A very warm welcome to bloomberg daybreak europe. We are waiting for one of the blockbuster reports. Dfm to come across the tape. No greenspan said there is bubble in stocks, he is right on a few things. Just cut rates and sometimes you end up with bubbles. What we have done is we have taken volatility index and overlaid it with a little bit of extra which is the cost of options to bet on the volatility index and that is right. We talked about subdued volatility for some time. Tape, anna ng the back to the allah told the story. 2. 16d quarter net sales coming through on the bloomberg. At 6 Million Euros. Ompany that has hold the has had to hold itself together. The attentions of industries also came. The Company Seeking to cut costs and they have been transforming themselves into a new a nutritional ingredients company. E will speak to the ceo back to the story on volatility. Vvix which tracks the cost of fix options, that is what is circled in the far righthand side. Vix, wayraded on the above the average daily volume. That gives you something in the background, there is a lot of betting going on, that sell in may, go away could be set for a hop. Nd a hot anna i was reading notes from yu. Rey you geoffrey lets put up the asian equity session. This is across asian equity markets, japanese banks getting a boost to the tokyo, giving it a boost. Chinese pmi, we mention that. Ase year on year in july, increasing confidence along the Global Growth story. A couple of fx movers. Manus you have the aussie dollar and they are hitting 15 year highs. Be Exchange Rate would expected to result in slower pickup in activity. Then you have the dollar index, the question is this, whether youre going to have a galvanizing of the white house, real order, real structure or are you looking at implosion . The dollar is the parameter of and willhe white house they double down on tax, will they get a tax reform . Anna we asked what the white house story means. Lets get a bloomberg first word news with juliette saly. Juliette Alan Greenspan has said equity bears hunting for access might be better off worrying about bond prices. The former fed chairman warned that this is where the actual bubble is and when it pops it will be bad for everyone. In an interview with bloomberg, greenspan said the real problem is that when the bond market bubble collapses, longterm Interest Rates will rise. The u. S. Has said it will combat the distortions to the World Economy created by the chinese economic system. In a report to congress the u. S. Trade representatives said its goal is to defend the governments ability to impose utes on china for dumping goods prices orially low unfairly subsidizing chinese firms. The report comes days after tense trade talks in washington. The Trump Administration has sanctioned venezuelas president nicolas majuro accusing him of undermining democracy in the south american country. The treasury move, department acted after a vote sunday that was a step toward rewriting his countrys constitution. The designation freezes any of majerus assets that are subject to u. S. Jurisdiction and prevents anyone in the u. S. From dealing with him. Just say, wet said believe that sanctions to work and we will continue to monitor the situation and consider additional sanctions. Juliette the uks chancellor of the exchequer said brexit will go ahead and march 20 19th in spite of disagreements with the government over a transition period to help dormant and businesses dealing with the split. The hammond said that this is about adjusting to a new not aonship with the eu, question of staying longer in the 28 member bloc. Central bank has kept Interest Rates unchanged while warning that a rising is expected to subdue inflation and way on the outlook for Economic Growth and employment. Governor philip lowe it held the cash rate it will be 5 as expected by markets and economists. Since they last met the economy recorded its biggest gain in fulltime jobs in almost 30 years. 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 is a new trading month, we had a 3. 7 rally on the msci asiapacific index in july. The best month since january and the rally continues, the nikkei upby. 3 of 1 , the hang seng i. 8 of 1 , h shares trading at 23month highs. On thevement in china back of the thai shin survey. Solid movement coming in so we saw exports rise by 5 . In terms of stocks were watching in detail, shortsellers. To be targeting toshiba. Number of saying the memory unit sale is still uncertain and delisting risks are rising. Probably why some are going short the stock. Nova group is rising, the best backtoback gain and some time. We hear swaps and driven lives may be extending the loan. This is led by a lot of the insurance players and brokers holding the eight share index at this 23month high. Ite a look at this chart, puts the astoria picture into more momentum and we have inflation here at 1. 9 holding ban of 2 to 3 . You have the cash rate holding at this record low, no change and still very subdued inflation. That is what philip lowe was saying in the minutes today, they are still not seeing much of a pickup in wages growth. Manus thank you. Joining president trumps staff, Anthony Scaramucci has been removed from the white house as medications director. This happened as john kellys first day at the white house as chief of staff. Anna last week he profanely criticized bannon and priebus. Form on for more on the are the new chief of staffs priorities and what is the president looking for from kelly . Jody discipline. It looks like what they need right now and with the president realizes they need as his close advisers is to stay on message, to move past constant turmoil which is what we are talking about today. A unifiedcus on message, they want to move forward with legislation and the thought is that i having a general, retired general who is respected with direct powers of the president and more authority than his predecessor had that that might allow them to do that. Manus how likely is it that they will move past this turmoil, you read some of the opeds and