Transcripts For BLOOMBERG On The Move 20160715

Feel the effect. Politicians around the world have condemned the effect. A series of questions that we are going to talk about this morning answers are very thin at this stage. Lets talk about how the markets are feeling about the story this morning. The markets increasingly that kneejerk reaction is not what it once was to terrorism. The markets are desensitized in some ways to what is happening on french soil. We have the cac 40 trading down by 0. 4 this morning. Expectedrkets are not to generate a big response. What else are we seeing . Not much of a move in the french government bonds either. There is not as significant a flight to safety as we expected. Against is weakening the pound. This is more of a pound move against the euro. Elsewhere, money is moving out of the end with the and continuing to weaken. The rally continued across in asia. It seems as though as you say, the market is desensitized. Maybe we will not see quite the kneejerk reaction we have seen in the past. This is the third key terror attack we have seen in france. Lets pick up, france has extended a state of emergency. With already talked about that it will deploy around 10,000 hours of the Security Force after the attack in nice killed 84 people. Loaded withuck weapons drove for more than a mile along the boulevard. President Francois Hollande reiterated his commitment to fighting terrorism in an Emergency Press conference. Thehis attack that has all elements to be called a terror attack is of incredible violence. Its clear we have to do everything in our power to fight. His terrorist plague guy lets go to paris now. Caroline, bring us up to speed with what we know. The terrorist attack is what president blunt said. What we know so far is that this was a prepared action because the truck was rented. This big white truck that drove into the crowd and middle of fireworks on bastille day. Nice is aboutt in seven kilometers long and according to several witnesses the truck drove for two kilometers into the crowd, driving at a speed of about 60 to 70 kilometers per hour. Authorities at the moment have retreat have retrieved an id card. It still being verified but it belongs to a french Tunisian National who is 31 years old. He was born in acting 85. Who is ready to become the regional head says, this is the worst tragedy that the French Riviera has ever seen but he is concerned that security measures around the fireworks and the bastille Day Celebrations were not sufficient enough. Caroline, looking forward to how this affects the Political Sentiment in france, we have seen polls. It is possible that this would fuel more backlash against immigrants especially given that the id card in the truck was from a french Tunisian National. He supposed to run for president next year. Likely to pass the first round. Pen reacted on her twitter account and said her thoughts were with the victims and the fight against radical islam must start. Obviously fingers will be pointed at Francois Hollande. The state of emergency was supposed to be lifted in 10 days and now he says this state of emergency will be extended for another three months of the is a andle bit of confusion here 10,000 extra military officers will be deployed just what we had seen after the november attack date months ago. Up the programck monitor developments. Now,e joined by our guest the head of european fixed income at blackrock. I would prefer to discuss the markets and what happened overnight. We have all the political problems that have come with it. Todays ago, i wouldve said that the euro, the football to didnt bring the resultant france hoped for. Host the bigy can event and have a safe event so that feeling is gone after today and we will see all of the discussions about immigration, safety. The market is relatively relaxed because it has almost accepted we live in an uncertain world. With paris and hitting the south of france which is important for tourism it is also relevant in the economic sense. We are the euro trading flat and that fixed income area. We see start to move if significant reaction from a political perspective . If we see the front build further momentum and the election looks that much more difficult next year . Those risk factors you mentioned are risk factors which would move the market. It is quite obvious that events like that will help especially in the first round of the election. It will probably help other parties. We are partly already seeing it with prolongation of the emergency status in france. I think the authorities are quite keen to show they can react in a tough way. The markets really only price in big political events days or weeks before him a not months before. Frenchworking toward a election. It will be in may next year is anything priced in in terms of the risk that could be associated . Think your analysis is quite correct. Six months ago, people spoke about it but not that much and now we have that period for 10 weeks before brexit where every piece of research was about brexit. But something which i could take into account when we manage our portfolios and to position relatively early for the headlines pick up. Actually under weighted funds at the moment for a multitude of reasons. What are those reasons that are under waiting france . If you look at how france performed recently at the absolute yield