Anna a very warm welcome to daybreak europe. I am anna edwards. Manus i am manus cranny. We have one spared we have one very special guest, tim draper who joins anna and i. Anna appetite for technology generally. More a foreign appetite for japanese stock. [no audio] manus this is your green line. These are the buyers that come. N, the nikkei ambassadors are buying japanese stocks. They bought nearly 6 billion in the first week, the most in 2. 5 years. The foreigners are still underweight and it could be the abe call. It could take you to 25,000 on the nikkei. Anna we watched the politics of there. The japanese stock market up by. 2 . Lets put up the risk radar. The Asian Session is really on pause. Near recent highs. Concerns around the korea coming back to the market concerns around north korea coming back to the market. Not shaking the markets excessively. Outover in the u. S. Geeking new alltime highs. On thes a lot of focus next fed chair. How hawkish is the next fed chair going to be . John taylor is said to have made a very good impression on President Trump. Is that because of what he would do with his role . Just his rule tackle his rule . Manus you have a couple of other Asset Classes at work. You have the real numbers to play. John taylor, rates would be three times higher than where they are at the moment if you. Pply his former economic you have fighting in cook. Guess you have fighting in kirkuk. Is on a bigger massive picture, rather than necessarily kirkuk specific. Anna a lot of thing going into prices. L we will hear from another fed prices. We will hear from another fed speakers this week from a number of fed speakers this week. [no audio] guess it hasnt stopped the dollar from gaining a little bit hasnt stoppedit the dollar from gaining a little bit of momentum. Hasette donald trump signaled increasing alarm about the situation in northern iraq. That is after forces loyal to baghdad seized that quarters instrumental in kirkuk. John taylor is said to have made a favorable impression with the president after an hourlong interview last week. Taylor is known to advocate a hawkish style. Trump is expected to meet janet yellen to discuss the possibility of a second term. President trump has Senate Majority leader Mitch Mcconnell has prevented a united front saying they are fighting for the same goals of tax reforms. The two appeared together at the rose garden and insisted they are closer than ever before. Trump told reporters that they are on the same page when it comes to tax. Government regional meets later in government meets later in barcelona to consider [no audio] thanks close branches. Airlines canceled flights through the storm slamming the south of the country. At least 350,000 homes and businesses lost power while School Remains closed today. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Anna and manus mentioned we do have those words from the korea that it doesnt seem to have a rattled just from north korea but it doesnt seem to have rattled investors. Throughhat rally coming in copper, but the rsi signaling that the asx 200 is overbought. He have the Hong Kong Market up by. 2 . We are seeing seoul holding onto gains. In terms of stocks, kobe still focus. N in it is rising desk kobe steel has been in focus. Kobe steel has been in focus. It is rising. [no audio] in tokyo. We are seeing sally gains coming through from korean recreational stocks on a media report that china could easily three focus. It issections in regard to cultl differences despite the missile issue, saying they will do the best to lift restrictions on culture. Manus juliette, thank you. Top story in theresa mays story to brussel tom story and theresa mays story to brussel. Anna made made the journey to try and break the deadlock. May made the journey to try and break the deadlock. Jones, a very good morning to you. What do we know about what was discussed over this dinner . Jones they talked about all the sticking points that are still there in these deadlock brexit negotiations, in particular the brexit bill. The eu has made it clear that u. K. Needs to comport with more detail on how it is going to address that and theresa may will be handed on the issue last night. E have no progress they continue to be deadlocked. They agreed that the talk should be accelerated in the months to come so the cake it take that back as a little bit of a something. A little bit of a nudge but it is a polite way of saying we havent made enough progress still. Manus a very polite way of communicating a position, a strength, i am not sure. When should investors start to look confident in the deal . One line in the story, some senior ministers are doubtful. That is game theory, is it . Peoplei am not sure but are already losing confidence. One of the problems is business and investors know theres a closing window when a deal can be done. Done. It looks like they know [no audio] i think some things are going on in the background and the eu is trying to prepare for that, that it has not come to the table yet and they are pushing the u. K. More details on the withdrawal issue before they make that shift. Anna jones, thank you very much. Tim haywood is with us here. Morning. Good no deal seems to be something that has been talked about a lot. Now it seems to be much more mainstream. Tim sadly, yes it is. Is between more consensus that we have been bearish on the outlook of gilts. Thinking that the yields would rise. This potential slowdown, driven by lack of confidence could cause people to be misaligned. Testifying,carney this is sterling month to date and there has been this reversal. If you are now rolling out the possibility of no deal, take me through your thinking in terms of sterling . Down in a month. Where do we get to . Tim no deal is 10 on trade weighted, so if the sterling were to drop by 10 against all of its trading partners, that would bolster the economy anyway that no deal would