Daybreak europe everybody, this is our flexion morning show from the city of london. I am anna edwards. Lets start to whether dollar has got to. The dollar index and the dollar the risk onyen and attitude coming through on markets, rebounding from the lowest in two years. Different than when we went into the weekend in europe when the conversation was on owning anything but the dollar. The two waiting on the currency lifted a bit, which has to do with Hurricane Irma and north korea. It is clearly deadly and very devastating to those affected, but not quite as powerful as has been feared and it spared miami, meaning some of the protections have been coming down. No missile tests from north korea yet, also lifting Risk Appetite a little bit. We are higher across the asian equity markets,surprise we see strength in the japanese markets, the weakness in the yen , a rest bite for japanese exports as the risk is coming through in Foreign Exchange markets. On the u. S. Markets, suggesting we will be higher, the u. N. Voting on increasing sanctions toward north korea. John yang warned pyongyang warned that could result in hostile measures. 09 we got down as far as 2. 01 in last weeks trading session. We didnt go below the psychologically important level, but we saw the risk on attitude and market, helping to weigh on treasuries and lift those yields a little bit. William dudley saying the hurricanes could affect the timing of rate hikes. Lets go to bloomberg first word news with Juliette Saly. Has warnedorth korea of the retaliation if the United NationsSecurity Council approves the u. S. Proposal for harsher sanctions against the country. Kim jongun says it is closely following moves with vigilance in the u. S. This comes after a draft resolution to tighten sanctions on pyongyang after conducting another nuclear test. Accelerated from earlier, Beat Estimates from all but one of the economists surveyed at bloomberg. It can support metal and can support the plan supply and demand. China policymakers are pushing back against the surging you on that made lifting of rule currency expensive. It will no longer need to set aside cash when buying dollars. The new straws currencies lower and analyst say it might become more range bound in the near term. Brexit secretary warned lawmakers if they block legislation today, it can lead to a chaotic departure from the european union. David davis rejects accusations the government has launched a withdrawal bill. The law contains henry viii powers that allows people to make changes to existing laws by passing normal scrutiny of parliament. Former white house strategist steve bannon said he is absolutely going to work on the republican assessment because of its lack of support for donald trump. In an interview broadcast on cbs , he said Administration Figures that disagreed with the president should resign. If you are going to break, then resign. The stuff leaked by the white house i thought was on accessible. If you find it on accessible unacceptable, you should resign. If you dont like what he is doing, you have an obligation to resign. Gary cohn should have resigned . Absolutely. Juliette you can catch more of that interview on charlie rose. Find it atyou can 6 00 u. K. Time tomorrow. Angela merkel has called demonstrators rowdies driven by intolerance. Despite some discontent over her liberal fiji policy, her christian democrats leads polls by 16 Percentage Points two weeks before the vote. Dont miss our weekly 30 minute germany decides show every monday at a 30 a. M. U. K. Time. 8 30 a. M. U. K. Time. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. The fact we did not have any action from pyongyang over the weekend and Hurricane Irma seems to be weakening has given investors reason to get the toes back into equity today. The nikkei up 1. 4 , the biggest jump since the second of june. Also, a big rally coming through in hong kong, particularly automakers. Sydney up 7 10 of 1 , doing far better than it was, up 7 10 of 1 . Asian stocks as a whole at the 10 year high. We have seen a movie out of those risky safe haven assets into riskier assets. Byd is an electric carmaker in china rallying on the news china wants to ban or phase out fossil fuel cars. Falling the most in six years, btv 5945, we are talking about the pickup in chinese prices, much better and stronger than what was expected. This chart shows the relationship between chinas food costs slowing. That is the yellow line. Then you have cpi moving sideways. Industrial prices are rising and Morgan Stanley has upgraded its pbi. Anna thank you, Juliette Saly in singapore. Hurricane irma smashed into florida with water and violent winds, wreaking havoc from miami to the western coast. The storm left 3 Million People without power and millions temporarily displaced. Hurricane irma finally it made landfall in florida on sunday as a category four storm packing winds as strong as 130 miles per hour. It crossed the florida keys this morning and officials described the situation as a humanitarian crisis. The storm is moving up the west coast, threatening naples, fort myers, st. Petersburg, and tampa, with Hurricane Force has high storms surge as 50 feet. I spoke with the mayor 15 feet. I spoke with the mayor. We are a lowlying community on the water. 