The question is where next. Janet faces her semi annual grilling by lawmakers. Ceo garyormer saks cohn is the top person to take her job. While it has risen sharply, hedgings have been their bets. What are we expecting . Look at european futures. We have gains across the board. Up 0. 4 . Far more interesting is looking at on yields, especially considering what we have ahead or bank of canada. Take a look at 83 j chart of the german bund. A threeday chart of the german bund. We have seen moves like this recently. Spike toe saw a bigger read right now, looking at the 10 gain. Investors feel comfortable selling off the perceived safety of German Government debt. In terms of the risk sentiment, that is interesting. Basis points, that does not sell like a big move, but in terms of real money, that is a significant move. In terms of the gmm, lets look at what is happening. The upside for the turkish market. The Australian Market down. The brazilian market, overnight, gaining as well. Toeer victory when it comes labor market reform. Elsewhere, the risk sentiment story, look at what is happening. The yen, that goes against the idea. The yen is rising. Lets a role that off to read sure you what is happening with oil. That has been you have to come to the bottom. Gaining. Eing crude data, aggregated factors coming together. On the crude story. We will run you through the details. Coming up. In the meantime, lets catch up on what you need to know. Heres the first word news. Juliette thank you. Gary cohn is set to be the leading candidate to replace janet yellen as fed chair. That is according to political. Senate Republican Leaders said cuts for high income earners. The measures would generate million billion in revenue which could extend desk cover extended coverage for the poor. The senate is delaney plan by two weeks. House republicans have included a funding bill that includes trumps border wall per review Appropriations Committee wants to add 1. 6 spending bill. Even as other domestic agencies face cuts. Five of the retail banks have banks withport for retail backing. The partnership will help quote Small Businesses sees the global demands. Alllays and others have been part of the initiative. Global news, powered by 2700 journalists and analysts. Matt thank you. Emails received by trumps oldest son show he was aware of potentially damaging material about Hillary Clinton before he met with a russian lawyer career that has intensified questions about whether his campaign colluded to read he said he never told his father about the meeting and spoke out on fox news. In retrospect, i would have done things differently. This was before the russian mania. This was Opposition Research. They had stories contrary to what i was hearing about. I want to hear it out to read it went nowhere. That is not with the meeting was actually about. Matt this comes as the uproar intensified in capitol hill. Mark warner, the highestranking democrat on the committee. I have never seen an example where the agent of a foreign toernment, massively trying interfere with our elections, that has been the consensus, reaching out in this way. A response. Have any Campaign Official would know you dont do this. Bloomberg editor joins us. Break down the significance. Mark warner is a democrat. Is going to ring this out as well as you can. What is the significance of , this trump junior saying was before we knew everyone would freak out about russia. Saying this is the first time. They dont necessarily do it with Foreign Governments. Now there is an email trail. This brings this closer to donald trump. Donald trump junior said his father did not know about the meeting, but the fact that a very Close Campaign advisor and a member of the family has now, has knowledge he was having these meetings, there is emails showing this, this brings it that much closer to the inner circle of president trump. In the middle of various it really raises the stakes. And intensifies everything. Theuts more pressure on white house at a time when they are trying to change the topic. Things forward in another direction. It is impossible to do so when there continues to be these kinds of revelations. That is probably the most important point. I wanted to follow up and say, we see the democrats take hold of this. The republicans, this is going to cause them a problem. The white house agenda is going to be difficult to move forward. Is the big thing we are hearing. The emotion we are hearing from isublicans on capitol hill frustration. They had such high hopes. They controlled both chambers of congress and the white house. Had hoped they would be doing things like tax reform. They wanted to pass a historic tax overhaul. Make changes to health care. They wanted to do infrastructure spending. Day after day, the discussion is about investigations into whether the russians colluded with the trump campaigned. And to try to get involved with the election. That is something conversation that want to have. There are only a few weeks left in two a monthlong recess. They are going to have a lot of trouble getting things done. Think they are very frustrated. The democrats will make as much as they can of this. You do. What at the same time, the republicans are frustrated. Thank you very much. Joining us on the latest on the email stories. Donald trump junior, also causing ripples through the financial markets. Market, starting to Pay Attention. Pimco down. That economicims outlook. Do you think he is right . Why are the markets now paying attention . Has a quarter been turned . Im not sure a significant quarter has been turned, but we are