With a but of Dollar Strength of their in advance of the ecb on thursday. A quick look at u. S. Stocks, i huge day for earnings both good and not so good. Here we have some of the better ones, leading the s p 500 is hasbro, aladdin toys were very successful. After it is up 5. 6 Beat Estimates as well. Those stocks are higher now so you might think why isnt the s p doing even better than that . Still below 3000, but that is because some earnings stories were not so good. This is their worst performer in the s p 500. Guy getting back to our top story, Boris Johnson has won the race to lead the party and by extension become the next Prime Minister and he has made it clear what his top priority will be. Theres a mantra for the campaign the adjustment by case you have forgotten it. Deliver brexit, unite the country, and defeat jeremy corbyn. That is what we are going to do. Bit of insight now on what exactly is going to happen next, for that we are joined by our Bloomberg Government u. K. Reporter. What changes as a result of Boris Johnson becoming the Prime Minister . The first thing to note is what doesnt change. The maths in parliament that are incredibly tight and have been 2017 generale election. Boris johnson becoming Prime Minister doesnt add a single tory mp to the number that there are in parliament. In fact yesterday by coincidence , because a conservative viewer it has been charged, the number of conservative mps has gone down. Technicallightly point, but the government majority even with allies is two, which is not a lot. It probably goes down further next week after the election of a conservative who was convicted of fraud and is probably going to lose his seat to a liberal democrat. Guy given the math that you have just discussed, is a going to be with the deal or without a deal, brexit . The only way i can see this going through is if he can persuade the European Union to do something that he can then sell to his party, removing the irish backstop. This is the brexit deal that they dont like. Maybe theres a form of words that they can move around or something. Essentially the conservative already pretends to believe that and not all of them probably 20l, but then there are labour mps who are potentially inflate who want brexit done and who can see that their party is moving in and antibrexit direction and if they want to get it done, they have to start voting for it. So maybe they vote for it. My mentalbe image of this is a very small runway and a very dense jungle on which hes trying to land a very large plane. Mpse goes for no deal, tory who dont want no deal are fairly confident they can stop them. Now, lots of people are not quite so sure that they can, but it gets really messy at that point. At that point hes potentially being sort of forced into a general election or he would lose a confidence vote or all sorts of stuff that will very exciting interesting outcomes. Just in terms of the broader question, does Boris Johnson half it sides between the United States and europe . There are a whole kind of range of issues on which the European Union is on one side and the United States is on the other and he seems to be kind of caught in the middle. Can they navigate a path to stay in the middle or do they have to pick sides . Yes, there are issues in which she will have to pick sides, but on iran and things like that britain has always betweend an odd course europe and the eu, brexit making things difficult, europe will no longer be at the table. But they have always managed to have quite a lot of theres a lot of british diplomatic experience in sort of talking to them and sort of talking to them. I think that in a way, given his natural have his cake and eat it desires. In a funny kind of way thats the bit of this that aligns with what britain has been doing for a very long time. Guy we will leave it there. Thank you very much indeed. Vonnie joining us for insight on the Market Reaction to these developments we are joined now by daniel morris, Senior Investment strategist. That we know one of the elements Going Forward, the new Prime Minister, Boris Johnson, is there a trade you could put on here . Daniel i think its probably too soon for that as far as what we are concerned. What happened today is one of the things about the future for the u. K. That we were relatively certain about. At this point there are so many scenarios and paths on which brexit can develop and the implications of that on the economy at this point, we are neutral on the u. K. Market and on assets within the u. K. We are just waiting to see if and when we have a bit more clarity about how things might develop and then determine where the opportunities or the over and under valuations are. Guy its interest vonnie its interesting, the pound index is relatively unchanged, the pound versus the sterling and the euro may be weaker, but nothing to write home about. Does that mean that the market is pricing in continued stagnants . You could say that this is one of the few times that the market has gotten a political event correct over the last few years. I agree that it seems to suggest that this is what the market expected and reflects the particular decision today and the overall uncertainty that we have had for several months or years now that we really expected to continue. Some were not six expecting significant moves into we had more clarity. I think it will oscillate on the range that we have seen because there is no Additional Information that allows you to change or expectation. Daniel, what would a no deal brexit look like . The moment is that the market is not pricing in a no deal brexit and yet a lot of people