3 in tampa bay, my office would be underwater. Thats what we train for. It is tempting to describe the storm in superlatives terms at it might be the costliest in it u. S. History. Florida may be spared the worst. The bad news is that this is a big monster, but we are well courtney did. Officials across the state will add up the damage and we will have a better idea of what is headed next. Erik schatzker, number, orlando. Coveragewill bring you of Hurricane Irma threw up day and key interviews on it object. The mayor of naples interviews on that subject. Both of those interviews you can see on bloomberg television. Joining us to discuss the hurricane itself and what damage it will bring to the economy. You join us on the state we are trying to address what Hurricane Irma means for the u. S. And the devastation it will cause, the damage to peoples lives, the loss of life will be tragic. But we should talk about the effects on the u. S. Academy. Goldman sachs has been reprofiling where they think growth will come through in the United States and we saw one Officials Say this can affect the timing of rate hikes. Think the two things you about with this kind of event, outside of human cost, you get a Capital Stock and the disruption to the flow of income. Only the latter actually features in the accounts, ironically, hurricanes tend to be good for gdp. The destruction doesnt feature. More broadly, what tends to theen, it doesnt disrupt underlying trend in economic growth. It will be harder for us to read the economy for the next couple of quarters at least. Cause, itake the fed feels like the market is betting that. Anna the expectations are around 25 , 30 on the wirp function this morning. How does that fit for you . They dont want to change Market Expectations or not hike in december. Guest a number of things have happened that think the fed will not go for it in december. If you look at swaps market, pricing at the end of 2018, you have one rate hike, not even one rate hike. Mid2019 before you get a rate hike. The u. S. Economy, in spite of these things going around, looks normal to us. Risk appetite is normalized. If you look at the eye is am, the isn, we need to get onto the process of normalization. Not much inflation. I dont think that should be a source of unease. Inflation is not a leading indicator. The leading indicators tell us things are looking good and picking up. Anna we have done a survey of where investors expect to see treasury yields and the number has been falling. Higher than where we are now. It is at 2. 0870 and the estimates are now 10 years rising. 10 year yields is the lowesttion since november, so it is coming down. Guest that has been the case for 30 years probably, but i think the bond bull run has outlived many of its detractors. I think that was one statistician that said eight centuries of Interest Rate data and this is the second longest and sharpest on record. Us,point is, right now for you cant own treasuries necessarily for most of the returns perspective. It is a safe haven trade right now. For us, if you look at nominal 5 in the that is u. S. That suggests a significant upside. Will it make it . Who knows. There is a significant bid for treasuries. Anna btv 3978 hundred lines the point of how treasury estimates have been coming down. There was excitement about what trump could deliver and i last week, we talked about how he seems to come together with the democrats to do a deal on the debt ceiling. Was this the start of some kind argan whathill grand you can reach across the aisle and move policy forward . Probably not. Maybe, you never know. It seems to let republican noses out of joint, so im not sure if that might be the case right now. When he was elected and before, the argued he would get less done than people argued and thats because if you look at history, the president s that have managed to affect the longest tend to be the consensus figures, the unifying figures. So far, President Trump does not fit into that mode every desk mold. Mold. Update. Ick apple is expected to interview three new Iphone Models on tuesday with an updated version of the iphone the apple watch. Also tomorrow, we get an update on u. K. Inflation with the release of cpi data for the month of august. They reckon the rates will take up 2. 8 . The u. K. President will deliver his state of the Union Address in 00 a. M. U. K. Time. David davis warns of a chaotic brexit if lawmakers block the government plans. Will they breakthrough with the legislative agenda earlier this week . Chances are, they might. We will discuss that next. This is bloomberg. , everybody,e back it is 6 18 in london, 1 18 in singapore. We got Hurricane Irma devastating and deadly, but the damage perhaps not as high in a Financial Sense as it couldve been and no missile threats from north korea. All of that lifting the markets this morning. Lets get a Bloomberg Business flash with Juliette Saly. Juliette uber and lift have been offering free right to shelters near tampa as Hurricane Irma headsup the gulf coast. They publicized the free rides on it twitter feeds and mobile alert services. Always givings right to hospitals. That will make it the biggest market to do so in a move that will accelerate the push them to the electric car market led by companies byd. The vice minister of industry and Information Technology says the government is working with other regulators on a timetable. Shares have tumbled in hong kong trading after the company warned its turnaround plan might take longer than expected. First half revenue dropped 5. 