playing that narrative. The Trump Administration will fiscal stimulus because they are distracted by the distractions in russia. We are seeing a bit of a resurrection of that theme. Up. Ear treasury yields, spike, topping out in may. Is readyg, the market for yields to come lower. We are seeing the yields lower. It is not because the markets are committed. Couple of quick questions. Gary cohn as chair of the fed. How will the market react . X i dont know they will price too much into it. They have too many other things to worry about. There is no point trying to do the marginal pricing if the and on sheet is uncertain. Guy can i ask you about another central bank, canada. Loony has gone up quite a bit. An interesting chart you can see on your bloomberg. The risk reversals, the fact reversals areeek above the onemonth reversals, indicating the the market is buying calls. Is there a chance for central bank will not deliver . I think the central bank will deliver. I think this is positioned the wrong way for the meeting. It is very much of you, you should be fighting this rally. Commodities have been falling. The Housing Market has been having problems. We have seen the loony rally. We are seeing this market gets squeezed. On a record short position. I am too worried i have seen too many analysts and traders expressed that view. Do, even ahat they mini correction, the market will continue to rally. Guy thank you very much. Joining us of of or you can pick up plenty of great charts on your bloomberg. I want to just remind viewers they can also use tv to see the charts we are seeing. You get the video stream. Use,an see the charts we those we intended to use. Maybe a better chart here. You decide. Check out what guy used. You can also message of us directly. Come, we will speak financeely to cypruss minister. An interview you do not want to miss. Matt welcome back, the european open. Lets get the business flash. Juliette Fidelity Investments is said to have cut hundreds of staff on tuesday. Last month, 1500 workers had opted to except a buyout offer. The company, which has made its reputation by picking stocks, has adjusted to the wave of investors. Of heas filled one is currently a Vice President of finance and will replace the chief operating officer. Biggest bankpruss says the country has done everything the country has promised it would do. Speaking exclusively to bloomberg, he says the country is a case study of how a smaller country can do well in europe. Cyprus has been doing everything it said it would do. Maybe it should have done more reform, but in general, this country has behaved impeccably giving confidence to investors. Juliette that is your Bloomberg Business flash. Hsbc is hong kongs new stock market darling. Joining us to discuss this, the Bloomberg Markets reporter. What is driving it . Why is it Hong Kong Related . It is part of the story financial shares should rise rate the high interest environment. Also, what is interesting, the busiest day for trading in hong ofg, almost 5 billion worth shares have been traded. It is highly unusual the stock is traded more than in london. After the fed stress test where all of these banks were given basically the green light to return a lot of capital. That day, Morgan Stanley upgraded and really raised the target price, saying the stock has a huge potential. Saying thewe had same thing. It is all about come a how can this give more money to shareholders . Can i ask how much is about higher rates leading to more profitable lending . That is a good question. Both theuld expect stock in london and the stock in hong kong to react the same way. Why hsbc . The Capital Position is really strong. We also have new management ight changehich m the strategy, may get more aggressive. We do have earnings coming in at the end of the month. We know the ceo once to step down in the next few years. It is all about this new regime for hsbc. A strong pick up in volume. Lets come back to the issue of why hong kong. You tend to get these kind of fads emerging in china. They have played all kinds of different options and aspects. It kind of a fad . It doesnt seem like a fad per se. There are fundamentals behind this. Hong kong is the market where derivatives traded more. It is not a mature market. To play thist game, it seems like a better place to play in. Options traders are jumping on this. Contractsof bullish is more than bare ones. Might be about these liquidity. Also, some play on the hong kong dollar. The trading volume, the highest since exit. Guy thank you very much. On the hsbc story. Minutes away from the market open. Checking and. Excuse the pun. The stock is higher, we think. That story next, plus market moves. The open is eight minutes away. Cash opens in five minutes. Lets talk about some of these stocks on the radar. Grossing to hit the margin target, 20 . Interesting to see if a can achieve that. Some concerns around the Housing Markets in london. Proceeding pretty well. The gross margin, people will probably focus on. Matt one retailer doing well. They had better than expected sales. Probably become sales number that really impressed. 2. 