level, also in spreads to periphery because it should trade somewhere in the more andts probably line which are many. But obviously, we all know that the elections are coming. We dont even know who is running for which party. I think that is a good time to at least go into such a phase relatively defensively so when a headlines come up, you have the flexibility to react. With michaeltaying michael will be staying with us. Sevenths hit by the deadly terror attack in 18 months. We bring you all of the news from the scene. This morning, the morning after the tragedy before. Guy , 7 43 in london, here is the Bloomberg Business flash with david ingles. Lets get started with what the french president had to say, he extended a state of emergency and will be deploying 10,000 members of Security Forces after that attack in nice. A truck filled with weapons drove for more than a mile along the boulevard track packed with holiday travelers. Officials say the driver was killed in a shootout with police. President hollande and his interior minister say their country is at war with terrorism. This attack that has all the elements to be called a terror attack is once again of incredible violence and it is clear we have to do everything in our power to fight this terrorist plague. Of terroristswar who will strike us at any price and in the very violently that demands strong mobilization by the interior military and Security Services such as those i have seen tonight in nice. The European Council president adding his voice of support to the people of france in the wake of the attack. For france, europe, and all thes here in the goalie a subject of the attack that has people celebrating liberty, a talent equality and fraternity. European car sales grow in june car sales in june slowed registration rose 6. 5 from a year earlier. It marked the 34th consecutive months of gains of it was the slowest since last month. Half salessaid first slowed by as much as 60 under weaker demand in europe. First half sales are estimated to have declined about 12 . Maker of the watches have a costs have been increasing after the company decided to keep them flowing. That is your Bloomberg Business flash. Lets bring back in michael krol spurred her head of european fixed income of blackrock. Do i need to put what is just happened in nice, fronts and brexit in the same thought . I wouldnt connect it too much. Obviously some of the underlying reasons are similar. If that wouldve happened before the brexit vote, analysts would probably point to it as one of the reasons which led to the effective immigration being quite relevant. Connectednse it is relatively lead to a tough response from the text u. K. European union just to make sure that what we have seen in with lots of arguments like selfcontrol as well dont ord to many other parties countries to similar ideas that we have seen in the u. K. I would say it is the same underlying reason but as the opposite effect has happened i dont think it is a completely new situation. Unfortunately it was one third of those incidents in france. The markets are becoming desensitized to it. We talked about that already. It to see trifle and leisure stocks affected by this incident once again. I would expect anything associated with Consumer Confidence to mean happiness. Much is the consumer already absorbed in what is happening here . We talk about brexit and terrorism incidents in france. Consumer confidence is already at a very low and in europe very low ebb in europe. Everything that is tourism related and french related will be hit most. In Consumer Confidence, we will see another approach. You could miss out on the bounce. The euro things a sign of relief. That we can hold to tournament in a peaceful and happy manner. I expect ase, reaction. I personally would not try to over interpret it. I probably would not draw the line and say thats clearly because of this. Michael krause berger will be staying with us from blackrock but now lets get back to the news coming out of south france. At least 84 people are dead after a truck loaded with arms drove into a latenight crowd and nice during bastille Day Celebrations. Crystal joins us now on the phone. Thank you for giving of your time today after the tragic events. Can you explain what it was like to be there . Family becausey we were celebrating the national and bastille day yesterday it was around 10 30. After the fireworks we heard some gunshots at the beginning of thought it was the fireworks. We saw thedenly crowd moving into different directions. I took my kid and my wife and we got inside. After a while we just were leave thend trying to center of nice and we saw many policeman in the streets trying to guide us to evacuate. You are part of the socialist party, fronts while a lot ofs party. I saw your blog and i went to your website and you are talking with excitement about how best deals celebrations you were hoping would bring vitality back to france. How much of a wound is this to the public sentiment in france and to you . I think it was very hard because its such a specific summertime that we needed that feeling of being together. Of course president hollande reminded us yesterday about all of the events. Eurozonelad that the the euro cup edition of 2016 was safe. Its very hard. We dont know if there was a network. But just one individual can kill 84 people in the crowd, that