are talking about the fact that Boris Johnson raises the chances of a no deal brexit so im wondering where you think the level is. We are kind of trading one hundred 24 now. Are we 110 on the cable rates . Where is it . Daniel i dont think it would be any lower than it is today. The estimates that we have seen, we havent come up with our own, but it does grow to 110, 115 which seems to us a reasonable expectation of thats the reality. If we got to parity, we think that would be an extreme level and at that point we would think it would be very attractive, but we dont necessarily anticipated reaching parity versus the dollar. Anticipate it reaching parity versus the dollar. Are morechief hawks dovish now, taking rate hikes off the table. Was it always assumed that the bank of england would be unlikely to hike rates in any shape or form given the scenarios faced by the u. K. . Yeah, it was never a scenario we found entirely plausible, despite the capacity of the u. K. Economy under whatever scenario you anticipate from here. But in the shortterm of course it will be from the bank of englands point of view at least supporting the economy case there is any additional drag on growth for more never source. But over the median term it will be about the potential growth rate of the u. K. Economy and the trade relationships that the country has. It is from that point of the bank of england is going to have to set what they think is the right level of interest to keep inflation from accelerating. Daniel, what is the mps best idea right now . We are currently overweight equities so overall even with the risk that we talk about, be it brexit or iran, we think there is more relative opportunity there versus emergingmarket equity, so thats the area that we think is the best place to put your money in at this point. Vonnie daniel morris, thank you, hes sticking with us, we will get back to him in a moment very at, lets check the markets, small gains for the major indices, the dow up one third of 1 , the s p up a quarter of 1 . The nasdaq is up 1 10 of 1 . But lying the turmoil under the surface, cocacola is up almost 5. 5 . The likes of verizon and travelers are lower in the dow. Groups down 7 after a difficult quarter. Likewise, bank corp. Is down more than 6 and some of those are dragging other stocks with them. This is bloomberg. Guy from westminster, im guy johnson. Vonnie from new york, im vonnie quinn and this is the european close. Heres courtney donohoe. The globalutting growth forecast again, the World Economy expanding 3. 3 this year in 2020, down from aprils projections. The imf suggest that brexit could derail a projected rebound. The white house and Congress Reached a compromise that no one is happy with. Boost spendingo levels for two years. Defeatdemocrats president from next year and could settle the administration with a fight over the debt ceiling and 2021. Sales of previously owned homes more than forecast last month. Unlimited number of low to mid priced properties were straining demand. Median sales prices rose to almost 286,000. The Justice Department has given Robert Mueller guidelines on what he can and cant help with tomorrow. He has been told to stick to the already released public report and is not supposed to discuss ongoing cases but some details of his work maybe covered by executive privilege. More than 2700 journalists and analysts, im courtney donohoe. This is bloomberg. Lets get a check on Global Markets with abigail doolittle. Abigail taking a look at the s p 500 in the u. S. , up one quarter of 1 , optimism around earnings along with a potential debt deal. This is of course perhaps in reaction to Boris Johnson being elected the new Prime Minister of the u. K. And what it meet will mean for brexit. , oneikkei is higher percent, confirming all of this. At least here in the u. S. We have the 10 year yield that was higher earlier telling you that bonds were lower and now flat. Whats not flat, in germany we have a fiveday rally from the. Ond the bund seeking bonds, losing 11 basis points over that time and the yield now is down 36 basis points on the year again. Its extraordinary that investors are paying the German Government to park their money, another story we will be keeping an ion there. Helping the s p 500, earnings winners today, Sherman Williams is up, a mixed quarter and they beat earnings with margins much better on a yearoveryear basis. Investors like that. Cocacola hitting an alltime high, plus those low sugar drinks really helping out. United technology putting up a strong quarter, beating the boost on arrow space. Guys, we are of course in a midst of the summer. Like last summer, not a lot of big moves for the s p 500. This chart goes back to last summer, the daily moves, starting in june we have a long stretch of the s p 500 basically going july, august, and september without making that 1 move and at the beginning of this year right now we are on day 31 without a 1 move up or down for the s p 500 and it will be interesting to see if it replicates last year, where the s p 500 took the stairs. Guy abigail, interesting. Range,reak down that what could deliver a 1 move on the s p . At 25 basis point cut from the Federal Reserve . You wonder though whether or not that will move the market up and down. If you could get 50, that seems to have added a bit of cold water upon it. Lets get back to daniel morris. Joining us now in the london set, daniel, do you think that we go up or down . Have at move the s p tight range that abigail was talking about . Daniel i think you are quite right, it will depend on the size of the market at this point and that will determine the direction