5 growth. There was a big rebound in china. The new ceo is overhauling the u. S. Business. Not necessarily the lads in london. Markets about to open. We will be back, we will talk about that. We think the market is going to be open three, 4 10 of 1 . The market going up. Later today. This is bloomberg. A guy four minutes until cash opens. Were expecting a positive start to european equities. But if stocks to watch. We are not called that much higher but it feels a little risk on which is interesting given the bond market this morning. Something to Pay Attention to as you work your way into the guilt open. We get wage data today. That is going to be important. Absolutely. Wage data importing for central bankers around the world. I wanted to point out something. As we go towards the open, the currency story has a lot to do with weighted equities. This is a look at the euro in white, the aussie in blue and the bloomberg dollar index in yellow. It has normalized over the last year and the euro has really taken off. There is a number of ways to look at this differential. For example, the curve is a lot steeper than you see on the u. S. Treasury curve. Marketts see with the open looks like. This is how we are opening. London positive. Not by much, but a little. We expect that up about. 4 in gains. Dax up. 3 . Similar story coming through and we have car data coming through. Bmw lets go back to mac. You are allowed to do car stories. I am not hogging all of the car stories, although i suppose it is a german brand so ill take it. To car sales up 2. 1 in june 232,000620 vehicles 620 vehicles. Many rose to 39,443 cars. Important to look at mini and rollsroyce. Could be inbs that danger postbrexit and we are talking about not an insignificant amount. They have 18,000 or use in the and unitedes kingdom. Bmw really chipping into the game. European markets are opening up so lets cross to manus cranny and see how they are doing. Manus a nice strong opening in European Equity markets. Burberry leads the luxury goods. 4 , way ahead of what market expected. Financials up. 26 . A big day today in the bloomberg building. A conference in terms of what happens with cyprus. After what you saw in spain and in italy, the next logical step is to go from domestic saviors. O crossborder m a that is the next facet of the banking spectrum. That is your stoxx 600 opening. What do you do in july apart from book a holiday or party a little bit . You want to be long equities because in the past number of years, the best month is typically july seeing a nice rally. The average return in your average july over the past five years. Beach, go long equities. Dropping a are little this morning. 26 some long that a supply coming to markets, 2. 5 billion pounds worth of fixed maturities. What you have in yield is potentially going to be Deputy Governor saying he is not ready to raise rates or jump on the bandwagon yet. There are reasons to see why the committee might move in that direction, but these are gilt yields at the bottom of your screen. Im off to digital radio. Guy . Guy lets look at what is moving around europe. Oil stocks seem to be on the forefront. Gaining a little traction again. Bp trading higher. This is an index point. Total is rising. Lvmh is getting a pickup off the burberry numbers. Hsbc, talking about that earlier on, continuing to move higher. On the downside, pearson off the good news of yesterday on the downside this morning. Pearson down by 3. 05. The fed is something to Pay Attention to. I want to point out, the fact we are getting a decent move in the german bund this morning and you are getting a significant steepening of the german curve, which is something with paying attention to, particularly when you think about how to german banks perform going from here and that story in relation to what is happening in the United States with the federal reserve. Investors watching for guidance on when the fed will start reducing its Balance Sheet. Testimony being delivered later on. Janet yellen will be speaking to Congress Today and tomorrow. Meanwhile, and this is kind the twist, we cant figure out where the market will stay start pricing in yet. Cohn, thechs gary leading candidate to replace janet yellen this could come next year. What are you expecting from the fed later on, because reynard was pointing out that it was either or. Either we run off the Balance Sheets will be raise Interest Rates. What it is unlikely to be both. Is that what we get from chair yellen . We will probably get more clarity on one or the other. There is a bit more consensus on the Balance Sheet runoff. There is a bit more wide acceptance that has happened and will happen at a pace that is almost imperceptible. The rates are something that is more of a debate and a good reason why. If you look at unemployment, it is a big check. They should be raising rates and aggressively. Look at the unemployment rate. Big problem. A it has been falling for a long time. Core inflation is far from where it should be, as well as the chief measure with the ecp is about 1. 4. There is a big x there. What does the fed do in such situations . That is why there is such a huge debate. Mandate isnt to keep inflation up, right . Is to keepdate inflation in check and we are pretty far from deflation so as long as they have runaway employment and prices are not falling, what is the problem . They still have hike, right . Didntwell the fed mandate specifically to keep unemployment low and keep inflation at 2 . There is an actual target there. In that sense, we are close but not there. Another part of their that it is not just the 2 target, it is keeping it sustainable. There is reason to be the inflation rate is not sustainable and while unemployment is very low, it is certainly not generating the sort of wage pressure that the fed would like to see and what inflation is sustainable and the good time. The inflation you are seeing in markets and this is across the globe the not so nice cost push kind. It is the inflation the fed would like to see come through that is not there yet. That is why the mandate is largely