something which is very hard this kind of event. That is a hard feeling because we know that we did the security issue and we know some other attacks can happen in the upcoming months. Do you worry that this will take france particularly closer to the political extremes further to the political extremes . I dont think so. I think we need to be together. We need to find out the best balance between security, our freedom and civil liberties. Its important, especially when it happens during International Day but now it is concrete. I saw that yesterday, but it doesnt change my mind by saying we have to have more security. We have to share more information we have to act in a different way in order to share this formation to be more efficient. Time, we know from the report and the services that these kind of terror attacks can happen with bombs in cars and things like that in order to spread the feeling of fear. See have to be careful not to give up our freedom because that is exactly what the terrorists want us to do. There is a concern across europe that immigration is part and parcel of this discussion. We party scene evidence of that. Its been very clear as part of the political narrative both in france and the u. K. Do you worry that this will become part and parcel of this story question mark story . Yes. We have two different challenges. Claimingple are just the careful because thats what the terrorists want us to do. There with the nationalist to be more and more violent. To create the feeling then you have the second point that you dont have to connect that with what happens most of the terrorists are people who were born in france. Hard to depict those people as the were born in the country. They can try to act. In the debate we need to focus on the facts before making those thetheories that can help extremist parties to take power. We have to be careful how we analyze it. Guy we will leave it there. A terrible night for france. Thank you for taking the time to join us. One of france will ons parliamentarians in his party. We are awaiting statements. We are going to be moments away from the open. We are keeping a keen eye on many of the companies affected by this tragic news. There is such tragic timing for nice. Keeping a close eye on the likes of easyjet and the like to see whether they are affected by this tragic news. There is other Corporate News out there. Eroded. Ofitability has today there is a time of mourning for the french and we keep a close eye on what the economic ramifications of this will be. Most crucial most crucially what it means to the people. This is bloomberg. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. Guy good morning. We are in the city of london. Caroline hyde is over in berlin kerry europe is about to start trading stocks. There will likely be an effect from the terrorism. Terrorism or turns to france. At least 84 dead in nice as a truck plows into the crowd celebrating bastille day. Industry prepares to feel the fx. Politicians around the world condemning the attack. How will the latest incident affect the president ial campaigns in france and the United States . Looking at futures. It was eight down day. Guy the European Equity markets are now opening. Let us show you what is happening. Cac instantlyhe market iserry the increasingly desensitized. They have already priced in terrorism to the european landscape. The price. Dy in we are seeing a drop this morning. Ftse 100 down 0. 2 and a similar amount for the check cac. It is interesting that you talk about the limited impact we are seeing on markets from attacks such as the one last night. Looking at the Industry Groups worstperforming group is energy. Down 0. 6 . Consumer discretionary following down 0. 5 . A weaker oil price. Looking at the consumer stocks. If there is any impact on airlines. We are not seeing huge losses. At most, 0. 7 on energy. The best performers are health care. Let us take a look at the 10 year yield. Market. T gilt it looks like it is down one basis point. We are at 79 on the 10th year yield. Dropping below 1 for the First Time Ever in the aftermath of brexit. Let us take a look at stocks we are keeping an eye on at the open. Starting with swatch. The maker of omega and t so tissot timepieces. Demand in hong kong, france, and switzerland collapsed. 15 years. T drop in swatch is down 11 on that. Er is raising the bid for bayer is raising the bid for monsanto. 1. 8 . Ance is down whether that is an impact of the attack is still to be considered. Guy i think there is a clear affect coming through. Let us talk about some of the stocks on the move. Easyjet down 0. 