Transcripts For BLOOMBERG Bloomberg Markets European Open 20170523

Question mark the odyssey continues. A deal on greek debt relief, creditors angry, reaching an accord next month. , 22 people have been confirmed dead with around 50 injured at a blast in the u. K. In manchester. It happened at the Manchester Arena late last night as a pop cert by arianne Ariana Grande was wrapping up. Most of the u. K. Attack since the london bombing in 2005. Theresa may will chair a meeting of the Emergency Committee at 9 00 a. M. U. K. Time. Our executive editor for International Governments joins me on set. The Prime Minister and the home secretary before that, she has experience in dealing with these incidents. What are the structures the u. K. The in place to deal with investigation and the incident itself . The same structures that you see in most other major countries but the key thing now for theresa may is that this is happening at an on time. This is happening in the middle of an Election Campaign. She needs to look like she is Prime Ministerial. Let it look like anything related to the election. Norwich you want to. The question now looking at the election, we might see a suspended protracted time where election is suspended given the horrific nature of what we saw last night. Also interesting to point out that she is going to a nato election issummit and that is t a time when donald trump has been trying to criticize nato for not doing enough to tackled terrorism headon. , pose a primee ministerial head of the nation. This is a real issue at the nato summit later this week. Matt interesting from a european perspective, president macron issued a statement saying he will speak with theresa may and will stay informed. He said the president of the republic will continue to fight against terrorism with the government and the british forces. We are talking about continued cooperation here within europe. It is important to bear in mind that this is happening at a time when we have an election but we are heading into brexit negotiations. Theresa may was criticized a few months ago when she seemed to put security and intelligence cooperation on the table, that is something she was making a bargaining point of and she was not getting the free trade deal she wanted. The events of last time are a reminder of how important intelligence sharing is in the kingdom and theresa may will perhaps not make as much as a negotiating position as she was threatening. Important to bear in mind if they do fallout over these shared European Security structures, this is going to become quite a big deal at the negotiations for theresa may. Willhow do you think it affect the british psyche and that Consumer Confidence story . Many people approach the election as they approach going shopping on saturday. How do you think that will change . One of the things we have learned with this wave of terrorist attacks we have seen in europe starting in france and moving through germany, sweden, u. K. Difficult to predict how people will react. Whent a year to the day jo cox was killed. Andid not have as much as effect as we thought. Sitting here right now the morning after it is impossible put to predict with that will be. The british response is not going to look like that. It is hard to say. We do not know yet who is behind this. Wek with betty kline know that this was a concerted attack that was his lot organized by a sonic state islamic state. There was the sense of a Broad Network of terror cells in paris and brussels around france and belgium. Security forces were taking no chances. They needed to make a big show of force. And they u. K. So far, what we have seen is the act and to be lone wolves. You could make the argument that putting soldiers on the street is perhaps an overreaction. If they think this is a series of lone wolf attacks. A lot will depend on what they as they digey into the identity of the person who did this. Matt thanks very much. Bloomberg executive editor for international government, appreciate it. We will hear from you later on this morning. We are less than half an hour away from the open of cash trade. Lets look at futures to see how the markets are setting up this morning. Not a lot of movement here. You can see a little bit of a mixed trade between london and frankfurt. Gain,have substantial half of 1 on cap futures. More telling is a look at bunds, investors buying german debt pushing the yield down to zero 0. 36. And driving without, a lot of it besides public and private spending onwas construction. 2. 3 was the gain theyre so pretty strong you to the model because of the mild weather. Guy we will Pay Attention to data coming out of the eurozone. The yent, we are seeing strengthening. The british pound is down by point two of 1 . We will see how the london liquidity story treats the british pound is we work our way through the day. From an fx point of view, small reaction but i would watch the data reader on. The pmi numbers which are have been on a real rip of late from a european perspective. Is that going to be sustained and if it is not, well this move up to the 114 level we have been watching surrounding the eurodollar continue question mark we will watch that data carefully and break it for you here on bloomberg. Matt donald trump is using a threat from iran to secure it leverage. The u. S. President and the israeli Prime Minister benjamin not to know who say they see an unprecedented opportunity to achieve an elusive mideast Peace Agreement as trump seems seeks to bring nations together to confront what is seen as their common rival. Interest in. Is how does donald trump think he can secure what would be in his mind and i think many others the ultimate deal here . Reset in thes a rhetoric we saw from the campaign trail. I have been told by Administration Officials they want to try to have this be step one and what in what has been a predictable type of First International trip. But i want to put this question to michael arnold, the bureau tiff chief for israel. Terrifyingn these headlines about a terror attack. President trump said later on later on. T how does this impact the president ial trip . I do not think it will induce him to cut the trip shorter. It could influence his remarks to the palestinians. The israeli Prime Minister has been adamant that terror attacks youre seeing around europe are similar to the attacks that israel has been suffering for a long time and could increase