unmet and why rates remain in a murky future pathway. I will point out that many of us often get lost in the minutia of when will the next rate hike come . Will it be december, one month before, one month prior . I would really say it doesnt really matter. More importantly is where is the eventual path going . Where are we going . Undoubtedly, there is going to be another rate hike this year and three in the next two years or so the fed would have you believe. That means rates are going up in the long run. See what the fed beliefs, why doesnt the market believe . The market has half the number of freight rates priced in. By the skepticism in the markets . Fahad the market does believe rates will go up eventually. The difference between the markets view and the feds view is a matter of timing. Part of that is what we discussed regarding timing is important because this incredibly long cycle will run out of steam and the longer you leave it, the less hide the terminal rate will be. Or do you believe the later you leave it, the steeper the rate path will be . It those things matter is a matter of perspective. 10 years from now, whether they raised rates three months before or after month matter so much. The market and the fed are in agreement that the terminal rate is going to be around 3 and that is a historically low level. Guy thank you very much indeed. Fahad kamal joining us. , this is show you this the german curve. Look at the steepening taking place. It started a few days back and is accelerating this morning. Year to date chart since the beginning of 2017. A significant three steepening of the german curve underway this morning. I will startng, off with the launch page of the tv function. Event coverage, the recommended dimon down here and jamie leading charge in mostwatched videos on tv. Matt can i also i have a dueling chart here that i wanted to point out. It is 2898. It shows the german curve in blue. Then you see the Treasury Curve steepness and white. Australia in yellow, canada in purple. The german curve is steeper than all of those others. Not only is it rising, but it is beating the rest of the pack. Check that out. You can also see that on tv. Coming up, a wager on wages. We will discuss what the markets and bank of england policymakers are looking for today. U. K. Labor report is next. This is bloomberg. Matt welcome that to the european open. 12 minutes into the trading day. Were looking at gains. Across the board after some losses yesterday, more for the ftse than others. The ftse gaining more than the others. A little deeper look here with nejra cehic. She has your midcap movers. Nejra bn of value retail mosting 5 , rising the since january after reporting a First Quarter u. K. Comparable sales up 7 . The Second Quarter started well. It is also on course for the markets fouryear profit expectations. Response inpositive bshares. One of the best performers on the stoxx 600. Amec fosterside, wheeler. There has been an investigation bribery with third parties. They did assure shareholders it did not expect was not expected to affect its takeover of john group. Foster trying to reassure, nonetheless, we are down almost 5 on that stock and seeing an impact on other stop. John would Group Trading down as well. Premier oil rallying significantly, rising the most offshorehan a year for mexico, pushing up stocks 28 right now. Guy thank you very much. Sterling, a good day for sterling. The u. K. Wage report is due out today. Average Weekly Earnings expected to slow to 1. 8 in the three months a rolling average. It is not just a one month snapshot, it is a rolling average. This according to a survey. You can find us on your ecoscreen. You got the 1. 8 number here. What i want to point out is this number down here. This is cpi year on year running at 2. 9 . There are 100 basis points in between the two. It is more than 100 between the two. It is a story of the squeeze taking place on the british consumer. This is important for the bank of england. Fahad kamal still with us. Can the bank of england still raise rates when facing this kind of pressure . Fahad i think no. They will air on the side of caution because they dont want to slow economic buildup or growth we have at the moment. Will dong rates, they exactly that. If you look at the table you have put out, you pointed to the cpi number and if you look below to the rpi number, that is 3. 7. Points. Her 100 basis that rpi number is the one that is more felt by the average consumer. The consumer is being squeezed, but either way, i would be staggered if england did anything other than air on the side of conch caution and keep rates low. Matt how would you explain the lack of gains in wages . Surely it is not a brexit uncertainty issue because we see the same problem in other countries that havent voted to leave the eurozone. Fahad excellent question. The answer lies much in the way the very lack of productivity we have across much of the world right now. We are in a place where technology is making tremendous advancements and it is really keeping a lid on the kind of wage pressures we have seen in previous times and previous cycles is where we are now. Unemployment is very low. But the kinds of jobs people are getting tend to be relatively low paid and productivity across the board is extremely dismal and that is one of the great challenges of our time. Why big question surrounds they believe this is the time to think about a rate rise. In some ways you can look at the u. K. Economy and say, did it need that emergency rate cut 25 basis points . In some waysomy has done much better than expectations