Is set to widen, looking into whether the president s limited attempted to slow the Michael Flynn probe. Anna a very warm welcome to bloomberg daybreak europe. Our flagship morning show here in the city of london. Us she finds the story the fed told us what theyre going to do incrementally about the Balance Sheet but what is the dollar more focused on . Its down 6 this year. Its focused on this, the economic surprise index in the United States of america is careering towards zero. We have not seen that since the president of the United States was elected, and there is your dollar index, giving it all back. What is the dollar really focused on . Anna focused in the longer term around this. The dollara boost of around what the fed did but that was only after it sold off inflation earlier in the day. That astalk more about we go through the program. There are stony some another stories we want to get to as well. The msci hes in the red, down. 8 . A lot of that has to do with what were seeing in oil prices. Oilprice of a barrel of below 40 abit but barrel. It was up by 3. 7 in the session yesterday, the lowest levels since november. As concerns intensify as to whether u. S. Production will offset it. Manus the 8 tells the broader story. Lets have a look. Looking at s p futures as well. The s p is a little lower. Bloomberg intelligence saying we are impressed by the aggressiveness of the fed pause intentions. We will talk more about that in terms of Balance Sheet reduction. This is the aussie dollar and new Zealand Dollar. Australia just keeps on making those jobs. Unemployment drops to a fouryear low in australia and theres a rebound in fulltime positions. If you were short aussie in any way, youre getting lynched. See some of the features in the u. S. Coming up a little bit more after we got use of the probing of whether the news of the president and whether hes was attempting to obstruct justice. Maurice leave you will join us at 6 30 a. M. London time. Juliette saly is standing by with your first word news. A special counsel investigating russias interference in the 2016 election will examine whether donald trump sought to slow the investigation into former National Security adviser Michael Flynn. According to three people familiar with the inquiry, Robert Mueller plans to interview to top intelligence officials over the matter. The move expands the scope of the investigation. U. S. President donald trump and stevefe have visited scalise in the hospital after he and four others were wounded in a shooting yesterday. The thirdhighest rank republicans suffered fractured bones, internal organ injuries and severe bleeding after being shot in the hip. He remains in Critical Condition after the attack at a congressional baseball practice in alexandria virginia, near the nations capital. In the u. K. , fire crews have worked through the night to doubt the deadly blaze that killed at least 12 people. Officials have warned that the number of for tallies will almost certainly rise. The fire also injured 74 others and left an unknown number missing. Cause of the blaze remains unknown. Into. K. Has slipped slitical limbo as theresa may talks drag on. Calls are mounting for Cross Party Consensus on brexit. The slow progress of talks will further delay the formal opening of the new session of parliament. Apparently it is scheduled for monday. The chancellor of the exchequer Philip Hammond will make the case for a new path to brexit today. He will give his annual address to the city of london to push for socalled pragmatic brexit. It will come in his first public appearance public since the election results. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Its a been a little bit of a risk off move in asia after we had the fed hike. A lot of the Energy Players dragging the region in light of the Australian Share market and the hang seng which is off by 1 . The nikkei index is weaker to the tune of about. 3 . The taiex is one of the few markets in the green. Digital sought a court order in california to try to sale weve heard that private equity firms are interested in trying to buy that unit. Goldman sachs is come through saying alibaba risks are not as extreme its what weve seen in the u. S. Tech stocks. Bellamy australia is looking quite green, up by 12 . After back online completing its institutional offer. Manus was talking about the australian jobs numbers earlier. It was once again a surprise, but check out how many fulltime jobs were created in the month of may. We see that reflected on this chart. Overall, 42,000 jobs were created in the economy last month, 52. 1 thousand these were fulltime. Those will start to show strong momentum coming. Ack into the economy the aussie dollar spiking on the back of this. Anna we were looking at the aussie against the kiwi. New detailss out of Deutsche Bank in the last hour or so. A new structure for its corporate and Banking Division which includes creating a separate business for its Capital Market corporations. Manus lets get into the details. I reported joins us now the colors finance for bloomberg. This would bring corporate and Investment Banking together. Its about more efficient use of capital. 