understanding of israels position. It will be interesting to see what the president says in bethlehem. Kevin have we seen him adjust comments about [inaudible] to jerusalem. He did visit the wall alone. The first to do so. How much and issue is this . A very bighas been issue. One trump was election elected there was elation on the israeli right. This is something that president have promised and then walked back. I think the message is that the new ambassador David Freeman friedman was giving, we intend to move the embassy but we want to give a year or so to see if we can refine the Peace Process so that as it stands is the plan. Kevin netanyahu had a complex relationship. Where does that stand now, where could it head . John they see themselves as leaders who are hounded i a hostile press, who are mistreated by the public so they have a certain commonality of interests. We saw on the tarmac yesterday the Prime Ministers wife mentioned that they have a lot in common. Personal chemistry aside, once we get to the core issues of the conflict we could see disagreements emerging between them. Kevin on a busy day for you, thank you so much for stopping by. Back to you in london. You very much indeed. Atning us out of jerusalem the as the president s trip continues. He moves to italy next. We are clearly going to be monitoring as this trip develops. Which isup to the g7 going to be a fascinating encounter. Coming up, we will get the take of the ubs chairman, he is axel weber. Joining us from the dvi womens finance summit. Did you see what Angela Merkel said about the euro and the question mark fascinating comments. And the rescue plan. We will discuss the Restructuring Plan with the european chair of the single resolution board. Banking firmly in focus in italy and spain. The open 17 minutes away. This is bloomberg. Guy good morning. In the u. K. , 22 people have been killed in a pop concert packed with young people. 59 others were injured in the blast outside the Manchester Arena stadium this after a concert was concluding by arian a grande. No one has claimed responsibility. Lets talk about the impact of this. Francine lacqua is there. Thecine we are joined, by chairman of ubs. Given the sensitive news, welcome to the program but we need to start to talk about terrorism and the impact this will have on europe. Unification or disunification question mark disunification . Event and disturbing my thoughts are with the families and the victims. Terrorism has become part of european reality. In the past,that markets have reacted to such events. The reaction has been you did and has been transitory. I expect as sad as this is, the markets will be unsettled for a while. I do not expect a big move in markets. Is the marketsnd focus. What is the reaction of the u. K. To this and this would strengthen the hand of those who say we have to secure our borders and we have to make sure that we live in a safe environment. Francine it may be too premature to understand what happened but will it have an impact on brexit negotiations at all . Anst no but there has been underlying current in many european economies with the rise of nationalism and these events very often after that sentiment affect security. We do not know what the reason for that was. Have at think it will straight impact on the go shooting strategy. It is another example of very feed for national sentiment. Francine do terror attacks and threats have an impact on Consumer Confidence . They in a transitory way, do. They affect confidence in general. Longterm there more challenging for what is the political response to this and how will policymakers do with this and that is going to be the focus rather than the reaction to the event. Francine is this too soon to say if this has an impact on german elections question mark in the u. K. We are to it half weeks away from the campaign. Is there any read a crush on that question mark with the unfortunate events in paris two years ago and the events in germany around christmas, it does have a transitory effect. I do not take it will have an impact on the Election Campaign and germany in the sense that there are many parties that have already addressed the issue of internal security and securing the parameters of the European Union or migration policy. All these discussions are in play, it is another data point that adds to the severity of having to come to a conclusion pressing need by populations to ask for policymakers to do with this. Francine the chancellor Angela Merkel was talking about the impact on the euro and she was blaming the cheap euro as a side effect of the ecb Monetary Policy. It was probably more claim. Ion than a germany has been on the Receiving Side of comments about its trade surplus and its currentaccount surplus and it is one of the countries that has one of the largest. Claim. Germany has been on the Receiving Side of commentsalmost where germany is one of the strongest members of the monetary union, the average of the eu which is reflected in the euro trading is weaker than germany as an economy. If germany in isolation what have the stronger currency, for the approximation of a shadow German Economy is the swiss franc. If you can see how the swiss franc has strengthened and how switzerland had difficulties in dealing with the stronger frank the strongerranc, currency puts pressure on exports but it has helped in the past to preserve stability. Corporates would have to adjust to a challenging environment for an Exchange Market are usually getones that reform and competitive much faster. I think a strong currency does have some advantages. It is a challenge also for exporters. Francine do think this is a push for the next European Central Bank President to be a german and what would it look like question mark guest this is too early. This is a debate and mario draghi is in the ecb for another 2. 