they talk about an implosion at the white house. Jody it is a good question. Part of the lack of discipline and the lack of ability to stay on message is the president himself. He with his midnight tweets and talking about members of the Administration Like the attorney general in the interview he gave with the new york times, he is moving past their prescribed message as well. A lot of this will be, can mr. Kelly, can they chief of staff rain and the staff and rain and the president and will the president give him the authority to do so . Theres the constant distraction around staffing, where do we stand on the president s policy agenda . Plenty of talk about hacks on the other side of the reset. Wouldthat is right, they like to move on to tax reform given that the implosion with the Health Care Bill is being unable to do obamacare which is something they said they were going to do. Tax reform is hard, the tax code has not been rewritten since 1986. There is a reason. It is incredibly complicated, every industry has the tax breaks they want and so it is hard to see that this will be something that could get done quickly. Given the administration that has had few other legislative victories. Manus thank you. Joining us the next hour is geoff yu. Great to see this morning. So here we go. Another chess please moving in the white house, there is a hes written by tim obrien who is the head of our gadfly columnists and he says trumps presidency is like his business career. So radioactive it burns most of what it is exposed to. Politics is still there but does it move markets . Geoff you are having these discussions, at what point do we stop treating this as a bit of a reality show . In anill have an impact indirect way by virtue that expectations are not possible and will anything get done . This has an impact on growth expectations. Now is are weght going to get the period of stability . Positioning for this is asymmetric. Markets feeles happy for politicians to be slightly able unable to enact change so we see times when the white house is unable to pass legislation has pleased markets but there is so much expectation especially around the tax agenda. Things look a little different, do they . Geoff there is the dollar index chart that shows the dollar. Ndex gain manus you said a lot of this is baked in. Carefule need to be going down the slippery slope saying that government does not matter. That seems to be the attitude right now. Europe is in perennial disarray and nothing is going to get done. The u. S. , nothing is going to get done but life takes on even though that governments are in a state of paralysis. That is a rather slippery slope to go down, sometimes we need that injection of policy. Anna some comments from your chief economist in your notes, recessions tend to be kospi policy error or bubbles that burst. An action is policy error as well so we need to be careful about that. Manus Alan Greenspan saying there is no bubbles and equity markets but he rang the doorbell over the bond markets. This is options on the vix. They are moving higher. On,e is something going sell and make, go away. You talk about seasonality and talking through the data whether there is a subplot going on and if you have seen anything. Geoff i think it goes back to asymmetric positioning markets. All the consensus trade has thats what people are are looking for, where the risk reward is, you have to sell volatility, and earnings continues through fed expectations or surprise to the upside. I buying the vix that is were looking at the Second Quarter derivatives. That is the cheapest possible. Leave,here does that that is what is going on with the vvix. Low, gold span says so when the gold market mode bond market moves [indiscernible] now the fed is cautious. Onmeans we will be wrong u. S. Growth and u. S. Inflation, that will surprise the upside. There will be an initial shakeout. Market positions have said the tenure are different going to 3 . That would be wrong but it would be driven by stronger u. S. Growth and Household Spending and investment growth. These are good happens to have. Anna the bond markets would say this is good news. Geoff right. Manus the target of getting tax legislation in september, it is an aggressive timeline but doing that and affecting some tax change for the end of the year could reignite a bond right. A rout. Geoff if that directly generates investment growth which is needed, if you say trading growth would head for 3 and higher and that causes pressure and bond markets, that is a good problem to have that repricing is a good thing to have and markets will guide us along. Chinas manufacturing pmi rises to its highs level since march. We focus on the outlook for the worlds secondlargest economy. This is bloomberg. , 120 6 19 a. M. In london and hong kong. This is the hang seng trade. Lets get a Bloomberg Business flash. Findtte banks may need to 30 to 50 billion of Additional Capital to support new european units in the aftermath of a hard brexit. The extra money is equivalent to 15 to 30 of the capital at wholesale that wholesale banks commit to the region. The Management Consultant said up costs good buys by 1 billion and if functions handled in london are depleted in the continent. Hedge shares plunged after its scrapping plans. They said they could not meet the conditions to redo to redeem its notes. The stock will fall to nine dollars. The representative did not immediately turn return a message seeking comment. One of two Nuclear Power project in the u. S. Scrapped after one of the coworkers said halting work would save customers 7 billion. The decision comes four months after westinghouse filed for bankruptcy and undisclosed and disclose the challenges facing u. S. Nuclear power. That is your bloomberg is this flash. Manus asked output and new orders rose compared to the previous month. Still here. Ey yu is you spoke about interesting developments in the Real Estate Market. Tell us about what beijing is compared to have happen with its prime real estate. Geoff they are releasing within the second. Yearse first