leading the parade. I would go back and say we have not seen a ton of earning from european potential come through. If we have reform go through and if we have stability, there is huge potential. Notthen valuations are is not as high as they would appear otherwise. Aboutwe have more to talk in the next hour as well. Inc. You so much for your time this morning. Break some more numbers at the top of that show and level out the playing field. What is happening between the u. S. And china . This is bloomberg. Bond bulls are in charge and signs of the Global Economy and tosident trumps ability achieve fiscal stimulus. This as we look ahead to tomorrows policy decision from the ecb and the bank of japan. Anna hot deals. Mccormick discovery and viacom are said to be holding separate talks with scripts. For healthgning reasons amid a battle with an activist shareholder over a g bid. Ed [[g pp you are welcome to daybreak europe. Anna it has gone 7 00 and paris, it 00 a. M. If you are in paris or berlin. We have a host of earnings this morning and lets focus in on europes biggest maker of appliances, electrolux. Second quarter profit coming in 9. 4 billion. The estimate was 1. 7 2 billion. The sales number a touch ahead. They are waiting for comments coming out from the president and ceo. By 1 . Demand up this is in the wake of a time when they reported sales in north america down by 7 . The maker of frigidaire refrigerators has faced a number of problems in the u. S. , namely lower sales. And private label. They are talking about north america. Three percent to 40 and giving us details in the various regions. The stock has been up and say april results. Goldman sachs removed them from their conviction by list. This is a deal that we broke yesterday, 4. 2 billion worth. Runmberg intelligence has the numbers. 4. 2 billion dollars, the equivalent of 7. 5 times the es of 20 times earnings of according to deborah aiken. A super price and it will be used to do what, Debt Reduction and that goes back to the deal they did with me johnson. Johnson. Naming steven jones as deputy ceo and i mention this because the manager will be on a little bit later on this morning so keep an eye on that if youre interested in the European Aviation story. Lets have a look at futures and where we are expected to open up to we are expected to open higher. Of. 25an equity session of 1 . A little bit higher. That despite the fact we have this ongoing bond story, a bit of a bond revival going on because of people questioning with a we can see a hike from the fed, whether trump can deliver in terms of a fiscal boost. Manus let it go, the reflation trade. Equities are higher, record highs, buying and equity markets. Either equity markets are risk on or the bond markets are telling you Something Else about what is going on. Equities are up, risk radar shows it and the msci ticking higher. They say a drop of 5 to 10 in equity markets. The dollar is down, you are at a dollar. Low on the yields flop those so too does the dollar. Anna lets take a look at the other asset classes. Today and weings they conclude tomorrow. A little bit of weakness for the euro. We put in here also the price of iron ore because in china weve seen futures up for a third day in a higher iron ore. At this at the highest level since may. Is in the china story recovery. Lets show you the bond markets. We started this conversation about the decline in u. S. Yields and the rise in price. They take higher in price and a minute drop in yield. 161. 65. There could be a moment when they European Central bank has to do something to sue the bundesbank, they could raise rates in december. If the discourse became so aggressive, are the bond markets accurately priced . Anna that was a possibility. That was not his base case. Heres Juliette Saly. Juliette in the u. S. The white house is confirming President Trump met Vladimir Putin a second time at the g20, something that was not disclosed at the time. Last night trump lasted on twitter about reports of the encounter declaring he was the victim of a fake news story. He tweeted the fake news is becoming more dishonest or even a dinner arranged for top 20 leaders in germany is made to look sinister. European Central Bank Policymakers are said to be drawing up plans for stimulus after the summer break. Proposal has been devised in policymakers who start a twoday meeting today have not held forward discussions on the end of bond purchases. A stimulus change is not imminent. Declineman decided to comment. According to three officials familiar with the matter, the in aceiling is included series of documents. The imf is expected to discuss a new credit line for greece tomorrow. Venezuela has rejected u. S. President Donald Trumps call to halt a rewriting of the constitution that would consolidate the power of its socialist government. Speaking during a nationally televised meeting the president said he is reviewing his countrys relations with america. Brexit negotiators have acknowledged frustration on both sides over the uks divorce from the European Union but there are signs of progress. The second day of the monthly negotiations in brussels saw officials delve into the details of the main issues they want to make headway on before an october summit. Several hours were devoted to how to keep a soft irish border after brexit as well as the rights of European Nationals in the u. K. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. It has been another day of gains in the asia pac region and it worth looking thats much at the numbers, it the has not been that much of a rise in the asia index but the msci asiapacific Index Holding at levels we have not seen since december 2007. The nikkei closing higher above that 20,000 point level, the asx closing higher by. 1 of 1 and a good rally coming through in chinese stocks especially the large cap leading the gains. We did see a very strong rally in iron ore futures in china. Having a look at stocks we have n watching, chinese estate were seeing a slight check of ever grand shares in late trade. Cathay pacific under pressure, the ceo telling the markets he thinks the first half result was disappointing. Anz showing the big rally we are seeing in australia this after most analysts say the bank should be able to make the new requirements by the 2020 deadline. You can see the dividend yield on the shanghai composite is on the rise represented by the white line getting close or touching the blue line of the topix dividend yield. The yield is rising and pays nearly as much as the topix. Chinese shares becoming attractive, as attractive as the socalled seyfert japanese sharemarket but only for investors that can withstand the Roller Coaster Market that is the shanghai composite. There has been a strong return for those in the market at the most recent sessions. Thank you very much. Joining us from hong kong. The u. S. Is saying it is time to rebalance trade and level the playing field. Wilbur ross called for investors to be allowed to compete on an equal footing. Hold the two socks will talks in washington. Ross made clear the current trade relationship is also an issue for china. The trade surplus has created some money supply accesses in china so this is not just a problem that one side wants to deal with. This is a problem that both sides would like to deal with. Therefore, it is time to rebalance our trade and investment relationship in a more fair, equitable, and reciprocal direction. Anna wilbur ross there. , great to have you on the program. We are focusing on the trade story between the u. S. And china. The subject of a lot of rhetoric during the Election Campaign. When you look at the risks facing the Global Economy how high up as the antitrade rhetoric from the u. S. Or is it more hot air than substance . I think it is it should be more higher up. What we have seen so far is china playing for time, the 100 theirhich is lapsing and opening gambit is 365 days to discuss this. It should be higher up for the simple reason that the Trump Presidency needs to win quite quickly. Trade is an area where executive action is governance. Heres where innocence the presidency will lay out its stall for the midterm elections but it is not where it wants to be. Piece thisave a morning that puts to the marketplace, this could be the Tipping Point for china, the you havee china the bond connect and the stock connect, lets put up the graphic we have got showing the momentum. You have the chinese economy surpassing that if they u. S. Economy and this momentum the chinese are building, this is the year we look back and go, you know it, that was the Tipping Point. He really had a mission. Would you concur that this is the Tipping Point for china . It is becoming a far more serious investment destination and portfolios but slowly. The msci decision is one example of that. Is governed by chinas reluctance to open the capital account. Noticeable,it is the foreign quotas have been utilized. I think there is this growing interest in those assets. The spectacular performance of the tech stocks and new china stocks over the last year which have outperformed the chinese index and have been one of the principal biggest drivers of emergingmarket returns. That is one reason why people interested area and anna people are interested. U. S. Ending in the the day higher in some cases, the s p being one of them this might the setback on health care yesterday. That perhapsion this is because if there is failure on the shortterm and ,ealth care that puts pressure do you buy into that . Guest the republicans are short of actual deliverables the presidency is short of deliverables. They are using up the first year in office which is normally the year when you get things done. It does not bode well for the future. Why think that trade will be interesting. They are intertwined with the korean question so there is do not push china too far because you need them in relation to north korea and the chinese are acutely aware of this. Manus economists have written they need to divorce trade from battering them. This is the moving average in the bond market. The proposition is this. Let it go, let the trump reflation trade go, yields are going to fall, what does that tell you, what are the bond markets telling you . Guest it can tell any story you like create at the core of it there is a shortage of bonds because of the confiscation process that qe equals and that is why the debate over the next year around how the Balance Sheet starts one way and the speed at which they unwind and we will see mario draghi dancing on the head of a pin in egg press Conference Tomorrow