5 years. It is not useful to discuss succession. It is important that the ecb continues to do its work, that everyone is focused and we are starting to see the exit from this unusual unorthodox monetary policies. My expectation is we would see that over the next year. There will be some removing of biases in the Forward Guidance. There will also be a Program Discussion around september on what they will do in the next year, the tapering of its purchases. Int policy is going to kick over the rest of the year and it is important that the ecb. Trongly leads that and prepares markets for that. We have seen what happens in the u. S. Went markets were not prepared for a tapering announcement. The president be in command. Concerned theyou start normalizing policy to send given that italy is on the brink , there is a lot fewer euro support then there was three years ago. We had a little bit of noise from spanish elections. Guest as much is that policy that we are on now was appropriate when the crisis that policy looks increasingly out of place. Both to purchases and the negative Interest Rates will be removed over time. The u. S. Has is ahead of the europeans in terms of normalizing Interest Rates. The europeans cannot completely isolate from that. The long and has moved up with the u. S. Rates and the ecb would be wise if by the end of this year, they would start to scale back their support for the economy. The european economy is strong. We saw german data and the european economy is doing well. Economythe european increasingly is driven by consumption and sustainable development. That is the time when you need to scale back Monetary Policy support. Francine how would you rank the donald trump trip so far . Rich it is an important a outreach to the region. I was in the middle east a few weeks ago. The region has not had the support by the american president under the Obama Administration that is required in order to secure orderly to feldmans and the region. There are many conflicts, to put a cold tensions, the syria conflict. It is good that in the foreign asicy priorities shows that the region to visit. Francine he will be treated by more memos and possible leaks on the fbi. Doesnt make him a lame duck and if he is, what does affect does that have in on policy . Guest there is traffic challenges around the transition. He has not been a longtime political person. Ins and outsto the of washington and how you run government as opposed to how you run an Election Campaign will still be dominating the agenda when he is back in the u. S. Francine will we see more volatility in u. S. Markets . Strongthe u. S. Has a dollar. The u. S. Continues to be strong. What helps the currency markets is the outlook that the fed will continue to normalize. I do see the fed, they are looking for reasons not to change their course of continuing rate hikes. The u. S. Financial markets are strong. Global money is pouring back u. S. , you see emerging markets and many others invest in u. S. U. S. , you see emerging markets and many others invest in u. S. Equity. The u. S. Economy is strong and the dollar is going to be driven by the economy. There is always concerns went there are Major Political disruptions. At this stage, the market has got used to that. There was some repricing of the early trump reflation trade that has come down a bit and we have seen the dollar adjust. The dollar is ready fairly priced and looks to be strong in the future. Francine thank you for speaking us today. The chairman of ubs. Handing it back to you in london. Where will have plenty throughout the day from berlin. Guy thank you. Axel weber making comments to the effect we will see a big Market Reaction. I expect that is what we are pricing and at the moment. The market increasingly looks through such incidents. Let me update you on what is happening in the u. K. The bbc is reporting that the victorious aspect torilla coach station has been evacuated as the result of a suspect package. That is all the detail we have. That will be a story that may affect transportation around the british capital and around the country. The other thing to say is the president of the u. S. On the trip francine was mentioning. He will comment on the attack later this morning. This ahead of him journeying to europe. Coming up, it is the market open. We will talk about what we are seeing her. The pound is weaker this morning as a result of which you are likely to see the london market outperform just a touch. European futures are down by. 2,. 3 of 1 . You are unlikely to see a substantial move to the downside today when it comes to the european equities. Is story is focused on what happening in manchester as we see comment coming through from british politicians as a result. This is bloomberg. 22 people we now think have been killed. Over 50 have been injured. At the inclusion of Ariana Grande. Details still emerging and we will find out more as we make our way through the day. The Market Reaction looks pretty muted. Lets look at futures and you can see not a lot coming through. I got the screen, i have clicked on to futures see the percent mispriced. Ftse will open relatively flat, as will the cac and the back. Actiont see a lot of for equities when the cash trade opens right now. Guy lets show you what is happening around europe. We will get a lot of data out of the eurozone. Actionemi numbers have been sof late. Getting our french numbers coming up. We will flash those for you to at thee me just to you moment, the ftse is doing very little. We arent expecting huge moves today. On either side of the atlantic at the moment. 58. In france rising to that forecast was 56. Anything north of 50 is an expansion number. 58 is an incredible number for france when it comes. Manufacturing has fallen to 54. Anna his little bit of risk off sentiment in the asian session. Not just on the dreadful events in manchester, but another reporting. Said trumpgton post denied collusion between his cap tempt campaign and the russians. A little risk off was in the markets and then we saw the dreadful news out of manchester. European equity markets opening a little down, down. 1 . In there, but perhaps that gets lost on a day like today. This is where we are on the u. K. Guilt open at this hour. 1. 