Ceo from november 1, becoming the first female head of one of the u. K. s top lenders. Sterling on the up. The pound jumps after Jeanclaude Juncker says a brexit deal can be reached. The feds funding problem. As callsbank mount for a permanent fix. Good morning, matt. Matt lets take a look first off at the 10 year yield coming down a little bit, but still a 1. 76 . A lot of choppy trading over the last couple days in this week of huge centralbank announcements. It has left us pretty close to where we started. 1. 8 . We did spike to 1. 9. At least we are below that. Take a look at the equity indexes here this morning. I wonder how the pound moves are going to affect the ftse trading this morning. Dax and cac futures are down 0. 1 . Ftse futures down two thirds of 1 as the pound jumps up against not only the dollar, but the euro as well. What else do you see in the gmm . Anna really interesting on that point. At four 30 yesterday afternoon, as equity markets were closing up, we saw that spike in the pound. All those comments from Jeanclaude Juncker. Will that have the negative correlation with stocks . Or will this be seen as risk positive . We will get into that with our guest a little bit later on. Lets talk about the asian session. India at the top of the equity indices. The moves we are seeing in the market are unusual and the reason for that is because of tax cuts. Surprise tax cuts from the indian authorities at a regional level it would seem for corporates. This comes on the back of a wave of other stimulus measures the Indian Government would try to introduce, including trying to attract investment. We will get to that. Say isger picture as you around Central Banks and what they have or have not delivered to the markets. Lets get on that subject to mark greenfield, our Bloomberg MarketsLife Strategies strategist. Great to have you with us this morning. Let me ask you about Central Banks. The narrative this morning seems to be, sure, Central Banks delivered using. Because expectation was so high, whatever they did deliver seemed a little bit more hawkish than the market anticipated. Good morning. It looks as though india is a great example. Investors want to see more from government and less from Central Banks. A bit of a shrug. A lot of centralbank action. Not a huge response. As soon as the government gets its act together and does a tax cut as you have seen from india, look at the response from equity markets. That is what other countries would be encouraged to do. India, quite an interesting story. Expectations are very high. Foreign money flows into the market. , other bad loan situations, missteps by the government there, started to turn around. All the gains which you had in the first month of the year. Thats why were seeing such a huge jump today. A lot of money has already gone back out of india. There is a lot of money on the sidelines. People want the government and the Central Banks working. India has been lowering Interest Rates, but it has not had a lot of effects. The two in unison and it is helpful for investors. You see in terms of the pound . Investors are pricing out and no deal brexit. We are at almost 126 in dollar terms. The euro is trading for less than 88 pence. Is that risk fading . Gettingcertainly we are back to a more neutral position. 1 20 to the pound. Very skewed toward no deal. 125, 126, it is more neutral. 130, you could probably say they are pricing a lot of good news. We are somewhere between the two. We are toward people starting to think some kind of compromise is possible, some kind of deal is going to be reached. We are not all the way there yet. The next couple weeks, it looks as though europe and the u. K. Can get together and do some thing serious, even if it is a lastminute deal. The pound probably has more upside. If it turns the other way, unwinding momentum and people start moving back toward no deal, the pound has long way to fall. Were going to see a lot of volatility, but it is not fully priced in. Were upside is the if the good news continues more upside if the good news continues. Anna let me ask you the question of the day we have been wrestling with. How far could stocks rally . What does success look like . , a china hawk,ry has shot rates through china, hasnt he . What is your assessment . What investors will be looking for is what it does to growth levels. People like the oecd, plus because ofnomists the effects of the trade barriers which are already in place. If a trade deal comes along which unwinds some of those tariffs, those numbers will be revived and people get optimistic. There could be upside. If a trade deal just means stop where we are and the existing tariffs are still in place, it is not that positive. Incrementally, a little bit, but not spectacular. What we really need to see is to get back to where we were more than a year ago when people were very optimistic about china and the United States economy is doing well. That seems to be a long way off. We need to hear more details about what china and the u. S. Want and see how that spins out. Any optimism would be good right now. You have a fascinating post about something very related to dollar yuan. The one into your cnh forwards, what does this tell you about 2020 election, Donald Trumps reelection chances . Though traders are beginning to bet on the fact that there is a limit to how far the yuan will reach. The two year forward against the one year forward, that gap is narrowing, suggesting at some stage, people are getting bullish. They see a bit of a pickup in the yuan just after the election next year. That does not necessarily mean to see they know where the election is going, but they probably are thinking the worst of the trade war situation happen before the u. S. Election. If we see this gap continue to , a good picture. Investors are putting more money into china for some improvement in the second half of next year. There is a longterm play, but