Loreal. Manus welcome to bloomberg daybreak europe. I am manus cranny. Anna edwards is out this week. This is the deal. There is value in water. That is what we have got here. This is the forward for nestle. It is trading at a premium. To its peers. On average, is about 4 over. This is a value creation. What does he want . He wants loreal. Mark schneider, activist shareholder could be his Worst Nightmare or create value. Sell a stake in loreal, taking 27 billion. Any 7 billion. This is rare to find a businesslike nestle with so many avenues for improvement. Set a target, the break. 80 to 20 in terms of your margins by 2020. What will nestle deliver . Lets see how the stock performs on the open. You go away for a begin to come back and nothing can stop the juggernaut of foolishness bullishness. The msci pacing higher. You have oil rebounding. You see technology playing into this market. Since on is up 1. 2 . The csi 300, what a storm or. A stampede continues. Mscis addition to mainland shares is a still reverberating. We understand state backed funds are supporting the market. The volume, 60 of the average volume is changing hands. Oil, what a butchering it has taken. It is still technically both brent and wti are in bear market territory. Five weeks of torture. The hedge funds have pulled their long positions. , cable, up. We have not seen a run when on sterling since june 4. On sterling since june 4. It comes down to brexit. Those are your markets. Ets get to Juliette Saly she has your first word news. Italy will commit as much as 17 billion euros to clean up two failed banks in the nations biggest ever rescue. Support to state acquire their good assets. Speaking after an emergency said theynd officials can take on some assets without hurting capital ratios. Alternativea better than this decree . From the point of view supporting families, the two banks, the stability of the financial system. I wish the people who criticize me would tell me what a better alternative could be, because i do not see it. Juliette you can permit with hit by a cyber attack on saturday. The house of commons is investigating the incident along with the National Cyber security sector. The breach came two days after the times reported the password for officials failed. Qatarllerson has said will find it difficult to comply with some demands led by the saudi led block. He did say they can there can be a basis to talk. The list of demands numbers that 13. Numbers at 13. In pakistan, more than 150 people have been killed after eight tanker exploded. A tanker exploded. In the u. S. , firefighters are battling intense leases in california and utah. Out in Southern California after a car crashed on a freeway. Meanwhile, Officials SayBetter Weather conditions have limited the growth of a wildfire in utah. It has come to the evacuation of 1500 people from hundreds of homes. Spacex has launched its ninth record of the year. Last nights liftoff from california follows another launch on friday. The craft is carrying 10 satellites. It is the first time spacex has sent to rockets into orbit in shutting in such a short period. 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. We are getting towards the end of the first trading day of the week in asia. There have been a lot of markets closed today, including should say,ndia i and the philippines. Some great games coming through from the tech players. Japans index has been marginally higher all day. We are seeing a lot of info coming through into these large cap stocks in china. We are seeing a lot of inflow coming through into the large cap stocks in china. A Taiwanese Company has hit a record high on upgrades iphone maker on the back of its agm last week. Toshiba, after theyll on friday, we heard the Tokyo Stock Exchange was demoting it to the second session. Toshiba falling by four point. 4. 9 . Rbc analysts have told bloomberg it is likely that rio tinto will look at that big closely. Closely. Id we are counting down to the handoff from hong kong to china. Continuing to see this growth accelerate in china. If you look back to 1997, hong kong had about 18. 4 of chinas gdp. It is now less than around 2 . Kerry lambeau telling bloomberg she still expects hong kong to be a key Financial Sector in another 20 years. Thank you very much for the roundup. Some headlights coming through from the fed president. He says the u. S. Is a strong job market. We going to have a whole host of fed because this week. Fed speakers this week. This is the first of the week. He said you have a strong u. S. Job market. This is the speech he gave in sydney. He says inflation, he sees, reaching the 2 goal in 2018. These are the headlines coming through from him. One or two lines coming through. A banker is find the panetta banker assets. Fly will by some of the assets of veneto. We will have the details shortly. Theresa may will give more details today. These on her plans for e. U. Nationals. The proposal last week was criticized by european leaders. It said it did not go far enough to protect citizen rights. Meanwhile, david davis responded to reports to oust the Prime Minister. He spoke to the bbc. Selfindulgent is my message. It on with the day job, which is people put us here to deliver a decent economy, like for them like for them. The more you do of that, the more selfindulgent nonsense you go for, the more difficult to make it for us to do our job. Manus david davis there. Stephen macklowsmith is the atd of european strategy j. P. Morgan. Good to see you this morning. I wrote down, the leadership challenge. Catharsis or pragmatism . Of padma to voice them at the moment that seems to be raining for theresa may. In other words, hold the hound the debate. Hounds at bay. Stephen they are not what they would like to be. That theresaon is may would win a compelling majority in the general election, and she did not. Any Prime Minister who calls an fails by a majority is in a weakened position, but the choreography is complicated. Two weeks after the