at the point of brexit when the rate cut was delivered. Why not take it back . Fahad policymakers across the world have done tremendous amounts of study about previous situations and previous times in history when Something Like that happens and as always, it turns out to be a good time to cut rates preemptively rather than wait till it is too late and things are bad and try to push rates down lower. In that sense, they did the right thing. They prevented what could have possibly been a big catastrophe and that was the consensus. I think even now, there is a lot of uncertainty. Did reasonablye well in the u. K. Following brexit, but that is because we had just voted for brexit. It has not happened. We are in a sweet spot where we are able to access european markets. It helps us be extremely competitive. Guy we believe that there. I give for your time at joining us here on bloomberg. Fahad kamal Senior Market strategist forkleinwort hambros. We are not done with him just yet. Live on London Digital radio. Matt miller and guy johnson. Matt i am looking forward to it. Up next, vote victory. Senate passes in important labor reform bill. Will it help embattled president keep his job. We will discuss this emerging market. It is bloomberg. Welcome back to Bloomberg Markets, the european open. Were looking at gains across the board. 22 minutes into the session right now. Lets get the business flash with sebastian salek. Beastian investment said to cut hundreds of staff on tuesday according to an unconfirmed report. Last month, 1500 workers have opted to accept the buyout offer announced in february. The company that made a reputation of taking stocks has tried to adjust to a wave of investors preferring low cost over actively managed mutuals. An investigation into Engineering CompanyFoster Wheeler over bribery and corruption linked to third parties. The company said the investigation is not expected to impact its merger with john would group. In the laststimates quarter. Given the this has ceo a boost as he seeks to benefit from a rebound in china while overhauling the companys u. S. Business. Mer head of lvmh brand Christopher Bailey who will continue to serve as chief. That is your Bloomberg Business flash. Guy lets talk about what has been happening in brazil. The Senate Approved a bill 5026. We are joined from dubai and bloomberg emerging markets managing editor Justin Carrigan. Brazil news surrounding has really focused on his inability to pass significant labor market reform and pension reform. This is a huge piece of news, isnt it . Justin this is encouraging piece of news for brazil. It is not everything, but it is something. There is an argument that had this not gone through, it would have killed the much more important element of the whole Reform Program with which he is associated. That is to say the pension reform. What this does is keep that element of the reforms alive. That said, it is a more contentious issue. Reform, there is a lot of opposition out there from ordinary brazilians and the Political Class in brazil to the measures and it will require a larger threshold to be approved in the brazilian congress. A two thirds majority would be needed, whereas on the labor reform package that has been at least the text has been approved, you only need a simple majority. There are still some hills to climb. Matt four we go any further for the important aspects to the country come up with the people in brazil, i wonder about him personally. What does his fate look like now . Justin he will want to brca this as a victory portray this as a victory for his administration. The fact remains he is still under a lot of pressure. This doesnt really alterjus any of the substantial allegations made against him surrounding the whole corruption scandal. He will want to pick this as a victory and we will see what happens with that. There are a lot of things to unfold. Brazil will want to get this settled quickly. Men being tipped as most likely to feel his shoes should he be saying, we need to get this done quickly. He would say that if easier is harboring thoughts of becoming president. To get this done quickly before any fresh allegations arise. Guy doesnt really matter who is leading the charge as long as the charges being led . Justin that is a good point the sense is that there is much more support for the reforms as a concept than there is for him as an individual. He wants to survive and protect seen as the man who broke through these reforms. But there is more support for the reforms in the Political Class than for him. Ultimately it will not determine whether he survives or not, and the market doesnt really pay as much attention as it does to these important reforms which are needed. In order for brazil to get its fiscal imbalance sorted out. It comes down to this deep recession is him recession. Guy Justin Carrigan joining us from dubai. Thank you. Matt up next, donald trump junior on the defense. Son tries tos quell the outcry over his meeting with a russian lawyer. We will break down the latest controversy for the trump white house. This is bloomberg. Matt the trump junior controversial controversy, a new email showed he welcomed an offer of information that would damage Hillary Clinton. Investors were briefly rattled by the revelation. Where next . Cohn next year. Reports swirl that gary cohn is the top candidate to take her job. Today, canada looks to join the u. S. In raising Interest Rates while the Canadian Dollar has risen sharply in anticipation of the news. Investors have been hedging bets optionsions market. Welcome to Bloomberg Markets, the european open. I am matt miller embolden in berlin. Guy 30 minutes into the cash session for european equities. A little better bid than we thought, but on the front foot. The ftse 100 trading at 73. 