it is quite interesting to see what happened. Thanks for joining us. Mark is a bloomberg mliv strategist. You can find these insights by typing mliv on your blaber terminal. Next on your bloomberg terminal. Next, the socalled climate cabinet, still no agreement. Ande is still talking pushing for what could be some have described as a stimulus in disguise. Yourberg radio is live on mobile device or dab digital in the london area. This is bloomberg. Anna a comeback to the European Markets open. 18 minutes to go. Weakness on the ftse 100. A lot of that pound related. Lets get a bloomberg first word news update. Iran has warned that a strike against the country could lead to, quote all out war, according to the foreign minister speaking to cnn. He denies to rons involvement in the attacks on saudi aramco, adding iran is very serious about defending itself. In japan, inflation hit its lowest level in years as the centralbank answers speculation it could have stimulus next month. In august. Ices rose japans key inflation gauge has not risen above 1 in years and is expected to remain at 2 . Netanyahus time as Prime Minister of israel may be coming to an end. Gantz may be recommended as the new premier. President trump may be about to lose one of his foreign allies. President Trumps Communications with a foreign leader. The Washington Post reporting an anonymous whistleblower raise concerns over the president s dealings with ukraine. Democratic lawmakers are accusing officials of stonewalling on details of the complaint. Sident trumps of missing dismissing complaint he did anything appropriate. Beijing is winning some allies. For the second time in less than taiwane nation has to the mainland. It comes amid spending on transport and utility infrastructure in the pacific. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks very much for that. Germany is expected to announced sweeping cuts sweeping plans, i should say, to cut Carbon Pollution today. A draft proposal says Angela Merkel wants Green Electricity sources like wind and solar power to generate 65 of the countrys energy. Of course, germany is a huge coal burning polluter right now. Does not agreet on how to achieve this dramatic change. I took a closer look at what the key issues are. Berlin is stepping up efforts to tackle germanys pollution problem. The governments climate cabinet will draw up plans to meet the Mission Goals to reduce Greenhouse Gases to less than half of their 1990 levels. Not everybody in the grand coalition agrees on how to reduce germanys Carbon Footprint. The main options up for discussion are to expand the Carbon Credits Program known as the omission trading scheme, or to come up with an entirely new tax on carbon fuels such as oil, gas, and diesel. Angela merkels christian democrats are worried a simple tax could spark popular backlash similar to the Yellow Vest Movement in france. Instead, they prefer the marketbased trading scheme which would put the burden on energy Consuming Companies and only affect consumers indirectly. Critics point out it could place German Companies at a disadvantage. Partners argueon it will still raise prices for consumers. The poorest among which could be hit hardest. Proposes a taxd tied to rebates that could help the middle class. Germany will decide how to set its industry on track to lower Carbon Emissions while not further weighing down the countrys already sluggish economy. This tax is key because germany has seven of the 10 biggest polluters in all of europe. They would be hit arguably hard. Others would benefit depending on which way the climate cabinet goes. The other huge thing here is that there could be 40 to 50 greenn euro package, initiative package, that would be stimulative to the economy. Some are calling it a stimulus package in disguise. Joining us to talk more about it is our western europe managing editor chad thomas. Sawme in this morning and that half of your reporters have been here all night long. Where do we stand right now in terms of negotiations . This is typical merkel. She loves these allnight sessions. We just found out chancellor merkel and the finance minister, one of the leaders in the spd, they have called a press conference this afternoon. We are hearing positive mood music from both sides. There is no agreement, but they are moving forward. We expect there will be some sort of a deal. Announced later today. Anna we know they are moving towards a deal. What do we know about what the deal will look like . Matt was talking about the theous strands, spending on green agenda, a change to the way taxation works. What do we know about whats going to be in this package . This is the real issue at the moment. There have actually been no leaks out of these discussions. Nothing in the german media as to what they have agreed on. Maybe they have not reached a final agreement on any of these matters. One of the things we are watching very closely is this proposal having to do with airline tickets. They are discussing potentially putting attacks on tickets here in germany to raise putting a tax on tickets in germany, at the same time, dropping the tax on train tickets so more people will travel by train. At stake here for the chancellor, her legacy, the government, the coalition. Why is it that germans explain four people who dont live here. They hate spending money. It really hurts. The german voter is so frugal. This is part of the mentality. They are really proud of the fact they have been running balanced budgets for years and years. Could not be higher. The social democrats have said they are likely to pull out of the coalition, which is why we are likely to have a deal. Greens surging in germany. Out this window, the brandenburg gate, there are huge protests planned to push forward on this agenda. This is topic number one in public polling. They want action. Importantedibly politically, economically, for markets. It is a huge story. It really