055 . Little flight to safety in some assets, perhaps touted by what we heard. The pmi out of france, really strong number. On, noting early exactly an outside move in the overnight session in asia. The close in asia, the shanghai composite closing down in the session on tuesday. We saw weakness across the asian region, but not by a great deal. On indexes by the close. Shanghai composite down more than some others. A busy calendar through the week. The fed minutes tomorrow, budget details later on today. Have the nato meeting which takes on relative relevance given what we heard from manchester overnight. Guy a busy calendar through the week. The fed minutes anna, thank you. I want to take you back and show you a quick chart we have of french manufacturing. Updraft that we have, particularly in the services. A slight dip in the manufacturing line, but that Service Number of 58 is comparable with the figures out of germany right now. You what is happening on the mov screen in your. The market is broadly negative in europe. Sanofi sold off in the drug little pressure in terms of where the money is. Clearly, index nine is going to affect that. Lets take things to the percentage story. A con a little softer. Upside, two stocks will bid this morning. Matt the yen has risen as well along with gold as u. S. Equities Index Futures fall. Investors are taking a risk off approach amid the trump issues in the u. S. And amid a suspected concertt attack and it we talked about in manchester last night that has left 22 dead and Dozens Injured. The incident happened monday night after a performance by Ariana Grande, who is popular with teenagers and children. A lot of young people at that show. No one has claimed responsibility. With us, the Senior Investment manager at aberdeen and mark cudmore. James, let me start with you and ask, what do you think about the trump issues to me, seem to be a lot more of a concern for u. S. Investors, the fact that according to the Washington Post, donald trump allegedly asked a couple of intelligence chiefs to publicly deny any links between his campaign in russia. These kind of headlines just dont want to go way, do they . It is difficult for us to be able to analyze exactly what is going on because there is a lot of he said she said and i think that will continue for quite some time. The appointment of a partial indicatesosecutorit is difficur this will be drawn out as we tried to get to the bottom of what has happened and what instructions or requests the president did make to security officials. Very difficult to see the signal within that but there is definitely a lot of noise. Your point about whether it is more relevant relevant to u. S. Investors, we know the u. S. Sneezes when the world catches a cold. So caution in the near term is advisable. So on the one hand, weve got political scandal in the u. S. Continuing to unravel. On the other hand, the terrible tragedy in the u. K. What do you see affecting Global Markets . Guy the events in the u. K. Were tragic and are very much distracting us here, but arent a big market story. They are a side event but wont be a major influence on markets going forward. Slightly bigger news what the market Washington Post reports on market includes. I dont see it lasting. We had a strong day yesterday and todays risk aversion has seen the context. A littleties are down bit, but havent pulled back anywhere near they rallied yesterday. We are in a generally positive environment this week and the data continues to be good. Good again on the european pmis and the market will test higher levels soon. Jameso stay on the u. K. ,we lets talk about the consumer the u. K. Consumer for a moment. They have a number of issues going on. Rising, the credit impulse is starting to fade, you can see it happening. Iten attack like this make more likely that we see Consumer Confidence rolling over . Do you send your teenage kids down to the center in manchester on saturday to go shopping . He sent them to the Big Shopping Centers in london . Is that one other reason why you may see confidence coming under pressure . James that is fair. It can have an impact locally in that area, people will be hypersensitive over the next days and potentially weeks. To marks point, the Bigger Picture is this is going to shift the picture greatly. The other things you mentioned are longerlasting influences and more likely to be something which squeezes the consumer. This in another itself, unfortunately, this tragic event as it is, is something we are becoming a little more used to and therefore, were seeing maybe the Behavioral Changes from that being shorter and shorter. Guy lets turn our attention to the more broad eurozone economy. E will focus on that later on the me get your reaction on french services. James absolutely impressive. There is no design denying the eurozone is feeding off of itself and this global eight cyclical upswing. Deviously, recovery was exported ive. Now it is more domestic. Therefore, that leads me to the question of what is the ecb doing with negative 40 basis points on the deposit rate and still throwing 60 billion per month into the system . That looks increasingly inappropriate in this environment. The ecbs Balance Sheet is now greater than the feds as of now. That tells you where we are. Mark cudmore, the german chancellor speaking yesterday said the euro is too cheap for germany and that is the ecbs fault. When did you make of those comments and is she right . I agree with james, i think she is right. The euro economy is looking strong and it is no longer relying on the world. It is a partially domestic story. I have been reiterating the positive european view for a while and the euro does look cheap on a longterm basis compared to some developed market appears. That said, it has rallied very fast and in the shortterm, it is honorable. It should be glued to that for a year or two. The structural narrative around the eurozone is changing. We are no longer worried about eurozone breaking up. We need to move on. The euro should gain as we realize that in the months ahead. People are thinking it may have gotten ahead of itself since the ecb are unlikely to taper or taper at the next meeting. Matt mark cudmore, thanks for joining us. A bloomberg mliv macro strategist. You can follow life Market Insights on mliv. The Senior Investment at asset aberdeen. Coming up, the italian lanter monte dei paschi is said to be g. Lling wooin we talk about that with the european commissioners chair. This is bloomberg. Guy welcome back. 13 minutes into cash trading in europe. Lets see where equities are this morning. Broadly bid. But not by much. Cap up by. 4 . Stoxx 600, no sense of direction at this point. We are bid, london markets up by around. 