83. Pound down on the comment that he is not ready to vote for a raise hike. Elsewhere, the dax up. Big move in pound germany is ine bond market, which is now trading at. 61. We have broken out convincingly of the. 50 range and a big move this morning. Absolutely. Basically tripled in the last three weeks. Lets get to our top story. Emails released by president trumps eldest son showed he was told about potentially damaging material or offered potentially damaging material officials in moscow before he met a russian lawyer last year. That has intensified questions about whether the president s campaign can colluded with russia to win the white house. Trump junior said he never got the material in the meeting and never told his father about the offer in the first place. Us into him on fox news. Listen to him on fox news. This is before the russian mania, before they were building it up in the press. For me, this was Opposition Research that maybe had concrete evidence to the reports i was hearing that had been underreported for years. I wanted to hear it out, but it went nowhere and it was apparent that was not what the meeting was actually about. Uproar over the episode has intensified and spread throughout capitol hill. Bloomberg television spoke to senator mark warner. The opposition because hes the highest ranking democrat on the Intelligence Committee but this is what he had to say about the conduct. I never seen an example where an agent of a Foreign Government , one that is an adversary and has been massively trying to interfere with our elections and that has been the consensus of the whole intelligence community, has reached down out in this way. Any Campaign Official would know you dont take this kind of help from a foreign adversary. Guy has this story turned a corner . Absolutely. This is kind of almost 24 hours on, still a bit of a shocking development. The fact donald trump junior himself was the one who posted these emails on twitter. It seems to limit their future options in terms of what they argue about the allegations. That is one of the most interesting things. Another interesting thing in the wake of this was that a aokesman for mike pence made point of drawing a distinction when he was asked about it and said, assault occurred before mike pence joined the campaign, which is an interesting distinction to draw given we are far away from this, but if there was some kind of movement to remove trump from office or if trump to look to do that it is interesting he is creating distance. The third thing we saw that was a turning point, a lot of republicans on capitol hill that have downplayed the seriousness of this or stood by trump are starting to see some of them namely david purdue, an early supporter, the Georgia Republican in the senate, now really arent commenting or sticking by trump the way they have been. Kathleen, what about from the interview that trump junior gave to fox. He never got any of this information, see you cant collude on an offer. And that he was doing Opposition Research. What both sides to Opposition Research and certainly before all this news came out, even talk to the russians . Is aeen absolutely, there difference between Opposition Research and working with a foreign agent. Mark warner in the segment you aired made that point pretty eloquently. Thatnalogy i have heard is donald trump junior seems to be arguing that because the meeting didnt yield any negative information that he didnt collude. I feel like one of the act analogies i have seen made is that if you were to still someones purse and discover the person is empty, doesnt mean it isnt stolen. That is a good way of thinking about this, that trumps defense and the trump teams defense doesnt really change the fact that trump went into the meeting thinking he was going to get negative information from the russian government about Hillary Clinton. Pursealthough in the analogy, you have stolen someones property and this , he didnt realize she was a representative of the kremlin, just a russian lawyer and he didnt get any information or use anything from the meeting. Kathleen he definitely didnt get any information but if you look at the email, he may say he didnt realize she was an agent of the russian government, she may not have been, but that is how it was pitched to him in the initial email if you look at that, and i think that is another telling thing. Another potentially damaging thing is the extent to which he doesnt seem surprised in his response by the notion that the russian government is trying to help the trump camping. Campaign. We try to put ourselves in that timeframe, that should have in a surprising and concerning notion to any campaign. Certainly all campaigns want to win an election, but they have certainly said since then that they didnt believe they had any help from the russian government and these emails tend to disprove or call into question. They seem to indicate Donald Trumps eldest son knew there was some help coming from the russian government on his fathers behalf. Guy nice work. Thank you, kathleen hunter, joining us on the politics that are appearing together pace in washington. Definitely a fascinating story. Stories onmost read this. Something we will continue to follow. There is no other choice. The crypto currencies are starting to look right. Has lost about a third of its market value since peaking in early june, pushing into what traditional analysts label as a bear market. Is this the beginning for the end of the bitcoin . Lets ask that question which has been asked so many times since 2009 to our reporter in tokyo. How many times have we seen this . I remember when 30 was being described as a bubble and the crash, people were saying that is the end of bitcoin. 