60 got percent will go to the corporate side. Step inis just the next the restructuring that was announced earlier this year. The bank tried to do a few things to streamline some of the different businesses and is now basically putting its corporate to overseeking the effort. The responsibility is to oversee some of the business lines including corporate finance, s. Obal market these are crucial businesses for the bank. I think thats part of their it moreo try to make efficient and streamline the managerial structures. I suppose thats what theyre trying to achieve. Whether they will find it effective or not remains to be seen, but for now it appears its a long expected plan to overhaul the bank top to bottom. Anna thank you very much, matt scully with that update. Fed. Return to the manus janet yellen is pressing ahead with plans to normalize Monetary Policy and raise rate. She News Coverage yesterday played down softening price pressures and showed confidence that the fed could hit its 2 inflation target. Data maping inflation move the markets, but it didnt move the fed. Policymakers raise their benchmark Interest Rate once again and say they remain on a path to have another rate manyase this year and as as three next your. While the statement suggest policymakers are watching closely the decline in inflation, chair janet yellen said they expect to raise rates, because it is prudent. Even with the moderation of newlevels needed to provide entrants in the labor market, we do have the strengthening policy, with accommodative, all that we are doing in raising rates is moving removing a bit of accommodation heading toward a neutral pace. Appropriate, were not moving so aggressively as to put a brake on continued improvement in the labor market. The fed released a plan for winding down its 4. 5 trillion Balance Sheet capping investments over a 12 months. And continuing to do it until the Balance Sheet reaches and unspecified level that will allow it to decline in a gradual and predictable manner. The committee will continue to use the Balance Sheet if necessary in the future in the event of another recession. Stubbsoining us is david from j. P. Morgan asset management. Janet yellen, so much to talk about from this press conference and what did or didnt happen in markets. They are data dependent, but were talk to ignore some this data because it is a bit noisy. David they are in a difficult situation where historically youd expect inflation pressures to ramp up. Withdraw,to gradually the key word is prudent there. At the same time you have some unusual things going on in the Global Economy and the u. S. Economy which is dragging inflation down. A couple of key things in the p intion data, core cpi august of last year and is down to 0. 6. So theres nothing to see here for the moment. Bloomberg intelligence, we talked about the Balance Sheet. They given some caps in terms of what theyre doing but i love going to be like watching paint dry. What did you interpret in terms of the caps . Its quite ambitious, they want to wrap it up by a further 10 billion to get to a point where in theory they will be allowing 50 billion a month to roll law, if it is rolling off in that month because the actual schedule of three investments is in the Balance Sheets. Precommitting to that is quite ambitious. Are fully caps filled, that gives 1 trillion off the Balance Sheet by 2019. Its fairly aggressive. Where is the target for the Balance Sheet . Phrase, we wonderful dont really know, but we are going to learn. It will be lower than it is now. Started, it will be nice to see a staging point. The main power of qe3 was its unlimited nature. If you dont tell us where you going to stop, the part of the market that might worry is still waiting for details. Anna what about the start time . Do we know that yet . Were were looking for an announcement in september on the wind down. Some people now say we get the start time for the wind down in september and then we get the next rate move in december. David thats where i am right now. Manus hes off like a racehorse. This is obviously pointing to the fact that maybe you should focus your tightening on the middle and long end of some of thed allows dollars to roll law there instead of hiking the short rate. There was another line in mayerdays story that she go for a bit of a path in september. It looks like it will be Balance Sheet reduction and rate hikes in syncopation. Has the market got the ability to do that . David the market is not priced for it. Im very skeptical. The difference in getting policy away from being extraordinary low and continuing to hike it three times a year while the global context remains the same. By the end of next year, the ecb will still be at 40. It will be very hard for them to go at that pace and im not sure the economy is going to warrant it. I think it remains quite aggressive. Remember they took down the inflation forecast for this year for the next couple of years. They still by that inflation will be at the target but im not quite sure. Anna we have at least three more questions to ask you. David stubbs will stay with us. A busy day ahead. Manus Rate Decision from the Swiss National bank at 8 30 u. K. Time. Tonight u. K. Chancellor Philip Hammond and mark carney mansionak at the annual house dinner. That will be very interesting. Find outmage control, how the u. K. Chancellor is looking to refocus brexit on the economy and away from the immigration story. This is bloomberg. Anna welcome back. 1 21 in the afternoon in hong kong. The hang seng down by more than 1 . Move lower in the oil price yesterday. Talk about whats going on in the u. K. Manus Philip Hammond will make the case for a new path for it that focuses on protecting jobs and economic growth. His first appearance since the election. Use his annual Mansion House address this evening to the city of london to push for socalled pragmatic brexit. Reflects theresa mays failure to make immigration control the priority in leaving the eu. Fascinating, how strong the language will be will be one thing we will be looking for. How convincing he will hold sway and have the upper hand. I think he has more sway right now after the election because of the weakness