time in five. It might be a sense of what has been going on, that is a segment of the Real Estate Market that has underperformed. Will be willing to, i cautious with the word reflate. It may be a sign that theyre comfortable with how real estate prices have developed and they are willing to let the market keep up slightly. Anna there is a story about removing leverage from the economy. Geoff that is the most important part. Even though they are still tightening, it is slowing down the build up of leverage and the data is showing overnight the economists are outperforming. There is still risk to gdp numbers. Gettinge talk about away from the traditional heavy engineering building. They are relying on the anchorage. We have ireland moving up. It is iron or moving up. It is up 30 since low. If seen this rolling over, is that the kind of thing that is driving the authoritys do this release . Geoff hello there will be a concern. We may need to store up ammunition. It is not going to be done by services, by consumption. The segment of the economy is growing but not fast enough. Are they starting to load up for better growth driven by investments. Manus the data we have been bu ing, things are good, [inaudible] geoff if you look at the forecast, it has. It will be a big difference between peaking and staying at a level. I think that is where the diversions is. Are wondering are things going to roll over, will we see a recession, our answer is no. Anna on china you think there is upgrade potential for Growth Numbers but when we look at what came out of south korea overnight, export numbers and 20 and that usually means great things for the global economy, more positive indicators. Geoff look at where dollar renminbi is trading, it went through 672. That trade has heard people so china right now still trying to suppress the upside. The yuan has had the largest amount of gains since 2014 at that is linked to dollar weakness. Dollar weakness but if you look at the reserve numbers and the crackdown on capital outflows [inaudible] we were looking at this waldorf story. Being pushed to sell the waldorf and selling the waldorf i sort of get, this is about control but this is about repack trading their money into china. If we look at the overseas deals, dropping by 50 . Huge are huge that is a retrenchment or is there in terms of doing deals overseas . Geoff if you look at some of the statements made by major conglomerates there is more to stabilize the capital flow situation. You cannot keep on going after you swipe, a much your credit cards overseas, that is not really affected. Im interested in how do you reconcile. That is what the president said in davos, so on one hand you have the you are trying to keep money in but driving investment outwards and how do you reconcile that . Anna we have european governments talking aggressively. Thank you very much. Manus we will break down the dsm numbers and talk to the ceo. Joining us now with an upgrade, what does it mean, what is the end result for 2017 for dsm. Who knew that phones would start doing everything . Entertaining us, getting us back on track and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save when you choose by the gig or unlimited. Call or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network, designed to save you money. Anna welcome back. This is tokyo, 2 30 p. M. A red headline crossing the bloomberg. Latest in what is a long and bloody saga. Effort to track down how much of the 6 billion that they are raised to pay for it lavishreal estate, parties, and more. We have been tracking the story for many months. Has been tracking this. We will watch the story as it develops. Manus breaking news coming through, this is the european chipmaker, the turtle total thirdquarter profit came in, about the estimates, a tough time at the end of the Second Quarter. Thirdquarter revenue 1. 8 3 billion euros, that is a bit above the estimate. Margins are improving, 8. 5 . There are sticking with the outlook for this year and they say that fourth order revenue will be about the same as you have seen in the third quarter. What you have here is the company wages challenged by the euro, they do not typically hedge their euro exposure in this is something that is much more discussion in terms of a challenge. 11 . Will rise by 8 to think of that kind of areas they whateir business has done, does it mean for companies . They are sticking to this. Has raised its outlook for the fiscal year and dividend. For more on the results we are joined by the ceo who joins us from the netherlands. Rate great to have you on the program. Thinking,ll us youre what gives you the confidence to be more optimistic . we had a good Second Quarter, continued performance in this first half year and we conclude a very strong first half year for these fort 2017. Our business and delivering up 40 , due tois the growth and materials and nutrition. And households. , we are of that confident about the remainder of the year, we are confident about the future. Increase for the end of the year. That confidence, good to speak to this morning. You were in china, youre talking about i can achieve a double digit growth, are you still confident of that kind of number . Strongest shoots of growth for dsm . Feike also in the Second Quarter we have been growing again. We were talking about firstquarter growth, more than 10 and this Second Quarter above 10 growth in china. Helped by the urbanization, a big move in their rural areas. So we are helped by the Economic Development which has an overall growth of 7 . We grow clearly above 10 in china. We grow very well, brazil is doing a little bit worse as we all know. Also europe, we saw picking up in all segments. The u. S. Is also very strong. Theres economic volatility and we see the currency volatility but dsm is positioned more to specialty solutions. I feel confident. Anna it has been interesting to watch the role of investors. Been pursued to some extent by third point and the economy minister in the netherlands has been seeking new Legal Protection measures. What prospects for