4 . We do have the luxury sector under pressure. Big losses there. Comingseeing an effect through from what happened last night in france. We talk about the markets being did the being desensitized to what happens but when we do see these incidents we do see an effect coming through. Easyjet, a big operator at of the nice terminal. We do a big operator out of the nice terminal. At reactions to what happened last night. We have already heard from a french member of parliament who was in nice last night at the bastille Day Celebrations. We have bloombergs Senior Editor on the phone right now. Walk us through what your night was like. What was the experience . We were here visiting friends. We had considered going out to watch the fireworks. We let the idea slide and had dinner with our friends. We could hear the fireworks going off in the distance. When i got a call from friends learned whats, i had happened. We were close to where the attack happened. It was a scene that has become all too familiar. There were Police Officers in riot year with shotguns and soldiers in camouflage with machine guns. There was a Massive Police and military presence. The center of the city was deserted. There were people gathered in small groups in front of hotels trained to figure out what was going on. Clearly, a sense of shock. Caroline i want to bring to your attention he is giving his condolences. The frenchupports government. This is from spain. Face ahink that we global menace from terrorism. How will the country react to this, this third major attack in the last 18 months . Will this fuel further support for the right wing parties, such as marie le pen . We have an election here in france in may of next year. The president popularity is near record lows. Marie le pen has been doing well in the polls. This will add to the fuel in the fire. Any incidents like this have a boost for the national front, her party. This will dominate the political discussion between now and may. It will be the top issue. Guy wrapping up the conversation thank you very much indeed for taking the time to be with us. Let us go to our french headquarters in paris. We are following developments. Thisve seen arrivals morning. Talk to us about the french government response. Right now, there is a defense emergency meeting taking place including the president , the defensenister, the meeting started about 10 minutes a go after that, the Prime Minister and president will go together to nice to pay tribute to the victims and to discuss with local authorities the latest in the investigation and the response. We heard earlier from the former mayor of nice that he was complaining that the security measures around the fireworks were not sufficient last night for this celebration. We know as well that according to him, there should be at least the dead,ildren among among the 84 dead, the latest number that we have. A lot of children because on these best deal day to liberations, it is a family event. Families went together to the waterfront to watch the fireworks when this truck drove into the crowd for up to two kilometers. The english promenade is about seven kilometers long and the ofck drove for about two those kilometers. A lot of people were gathered on the beach and on the streets along the waterfront. Guy talk me through how marie le pen will react to all of this. We are not fully in Campaign Mode yet but we are building up to it. How does this change the french Political Landscape . Marie le pen has tweeted earlier saying that her thirds were with the victims. And that the fight against radical islam must start. Here, she is hinting at the failure if you want to of the security measures put in place since the november 13 attack. The state of emergency was not sufficient enough to protect these people in nice. This state of emergency was actually supposed to be lifted 12 days from now. This is what the president announced yesterday during his bastille day Traditional National day address. Now, this state of emergency will be extended for another three months creating a little bit of little confusion. There will be fingers pointed to that. The president is still very low in the polls. According to the latest, his popularity is at about 15 percent. Record low. Pen is still expected to pass the first round of the president ial elections next year. These attacks will for sure fuel some more backlash against immigrants in france and could actually fuel more rightwing populism in france. Caroline thank you very much indeed covering all of the ongoing news from the tragedy last night. Let us return to what is happening in the markets. We are seeing a depression on the travel and leisure stocks. Feeling some concerns surrounding how tourism will be hit by this tragic event. Easyjet falling and air france as well. Is from black rock. You are on the credit side of the equation. The appetite for corporate debt. How much do you factor in these one off events . Michael very good question. I would almost say this morning, similar to the brexit, the Market Reaction is what i would describe as reasonable. Wouldected certain stocks fall. This is what we expected. I think it is a factor. A the credit side, we have much longer perspective focusing of thesustainability business. I would not overstress what it means for our portfolios. I would say that on the fixed income side, we have the additional element the ecb is in the market supporting the non banks. And does have an influence the Market Reactions which we are seeing are relevant but not dramatic. They are about right. On the fixed income side it will be slightly more muted. Guy back towards safety. That is understandable. Does this further, to your point about the fixed income, is this into theeason to pile safety of the fixed income environment . Michael everyone writes about how many percentage of global bonds or european bonds trade at negative yields. Nevertheless, if you look at is still ae, there lot of flow into the lower investment. That will be supported by what we are seeing here. I expect flows into quite stable investments to be supported. Another reason why the