We will take you to the frankfurt auto show. And anticipating apple. The worlds most valuable company is set to unveil look at be his most important Product Launch in years, the iphone x. But will the price point be too high . We will discuss it. Lets take you first of all to the frankfurt motor show. Matt miller, what are we going to be taking away . What will be the big theme . Does it involve batteries . Matt i think for the first time in years, we are seeing a major change, a major, multibilliondollar change from all the automakers globally. Volkswagen is talking about losing capex to create more electric cars, putting out orders for 50 billion worth of gear. We are hearing about cost cuts at mercedes that are going to be about 5 billion. Huge shift as this industry moves from diesel powertrains to electric powertrains, and that is all we are hearing from almost everyone we speak to. I have already spoken to a number of ceos, we will hear later from the ceo is lamborghini a bit of a dinosaur with its 12 cylinder and 10 cylinder engine . Those things might be a part of the past but we will hear from the ceo in just a little bit. Guy fascinating interview, looking forward to it. Away, about half an hour 27 minutes away, from the start of cash trading in europe. We will be watching more risk on, that seems to be the theme. Not as pronounced as we saw yesterday but this is the fair value it is a calculation showing you where equities should be opening and they should be opening around. 3 . Indon is a laggard percentage terms and it looks like it will open softer. Lets see what we are seeing around the world with the gmm. A great tool for telling you what the story looks like more broadly. ,heres the record yesterday Japanese Equities continuing to roll on, really an incredible rally in Japanese Equities. 2 , thatsup right an interesting dynamic. Lets talk about what else is happening around the world. Move this year in the japanese 10 year, trading yields up around for basis points. There was an auction that has gained momentum so that is a story to Pay Attention to. The gmm is flashing red. Lets catch up with what else we need to know with the Bloomberg Business flash. Juliette thanks. Governments plans for taking the country out of the European Union has cleared a major hurdle. In a vote after midnight london allowthe makers agree to the eu withdrawal bill to continue through parliament by 326 votes to 290 after Prime Minister theresa may promised discuss concerns before they had to vote again and to consider allowing more time for the next stage of debate on the law. In the u. S. , the people of florida are assessing the damage of the countrys second major hurricane in 15 days. They avoided the worst predictions of destruction but by one estimate the total cost of the damage dropped to 49 billion. Still, 12. 3 Million People is more than half the state population were without Services Last night. Norways Prime Minister has become the countrys first conservative party leader in three decades to be reelected. The victory was narrow as the the Opposition Labor Party had its worst Election Results in 2001 as an economic rebound and declining prospects boosted the coalition. Janet yellen met with Donald Trumps dollar daughter and advisor in july according to the public schedule. Eight days later the president told the wall street journal that she was in the running for a second term. Yellen has declined to comment on whether she would like to stay in the job most economists expect the president to pick someone else. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. Bloomberg. Guy thanks very much. Asian equities another leg higher, treasuries under pressure with less damage than originally feared, supporting the case of a gradually improving u. S. Economy. Now, hsbcs global had a 16 income research, the bloomberg mliv strategist. I want to start with a chart that i pulled up earlier it is the gap at the treasury market that we had a couple days back. Why hasnt it been filled . What does this tell us about the state of play . It is bearish for bond futures. People in north america usually like to fill the gaps pretty fast so the fact that it is still there could be a bearish butcator for the market when you look at asian equities it is a risk on day and obviously it could fall back into the s p 500. It is shaping up to be a bumpy start. Guy mark, we find ourselves in a position where we are wondering if you have turned the corner. Data,eeing chinese api the lead indicator telling us whats happening with global inflation. The work a look at function on my bloomberg, it has priced more in from the fed over the next 1218 months. Maybe starting to turn, will i get overexcited or is this something substantial . For now, dont get too excited. Nothing is priced in. If there is something the least bit hawkish the market has lots of room to price in changes because currently it is as though the market doesnt expected to do anything. They are assuming it will be a flat situation for the whole of next year. Guy amazing the way the pricing has moved. Remember, you can get his smart analysis from the rest of those team, mliv. Functionality worth read bring. Lets turn our attention in more detail to whats happening with the u. S. 10 year. Im not sure i can zoom in on this, but these are the candlesticks maybe just click this. Hit, 2. 0161e have on the yield, that is awful close. What have you made of Market Action . It is moving in a logical fashion, toward our forecast. I am struggling with what could for ably be a reason sustained move higher. We have had five consecutive months of downside inflation surprise. Be actually get to some point but unless we are sure we will have five consecutive months of upside i think it is difficult to look at inflation is a major risk the bond market. Then theres the rest of the world and the way qe continues to spill from one region to another. Whether it is three or four the bank of japan has basically nailed the jgb close to zero so what people are missing is the diminished stock element, not just the flow story. And int going anywhere a world where you have jgb close to zero i struggled to see how treasuries yield much more than the current level. The idea of going to 2. 