success and are they required . the best that any company can do and i think we are doing. T is having a Clear Strategy serving ambitious targets and delivering against those. That is the most important. Every company, also our company, you can find the website and that is common and the netherlands. On top of that the batch government is looking to measure s like a delay for one year, how they can prevent hostile takeovers. They want to protect the netherlands. My job is not to be too much involved in those kinds of discussions but to manage our company in the best possible way like i was saying. Rise inhere has been a activism and as you say your job as ceo is to protect dsm. Some people in the marketplace would say that because it me if i am wrong, youre not going after major acquisitions but this could leave you exposed to activists. Do you feel exposed to the risk of a activists joining the roster . no. I do not think so. I feel pressured due to Financial Markets and we need to deliver and that is part of the job. , ambitiousegy targets and delivering is the most important. And remember, we are halfway at , we are at this moment delivering ahead of schedule on our gross initiatives better than the markets we operate in. We deliver on our cost programs, we are increasing capital. Were monetizing, our joint ventures and at this moment we are not in for big acquisition , thehat will come back money still has to come in. Lets cross that bridge when we are there and we have to step up our progress in ambitions. I think we were on track and with all of the above we are on schedule so we do well, we lets finish the job and or work. Manus i am writing you up as pragmatic and confident. We have a story that the republicans are ready to go after major tax reform in the u. S. What impact would it change in individual tax and Corporate Tax have for dsm, is this important to you . reduced tax regimes or tax rates in countries will always help us but we have already a good in competitive tax rate. And competitive tax rate. It is fair where we are at this moment and i do not see a lot of upside in all kinds of tax changes in the world where that thats what that would mean for dsm. I feel confident if we can remain where we are at this moment. The biggest driver in the u. S. Is also the Infrastructure Investment and the economy. There we would benefit from. Anna thank you for your time. Ofiscussion of a range topics, activist investors and what the government should or should not do about it. And the priorities for the u. S. Growth story. Eoffrey yu is still with us. This trend we have seen in the dutch businesses and the dutch government looks to take action and feike give us his thoughts. Is this gave us his thoughts. There are ways to gain exposure by hedge funds. Which hasegy value. This kind of environment is the best for clients. Manus we did not get to the challenge of the euro with feike. One of the lines they use is despite theecasting headwinds from a weaker dollar. Sense of where youre, youre still bullish on equities but when you see the trajectory of the euro, this is the stoxx 600. Ae euro, how much of challenge is that to your bullish call in equities, our guest is hugging this european [inaudible] pace matters much more when it comes to Exchange Rates than levels. We talked about hedging before, if there is a pace that companies can deal with, there should be some time given to make decisions. That gives them better protection in terms of just [inaudible] the challenge for them in the ecb is the euro has gone so far right now, were still comfortable with the strong euro but lets say we overshoot 120, that is the forecast over a 12 month horizon area that is something that they may have to push at back against. All eyes will be on draghi, is he going to Say Something directly or by the forecast, saying this may be too much. You very much. Staying with us here on the program. Manus transition tension. This is a shock about the plans for brexit read we focus on the u. K. And its a note its eu negotiations. This is bloomberg. Anna welcome back. 6 44 a. M. In london. 1 44 a. M. In new york. Shares are moving higher at the start of the u. S. Trading day. Lets get a check on the markets. Guy were going to be opening higher as well in europe. The futures are pointing to a gain of. 5 of 1 . Bp could be one of the critical factors in how we perform. Wewith the s p in the dow, will be opening higher. In terms of the gmm, lets walk you around the world. The aussie dollar is up by. 2 of 1 . The question you have to ask yourself when it comes to the rba is is it in charge of its destiny and the answer is probably no. More to do with what is happening with china, more to do with what is happening with egg exports, iron ore and what we ore has beeniron something of a jump. The aussie dollar is turning of 1 . Around by. 2 in terms of the metals complex, we are not seeing the kind of moves we saw yesterday but yesterday, that has to do as much with contacts contract s. Metals prices, take a look at what happened with the miners. The best performing by some considerable margin. The white line is the mining sector, the blue line is the stoxx 600. Spread see that narrowing. What will next month produce . H shares in the back of betterthanexpected chinese didnt rising above 11,000 for the first time in two years. Back to you. Thank you. Oil has held above 50 a barrel for the First Time Since may. The output curves from the Oil Producers might rebalance the market and that may move us a little bit above this 50 month. Yousef we have u. S. Crude inventories to look forward to, drying down a 3. 