of the government in general. Machinations the of the the key word is pragmatism. Thats what markets and investors want. Step away from the harder line issues on both sides and try to find a way forward that doesnt disrupt supply chains and investment. Manus we saw Nicola Sturgeon yesterday politicking. And hisut participation call for greater cross party unity. Went through my mind was this, the eu are so united or would appear to be, no sidebars, no side deals. Ofbe there is merit in terms reestablishing some kind of strength from bargaining. David it would be nice if you had a position that was well supported. Think there are people who are putting the cart before the horse. , were we discuss the future dont discuss the trade deal before we discuss the phase one exit modalities. It includes the u. K. National and also the brexit bill. Brexit bill is where the eu is most united. Those are the figures, anything more than a billion or two somehow we are told the issue is going to go away later after the general election and i still dont see how. To a certain extent you can have consensus on the final point of the final resting place of the issue. Somehow both sides have to get past this incredibly difficult issue. We will not still be talking about this issue next year. You think so much of the time could be eaten into by talking about that bill. David im worried that it will leave zero time to discuss it. Do mark carney and company go . Nowhere, seems to be the consensus. They dont really have anywhere they can go. Theyre very cap doubt, Interest Rates, rockbottom. The hard data of a recession to bring any further stimulus back onto the table. They will look over downing street and say they will that done Senate Something about it was a budget. One is talking about a hike because you have the consumers under pressure from the ratings being squeezed. Savings rate at an alltime low. Somewhat. H has slowed on top of that you have a hit in the Business Confidence we saw from the elections. England isbank of perhaps in the worst of all carney we knowse has intimated hes not a fan of negative rates. Reengage qe . Ly what does it do to the gilt story . It will dont think react badly to bore fiscal spending in the short term because the u. K. Is credible and does borrow as a safe haven asset. In the event of a recession youd see lower gilt yields because of weaker growth and inflation. U. K. Does have the fiscal space to respond to that. Thats the opposite of the plan for the government, which was planning the greatest Fiscal Consolidation over the next couple of years. Anna we will see that plan has changed. David stubbs this staying with us here on daybreak. Manus we will talk about tax with tech with maurice livy, next. Anna welcome back to bloomberg daybreak europe. The dollar against the yen, pretty flat. Big moves in the australian currency as the result of a strong labor report. Pretty flat on the dollar against the yen for now. 6 30 herein london. Lets look at some of the stories that have made it into todays edition. Manus the cover story, something we will probably see boyle a little higher as the day looking into whether the President Trump possibly sought to obstruct justice. Investigators plan to interview the director of National Intelligence and the nsa head, michael rodgers. Expands the probe focused on russian meddling in the 2016 election to examine the president s own conduct. All the way back to james comeys testimony last year last week. The next story is on the Federal Reserve. The youth centralbank raise rates by point we by basis rates and laid out plans to cut its bond portfolio this year while evincing some concern about week inflation data. The cap forecast for another hike this year and three more next year while lowering its 2018 unemployment estimates. Janet yellen blames it on oneoff factors such as reduction in wireless plans and drug costs. She expressed confidence the central bank is on course to hit its 2 inflation goal. Anna manus and lastly, we focus in on brexit. Philip hammond will make the case for the new brexit pat. He said theres more focus on jobs and less on immigration. Plans ary official nationals. Fer for eu officials will meet today in brussels in the hope to finalize the arrangement for talks that began on monday. Theresa may is still convinced they can start these talks. Anna when will the queens speech take place . Bb tech showcases the work of thousands of startups. Where there with one of the industrys biggest names. Good morning, its the second edition of b the tech with 5000 startups, more than 1000 investors and im joined by the cofounder and chairman of the advisory board. Last year you raise more than 100 Million Euros for startups. Yes, what happened last year, collaboration between largecompany startups and we expect there will be more of that. 850 investors last night, 1400 have registered, so we are expecting a lot of investors, and we know expect weat we do will have a multiple of the 100 billion of last year, maybe four or 500. People areke focusing on making good contact an investment. We also have the visit of the new french president , Emmanuel Macron. How excited are you about this . Theou think hes creating right environment for startups in france . Hes been the one that would been leadinges the way during the last four or five years. Something a bit a little bit like his baby. Be a very good president for innovation, rmb, and startups. Agenda, heis in his has plan to spend about three hours, maybe a little more, and he will make a speech at the plenary session. So i am expecting that president macron will play a key role in the digital environment. Theres always been a concern fr