5 seems as our. Bizarre. A we have unambiguous evidence that they flow from europe to asia,s. , from europe to and the g3 markets are totally locked in. It is not the only argument for low yield but i am saying i struggle with the idea just because the yields are low. Guy ok. Where do you said . The likelihood is we are not going to be much higher than that by year and. We reduce that yield forecast. It looked good in june, we were basking in the sunshine in june, because banks to central and ands, the bond went to 60 then you have a tantrum. All this talk of taper tantrum was three months ago. With the ecb locking in a negative rate according to the forward guidance, unless they change that that is what they will do so you have negative rates at the front and and it is difficult to see how it can go up dramatically. I may have missed something but all the recent evidence suggests downward pressure on inflation it has to as the euro goes up. You have had a year of upside surprise in terms of real economy data, but the ecb is going nowhere fast and the tapering is pretty much discounted every man and his dog knows it is going to calm, the question is do they do a lot upfront or do they taper . Lets just get over it, we know what is coming. Guy Steven Woolfe stick around. He is the head of fixed income research. Still to come, lamborghinis ceo will join us, talking to matt miller. That is next. This is bloomberg. Guy 14 minutes until the market open, lets talk about french politics. Demonstrations planned across france in response to the landmark labor market reforms. The countrys second Biggest Union says 180 demonstrations are planned and 4000 strike notices have been filed stop joining us from paris is caroline connan. The real question i want to ask you is are these protests significant enough that mr. Macron will in any way Pay Attention to them . He has a very strong mandate, he was expecting that there would be demonstrations, are the demonstrations big enough that he will sit up and Pay Attention or will he say this is what i was expecting and carry on . I think the demonstrations would have to be really massive for him to change because he wants to pass this reform at the end of september at the latest and to be honest, this is not expected to be a major strike paralyzing france like we have seen in the past. There will be some demonstration across the country from Oil Refineries but daily transport will only be slightly disrupted andcommuter train highspeed trains or International Trades are not expected to be disrupted and only the second Biggest Union has called to join the strike. The head of the said that this would only be a success if you had more than 200,000 people in the street. Emmanuel macron may have added fuel to the higher last where he described his opponents as the lazy and the extreme so Jeanluc Melenchon has called for the lazy to take to the streets today in france. This may have convinced some were hesitating to join the strike. Caroline connan joining us out of paris thank you. Guy steven major is still with us. If you were mario draghi, how much attention would you be paying to the structure reform story happening in france . He has for so long and on about the fact that governments need to step up and deliver structural reform, that they are were the focus of attention should be. It is true that the ecb can only do so much and maybe the mistake the market makes is to expect too much from Central Banks because it is supposed to be about finetuning. Economic growth comes from hard work and productivity. Can borrow it from the future, which is what has an happening, and people are wondering why we havent had much growth. But the point is well made and repeatedly made and i think they are quite frustrated and it is probably difficult to contain that. And its not just about the structural reform, its a supplyside reform. Spain would have been a good example. Is spain ends up taking the markets of other countries that havent reformed and the has been going on for a while. The point is well made, complicated by the fact that in the background we will have to see meaningful steps at some point. Its a lot of work to do guy macron hopefully is delivering some of that if you are draghi and you see evidence of it actually happening, do you say i can step back . You want to see meaningful and tangible steps. It is one thing to make a promise and its another thing to deliver. It needs to be seen in the data. But as analysts we are guilty of looking at all the lefthand risks, what could possibly go wrong . Maybe we need to spend some time on the right where the data has , maybe if weod spend more time on the righthand side you can expect yields to go up. Guy the market is priced to taper so i am wondering what is next in terms of how the reform story works. Lets talk about italy. We have compressed down toward germany and it has been a fairly decent move. The elections are coming. At what point to do you think this story changes . Where do you see the spread moving . That has been a pain trade for a lot of people. Half of the attribution in that is also the upward moves in bunds. We had negative yields. Have beennvestors short, which is another way of saying they have been underweight, waiting for something bad to happen. After going through the dutch and french elections, the lazy thing to do was to focus on i could go a lot further into the future then people are expecting. If you news has been pushed into the future and meanwhile investments need carry into the market of low volatility, credit spreads are compressed. For now, everything looks just fine, but if you look into the future we dont really know what will happen with the election, all i can do is tell you what i read and see in the polls. It strikes me that theres a good deal of uncertainty. People probably put this at the bottom of the list. Guy steven major, global head of fixed income research. Minutes away from the start of cash trading inequities. Up next, a look at todays movers. Credit agricole wants to focus after an announcement that we are going to be seeing a big steak being taken in the company by the saudis. That is next. This is bloomberg. Guy welcome back. Four minutes away from the start of cash trading. I want to redefine what is happening with agricole. Buying 60. 