european economy will not get going again. Another blow to Mario Draghis plan to lift europe out of this low growth environment and push inflation up a little bit higher. Michael pollan if you look at mario to michael if you yields mario draghi across europe are relatively low. He is happy about that. Relativelyt happy about that also. If you look at political uncertainties, the formation of the government in spain, the italian referendum now, you have even more uncertainty in france. Making it more complex. Caroline you mentioned italy. We have breaking news. Italy is strengthening controls at the border to france. This is coming from a minister. Clearly, there is concern on the borders. Another dent in the schengen agreement. This was something that they u. K. Was so concerned about. This is something that we will be monitoring for you. In minister as saying that italy is strengthening controls on the border with france after the tragic event that happened in nice. The country is headed by the seventh deadly attack in 18 months. We bring you all of the latest news. This is bloomberg. Guy welcome back. In london. Let us check in on the markets and show you what is happening. Here is the broad picture in europe. Thever, and increasingly, market muscle memory is that you do not react to these events. Is priced in sadly to the european markets. Cac. 100, the dax and the down. This is the travel and leisure sector in europe. Ofwant to give you an idea what is happening to the sector. On average, down by 1. 1 . Look at where the losses are definitely in the operators that will be affected on the cote d azure. Klm. Air france. Easyjet down 2. 8 . A big operator out of the knees out of the nice airport. As we have already been discussing, we knew that there would be unaffected the travel sectors. Re let us get you caught up on what you would need to know. Here is bloomberg first word news. David let us talk about the french president. Placed a state of emergency. 10,000 officers are in place. A truck loaded with hand grenades and ammunition drove a long the boulevard packed with holiday travelers killing 84 and injuring hundreds more. The driver was killed in a shootout with police. Has all ofack that the elements to be called a terrorist attack is once again of an incredible violence. It is clear we have to do everything in our power to fight this terrorist plague. Bloomberg markets chinas economy china steps up monetary and fiscal policies support. Gdp jumping 2. 7 . Retail sales for june beating estimates while investments slowed slightly. Aboutg questions sustainability. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. We have some breaking news coming from other world leaders. The secretary of state john president been with vladimir putin. He has offered his condolences. Standing for a moment of silence. John kerry expressing his of of thee abhorrence carnage in france. Concern and anger coming from the United States and russian today. Switching gears. Bringing ourselves back to the economy and the markets. Let us get back to the exit vote and mark carney yesterday leaving investors in suspense after surprising the markets by not cutting Interest Rates. He may act at the august meeting instead. Let us bring it back to michael from blackwell. This is a sad and tragic event but give us a sense of your reaction to the boe yesterday. Are you pleased they are waiting or argue angered feeling like you were misled . Could describe it i understand why they chose to wait. Many analysts point that brexit will have a dramatic fallout on Economic Growth in the u. K. This year and next year. Seentically we have quite a price move. Many other things the brexit after Market Reaction has been very orderly. Was not anse, there sense of urgency for the bank of england. The reaction would have been different if Interest Rates were at 4 . I am pretty sure we would have gotten a preemptive rate cut but with Interest Rates at 50 basis points, there are only so many moves left. It is quite reasonable in this situation when the market is not panicking, stocks are holding up, sterling is weaker but that is welcome, they basically said ok, it is only a few weeks away. We will wait for the next Inflation Report and make an educated decision them. It makes sense. At the moment, markets have been so focused on Central Banks they expect them to immediately react. We need to lean back a bit and say the arsenal is pretty empty. Sometimes accept that Central Banks take the time to analyze and not expect an Immediate Reaction on every meeting. Guy to bring the politics into this. And thinking about what happened overnight in the brexit and where europe goes next. Fiscal. Let us talk about fiscal policy. Exchequer met with governor carney. The mix between monetary and fiscal policy to change . Probably the mix was about right in the u. S. But in europe and in japan, it was not always the right mix. The trend was already in place before if you for example look at europe before the brexit decision, we went from a tighteningontinued to a marginal loosening and now you will see that trend increasing. In the u. K. , we have a clear statement that we will have less authority. There is a discussion to combine fiscal and monetary policy. In france, around the election, and security issues. Even in germany, around the elections i would not be surprised to see some