could move stocks today. Pully could change germany out of recession, but also maybe save the planet . Anna maybe in passing. I was going to ask you about the stoxx including lufthansa. Could be on the move. Which other sectors to watch . Companies,r obviously. They could be hit either direction depending on the proposal. Requiresis a plan that far more electric vehicles, that potentially is a benefit for power companies. We will be watching automakers closely. What sort of proposals come out. There have been discussions about requiring carmakers to produce a certain percentage of their production in electric vehicles. There are many sectors that could be impacted today depending upon what we get out of the government. Matt thanks very much for joining us. Chad thomas. Weve got the whole team working on it. Everybody in frankfurt, all of bloomberg giving this full press because it is such an important story. Stay tuned for developments. We are minutes away from the open. Next, stocks to watch this morning, including rbs. The bank naming alison rose its next ceo. This is bloomberg. Anna welcome back to Bloomberg Markets the european open. Lets get to the stocks to watch. , a new woman at the top of rbs. Yes, alison rose is the first chief executive female chief currently the deputy chief executive at a unit of rbs. Kind of internal. In terms of the stock price reaction, this is in line with media reports, so it may be priced into shares this morning. Matt benedict, youre talking about rollsroyce. Im guessing the plane engine maker, not the luxury carmaker. That is right. Easily confused. We are talking engines. On the engineay that powers the boeing dreamliner. They have had some issues with that engine. We are hearing from rollsroyce they are having issues with a replacement part. That is not good news for investors. Consistent issues over the next couple years. You will see the stock down. The latestan get all sock stories by typing first go on your bloomberg terminal. The open is on the other side of the break. Anna a minute until the start of cash equities trading. Welcome to the European Market open. What happened overnight that could give clues . Up. 4 percent on the msci asia index. Suggestingere, s p upside at the start of the u. S. Trading day. A busy week in central banking. Oil prices edging higher on geopolitical tensions and the pound once again takes a leg up, up. 3 in this mornings session, it was up at the end of the trading session in europe yesterday. The ftse 100 hasnt had time to reflect yesterdays move and you will not be surprised to see the ftse 100 is suggested weaker. The negative correlation holding firm for the ftse 100 at least against the pound. We will see how it looks further down the market capitalization scale on u. K. Stocks. We are expecting a flat open for europe as a whole, but look for weakness in large caps in london because of what has been going on in fx markets. The dollar index, down. 2 . 2 underlining reasons for ftse weakness, down. 25 for large caps and climbing. Down around. 75 . European equity markets opening up some we will look for individual movers. Weve got big news around rbs come a few u. K. Corporates, rollsroyce, the engine manufacturer and smiths group talking about being on track to sell a unit. From a sector perspective, we look pretty mixed. Mixed on staples and production industrials. Storyergy stocks, a mixed on the round and health care looks positive. Not a very clear picture from the sectors. What do you see on individual movers . Matt a pretty even split. Not as much as yesterday at this time but pretty close. 317 gainers, 255 losers. Seeerms of gainers we adding to the stoxx 600, helping to lift the index, and it is up almost one point right now, nestle, novartis, roche, these are some of the heaviest stocks on the stoxx 600 index. On the downside, you see b. A. T. Off 1. 5 , rollsroyce down 3. 25 . Bigger movers that are holding down the stoxx 600 from further gains. Hsbc is also a loser. Interesting to see the banks split. Gaining, someubs like hsbc losing. Story being told by the move screen, either. Anna we will look for the u. S. Open where futures point sensitive lee higher. European markets opening next. From centralok bankers this week, a few cuts come a hike from the nordisk bank and hold from others. The chief Investment Officer at barclays is with us. One of the stories a colleague was riding overnight is neutral is the new hawkish because it seemed markets were expecting such dovishness this weekend last edit a got a bit of that but not as much as they had expected. That was interpreted in a hawkish way by markets. 12 are you expecting from the central banking story from here . At the moment, it is on a knife edge, isnt it . In the u. S. , there isnt that data to provide impetus to cut rates further. A lot of the market and bond market are talking about a japanization theme and secular stagnation and Interest Rates need to go to zero. The evidence is not there and the economy looks next and oriented sectors are suffering but the consumer is holding up ok and inflation hasnt disappeared. Matt you got some pretty weak pti numbers in germany. Yearoveryear, a drop of 0. 5 over the last month. Are we stuck in this negative rate trap in europe . Japan clearly looks like it is. When you do your longterm strategy planning for the next five or 10 years, are we still in negative rates . Will that is a great question. One of my colleagues has written a big piece on whether german widow maker, next referring to the idea many people were betting against japanese bonds in the mid1990s onwards and they have been frustrated mainly by japanese households continuing desire to fund the government and there similarrficially things. Low growth, low inflation, but what we would point out is the ecb retains some credibility. Evidence there was price setters in the economy were looking backwards rather than forwards in how t