of the market. We have heard a bit of both. U. S. That should be negative for equities and even if we have had a rally, clearly so far this year if the fed keeps them from emphasizing Downside Risks to growth and cutting rates because they need to protect a growth in the economy you feel that will impact earnings at some point but if on the other hand they suggest they dont need to have Interest Rates as high as they thought they did, it should be positive for growth. What were really looking at his communication. Guy there is an expectation that the fed is going to cut rates at the moment and there is growing anticipation that it will restart there qe program. Whered you think below is for the german tenyear this year . I have been hearing 60 basis points and some say that it could be lower than that. Where do you think it is . If anything we think it could be moving in the other direction. It has really gotten ahead of itself in terms of what it bank. Ed for the we have had it walked back to 25. Similarly in europe the markets have assumed that there is going to be a restart to qe and we dont think that that is necessarily the case. Recent Economic Data for the eurozone, its not obvious as it has been intended and they think they can do it if necessary, but thats not the same thing as them starting with the meeting coming up. If that turns out to be the case , what you could see is a backup in deals. Vonnie do you see any mispricing across europe right now, daniel . Daniel one thing that weve would be concerned about would be spreads on bonds, moving a turning from anticipation to disappointment with a bit of a backup there for a tie in as well. We think really what the market should be focusing on is fundamentally Earnings Growth in the earnings season on both sides of the pond right now. As far as what we get for this quarter, this is when it becomes much more aggressive with the market anticipating 13 of this year. Have forat we corporate to achieve. The Companies Wont be able to get the high Earnings Growth. Theres the risk for the markets. Guy the spread between value and momentum, whats a going to take to bring this in . Daniel you have got to have a scenario where you see a more significant steepening of the yield curve with inflation to have to for the differential to turn around. Daniel, thank you for your time today. Do remember the function g tv the allows you to look at bloomberg charts featured on television. Catch up on key analysis and save your favorites for future reference. This is bloomberg. Guy from westminster, im guy johnson. Vonnie and im vonnie quinn in new york. Time for the latest Bloomberg Business. Nissan reportedly cutting at least 5200 more jobs around the world according to kyoto news. It comes on top of a project unveiled in may 2 shed 4800 jobs. Recent car models and poor sales in the u. S. Are blamed. United technologies rated its again off it forecast, the Company Continues to show strength in the Aerospace Markets and that is seen as an of the ceos plan to reorganize around aviation and defense. That is your latest Bloomberg Business flash. Checking markets now we are seeing gains for the three major averages, the s p 500 is up 3 10 of 1 , but lying all of the earnings reports, some of which are wonderful, like hasbro and Sherman Williams. Thethen of course we had High Frequency data out at 10 a. M. Eastern and that Manufacturing Index saying that it disappointingly came in at 12 with economists looking at plus five. Interesting home sales as you probably know by now, disappointing a little bit coming in at five point two 7 million in june short of 5. 3 2 million that the market is looking for. Guy . Bonnie, less than five minutes to go until European Equity markets wrap up for the day. The big focus has been down here in westminster and on the political front when it comes to the markets you can see the big performers coming through, up 1. 8 are heading towards the close, largely being driven by the car sector with bmw doing well today, daimler training higher, its chinese partner taking a 5 stake in that trading higher. The market close is next. This is bloomberg. Nie we are seeing finishing angry. In green. Moderating those right now for the industry is, but has been a positive day on earnings in europe and on micro data. And on the idea that britain has a new Prime Minister, so we will see how Boris Johnson performs over the next 100 days. He is promising to deliver brexit by october 31. The ftse 100 is up 7 10 of 1 . The worst performer today performed a downgrade. And that was the worst performer for that, the hotel and restaurant chain. The dax in germany is up. Auto parts makers really did well today in the session and that really pulled up the dax. These companies did extraordinarily well. And continent towel, even though it downgraded for the year, he also rose off the back of the results. The cac 40 up 1 in france. Again, mostly on carmakers. The stoxx 600 auto index finishing up 4 . Rosey salama towel, it after saying at height prices on some products. And that is also hoping that helping the sector with 4. 7 . The pound index, relatively unchanged. This is versus a basket of currencies. The pound was weaker versus the u. S. Dollar, after Boris Johnson became Prime Minister. We will see what he can do before thursday when parliament goes on recess, and comes back in september. There should be resignations and a lot of moving pieces over the next couple days. Lets move now to the United States, where the s p 500 is i guess china to get above 3000 trying to get above 3000 again. A little more endued with their own movements today, because we have a