around this question. It is crucial. That shortage of bonds has forced investors to seek assets with longduration elsewhere. Has overflowed into a large range of other assets. What you are looking at, you can spin it as the inflation versus the central bank story but that should be making itself felt certainly if it is a Bank Policy Rate thing at the short and rather than the long and. Into that takes us unwinding the amarin us enormous amounts of stimulus. This is where we have seen the vix over recent years. It could double. They are talking about doubling on the vix but into 2008 it was around 80. What is front and center for you . Guest the first thing that strikes you is almost all of the time volatility is low. And if you could extended further back. Because volatility has been low for while it does not automatically mean it is suddenly going to be higher. That is intellectually lazy. Why would volatility rise . One or both factors, an increase in economic volatility, and we are in a relatively steady and tightening of financial conditions. To come back to my point about the way that taper works overtime and you can see central bankers are aware of this gradualism is the word they are using. I could see that as a headline, dancing on the head of a pin. We are bought bopping along, trading higher, waiting for draghi. You would suggest in part that chinese money is fueling the equity market. Participating in the equity market. Guest that is specific to hong kong. Because of the tightening of leverage and the chinese example to clamp down on the rate and Wealth Management products. A little bit of money coming out and through the hong kong route which is obviously what happens. There were your comments on iron ore, if you see an increase in shanghai for commodities in china it is a form of dollarization. Dancing on a pin, that is a mission for draghi according to our guest. This is bloomberg. Anna welcome back. 7 31 a. M. In london, 821 8 31 a. M. In paris. Little change on the german bund market as we have been talking about a bond revival and markets and a quick check on middle eastern markets. Dubaie a move higher in up by. 4 of 1 . Manus the German Government bunds, that will be the focus. The ecb consider the stimulus measures at it seems the qs are having less of an impact on the equity markets. The stoxx 50 is up. Anna we have seen 23 billion have flown into funds. Lets talk about the ecb and all things european and will come to the stocks story. You said the right question to be asked about tomorrow is whether we see this change in wording. That is the extent of our expectations. Be any clue that there is a trade done inside the Government Counsel to back off the idea that if you have another down tour downturn you would expand the Balance Sheet again and that is a natural ground to give up because the capital key of issue limits are redlines for central bank governors. They will look at the general description but they will focus intently on the statements or comments and the body language during the press conference. This is live tv so what the heck. Thist about it is takes you back to win ecb began their purchases. Concern. Is overall. Orea, there is the beginning if you believed in the trump trade in november you saw this huge reflation trade and your point is that if the ecb begins to tinker with the qe at the beginning of next year, what is . He impact or does macron guest european profits are well below longterm trend whereas in america they are above trade and in japan, i am talking about from the heat of the last business cycle. There is room for european profitability across a wide range of areas to improve. Our opinion is that will be the case, we are seeing that in the results. And you will you are seeing profit potential in the interest int activists are taking large european Consumer Staples businesses now. Anna this increased interest in europe that warranted [inaudible] the 40s not recovered billion that went out in the second half of last year. A lot of it has come from if you follow the etf flows, we see it in our own business, has come from north america and from asia as opposed to domestic european investors. It has been nondomestic investors saying valuations are low, the eu is coming through, the politics are quite calm. Maybe i should be looking at europe again in a sensible way. Manus these are the sectors where a guest calls for the quarter. There is more mileage to be had in europe versus the u. S. Guest the ecb Lending Survey [inaudible] it is a good story for europe at the moment. Anna thank you for your time. Got over half an hour to before the start of european trade. Axo its to prove that breaking up the company will be good for shareholders. Manus follow is talking about north america being up and they saw their operating profit jumped 39 . And then there is your favorite story. Mccormick agreeing to its foot reckitt business. The European Market open is next. Allave your day started, you need to know about the European Aviation sector. Coming up next here on number. Here on bloomberg. Guy good morning and welcome. You are watching bloomberg markets, this is the european open. The first trade of the day coming up shortly and 30 minutes time. Matt miller off today. I am guy johnson. Resigning ceo of axo. Mccormick buys