7 as a stronger euro cut into Tourist Spending in recent months. Apples most important new phone be called the iphone x. Strings of Software Code shows three models will be made. The new devices will be unveiled tomorrow and we will show you special coverage from 6 00 u. K. Time. That is your Bloomberg Business flash. Set you can lawmakers are to vote on the brexit legislation today. Getting the bill through parliament on amended will prove ded will be aen challenge. David davis warned lawmakers blocking the bill could lead to a chaotic departure from the eu. The head of Investment Strategy at barclays joins us here in london. As you look ahead this week, our reporting suggests those on the back of the gc could have rebelled might not be able to do so today. To committee stage. And the shortterm, that is the story. Guest it looks like it will squeak through. You hear from can carve and the like and they say they will let it through. The point is, government is in a fragile edition. The narrow majority has so much legislation to pass in the next few years. It will get it through and more broadly, what you worry about with the u. K. At the moment with regards to the eu specifically is that, you have a strengthening economy and an increasingly unified political class, thanks to helpful elections. On the other side, in the u. K. , you have a slow economy and a government not speaking with one voice, with a thin majority. How does this speak for negotiations to come . Is gettingation weaker. In his view, he was giving advice going up against the brussels machine, he said the mistake the conservative government made is to assume the eu wants a deal that works for both sides. Like german carmakers, for example, wont be. Do you think he has something there . Guest i guess. I think you are right in a sense. Extra negotiating leverage over the u. K. , the eu would have to be pretty an apt to allow the u. K. To leave their club with better or even the same terms of trade they enjoyed on the inside. That just seems a weird idea. On the other side, you could argue that the eu, feeling less insecure about life, there could be the need to honest the u. K. Might be a little bit less. Who knows . We can that the u. K. Does enjoy it worse terms of trade. Firstrate institutions, stable rule of law not threatened by brexit, but one thing threatening the u. K. Model at the moment is the squeeze on real wages. I pulled up this chart that shows u. K. Inflation rate, wage growth for consumers and that looks set to continue. Guest the consumer is where you are feeling the strain at the moment. Investment is flatlining, which you expect uncertainty around brexit in terms of trade we just talked about. That is deterring companies from investing. On the other side, the consumption story. That is a temporary thing. That imported spike in inflation will pass. You will get back to normal levels of inflation in 2018. However, it is not helpful given consumers. Our point of view, the u. K. When not go into recession but brexit will form a headwind on the u. K. Economy. The point from Capital Markets perspective is that the u. K. Not evaporate, but sizable changes in the growth rate might not be noticed by the worlds capital market, the uks economy is not even the dominant factor in the uks capital market. A mark on thees u. K. Specifically the cousin of guest i think i would go back to the point you made their, which is you want to be worried about everything the u. K. Evaporates in the aftermath of brexit. We still enjoy firstclass institutions, the rule of law, stable rule of law, and a benign democracy. Even amongst all of this turmoil. Relative to other countries, you have a benign drop and that is still longterm, critic a runway for investors. Create a runway for investors. Anna to what extent does the strength of the Global Economy and the upward pull that could bring to the u. K. Economy offset the headwinds from brexit . If the world is performing well, that could play to the u. K. Strengths. Guest it might paper over some of the cracks. While the rest of the world is accelerating, the u. K. Is not. A lot ofer people will say the Manufacturing Sector is doing well because sterling is devalued. We would put it differently. U. K. Exports have not been particularly price elastic. It is quite minimal and a low relative to others in the world. That suggests it is not so much to do with sterlings evaluation but increasing health and Robust Health of eu. Anna speaking of that relationship, to be get to parity . That would be a nice touch for the eu. Guest that would be quite interesting. For us, looking at sterling on a mediumterm perspective, in all but the very worst scenarios, but tactically it is hard to call direction. Anna william, thank you very much. He stays with us. You should be aware we will be joined on the Surveillance Program by the chairman of our bx. Thats from 10 00 u. K. Time. Lots to discuss terms of the Banking Sector and the brexit. Up next, spd leader Martin Schulz restarts his campaign. We bring you the latest on germanys upcoming election. We talk about a coalition after the german would look like after the german election later this month. Thats coming up next. This is bloomberg. Welcome back, everybody. 6 30 in london. 2 30 in tokyo where weakness in the japanese currency comes as a welcome relief for those Companies Listed in japan, the exports. We have seen reduction in geopolitical tension, that means money coming out of japanese currency. Lets get a check on the markets. Guy johnson joins us. Guy lets pick up on that theme, hannah. The gmm trading on the back of the yen. Swiss franc trending weaker, as well. You can see gold trading weaker. The storm has passed through florida, the markets beginning to look ahead, discounts around there and as a result, taking a slightly more positive tone. You can see that on the cpi screen, there is a fair value recognition looking at the start of european trading. 4 10 of 1 , an indication how the rest of europe might trade as well. Here is a function to give you the heads up. Talking of things that are british, lets talk about the pound. Here is a chart talking about eurodollar and eurosterling. While eurodollar he has gone up, eurosterling is trading maybe we are finding relief for the british pound. Here is a nice chart that i pulled out of the and live blog on friday. Mliv log on friday. This is the dol