marginal loosening but not as much as what people might like. Had bill grossve and larry fink from blackwell all talking about the fact that the market has gotten ahead of itself. You are feeling that it has . Michael i think that is correct. If you look at the market yesterday, it was not a dramatic disappointment. Because the bank of england signaled something barry likely will happen in august in that sense, the market has gotten ahead of itself in timing but in the medium picture, it does not matter that much if we have to wait another three weeks for the reaction. Expectations 50 basis points cut and qe on top of it. I dont think there is a Crisis Reaction in the near term. Guy to wrap this discussion up. Before we let you go to your day job. The focus of the last few weeks have been on brexit and how the british economy is likely to suffer. Taking amarkets step back and looking at europe in the round to figure out what is going on. What happened in nice last night is tragic but it will have an effect more broadly. It will ripple across europe. It will change politics in central and eastern europe. Marketsme about how the perception markets perception will evolve regarding europes ability to coalesce regarding changes. Michael a positive affect to the euro and the European Union after brexit. The media and many politicians and even the public the reactions were not extremely rational. In the opinion polls, the mainstream parties did better. That was a good trend. As we pointed out before, that tragic event, we have to wait to see if that will change the situation. It is important to wait for the details. If it was indeed a Single Person with a french passport, i do not necessarily think it will hurt a lot. We have had some situations in thepast where some of terrorists were tracked down as coming from syria. To see some more details how it will affect the political situation in germany and europe. Guy thank you for your time. Let us check in on the markets. European equities by and large are suffering. The French Market down more than most. It is the travel stocks that are down more than most. Easyjet, down 2. 73 . Air corps down as well. We will have more on the attack in nice next. This is bloomberg. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. Guy welcome back. Move. Watching on the how are things positioned . Let me take you through the market action. Are they largely desensitized. The french of market is softer and french stocks are being affected by the likes of heavyweights. Let us get the details of the stock moves. Nejra coming onto the travel stocks of but for now, i want to highlight swatch company. The lowest level since 2009 after the company said firsthalf profits fell by more than half. More than 15 years. In hong kong and switzerland as well as france have collapsed. It looks like a disaster. 11. 4 ,shares are down the worst performer on the stoxx 600 this morning. The biggest European Hotel operator has fallen by as much as 4. 5 as well as stocks like air france and easyjet. We are closely watching travel stocks. The gainers,ne of the best performer on the stoxx 600. Andiding maintenance Recreational Equipment like lawnmowers. Basically, secondquarter operating at a profit. The turnaround of its Consumer Brand is proceeding to plan. That is one of the gainers this morning. As we look to the effect on the travel industry, we return to france which has extended the state of emergency. 10,000 members of the security arces are present after terrorist has killed 84 people. A truck loaded with weapons throw for a long day packed with people celebrating bastille day. An emergency statement was made. We are at a war with terrorists who will strike us at any price. Caroline we have been covering the story in france. Let us know the latest. Moment, there is a defensive meeting taking place in paris with the president and the Prime Minister. They will then head to nice later this morning. Nice who youyor of could see here said the security measures in place last night were not sufficient. The state of emergency and the levels of security around the main tourist sites and these kinds of events will be the focus of these defense cabinet meetings. We know an id card was found inside the truck that drove into the crowd last night. The card belonged to a french Tunisian National. The document is still being verified. This individual is 31 years old. He is known by the police for petty crimes but he was not on any intelligence wash watch list. Ofhave a list in france radical people who could potentially commit these kinds of attacks. He was not part of this watch list. These measures will be discussed just as the president has announced an extension of the state of emergency for another three months. Guy let us talk through what for happen on the riviera the next few days. This is the height of the tourism hes in. Season. Ourism how will france deal with the Security Threat while managing huge numbers of tourists visiting the area . A difficult balancing act for the french authorities. Absolutely. As you can imagine, this is the middle of the forest season in france. Any people were in france for the long weekend because bastille day is a bank holiday. Many people took friday off and went there to take a long weekend. You were showing earlier the reaction on the hotel stocks for example. Hes probably show you that