1 . Trading in line with the Global Benchmark at the effects of last night in manchester, not being felt, matt. Matt horrible tragedy there. We learned more throughout the morning and will continue to learn more about how the u. K. And the eu want to fight this together. Lets talk about something else. Something that is an issue for europe. Monte dei paschi is in talks with investors to buy a greater portion of bad loans. The move comes as the European Central bank objected to the lender, giving away part of the deal for free, according to people familiar with the matter. With us now is the chair of the single resolution board. The deal with issues like this is something that a lot of our guests say is the biggest concern for the eu going forward. Thank you first of all for having me here. Sentence, allirst our thoughts today are with the u. K. And the families of those victims. When you go to our core business, which sounds small compared to these tragedies. Confess that clearly, legacy within the system is one of the biggest concerns. It is one of the topics to be dealt with. You will understand i am not talking about monte dei paschi and any possible deal to be struck there, but clearly to address nonperforming loans within the system is one of the core topics to be addressed by the commission, by the central bank and to some extent, also by us. Matt last week, i was in italy for the g7 minutes meeting of finance ministers and was talking to the italian minister and one of the things he seemed to be doing was allaying concerns about the italian banks in general, saying that bad debt there was a tune to tens of billions rather than on serbs hundreds of building billions. Bein the situation is improving rapidly . Cant say that, but i wholeheartedly agree this is not a problem of the entire Banking System. It is always, when you talk about bad loans, it is by far more idiosyncratic problem of certain banks in italy, like in any othersystem. Country you have banks byt our heavily burdened npls and other banks that are performing well. That is one of the most important messages to get across , to say it is not the entire european Banking System and it is not just a dummy. You have nonperforming loans also to some extent in other markets. It is always a very specific issue. Matt what is the best way to deal with this . The eu is on the fast track to legislation to get bank debt to create a new senior class of bank debt and help deal with it in a faster way. In terms of resolution. Think is the best way to deal with the issue that we have tools that we have now . Elke first twostate the Bank Recovery and resolution it has a, which is way to deal with banks and crisis and even for resolving a positivee there is no way forward. , there have npls been some activities. One was a proposal by the chair of the european banking supervisory association, who was thinking of a european bank. I have my doubts about a european bid bank but i think there is some valuable pieces in this. The proposal you have mentioned, the fast track on creditor is archy, potentially also totally different topic because that would deal with how you rank creditors within a bank. Lossesore into who bears and in which order. Matt and what you think about that . Elke the fast track is a good idea and it should be really a focus. But because clearly going forward, and that is our core business of resolution planning, to make sure that creditors know and also forest in us, to have a very clear understanding and oakley a harmonized european orderstanding of credit hierarchy. It gives clarity to investors and to the bank. Guy guy johnson in london. Can i take you to spain . I want to show you our audience something on our radar and that is Banco Popular and the cocoas. Which are under a little pressure right now. This is a situation. Is it on your radar screen . There are more banks than just one on our radar screen. And of course, bengal r is a case were banko popular is a case we are watching. Guy does goldman have a role in rescuing institutions stuff . Elke i think we have a deliberate decision in europe to say that government should not be the one who has to bailout institutions. That doesnt mean governments dont have a role in bank regulation, dont have a role in overall environment but i would in 2008 to 2010 was to put a lot of taxpayer money in. Clearly an institution like this has been formed to ensure the resolution and i would always say we are always last resort or this has to have no minimum impact of taxpayers. Guy there are institutions like banko popular that raise money, it will struggle to do that againguy what is the futurer institutions such as this around europe . The currentnd in political climate, a solution for a workout of such institutions . Is it takeover, a consolidation story, is it passing individual creditors . How much further forward army . The problem forward are we . , howroblem is here and now do we deal with institutions like this . Again, i wont talk about Banco Popular. Topic isealing with a exactly going back to considering what is the root casebycase to see if you can offload npl portfolios in a bad bank and you try to sell it, how can you restructure . Merger is always one option. Selling bits and pieces is an option. My clear message would be, we have worked hard over the last two years in trying to set up resolution plans, which hopefully offer more private solutions. Before you come to the point of being nonviable or going into the bankn to say, is structured in a way you can find alternative private solutions . Preferredlways the solution. There is not onesizefitsall. Matt would we have a safer system in europe if there were tighter union a deeper union, a single European Finance minister, eurobonds even, would that make resolutions of banks easier . Will take your comment and say, that would take some time. What are we doing now . We have moved a long way. Banks are better capitalized on average and we now have a single supervisor being the ecb, for most of the banks of the larger banks. We have a very clear set up there. We have the single resolution mechanism. Not just brussels, but within the memberstates. The only leg of the Banking Union that is still to be developed further is the european deposit insurance system. At least we have a harmonized system eurowide. Is more integration needed overtime . Yes. But it needs to come stepbystep and you should not lawrestimate other areas of that have to go handinhand. You mentioned creditor hierarchy. I would say in broader terms, solvency law. The value of npls is not determined by the quality of the insolvency system. That is deeply national law. Matt great to hear, reassuring what you have already dummy here and now and your plans for the future. Chair of the single resolution board, thank you for joining us this morning. Now to brussels euro area finance ministers have failed on