hurt it. If you were to not look at month to date but the summer on the trade weighted basis, the sterling has done reasonably well. Manus this is the sixth month view of w crs. Tim the story at the bottom is the weakness of the dollar and the yen. About the summertime 122 onh move up from cable has given future Inflation Forecasts a bit of a this inflation data should be a peek in coming months. Anna this will be the peak. D think it comes down because of this do you think it comes down because of the strength and sterling daca in terms of no deal and sterling . In terms of no deal, were talking about the ups and downs of negotiations, but really the deadline is not for another year. She wants an agreement in place before that to get the necessary votes that is needed. Againstot exactly up the hard wall right now. Another six months . Tim when you think of the work that needs to be done in the most in need to be had, i think it is a tremendous workload. I dont know if they have a staff to be able to put them into place. I am no expert on that. It is a hell of a workload. I think it is going to struggle. Without a transition deal, i think no deal is quite likely. Manus the damage for marks a deal with is mark carney. Willie hold the line will he hold the line . For the market, this is the forward view on when we might see rates hiked in the United Kingdom and the presumption is up. Rate hike is a step the market doesnt believe anything will come through until the First Quarter of 2019. How does he walk that line, in terms of i am taking a way a little bit of stimulus, but fear not, im not doing anything more than a balancing act. Tim across the world it is the removal of emergency measures. It is the vernacular rather than we are hiking Interest Rates. We want to be able to create some sort of symmetry going forward. At the moment, they dont have symmetry. To reduce qe, they have to increase it again. To increase rates [no audio] if they dont remove those measures now, how much better does it have to be before they do . When do we start to get concerned about when mark carney should be handing over the reins . Economists seeing another hike in 2019. That is beyond mark carneys schedule the parts are. June is very close to march. [no audio] for that qe shouldve stopped and in part reversed and policy hikes shouldve been at least tried in the longterm since we have seen one. Us. S tim, you stay with tim haywood, invested disinvestment director over at gam. Ata an exclusive interview 9 a. M. U. K. Time. Manus the communist Party Congress spreads twice in a decade gathering. Anna the u. S. President meets , johned chair candidates taylor is said to have made a favorable impression on trump. This is bloomberg. Manus a live shot. Stocks are flat. There seems to be that north korea could be seeking to have discussions in russia. You have this i ringing noise about nuclear war. Stocks are flat that we have had a run, a tenure hike more or ain the 18 year hike 10 year hike more or less in the trade. After 11 00 a. M. U. K. Time. Manus the beast of wall street. Anna lets watch up for the trading story. Alexis tsipras is in washington to meet with donald trump. Manus lets get to the Bloomberg Business flash. Juliette airbus has agreed to acquire a majority stake in Bombardier C Series jet program. Boeing over global aircraft sales. In a effort to circumvent the tariff, it will add another some to its factory another Assembly Line to its factory. The nations Second Largest BankCredit Suisse according to a person with knowledge. Stake in Credit Suisse. They met with senior managers to discuss some ideas including a separation of the investment banks from the Private Banking units. Netflix shares have hit a new high in afterhours trade after the Company Posted its best thirdquarter ever. The service added another 5. 3 million prescribers beating estimates million subscribers beating estimates. [no audio] speaking with investment banks to study the feasibility of lifting the asian business on the hong kong kforce. They say it could belly the unit as much as 2 billion. That is your Bloomberg Business flash. Manus juliette, thank you very much. Caution is spreading through market. Financial chinas composition is up for a second day. Effect on your chart, you have a very high white bar for corporate debt. , it you analyze the so we continues to push the yellow and increase the white but we can get away from the fact that there is a lot of that out there. There t of debt out a lot of debt out there. Remarkable. Anna is this the only expectation . Even though she is going to be even though xi is going to be increasing the power in china, many economists might want to see my not follow. It might be more of a study, little more of what weve had. Tim i think theres the fact that there is no great crisis on the horizon in china. If you have been worried about the debt story, we have got to have phenomenal growth. Nominal Growth Numbers are not been too bad. When youre ago, you worried about significant slowdown in china could not only is china not slowing down come almost every country in the country on most every country in the country on most every country in the world is showing growth. [no audio] money goes on sure and in the event of the crisis, what is your plan on the money coming back. Compared thate, to the u. S. Which is half that number. Most curves are terribly flat. The level of yields are not superhigh either. It is not obvious that emergingmarket investors will sale will sell our move away from the brazils or mexicos. To focus onto focus on china. [no audio] anna coming back to some of the comments we heard from the pboc governor, sort of waking up markets to the increased urgency, the need to open up china to foreign capital flows. It is something he has been talking about for a while and he has been keen to talk about that ahead of the imf. Do you expect further opening up . Tim they need the money. Ndia and other places what Bond Investors want is something they can readily trade. Money there and get your bond without texas, nice and simple without taxes, nice and simple. That is what capital controls would be in china. You cannot have a really trading option of bond markets. Anna there is talk of whether that will follow this congress. John taylor is said to be the favorite of mr. Trump for the fed chair. This is bloomberg. Daybreak europe. Anna this is anna this is daybreak europe. We are pretty flat on dollar yen. We talked about appetite for japanese equities. Lets talk about appetite for european fmc g goods. Manus we have been talking aout dan and, that is just snippet below the estimate of 6. 