the Hotel Industry on the French Riviera might be hit. There are many hotels. The attack started near two hotels. Rumors that at some point earlier in the night, ande were scenes of panic that there was a hostage situation. This of course did not take place. Every hotel though and every security and every tourist site will be on high security alerts. Paris, ourg us from bureau there. We will continue to update you on the latest from france. We are joined by our guest from the eurasian group. French politics is getting used to the terrorist threat. Do president seemed to go quite well. He carries the presidency well. Time, peoplehird are getting slightly bored. Marie le pen who has not done well in previous attacks. People have made fun of her. This time, i think she will learn her lesson and could potentially use it to say she has been offering a pragmatic solution and closing the borders and dealing with syria. He will more likely to listen to her. Caroline there was a poll we were looking at earlier. In june. The president s popularity was at 14 of the vote. Marie le pen was at pen pen was at 28 . Could this be a key concern that the right wing will indeed harness further of the vote . An upwardere is trend. It is likely that she well perhaps top the first round and she will definitely be in the second round. It seems unlikely she will become president at the moment because whoever did not vote for her in the first round will not likely vote for her in the second round. It is unlikely that we will see a president le pen. It is hard though to roll things out. Guy is this significant that this happened in an area that is in an area ofic france that is sympathetic to her . She tried to use it though when it happened and paris. Paris. There have been affects of the geopolitical turmoil in the lais. , in cal it is helpful to her, a terrorist attack anywhere in france. Caroline and the rest of the eu notification that italy is looking to strengthen its borders. What does this have to do in terms of the schengen agreement . Is it further eroded . The right the interesting word that you used is further. We are already in a gray zone with the schengen agreement. A lot of the borders have de facto checks and slowdowns. We can only go further in that direction. There is not much talk about reforming schengen in the shortterm. We could see after the french and german elections, people may talk about seriously reforming schengen but that is not the same as freedom of movement. Sometimes, it you will hear people in britain say that perhaps britain can piggyback on it schengen reforms to get access to single markets. The debates are disconnected. I think it is a misinformed view. Guy we do not know who this was or how he got into the country. Details matter to Angela Merkel . Details do matter very much. I heard your previous speaker say that if he is a french citizen and he was known for therecrimes, and sadly was little anyone could do about this. These details will be important and may be a sort of relief. If there is something she can be blamed for, that would be working in her domestic context and in terms of driving a consensus route europe which is different which is difficult at the moment. Guy we will continue to monitor the situation in france. The country is headed my the seventh deadly attack in 18 months. This is bloomberg. Caroline 8 43 a. M. In london. Move. Let use get to the business flash. David let us talk about france the french president has extended the state of emergency and will be deploying 10,000 members of the Security Forces after the bastille day attacks in nice. A truck loaded with weapons drove for more than a mile along a boulevard pact with holiday travelers killing at least 84 people and injuring hundreds more. The driver was killed in a shootout with police. The president and the interior minister has said have said that their country is at war. This is a terrorist attack. This is of incredible violence. It is clear we have to do everything in our power to fight this terrorist plague. We are in a war of terrorists who want to strike us at any price. We will have a strong mobilization by the interior ministry. European Council President adding his voice of support for the people of france in the wake of the attack. He was speaking at the athens summit in mongolia. France,is a sad day in for europe, for all of us here in mongolia. This is tragic. Attack taking place where people were celebrating liberty and equality. David that is your Bloomberg Business flash. Caroline thank you. Meanwhile, there seems to be some sort of numbness to these terror attacks. European stocks are moving into green. The ftse 100 traveling up. With the chinese news. The chinese economy stabilized in the Second Quarter after policymakers stepped up monetary and fiscal policies. Overall, we are seeing an increase in chinese gdp. Jumping 6. 7 , more than what was anticipated. We were expecting 6. 