debt relief for greece. And a disbursement of loans needed to repay obligations due in july. Not far from today. For more, nejra cehic joins us from brussels. Why wasnt a deal reached . That is a good question. We had almost eight hours of talks and yet eurozone finance ministers failed to break the impasse. The answer to the question seems to be there were so many positions that various finance ministers were coming from and the talk of complex, so it made it difficult to come to a final agreement. The we are hearing talks were constructive and indepth. One other thing we heard from greek and eu officials was that soughthas soft more more clarity on debt relief. Speak to the finance minister this morning. He said we should look at this positively because of the review well andilout going now talks could turn to debt relief and work on that will happen in the coming weeks. Guy what is the timeline here . Nejra everyone i have been speaking to seems very confident and positive that this deal with thought might come yesterday will be reached in three weeks time at the next hero Group Meeting june 15. The finance minister was positive on that. I also spoke to the french finance minister at his first euro group last night and heres what he had to say. Im quite confident that in three weeks time, we should find an agreement and a compromise among the Member States and the question of the greek debt. I would like to emphasize that today, the work we made together was a very useful and constructive job. What greece needs is the disbursement to make that roughly 7 billion euros of debt obligations that are due in july. The chances of them defaulting on that are ready much zero. There is still the Sticking Point between creditors, largely the imf and germany, about debt sustainability and about that debt relief. Those talks are likely to continue. The details of that will continue until the end of the program in 2018. Guy thank you very much. Cehic from brussels after last nights talks surrounding greece. Up next, the latest from manchester. 22 killed, Dozens Injured at a pop concert last night. Angela merkel saying she is horrified by the incomprehensible a parent attack serco she has determination to stand by the uks side. Jeanclaude juncker prepared to fight terrorism with the u. K. Atre was a suspect package the station and has been cleared. The latest from manchester and its affect in terms of the markets and political story in the u. K. Next. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Terror in manchester. At least 22 are killed and Dozens Injured at a pop concert attended by teens and children. Peace in the middle east, President Trump uses the threat from iran as leverage to bring israel and the palestinians together. Can he get the rivals to the bargaining table . And the odyssey continues. A deal on greek debt relief breaks down. Can creditors and greece reach an accord next month as they kick the can down the road again . Morning and welcome to Bloomberg Markets the european open. I am matt miller in berlin. Guy johnson is in london. Guy getting more data out of the eurozone. German may manufacturing pmi has 59. 4. To the forecast was 58. That is an extraordinarily solid number. It is in sweden, but a solid number. The Manufacturing Services 59. 4. The forecast was 58. Thatnumber 55. 2. Still a solid number. I want to bring some news from the chancellor. You mentioned these headlines, but it is interesting we have gotten from the president of france, macron and chancellor merkel in germany. Pledges to stand beside the u. K. What isanchester assumed to be a terror attack at the moment. Assuremerkel saying, i the people of britain that germany stands at your side. Also saying, incomprehensible that someone would use a joyful pop concert to bring death and injury to so many. 22 people so far is the death tally and dozens others injured. It happened after a pop concert by arianna gronk, a u. S. Singer who is popular with teenagers and children. It as a treating terrorist incident which makes it the most fatal u. K. Attack since the london bombing in 2005. Theresa may will chair a meeting at 9 00 a. M. U. K. Time. Our executive joins us now. John, theresa may, Prime Minister and before that, home secretary for six years, how does she respond to this is to mark especially considering the situation she is in with europe . The first thing, she needs to come out the last thing she can do is sound like she is trying to take political advantage. The firstnor what i think she t to do that. She will have to stand very above party politics, speaking yes, there is but a global context to this. This is happening in the context of brexit negotiations were intelligence sharing will be an issue. This is a reminder of how much of a big deal intelligence sharing will be and you have a nato summit later on this week where counterterrorism may well the one of the leading subject that leaders talk about. Guy does it change the debate . Does it make a u. K. Want to think more about how it will work with its european peers or are we stones and course . John probably the same course. One of the tragedies of this is that it is not necessarily that surprising. Were all braced for this sort of thing to happen. We know the risk is there. There is only so much Security Forces can do against lone wolf attacks if this is what it was. Guy the u. K. Puts security on this,ble and in light of was that a wise decision to make . About ministers talking walking with from this. John they would argue we suggested this might be something we talk about. Yes, there wasnt surprised at the time when theresa may laid out the brexit position on negotiations. Likely this is something she will walk away from more and more overtime. Bloomberg executive editor for international government, thank you for joining us this thisng to talk about horrible and senseless tragedy. Lets get the latest from around the world. We go to juliette saly. In the wake of the manchester attack, Political Parties have suspended Election Campaigning. Theresa may is chairing a meeting of the governments cobra Emergency Committee at 9 00 u. K. Time. The u. K. Homeland secretary has denounced the atrocity. This time, it has been an attack on the most vulnerable in our society. Its intention was to so fear, its intention is to divide. But it will not succeed. Finalizedthe eu has its brexit position, reiterating a hard line on u. K. Potentials divorce