3 Million Barrels last week. Global rebalancing may be on track. The other metric we are keeping an eye on is what is happening with the benchmark crude tanker rates. Jpmorgan pointing out that you are seeing lower rates, those are coming under pressure but the market is scratching a ted over what is happening with venezuela and the prospect of tighter sanctions. Your line and blue is the venezuelan crude output which was already on the way down, still short of 2 Million Euros per day. That is the sixth largest producer within opec, Goldman Sachs are saying a u. S. Ban on venezuelan exports are imports would lead to reshuffling of oil trade with likely limited impact on prices. The other reference line in terms of opec production, a bit of a different view from softbank. That might push oil toward your 60 a barrel handle. This is a heavier grade of crude and that makes it harder to replace. The disrupting could be extensive. Anna lets stick with the oil theme, shall reported strong secondquarter earnings shrugging off low oil prices. Totale said it was ready to report. We have the bp numbers and we have brought in the big guns. Here is will kennedy. Geoff yu is still with us. What is the first thing the market will be focused on . Will you saw they managed to get on top of that, bp has this big drag, it is having to make billions of dollars of payments every year to people in the gulf sense that spill. As the industry recovers bp is doing it with a big weight on its back so it will be harder to get net debt down. Sync with its peers and that could be a problem for the company. Anna this is the debt distribution for bp. Tell us about the muck condo issue. There is still so many years after the event, still something that is weighing on the business. Will they have done a bit done a deal. They committed themselves to make payments for years in advance. That is at a time when every oil company is struggling to get positive cash flow to pay investors with oil prices at 50 or below. It is constrained by the payments. You can see at has a lot of debt to pay over the coming years. Manus that is the maturity program. Writedowns, there could be a bit of pain, where could it come from and what size . Have this why bp will not a spectacular quarter. We expect earnings to be lower than what they were because they have a big right off in angola where they were exploring a block. That did not happen. They are having to write off 750 Million Dollars and that is likely to impact. Interest ande Energy Stocks . A lot of that is not predicated on recovery from prices. Rise, ther to dynamics are shifting somewhat. , people arep back chasing yield. Still an offer. Manus we look at the dividend, we caught up with statoil and extent are these dividend plays on the upside for you . Well right now we are on a riskadjusted basis. Positioned asymmetrically and everything is going wrong for energy prices. Butctations are still weak the cash flow conditions approve across the board. If we go into the low volume environment, on a riskadjusted basis, we are looking very attractive. Anna thank you for your thoughts on oil. We will hold on to you for further thoughts on the u. K. Will kennedy joining us to talk about bp and we will break is numbers at seven. Manus the chancellor of the the u. K. Willsaid still leave the eu on march 2019 despite cabinet disagreements over transition. Banks may need to find up to 50 billion of Additional Capital after brexit. Of threads to pick up your. , anyimescale around brexit new thinking on the transition . We talked about the importance of having not necessarily right decision but change happening gradually, what about in the brexit conversation . Geoff the euro is selling, we see some upside risks but when it comes to the transition what could happen is you are saying general agreement in the cabinet, that is a necessity for transition and individual sectors, that will come into play. It is all about reducing uncertainty. The consensus about transition, that is the first step but lets see how talks go. Anna found it and sent it through yesterday. And would yout run us through that . Anna this is the bank of englands Consumer Credit data and there is the u. K. Finance, the big Banking Credit and this shows there has been a boom. Also a lot of that has been away and the high street banks with these alternative lenders. In terms of the overall picture, knows surprise with such low Interest Rates but something the bank of england is increasingly worried about, are you . Geoff the Banking Sector is in is oneshape, and so that and the overall sizes are small. Household watch incomes, whether they continue to stagnate on a real basis. That is something that inflation will manage. Interest rate expectations, do you really want to hit households on the mortgages side when this is starting. Manus the possibility of a rate hike has dropped aggressively, 56 at the end of june. They might a moving that way to 40 . Have you shifted youre thinking and what does that do to sterling . Geoff u. K. Expectations were higher than the u. S. It is all about the household sector. If inflation gives a buffer or cushion for real Income Growth maybe we will reassess. Headline numbers were softer than expected. Tell everyone that real incomes will soften you will stop spending and that will be the start to keep a lid on prices somewhat. Story right now for the upside, sterling in general will be range bound because the euro is dragging dollar isthe underpinning cable. Anna this would be an argument for unwinding emergency stimulus. Geoff i think you need insurance policy on brexit as well and that could they can stay where they are. Manus thank you very much. Of ubs wealth management. Anna we have a few corporates that are yet to report, bp, we will talk about that out with earnings in just a few minutes time. Rollsroyce also reporting, and taylor delivering earnings. U. K. how healthy is the Property Market . What is happening from the vendors and what incentives it at if it all would Companies Offer . Anna we will look out for the numbers on rollsroyce. What will they do with their outlook, how can what can they tell us about how optimistic they are for the future . This is bloomberg. What should i watch . Show me sports. Its so fluffy look at that fluffy unicorn hes so fluffy im gonna die your voice is awesome. The x1 voice remote. Xfinity. The future of awesome. White House Communications director Anthony Scaramucci is ousted after 10 days on the job. After trump installs john kelly as chief of staff. Philip hammond says quitting the eu wont be delayed. The report suggests banks may find new cash to capital after bridget. Estimatesting indicating solid growth ahead of this morning zero area gdp reading. Welcome to daybreak europe, and our flagship show in london. Anna welcome back from the great break. Waiting for corporates to report. Theyre getting a lot of earnings, but not all from london. We start with numbers coming from japan. Numbers, they are giving us firstquarter operating profit, ¥157. 