election, you start with the e. U. Negotiations, and clearly, what you need to stability of leadership at that point. The last thing you can afford at the moment is a conservative Party Leadership election. Manus we will get more details today in terms of e. U. Citizens rights in the united kingdom. A more substantive response. Yesterday,g to us anything but the European Court of justice. I have written down, style over substance. This is the brexit right argument. If i can rebrand this, i have won a victory. Stephen its interesting. Im not sure the country as a whole is as incensed about the European Court of justice at some politicians. As some politicians. We will see what comes out of it. It is a year and a day since we voted for brexit. Lets talk about markets. A bounce for four days in a row. This is the topline index. How do you look at the u. K. At the moment . Fading consumer confidence. We have gone from hero to zero in terms of growth. Challenging time for the u. K. In terms of markets . Stephen personally, i do not see it as challenging. Revenues for companies are so much of the last month what is happening underneath is interesting. Growth is not zero. Gone from the bestperforming growth in g7 to the lowest. Stephen that is true. The u. S. Is still in the middle stages. The uks facing challenges, because until the nature of our relationship with our largest single trading partner is clear, it is probable you would get some deferment of investment from companies. The sterling has weekend. Has weakened. G there will be pressure on consumption. It is difficult to see genuine pressure on consumption happening at the moment. In the background, the cause of the rotation in the stock market , a lot of domestic sectors have been genetically berated. Dramatically derated. Manus i hear what youre saying. We have a variety of issues to deal with. We have been binging on credit in the united kingdom. It is growing at around 10 per annum. The numbers are pretty staggering. In terms risk is that of the financial policy committee, which will meet tomorrow . There is an expectation of drawing back. Me when iworry to look at the trajectory of that. Stephen in some ways it is. If you look at the history, it of ically the amount what is the saturation point for Consumer Credit . I dont think we have reached that saturation point. The aggregation of debt to Fund Expenditure is a danger. Productivity is not zero. It has been growing modestly in the u. K. Manus if i overly a percentage of debt i have relative to the household income, it becomes a more of a question. Stephen then flip that around. What about the debt servicing costs . Because Interest Rates have been low, there is that servicing cost. Manus lets see what happens. I will beove higher, interested to see how the u. K. Consumer holds. The position in the expectation, that puts doubt in peoples minds. Guest stays with us. We have a lot more to get there. Stephen macklowsmith stays with the show. We are going to go to italy. The government proving to emergency rules and the veneto this is bloomberg. Region. Welcome back. It is bloomberg daybreak europe. Lets get a business flash. Has called onloeb nestle to sell its stake in loreal. It intends to encourage management to sell its stake in loreal, increasing leverage for share buybacks and reviewing its portfolio. Thanlds a stake of more 3. 5 million. It for nestle was able to immediately comment. Was unable to immediately comment. Takata files for bankruptcy protection. The company filed for bankruptcy protection in the u. S. And japan. Filing listede more than 10 billion in my abilities. The filing listed more than 10 billion in my abilities. That is your Bloomberg Business flash. Manus to italy. It has approved emergency rules for two of its failing banks. Mobilizing as much of euros to liquidate the lenders, so good assets so good assets. The finance minister said there was no better alternative. Is there a better alternative than this it then this degree . The stability of the financial system. I wish the people who criticize me would tell me what a better alternative could be, because i do not see it. Great to see you this morning. How did this decree come about . I have to tell you the size of this operation. 17 billion euros is huge. Nobody was expecting this kind of amount. What happened is the two banks, bloomberg daybreak europe and bancao banca spa popolare di vicenza spa and veneto banca spa will be money to cover potential risks related to the operations. Monthsernment tried for to find a different solution. They were trying to attract private investors in order to rescue the banks. Successful. S not the ecb said time has run out and there are no other possibilities, plans to be implemented. That was the situation. From the political point of view, we heard a clear message from the finance minister, which is, you tell me. I have no alternative. This is the only alternative. There is no better alternative. What this driven by pragmatism or political actions . I think it was a mix of both. He wanted to avoid any big distraction. Lets from italy will go to general election maybe as early as next october, november, maybe early 2018. Of course there was a lot of criticism coming from the opposition. Saying, again, it will be up to the italian taxpayers to force the deal. Lets keep in mind that these two banks, while they may not be big in size, they are significant, because they are in the central of the region that is highly productive in italy. Thank you so much. Details. Latest stephen macklowsmith is the head of european strategy at j. P. Morgan. He is still with us. The saving of these two banks or the splitting of these two banks, do you think this is a good message to the market saying italians cannot in size, 17 billion . Stephen we saw this with the injection of funds. We are getting towards the end of the problem. This is not the start of the italian banking problem. People look at these assets, they look back to acquisitions of