bill and discussing trade ties after an arrangement. Chief negotiator says accounts must be settled on both sides to build trust. The exit bill has been put as high as 100 billion euros based on past financial commitments to the eu. In singapore, troubled commodity trader nobel groups crisis has deepened after goebel ratings global ratings triggered a slump in Company Shares and a trading halt ahead of an announcement. Singapore listed nobels stocks have fallen since 2011 on concerns the companies liquidity wont be enough to cover debt due by the middle of next year. That is your Bloomberg Business news. Guy thank you very much. From the meeting to be released tomorrow. Stay with us, the Senior Investment manager at Aberdeen Asset management. Financial conditions in the u. S. Tightened a little over the not but are getting looser, tougher at the moment. The fed is signaling to go one more time. Does it go twice . Does it go another three times this year . Give us a sense of where the trajectory is. The u. S. Economy, q1 aside, the momentum looks to be building. Jame the movement in financial conditions is at odds with what we are seeing from the Federal Reserve since december. Financial conditions have done nothing but get easier. Guy part of it is the stock market. James absolutely. A huge component of that and the trump trade has been a big part in supporting equity markets there. The dollar, because of this global recovery, has been going sideways and that helps keep financial conditions easy. The answer to the question of what the fed does, i wish i knew. Our best cases they go twice more this year. The economy can withstand them going more than that, but there isnt indication they will. A reason is the Balance Sheet policy. It sounds like they are determined to ensure as best they can that we dont get another taper tantrum stock Market Reaction and to push too hard on the rate till now when morelook like ideological than economically, they want to widen down the Balance Sheet. Probably the right balance. Then in hikes and december, we expect a Balance Sheet to begin in 2018, that would fit the bill for now. Next year, they can continue hiking. Want to take advantage of the moment to show you we have financial conditions monitored in the bloomberg. Screen ofll up a financial conditions for the United States or the u. K. Or the European Union zone. As you mentioned, we have seen financial conditions getting better. Easing. My question is if the fed carries through with the rate andease that is forecast, we get an unwinding of the Balance Sheet, where does this line go . James it should move tighter. Conditions should reflect the fact that some of the punch bowl has been taken away. Some of that stimulus is being removed. I think the biggest uncertainty there because the market has shown it can be grown up about rick policy we are talking about slow incremental increases from a low base in an economy which is doing very well and has been for a number of years, and the Global Economy is doing better. The Balance Sheet is the big unknown. Tricky one. Stages ofr the latter what Balance Sheet growth has meant for financial markets, but we forget the journey that took is there and it was not a straight line. We had 10 year yields of 350 in 2010. Growth looked worse, the Banking System was a bit rocky. We haveear yields gotten used to 10 year yields at 2 in the u. K. Or below. That has become an anchor for investors. Assetsquities or risk most vulnerable or should it be core Government Bond yields the drive higher . I believe it should be the latter, but it is difficult to say with any certainty. To talkes, we need about europe and the data coming out of europe this morning. Whether or not the market is correctly priced. Joining us from aberdeen. Next, i natural regulation gets tougher and we get data on the cloud. We speak to the ceo of next optimization. Were talking about the block chain as well. This is bloomberg. The welcome back to European Market open. I am matt miller alongside guy johnson. Tragedy overnight in manchester. Lets get the first word news with juliette saly. In the u. K. , at least 22, including children, have been killed in a suspected terrorist attack at a pop concert. 59 others were injured outside the Manchester Arena after a grande. By arianna police said the attack was carried out by one man died at the scene and no one has claimed responsibility for the worst such incident on u. K. s soil since the lending bombings of 2005. This has been the most horrific incident we have faced in manchester and when we hoped we would never see. Families and many young people have sadly lost their lives. Our thoughts are with these 22 victims that we know have died. The 59 who have been injured and their loved ones. U. S. President donald trump and Benjamin Netanyahu see an unprecedented opportunity to reach a Peace Agreement as formerly hostile arab nations joined the jewish state to address iran. That comes after a similar pitch to arab leaders in saudi arabia over the weekend. Today, trump will cross into palestinian held bethlehem to meet palestinian leader. In the u. S. , President Trump would dramatically reduce the u. S. Government role in society with spending cuts over the next 10 years. His proposal to be released today, claims to balance the budget within a decade. It relies on a tax plane from which the administration has provided precious little detail. The elimination of programs backed by Many Republican lawmakers and heavy use of accounting gimmicks. In brussels, euro area finance ministers have failed to break the impasse on greek debt relief. Allaying the bailout and subsequent payment loans. Athens will need that much to pay its bills in july and the delay adds to uncertainty around an economy that slipped back into recession. Which economy minister says he expects a deal will be done. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. You very much,inisterguy thank juliette. Lets talk tech and the financial sector. Infinity, the platform will put Financial Data into the cloud and hopefully reduced cost and complexity for clients on the post trade ledger. This has pressures mount. Xith us now, is the ceo of ne optimization. Tell me about what you are doing. The block chain is something we are being aware of a big part of our future. You are now harnessing it for the foreign Exchange Markets, using it as a post trade ledger. What are the advantages. The answer is in the description. It is a record that can be distributed to the participants so they are all using the same dataset across the entire ecosystem. That is transformative for our clients. Financial groups for the last few years have spent a lot of time and money making sure their i. T. Systems are compliant with the regulations. They are trying to do it in house. Has the penny dropped that this is the way forward . We are going to seeing lots more Financial Institutions the regulators are there. Stepping away from inhouse . Is this where everybody will go . What about the advantages of it . Jenny the industry has a lot of the same problems. As you said, the regulators have already transferred a lot of data into the cloud, they are already using it and relying on cloud technology. The cost pressures on many differently and do differently. Transforming these markets is what is required today. Thinking about how we can solve the problem in a much more unified way. Putting the data in one place, bringing services to it, putting it in the cloud and allowing our clients to distribute it one place and one time. Matt one of the benefits of the block chain, uses bitcoin and independent, miners can keep the block chain honest. I assume you will use your own block chain. How do you deal with the issue of not having a number of independent and anonymous miners . Jenny pure luck Chain Technology is not quite appropriate. We have more sensitivity to loot legal jurisdictions and what is one of the reasons we are working with amazon because they ise a bill cloud that significant to the architecture. The way we use block chain is about permission and that it at the clients request. We sit ine call the center and position clients were that data gets distributed. It is a slightly different use of the technology than currenci es. Matt now i get it. You will have a Genesis Block for each client that will be able to determine his entire trading history . Jenny its not the correct use is there is a trade and the protocol, the way we change our behavior to make that trade and agreed final record between those two participants. That is the data we will start in the distributed letter and distribute that trade do whatever the client permits. It is one record tickets shared among many users, including regulators should the client permit. That is a different nuance, but in the name. It is about distributing the data in the ledger. Guy time beats us. Thank you for joining us this morning. Sorry, matt . Matt i was going to say, very interesting stuff. Thank you. Up next, have european political risks past or is it merely dormant . Take. T james there is a lot going on. This is bloomberg. Guy welcome back. We continue to monitor coverage as it comes out of manchester and the political reaction in london and around the country. Ning, thery in mour world in shock. We are likely to hear from the president of the United States. The british Prime Minister will have a cobra emergency meeting later on as well this morning. 22 dead. Over 50 injured at a concert last night that was wrapping up at the Manchester Arena. Bloomberg will have continuing coverage of the event and bring you any breaking headlines as they happen. Get eurozone manufacturing and services pmi in about 10 minutes time. Following up on solid manufacturing numbers that came out of germany. Were 59. 4, above a forecast of 58. We got a 58 out of france as well as i believe. Strong pmi numbers. Still with us is the Senior Investment manager at Aberdeen Asset management. The euro zone economy looks to be doing quite well. European equities are still 16 compared tod 18. 5 for the u. S. Is there still room to run . James i guess that is telling you there is. What i would observe is equity markets have tended to front run the recovery across developed markets since 2008 because of the behavior of central bankers. Because this liquidity has been thrown into the system, because rates have been held artificially low and even negative in the eurozone, you have had this portfolio balance an effect which has driven equity prices higher. The question i would be asking is, how much of the rally in european equities we have seen over the last three or four years was actually already just because of the stimulus and if we extend the Economic Growth and environment we see at the moment into the future, what does that mean for ecb policy and for asset prices . I wish we lived in a world by which we looked at Economic Growth, inflation, the output gap and were able to invest on those traditional fundamentals, but that is not the world we have been in or are in unfortunately. Me, the big question is easy but ecb policy and what that means. Matt what do you expect from ecb policy . Is the possibility that mario draghi starts to normalize in the next meeting . James i think the next meeting is a bit early. It would be surprising if we got a language change in the bias. We have had asymmetric bias towards easier policy in Forward Guidance from the ecb. It wouldnt surprise me if that was amended or softened as a first step on this process. Central bankers are terrified of scaring markets and creating adverse impacts, which can feature into the economy. President draghi will be determined for that not to occur. Credibility into issues. I have concern about central bankers and their need and desire to wait till things are certain. By definition, waiting until things are certain increases the chances that you have waited too long and they could remove the downside bias just at the time they are likely to get growth and there is a bias to the outlook. A complicated communication challenge for draghi. But by the end of the year, definitely. Guy you will join matt and i on Bloomberg Radio and whether german yield. 4 is right. Hes going to join us on digital radio. Surveillance is coming up next. Mark barton and then Francine Lacqua and tom keene later on. We will continue our coverage of the terrible events in manchester last night. This is bloomberg. Francine at least 22 people are killed and Dozens Injured in the worst terror attack on british soil since 2005. Political parties suspend the Election Campaign. As trump seeks peace in the middle east, problems continue at home. Israel, on tour with the president. And the odyssey continues. A deal on greek debt relief breaks down. Can the creditors reach an accord next month . This is bloomberg surveillance. Im Francine Lacqua