45 billion. The market is penciled in 6. 46. Restructuring in terms of growth. Should exceed 12 including currencies. Eat have a higher profit. You have higher profit. Revenue in this quarter was the fastest pace in more than two years. Youve got revenue increased to 4. 7 . That beat the analyst estimates of 3 . This is a delivery, a tour de force. He is trying to resuscitate dairys yogurt and fresh which hasnt had a shipment growth and almost four years in almost four years. Anna it is brexit it is time appropriate to confirm in the target for the fullyear current operating profit growth. That is the downbeat side. Second Quarter Sales rising 6. 6 . Also talking about remi martin, the key to sales rising on inorganic bases more than 13 . Manus i dont know who has been buying watches. Reese more just richemont smart [no audio] other technicals, looking at the bloomberg dollar index, that is punching a oneweek high on speculation we could get a more hawkish fed chair following janet yellen. The bloomberg dollar index testing the 100 Day Moving Average after President Trump met with john taylor. Looking at commodities, it was a big day for commodities is today. Went approaching that golden cross or the 50 Day Moving Average looks like a good be close to going above the 200 day. Brent is already in the golden cross. It is a bullish indicator for oil. Gaining all concerns around. Raqikurd tensions Copper Holding above 7,000 a metric time after really spiking higher yesterday. Testing a key levels for the first time in three years. The lower this ratio is, the better the prospects for the economy if you see gold as a safe haven and copper as a sign of bullish prospects. Anna thank you very much, nejra. Manus theres a new edition of manus theres a new edition of daybreak. You get us online. Been faint spain has forced to cut its 2018 outlook to 2. 3 p at stocks continue to fall for a third day yesterday. We will be watching to see what happens today and we are looking at another deadline for catalan. Manus the pound is going to be in focus. Mark carney is in front of lawmakers. Will he hold the line . I will be asking him about the inflation data set to come in at a fiveyear high. That should hit 3 . Focuses in on john taylors star rising in the race for fed chair. Kevin warsh appears to be falling. Manus john taylor is said to have made a favorable impression on President Trump during an hourlong interview. The Stanford University economist known for his hawkish stance. Anna trump is excited to interview the current fed chair, janet yellen, on thursday. We do see the market move on it. We saw yesterday, we saw the bit. R, below does this have lasting impact, depending on the mindset of the governor . Is this more of a team effort . Tim i think it is more of a team effort, so much of the team is changing. Rates do seem there is an insensitivity. [no audio] you cant corral everybody around the one point. Yesterday, we emphasized 30 it tense. E got to tense. We got two tends. [no audio] curvecient issue for the could will it continue to flatten . Another, what will this curve look like in two years time that go two years time . Normally the yield curve is only this flat when yields are much higher. The fed has said 5 and then you could have a flat yield curve. It just doesnt get paid to extend. In unless you count negative Interest Rates yellen doesnt, then we are really in trouble for longterm bond yields. We think that bond yields, the curve. In overtime. The curve willis steepen the curve willis steepen overtime the curve will steepen overtime. [no audio] 50 countries rising industrial rates. 50 countries. There is no weak spot anywhere. Why would we need a much lower yields . Manus i want to go back to tailor because we blew up the headlines this morning. To fitting the bill. Together to where the taylor this is what is moving the dollar. This is what is moving the bond market. Where do you see the new terminal rates . The dots have faded slightly as a go out to 2020. As we go out to 2020. Tim wherever nominal growth is, should the 10 year yield be. Growth is growing at 2 . Fall. Es it ever seemed to two. N of what . To how quickly we get there, who knows. Someone like taylor might encourage a wholesale up in the yield curve at anna you would do that. We will see whether he is the person for the job or not as a janet yellen is in front of trump later this week. Tim haywood, investment director at gam. Manus if youre a bloomberg customer, you do to watch the tv show on tv go. You to follow all of charts and into the conversation and ask a guest a question. Anna use it wisely. Airbus has agreed to acquire a majority stake in Bombardier C Series. The move gives the plane a muchneeded boost in its battle. Ith boeing over global sales manus lets get to our reporter in asia, kind g park. How is it going to help bombardier . Reporter this is going to give a very big boost in bombardier and the Cseries Program because it has been overrun with cost issues and hence why bombardier has get financing help from the government. This is going to be very good news for bombardier because it is going to ease some of the financial pressures and having to market and s