6 billion against an estimate of ¥133. 3 billion. Above estimates in terms of the firstquarter operating profit performance. The net profit number looks to be above estimates. They also give a forecast for the next year, coming fullyear 2017. Etc. Numbers around growth from the gains unit, chips unit, music unit. They were positioned for a healthy performance. Just how strong with the level of players appear . Chipssing numbers of using smart phones, music streaming being paid for. To what extent with this enabled the business to deliver buybacks and higher dividends . That was something analysts would be interested in. Always forecast around the fiscal year for this business. ¥550ting profit tos the billion mark. They will be weighing out these forecasts. Manus. Manus bp, the adjusted numbers 518 . 4rofit beats million the market had penciled in. The dividend that . 10 a chair. Adjusted profit has a beat for bob dudley. He has achieved reducing debt and oil above 50. They are producing as much cash at 50 as they did at 100 hatchell. At shell. Nice numbers for bp at the start of this season. Profit, 710eam million, bp are looking at the possibility of ipoing their pipeline business. Whether and to see if theres a writedown on it. Net income is ahead of estimates, but only because analysts have slashed estimates over the past four weeks. Go to top live and you will be able to follow the breakdown. You have a little bit of breaking news on b. A. T. Has yes, saying the sfl opened a probe into misconduct allegations. There is an ongoing probe into this mix misconduct. B. A. T. Says it will cooperate with the portable investigations. The headaches for this sector continue. This after the end of last week, we saw b. A. T. Imperial brands and other sect in the sector selling off after announced plans for reduced nicotine counts in tobacco product. Interesting to watch another headwind for that industry. Some car news . Manus honda this time, raising guidance. Lifted operating profit outlook billionlien yen m ¥705 seven5 billion from hundred 25 lifting operating output outlook to 725 from 705. Raising the fullyear cash internet profit forecast to 545. Theyre basing it on dollaryen level of 107. Rollsroyce . Pretaxirst car adjusted profit, above the estimate. Beating the estimate, first half adjusted first half profit, fullyear outlook unchanged. A lot of questions direct did at the managers of this business. Around the outlook. They were forced this week to back away from earlier guidance around cash flow generation. The old was that they would reach one billion pounds. Instead, they seem to be aiming for something to beat the previous high of 2013. A little more nuanced on the guidance. Analysts and investors will be looking for media more detail on that. Were going to have a conversation very shortly. , whated pretax profit they are saying in terms of the marketplace, and this is critical, no change in trading the election. First half revenue 1. 7 3 billion is the number for them. We will have a conversation in a few minutes. That is it, we are done. Lets move onto the market. What we expect to see at the start of the day . Expecting to go a little higher. Look to digest between now and the equity trading day. Theing to little higher at start of european trading day. Futures five, u. S. Futures also suggested be up between 2 and 4 . Manus one line on the net data. Net debt for bp. From 30. 9 of june, billion a year ago. Forgive me when i say that dudley had reduced the debt profile. Divestment brodie proceeds of half 1 billion. The debt number, looks to have risen. We look for more guidance on that. Anna lets put on the risk radar. I. 6 ,quity markets of japanese banks helping the tokyo market. Chinese pmi and the export data look strong. If you are looking for evidence of Global Growth, global stocks high. The australian dollar, the r. B. I. A not changing rates early, but the higher us trillion dollar was weighing on the outlook for employment. He saw the aussie dollar. Manus lets look at the bottom markets. Global equities are up, near alltime highs. South korea exports, 20 rise helping the equity story. Bund market down three pips. What can you do for a bond market story . Flat as a pancake. Bloombergs first word news. Its get to juliette saly. Juliette thank you. Alan has said equity bears hunting for excess in the stock market might be better off worrying about bond prices. The former fed chairman warned this would be were the actual bubble is and when it pops, it will be bad for everyone. In an interview, greenspan said the real problem is that when the bond market bubble collapses, longterm Interest Rates will rise. The u. S. Has said it will combat the distortions to the World Economy created by chinas economic system, especially in markets of steel and aluminum. In a report, trade representatives offer the Senate Primary goal is to extend imposing duties on china for dumping goods at low prices or unfairly subsidizing chinese firms. The report comes days after tense trade talks in washington. The trump sanctioned venezuelas , accusing him and his government of undermining democracy in the south american country. In an unusual move directed at a head of state, the Treasury Department act after a vote sunday that was a step towards rewriting his countrys constitution. The designation freezes any of his efforts that are subject to u. S. Jurisdiction and prevents anyone in the u. S. From dealing with them. Has saidancellor brexit will go ahead in march 2019 in spite of disagreements the government over a transition period doubt government and businesses dealing with this. Philip hammond is in brazil to promote trade and economic ties and says it is about adjusting to a new relationship the eu, not a question of staying longer in the block. Australias central bank has kept Interest Rates unchanged while warning arising currency is expected to weigh on the outlook of growth and employment. The governor and his board health help but cash trade at 1. 