2 ngs is stake from Credit Agricole, the deal is valued at 1. 54 billion. That is exactly whats going to happen surrounding Credit Agricole. We will watch to see how it trades. The market open is coming up next. We anticipate that we will see a positive start. This is bloomberg. Guy a minute until cash opens in europe. The thing you should take on board as we set another record yesterday for the s p, we are likely to see that continuing to the european space. London a little laggard, the catch it on. 3, nymex. 3. Another pop as european equities get going. The commodities story remains relevant. , thether story to mention car sector. An interesting story to watch out for. But see how markets are opening. Around 20 seconds to go. Looks like it should be a positive story. How much longer will this risk rally carryon for . I know the market priced allotting over the weekend. A lot in over the weekend. Does it justify what we have seen . Ftse 100, trading around the 74 level, we expect that to be a little better bid this morning. We are expecting a similar story for other markets. 7413. 56 is where we are trading. 600, up initially around. 1 . The fair value pointing to. 3 of 1 . 3 , the daxcac up up. 4. Of a move upwards are we going to seeing European Equity markets . Futures, all of our european morning have been pretty meted. The Asian Session picked up from the United States and positive form and the u. S. Session was pretty strong. We saw the s p 500 closing at an alltime high, we are pricing that into the european session today. European equities opened up strongly, financials to the fore, industrial going as well. Move to be a broadbased higher in European Equity markets. Weve got those industries in positive territory as we saw in the United States. That was driven by financials and technology stocks, but everything was on the move higher. The u. S. N, start of gilt trade and the inflation data for the u. K. In focus today. To number to watch out for, point it percent, the estimation for inflation. That would come up from two point 6 over the summer. The pound the driver here. Bloomberg intelligence saying if we saw the bump up, it would be because of fuel prices. They see inflation peaking at 3 . Blog, if we see a higher print, does that send the town higher pound higher . Interesting to see if that is the reaction we get. In the pound, strength has not been the story for 2017. This puts it in the longterm perspective. Sees thehart, 2017 weakest average price against the u. S. Dollar since the early 1970s. Alan higgins about this story earlier on today, he sees positive for the pound. He sees upside potential for the pound. He says the kind of movement we have seen in 2017 is pricing in a bad brexit and if we get a transitional arrangement, it might not be quite as bad as that. That is his and analysis on the u. K. Assets right now. To theables in response vote late last night into tuesday morning, the labour party has tabled their first amendments. Will the theresa may legislation survived the Committee Stage . That is the next big questions. Anna, thank you. But stock about where the markets are in terms of the individual names. Partners group confirming guidance, the revenue numbers look pretty good. Top line looking fairly favorable for this business. Trading up 6 . Up. Trading hastings trading nicely to the upside. Lets look at where the losers come through. Let me highlight something we are seeing this morning in europe. Youve got some of the barrattn is down, trading lower. Definitely a theme in the house billing sector. We are getting inflation data out today, wages tomorrow, bank thursday. Interesting little run when it comes to the bank of england. Janet yellen and about the trump held a meeting on july 17. This according to yellens public schedule. Eight days after that, the president told the wall street journal that yellen was in the running for a second term. Janet yellen declining comment on if she would like to stay in the job and while donald trump has not said anything publicly signal he has sided against what bloomberg expects, to pick someone else. We have the implications and where the fed goes next. Steven major is still with us. Do you Pay Attention to this stuff, in terms of your thinking . Yellengot janet potentially going, fisher potentially going, a bunch of other opportunities to place replace people on the fed. How important are the people, the unknowable aspect of peoples decisionmaking in how you are thinking . Stephen unknowable and uninvestible. I guess we worry about personality shift, that is the current one which is why we focus on that. What was happening at the start of this year when i was in a our chief with economist, we floated the idea that maybe mrs. Yellen could continue and nobody around the table agreed. In fact, the reaction was quite strong the other way. I would say the probability is thenr today than it was and it was still meaningful volatility back in january. Say, it has what to to be strongly possible that there is another term. And the market has, based on my soundings at the start of the year, hugely underestimated that possibility. Uncertainty,me of cant to annuity continuity might be what you need. Guy let me point some doubt there something out there. How big shift would the man who has fought draghi every step o