american banks in 2007. They say, i have seen this play before. Italian s in the the issues in the italian baking system are now well known. We know what the it the size of the italian npls are. They are a relic of 4 poor growth for many decades. The size was so great and everybody knew about them, that trying to bridge the groep thege the gap and the marks bank has taken is too far for the banks capital base. Manus relative to the european story, you can see 40 at ven eto. As you say, it is nearing the end of the issue for italian banks. Stephen macklowsmith stays with us. Line in terms of money to keep the european banks and business. This is bloomberg. The dollar is. And there is a little bit of an update for you. Ande is the dollaryen small games for the dollar. Lets put the markets into context. Good morning to you. And weis is interesting are looking at how this will develop through the day. Up andtish pound is there are interesting lines talking about what is happening. Up righthe ftse 100, now and the pound is up and that tells you that some european markets might do good. Dragound has acted as a and the trend lines are interesting. You see the index here and the trend line still remains in place. We have not broken that. There are some interesting trends happening to keep an eye on. As pointed out this morning, will this be a lead indicator or an anomaly . If this was going to break above, would it act as a catalyst . We will keep an i on this and watch it carefully. Daybreak is available on your tablet. You know how to get it. Coming to the rescue of italy. Euros. Ion proper expensive. Two are going to clean up of the banks in the region and the eu approved the intervention governmentsl see provide funding to purchase the good assets by 12 billion euros and they will set aside risks related to liquidations, so let me bring in smith. You were just talking about this and you said that there is data on the nonperforming loans. I think that is staggering. What may take place with the markets . The issue for the italian banks is that the size of the market is daunted by that and you have seen the secondary markets and the gap is because of the largest in the world and there is 80 billion euros this and that is just 25 of the total. A big consequence. There is a flow of credit with a relatively modest rate precisely by the balance sheets. Lovely a. It is going to be a busy one. Andave the stability report it booms and janet yellen is in london. O draghi daybreak focuses in on a Company Fired for bankruptcy filing for bankruptcy. They have 10 billion in liabilities from the airbags. The company will be sold and the. Irbag maker is owned by china , you mentioned the central bank and what a week we have for you. European banks have cut their dollar exposure. The german lenders are among the highestmet dollar position and they are matching the assets and liabilities in the currency and it is a busy week beginning. We have brought in Richard JonesRichard Smith is on set me. It will be a big week from a intral Bank Perspective and want to jump off with the mostal bankers and their recent report that the inflation spurt cannot be excluded. The bigger risk is the financial cycle bust. Are the risks rising or are they ebbing . That it is taking a much longer view with this indication in the short terms. Cause me to be concerned about the financial buzz. As a result of this in the changes in policy, the position is more robust than it has been they have fairly aggressive risk of the credit portfolio. It will be a busy week, in terms of data. I have to go broad and swiftly and ease myself back in. It will be a busy week, in terms of inflation and it is globally proving hard. That is a key points to sort of focus ourselves on this week. We get these central bankers and you get your area of core get then and we we have not2 and 2 in four orat five years. The u. S. , pattern in but not where it has supposed to have been for the last few years. They are throwing the kitchen sink at this and it is still where it has been during the postfinancial crisis. We have a couple of articles up on the bloomberg terminal and we are talking about unemployment and the propensity to deliver Wage Inflation and the change in the dynamics of our situation. Would traditionally work and greater minds then i can question whether they are rogan. The coronations are last less robust and this is an issue that needs to change. Validare still valid targets. Theiris the point i had overwhelming of and it is aation and theh core inflation product was of the oil price in 2016 and you look at the dynamics in the labor market and it is very interesting, the change in the Participation Rate. In the eurozone, the Participation Rate has said only been climbing as a result of the deregulation in the labor market putting more people back to work. The result is that the eurozone unemployment is still in the 8 the percentaget of people employed is an alltime high. The Participation Rate has been you would associate with the employment rate and we andin a amending process they have not started to see the Wage Inflation pressures that you would expect. There have an comments over the weekend and talk about the propensity to raise rates. Is loose Monetary Policy going longer than actually on ad and i know he is hawkish tilt. We must not become prisoners of the governors of markets. This will be part of the debate from them and it will be important. Is a classical debate that we yearseen over the last 10 and we now are seeing this ongoing debate and the question about inflation and wages behaving as a conundrum. As long as it is still a conundrum, the models are not quite as robust or as applicable to situations as have been in the past. Opine let a smarter mind on that. If Thomas Jordan describes that as a conundrum, that is probably indicative of the central banks. It is a conundrum. Switch and talk about the corporate stories of the day. Sell 27pressure to is partin the proposal worldsge fund and t