5 . Met, the economy recorded its biggest backtoback gain in fulltime jobs in almost 30 years. 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. Positive session in asia. The closing of markets in japan and australia, the dow and nikkei closing down high by one third of 1 . Australia having a solid rally on the back of the smooth you have seen in commodities, particularly the iron or contract. 8 . The aussie dollar Holding Around the . 80 mark. No real job earning in the dollar so far in terms of the commentary. The hang seng index looking good and the h share index of chinese shares reached 11,000 a couple minutes ago. The csi 300 doing well on the back of that data. South korean exports up 20 . This giving a big boost to asian stocks, Still Holding at 10 year highs. In terms of stocks were looking at, toshiba, trying to get a quick profit from the stock it could be delisted. Up 7. 7 . Noble group rising on expectations its Loan Facility could be extended and China Life Insurance showing a momentum in hong kong. Stocks rallying to the 23month highs. Australian rate decision, as expected rates on whole. Record low 1. 5 , reflected in the yellow line. Cpi is at 1. 9 , below where the rba wanted it. Have a look at the white line, wage growth. It has been stalling at record lows. The rba saying in the minutes that wage growth remains subdued in most countries. As this core inflation. A few hurdles for the rba to overcome before they think about increasing Interest Rates. Manus thank you very much. Juliette saly with latest on markets in hong kong. The head of european rates and strategy there, welcome to the show. Mr. Greenspan says dont worry about the equity market. You want to focus on the potential for a bond market bold. Market research to low, unsustainable and when we experience a bubble, it is in bond prices. What you think of his call . , i think they are too elite not greenspan and the bubble, but the valuation on equities. And the level of longterm Interest Rates in Government Bond markets. The fed reduces the Balance Sheet and it allows longterm Interest Rates in the u. S. To go up. Eventually, it will pose a problem for equity markets. That would actually put the skids on any further monetary tightening from the fed. It is difficult. Many markets are trading as if they we have a zombie economy , one where corporate stone go out to achieve growth plans dont go out to take new dynamic edgers to generate earnings. They are more interested in buying back equity to increase returns to shareholders. Anna what does the bubble look like . What does in the an unwinding of the current bond market look like . 3 by the end of this year in u. S. 10 years . 2. 5 . That doesnt sound much a bubble bursting, like a slow movement. Peter that is exactly what the fed has crafted. It is 2. 5 on the 10 year u. S. That is what we expect. Purely from the fed reducing the Balance Sheet. Other Central Banks still increasing their Balance Sheets. The ecbs Balance Sheet will still be going up. The bojs Balance Sheet will still be going up. Nothing has changed from the demographic side. The savings glut. Overall, banks are still increasing Balance Sheets. Anna so this is a bubble of the feds making. They are in control of the unwinding . In control of the unwinding in terms of the u. S. , maybe under arming some other underperforming other interestrate markets. Said it is ay you nice problem to have. You do some tax reform, the first in three decades in the united states, potentially achieving 3 growth target. Actually a moderately good album to have come a moving towards 3 on the bond market. He said the risk is not a slow move, it is a ratchet . Peter no, it would only get a ratchet if washington was able to deliver and deliver quickly. That would change a lot of the forward Price Expectations for the bond market. That is when you get a big move. That was what november was all about. Trump came in and said he was going to do a lot of the markets decided to believe it and we got a big move. Whether we can have another one of those given the administration has struggled to deliver much. Anna scaramucci only their 10 days and then he goes not to dwell on the detail of that, but unpredictability, distraction as it comes to staffing conversations. Not to mention distractions around russia, does that lead you to believe trump cant deliver on tax and other matters . Peter it leads us to believe the market will be loath to pricing anything particular. The market is uncertain about what can be delivered, but also it has been offset either rising geopolitical risks his administration might have. This is why we have quite a solid underpinning of demand for u. S. Treasuries and other government on the markets simply because the conditions they dont allow, all of this liquidity to move out the long end of the curve and and other asset classes. Manus lets focus on some of the moves. He dollar andr t two year rate. The white line, bund spread and divorce with euro. What happens next . Use on some doubt with the ability of the fed to deliver on its promise in terms of rate hike. What does that do to the short end of the curve and the bund treasury spread . Peter the short end isnt priced into much in terms of what the fed says they are going to deliver. That will continue. The fiveyear part of the curve that sentiment on steroids and so the fiveyear can perform even further. It wouldnt surprise me if we Start Talking next year about having a balanced outlook of the fed and perhaps even looking someone on the curve in considering rate cuts, because this Business Cycle is very long in the tooth and if we cant get Economic Reforms