2000. Hit 1000, then how many times have we seen the rise and fall of the crypto currencies . My head, itop of remember three times. 2013, 2014 early and this year. Incredible rises. Now we are seeing the end of that current bubble that began in marchapril. Down 20 to 30 . People that ended up buying higher bought at 400 right now it is trading at 200. They are feeling pretty bad. That bought at decent prices are selling now, trying to lock in gains were stop losses. It is pretty brutal so far, crypto currencies. No indication this might be over yet. Stabilize nation today versus yesterday, but the current boom that began in marchapril, it is fair to say it is coming to an end. Guy there is talk of civil war in the bitcoin community. Put that story into this story for us. Yuji sure. They have had this socalled civil war for over two years about bitcoin. Datan handle the amount of hasbit moist bitcoin become more popular. There are a couple of ways to increase the data limit and they cant decide how to do it. At the end of this month, there are two proposals about how to do that. Jumps on theody same one, unless they all agree there is a possibility that people decide one, the group decides the second and bitcoin could split into two block chains, which would split it into two different currencies. That is a prospect weighing on traders mines. An article yesterday about what could happen if it went through. Expect a lot of volatility, whether it happens or not leading up to the event. The bitcoin civil war is hitting a critical period. Look at the article for more information. Although, is it really possible . Dont the miners ultimately control the direction of bitcoin . Core wont be anything if there any miners. How will they have any currency . Yuji the miners are not all aligned. There are people in both camps have beenn mind, they arguing for over two years now. Some people are saying enough. The ideological differences are two great. We will have to make a split. This is the big uncertainty right now. July 21 when the first of the Software Updates is supposed to go out, people need to keep a close eye on what the consensus is within the mining community. Are they all going to go towards one side and will that align with everybody else . The developers with core, or are we going to start to see tracks cracks forming the community . Happens, prices could get hit really hard. The possibility of a split becomes more realistic. Right now, it is theoretical. Matt it is a fascinating a lot of it is quite theoretical still. At least to me and you, fascinating stuff. Usually not camara in tokyo talk nakamura talking about the old currencies. Currencies. Guy let me bring you back to the bund story this morning. We have been curious about what has been going on. You can see the move we had seen. The contract role here, which contributes to a significant portion of what we are seeing in the rise. Once you role that outcome you get a more realistic picture. One that is worth paying attention to. , we will talk exclusively central banks, market reforms. All of that coming up. This is bloomberg. Welcome back to Bloomberg Markets. I am matt miller in berlin. We are seeing gains across the board in equity indexes right now with the ftse doing better than the cac or the dax. ,ll of them rising a little bit half a percent or more. Lets get the first word news with sebastian salek. National Economic Council director gary cohn is set to be the leading candidate to replace janet yellen has fed chair next year according to political citing two people. One republican close to the process saying the job is his if he wants it and he would win confirmation. Meanwhile, Republican Leaders said to be dropping tax hike incomes for high income earners in a revision. 230 1 billion in revenue over a decade, which could cover expanded coverage for the poor and demand by moderates. Bank of england governor says he is not ready to vote for high Interest Rates, even though he sees pressure to do so building up. Reason to seeis the committee moving in that i retching, but there is still a lot of imponderables and it is difficult to make a decision. The boe is facing an emerging economy where inflation is above target but growth is weak. In part due to the brexit. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Cypruss biggest bank is saying the country has done anything to do reform the economy. Says theof cyprus ceo country is a case study on how a smaller country can do well in europe. Itsyprus, in the context of peers has done everything it said it would do. Maybe more reform in areas of privatization, but in generally, this country has behaved impeccably in giving confidence to investors that when the fed says it will do something, it doesnt. Guy lets talk to the man responsible for some of that. We are joined by fahad kamal harris georgiades, the finance minister of cyprus. As we heard, the economic trajectory has been good. The political less good. Switzerland on reuniting the country, didnt produce an outcome that people were hopeful of. When you think about moving the economy forward from here, have have you builtin expectation you would see some reunification . Harris none at all. It failed to deliver results, it obviously takes two to tango and we still have to see tangible steps, which will match the words. In the direction of making it happen. No, none at all. We made the normal assumptions. With theued to operate processes and should not be able to resort resolve the problem immediately. The recovery of the centrist economy, which has been strong enough, happened under the current circumstances. The significant influx in foreign investment, which we are again, did not imminentcause of an reunification but the strong fundamentals and excellent prospects of the cyprus economy and that is where we focus our attention. Matt your point, minister, you issued a sevenyear bond in june as the lowest yield ever for a euro benchmark bond for you. You have had Economic Growth forecast at 3. 