6 . We will be moving over to our next guest looking at what has been happening with the chinese economy. Of gains forh day the asia stock market. Let us go to our guest. Chief strategist. Thank you very much indeed. You also ahead the Research Department there. You us your analysis of the numbers that have come out. Retail sales growing more than what had been expected. Growth in industrial output as well. Is this a sign of growth in china . It is largely in line with expectations. The numbers in you quoted just now, the retail sales number was helped by strong property sales in the first half, especially the Second Quarter. A big momentum. Helping those numbers. More importantly, if you look at the investment growth number it is well below expectations. Especially when it comes to private investment. Growing at single digits. Quarter, public investments, mostly israstructure spending helping to prop up growth in the Second Quarter. Going forward, because the property cycle has turned in china. Property investment growth could slow down further in the second half. It would make the Infrastructure Spending even more important driver in the second half and make the gross target at around 7 in the second half a more challenging objective to attain in the second half. Guy there is evidence that the policy is working. Are there similar policy responses as we work our way forward in the environment you describe . We know this is working. We will do more of it. Policyuld say that the is going at full steam but i would not think that i would not say it is working exactly. It is growing at about 25 . In the first half, we did 7. 5 credit. Yuan substantially outpacing the countrys growth. By letting out so much money, we are actually seeing Economic Growth slowing down. Because its so high is being pushed out. They are not finding enough Investment Opportunities in this economy. All of this money is staying in the bank. Into theay that going second half, because of the property cycle and there is less move to move on the monetary and there is less room to move on the monetary side. Theline give us a sense of we are seeing some of the technical indicators signifying that perhaps the rally is overdone in chinese stocks. On the shanghai composite, we are close to the moving day average. And the relative strength index the shanghai composite is potentially overboard. Is thisdit boom alternative area of support happening to the chinese economy fueling too much by the Retail Investment . For a rally to be sustainable, for investors to be able and willing to hold on to their equity positions, there must be a fundamental driver. Fundamental growth, if it is not in allating and likelihood could decelerate in the second half, it makes it harder to make a case for a sustainable rally. Indicators technical are showing overboard levels. We we see further not have auld sustainable rally Going Forward fromere. You very much indeed. Inwill talk more about china the days and weeks ahead but for now the focus is firmly on what is happening in france. The country head by the seventh deadly attack in 18 months. What is happening next. This is bloomberg. Guy welcome back. On the moveng here on bloomberg television. Bit aboutk a little how the markets have been reacting to the overnight news. Of 84 peopleaths at the hands of what appears to be a terrorist. In someimited effect ways. The market has priced in a great deal of the terrorism affect here in europe. We are seeing some affect on the stoxx that could be affected by this more directly. Stocks that could be affected by this more directly. Ist is down by 2. 56 down by 2. 56 . By 1. 4 thisdown morning. Let us go to france now, our paris bureau. Walk us through how the french state is reacting to what happened last night. There must be a sigh of relief seeome ways that we did not a terrorist attack at the football championships. People are asking themselves why did this happen given the elevated level of security that we saw during that event. The president s of the region has been on tv quite a bit criticizing the security measures in place. He is from the opposition party. This shows the cracks that could emerge after an attack like this. The president was on tv yesterday for bastille day. He was going on about how successful they have been in preventing attacks during the championships. Be state of emergency would allowed to expire. A few hours later he was saying that the state of emergency would last another three months. He has gone back on plants he had to reduce the number of military personnel guarding key tes in france. These satisfaction of the Security Forces to this attack in just a few hours later. Caroline a cruel twist of fate. Give us a sense of the president s viewpoint of the president s viewpoint. This is the third major attack. He is not a popular president but these kinds of events do bring out the best in him. He has a measured manner. He is firm but he always seems to find the right words. Attacks, weevious always said that that is the it will dropt and in the polls. It did not seem to have that much of an impact on his popularity. It is linked to the Economic Issues. Linked to a sense of a lack of authority on Economic Issues and his inability to create jobs. These attacks have not moved the meter much. Guy thank you very much indeed. Inerage of the incident france from last night will continue. Truck84 dead in nice as a plows into a crowd celebrating bastille day. Anddriver has been identiate oy calls up reserves as the country grapples with its third major attack in 18 months. He is holding an emergency summit right now. United against terrorism, the e. U. President voices support for france in the wake of the latest attack as it threatens to play into the president ial campaign domestically and in the United States