to allow it to become longer, and i think a quick word on the u. K. Before you go. Heard the time we comments from mark carney the markets seem to get more excited about a rate hike in the u. K. By the end of this year. You are a little doubtful. The rest of the market is on the same page of you because we had a 56 chance, now just a 40 chance of a hike again by the end the year. What percentage would you attach to the chances of a hike from the bank of england by the end of the year . Peter it gets smaller the further we get into the year, so i would put it this weeks meeting, it may be 15 and the way i see it playing out for the real economy is that it gets considerably worse from here. The position the consumer is in, they are overleveraged and losing confidence because real wages are falling, plus the uncertainty of the service or means that the main parts of the economy will be slowing down. Perhaps we will be talking about a contraction next year. Manus from a trading point of your, 10 year Government Bond 1. 3 . You are looking at u. S. Moving north. How does that spread move . Peter it probably widens out. But underperforming u. K. , there is a potential that the bank of england could start to move out there Balance Sheet. The market hasnt thought about those implications. The bank of england is looking at financial conditions thinking there is some potential to tie in business tight impetus, to stop the inflation, they can reduce with the ball last year. Anna we will add that to the conversation extent. Take you. Peter chapter peter chadwell, mizuho international. Manus we will talk to tailor about the first half earnings. See what their Peter Redfern has to say. The ceo joins anna and i next. Anna welcome back to bloomberg daybreak. The Residential Housing developer Taylor Wimpey reported revenue of one point 73 billion pounds for the first half of the year. Speak to Peter Redfern. Right have you on the program. The bank of england has been warning about the state of the consumer in the u. K. And Consumer Credit. Is that something that unnerves you when you look ahead to the rest of the year and into next . Peter it is something we keep an eye on. We are finding trading to be very strong, confidence among customers to be good. The Interest Rates, they are paying are at an alltime low. That means they are not that fragile, but certainly as we look into next year and beyond, it is something we are aware of and cautious about. Manus one thing we have written about his affordability. Nationally in england, homes cost eight times workers wages. Pretty seen on the doorstep . Our people concerned about affordability . Are they having a tough time getting access to them it on more just mortgage access to finance . Peter it is an expensive ,ousing market longterm sense so funding a home, whether buying or renting is difficult for people. The tradeoff is the choice people are having to make. That is definitely have an impact on isis. You can impact on prices. You can look at what capital cost is or what people are paying on a mortgage on a monthly basis. That remains cheaper than renting in many cases. At a situation of people buying houses. Anna can i ask you about practice of selling houses, you have setknow aside to fund people who were affected by that. You confident you have done enough, or do you need to set aside more money for the . Peter we believe we have. We have done the right thing, reviewed historic processes and we think it is right to help specific customers with a specific type of lease. On the practice of selling houses leasehold, it is back in january that we announced we would stop selling houses on leasehold on new sites. We did it ahead of industry and this consultation. We have been doing the right thing and as we look back on it is something we would do differently with hindsight. Where we believe we are now is right. You made a nice confident statement postelection. No Material Change in trading since the election. Are you still achieving asking prices are having to incentivize buyers to sign on the dotted line . Peter i would say overall pricing and level of discounting hasnt changed in the last few weeks. In the long run sense, it is less than i would normally have seen over the last 15 or 16 years in the industry. Prices remain very resilient. Anna what are these types of opportunities you are looking for, the land you are buying at the moment . What kind of land are you looking to acquire . Has that changed in the last couple of years or so or is it steady as she goes . Of land hasnt massively changed, but the nature of the way our business is developed is we are seeing more value in larger opportunities and you can see in the volume growth we have to dance the fact that despite strong sales rates our outlook numbers are up, that is coming through the business. Our business is more resilient because we are on larger sites were many of them we have been selling on for a while, we know the sites, the cost structure, the market and those are the kinds of sites we are adding. As we look at london particularly, we are starting to see better land opportunities in terms of value in a market that has been very expensive for a long time. It will never be anything other than expensive but on a relative asus, we see better opportunities today than we did 12 months ago. Manus peter, thank you for joining anna and myself this morning. Peter redfern, head of Taylor Wimpey. Confident outlook coming from him. You can follow the numbers on bp on top life. Everyone talking about debt and cash. Anna keeping an eye and rollsroyce, Taylor Wimpey in that ising sector are, it for daybreak europe. The european markets are up next. This is bloomberg. Guy the morning, welcome. You are watching bloomberg markets, the european open. Cash is about opening europe. Im guy johnson, in london. Matt miller over in berlin. When we watching this tuesday . Scaramucci ousted 10 days. Tries to steady the ship. This is a big question. Is this dollar positive or negative. We will discuss where the brick greenback goes next in this program