1 this year. Is that sustainable . Are you in an economically positive positive, sustainable situation . Harris i think so. There are two reasons for this. We did have high growth rates in by a, but they were public deficit and unsustainable credit expansion. None of the two factors exist today. 2014, we were operating with a no deficitdget, so spending at all, which would offer a temporary boost to the economy. The Banking Sector is able to offer financing to the economy is not exhibiting an unsustainable credit expansion. These two factors confirm the growth is real, it is strong and is sustainable. It is the result of the of keynt performance of sectors of the economy, keep productive sectors of the economy. Tourism, shipping, business and financial services, energy being a upandcoming sector. Tos is where we continue focus our attention, creating a of thes for the sectors economy to perform strongly. Guy the setup is good, the trajectory is looking fairly favorable at the moment. , you can we do here is be more aggressive when it comes to labor market reforms come and you can be more aggressive when it comes to providing the business platform. Would you agree or is the current rate acceptable . Harris i agree. Withe been tasked promoting reform and i wish it was possible for us to promote our agenda if faster, but that is democracy. We have to go through the process and win the support of the parliament on each and every issue. Move asything will fast, but excellent progress has been made. You mentioned the labor market. It is flexible enough and reacting positively to the recovery. The unemployment had peaked at in 2011. the syndication of the labor market being flexible and positively to the economic recovery. I think we are on the right track, but yes, i wish we could move faster, but that is politics. Politics is difficult, especially as you approach a new election and february of next obviously the labor market reforms that are most difficult deal with a tyrant and pension reforms. We you be able to keep pushing for more reforms in that direction as we approach this next election . Isris Forward Momentum paramount. Effortseeing the reform does not have an expiration date. We are continuing to make progress. Saw ahe last weeks, we major reform regarding Health Care Going through. Throughmanaged to see in investing extension in the Public Sector allowing for exceptions, these helping the longterm stability of finance. We are maintaining the effort and momentum, even though we are already in the final months of our demonstration, but i am will commence immediately after the elections. Guy much is being made on the fact that europe is on the front foot some of the euro zone with the arrival of mr. Macron has the opportunity to take a big step forward. There is a big halo effect surrounding him and the eurozone as a result. You feel that as well . I have been encouraged by the victory of president macron, that is a good signal for europe. Cautious, i would be in theng a dash direction of further european integration, and especially on the economic and financial agenda. In fact, i think we should be cautious that any additional fed , notd be well thought without securing a very strong popular support. I think that is the key. Im not against making if thenal steps, but steps are well thought, that they encourage economic activity, that they stay clear of excessive and unnecessary bureaucracy,d which furthers economic activities. That would be a condition and at the same time, ensuring strong Democratic Political support. We cannot take the risk of making another stake in steps which will widen the gap between european integration and the european people. People ithout would be an eu without people. That is an issue in mind. Guy thank you for stopping and joining us here at bloomberg. A lot of great cyprus guest joining us this morning. A big events taking here taking place at bloomberg. Harris georgiades, the minister of finance for cyprus. Matt i want to take a quick look at stocks. Gains across the board. Not insignificant drops yesterday, especially on the ftse. Ftse is upthat the. 8 right now. The cac in paris up. 7 and the. 5 . Up markets doing well today as investors are probably the most dramatic move, selling off bonds bigtime and we are seeing the german bund yield above 0. 6. We will talk about this on radio. Guy looking forward to that conversation. Coming up, matt and i will continue. It is surveillance with mark barton. This is bloomberg. Mark briefly rattling investors. Pimcos cio said the controversy is dimming the u. S. Economic outlook. Why is the jobs market hot but inflation not . One of the key questions facing janet yellen as she prepares for her congressional testimony. Time to tighten. Could canada become the first g7 nation to join the u. S. In raising rates . And amongst the hawks, a dove. Ben broadbent says hes not ready fo