Impact Investor Sentiment . He market is about to open and an arm and a leg. Japans softbank pays 32 billion for arm holdings. Is this a big bet on the internet of things and or an opportunity for currency trade . We will discuss that. Not 29 minutes away from the European Equity market open. Looks like we are going to see a reasonably positive start today. Over to the bloomberg and the wei. The fair value calculation tells us we will probably be of 3. 5 . A big premium being paid for arm holdings. Phenomenal move. We will dig into that m a. Assete see m a across classes . The pound is so much cheaper, particularly when you compare it to the end. The lira rebounding today. The dollar is lower versus the turkish lira. Breaking news that turkish stocks have opened and they have fallen. Turkish airlines, the tourist industry being particularly hit. U. S. Futures up. 3 . Money coming out of the yen. No need for that haven and no need for gold, either, it would seem. Part k aversion sparked by this concern in turkey. We have great analysis coming up across the program. We are definitely covering this story in a big way. On the get some details turkish market opened in just a moment. We are on the ground in istanbul. We will get to those two gentlemen in just a moment. Lets get you caught up on news that you need to know. John kerry says the u. S. Is awaiting a formal extradition request for a pennsylvaniabased. Leric the u. S. Secretary of state calls for evidence that will stand up in court and dismiss any accusation of u. S. Involvement to the uprising as a responsible. Softbank has agreed to buy arm holdings for 32 billion. The Japanese Company is offering premium tofor a 43 the deal secures a slice of virtually every mobile computing gadget on the and connected devices in the home. It would be the biggestever take over for softbank, which has become one of japans most inquisitive companies. Condemnedobama has the murder of three Police Officers in a shooting in baton rouge as the act of a coward. Police say a suspect has been killed but did not give further details. Two weeks ago, Police Killed an africanamerican man setting off a protest that was followed by the killing of another black man by Minneapolis Police. Global news 24 hours a day, powered by journalists and analysts in more than 120 countries. This is bloomberg. Guy it certainly is. Lets get back and talk turkey. Urkish stocks just opening up lets go to our Bloomberg Markets middle east anchor and. Enior reporter in istanbul we have seen the market open. Give us the details of what we are seeing. Turkish stocks are up and running and down over 2 as were speaking. The decline arguably less than most analysts and decisionmakers have been expecting. We are seeing a lot of selling when it comes to materials and information technology. Youave pulled this up for to get a better idea on the breakdown of what is selling and what is under pressure. Your traditional place under tremendous pressure. The breakdown is to be expected. Keep an eye out with the financials. Those are going to be an important gauge about how investors are feeling about turkey and the developments over the weekend. Financingy, companies costs are a very high chunk. So a good indicator of credit risk. 30 index. Of the these are some of the classic stocks. At the end of the day, we had spoken on thursday that there were very strong buy signals in turkey and that these violations were at a discount compared to. Ost emerging markets peers investors not as concerned as we had expected, but we will keep you posted about how capital flows play from here. Caroline thank you. I will take over from here. We are seeing credit default swaps creeping higher. Clearly, some risk in the market. Standing by following the events very closely. Mark, the coup is over. How concerned should investors gans next steps . Is the issue. There is a relief about the fundamental point, which is that failed. The government remains and the institutions remained and so on. The real things that people were concerned about were the coup. Erdoganake of the coup, has taken a number of steps already. They have dismissed 2700 judges. That will have a big impact on the courts. The question is, where does he want to take it from here . I think that will weigh on the minds of investors because there is a question about, at a certain point, the stability provided by strong leadership dealing with the coup and so on might be outweighed by damage done by institutions, depending on how far he goes. Eu Foreign Ministers are meeting in brussels as we speak. Does this rule out the possibility of turkey joining thanu in anything other the extreme longterm . Marc i think that has been a dead letter for some time. There is a possibility that now you have a line drawn under it if turkey decides to reintroduce. He Death Penalty a lot of crowds over the weekend were calling for it. The government said they would look at it. One of the fundamental memberships for eu and talks on eu membership is that you do not have the Death Penalty. The reason why turkey got rid of the Death Penalty, so that they could begin talks with the eu. If they reinstituted it, that would have a significant impact. Thank you very much indeed. Anthony skinner is the head of Political Risk and joins us in the studio. Take us forward. Walk us through how this picture is going to evolve. A lot of investors around the world very nervous. Anthony they have good reason isbe nervous because erdogan likely to solidify his grip on the executive his next step is to establish a presidency. His mission is to try to establish an executive power which is enshrined in the constitution. There are two options. One is to hold a referendum. The problem with the referendum, it is not guaranteed to succeed because society is split down the middle. The other option is to hold new elections. Gansould play into erdo hands, but it is not guaranteed to succeed. That said, there are some positive dynamics playing into his hands. Party are having their immunity lifted it at the same time, they would be ejected from parliament. Guy how quickly will he call a general election . I think he will hold Public Opinion polls to determine what extent Public Opinion has shifted even more so towards that party, especially the nationalist constituents. Feels they can tip the balance in favor of a fullfledged presidency, we can expect elections in the next few months. Give us a sense on the conspiracy theories that abound as someone is driving this. What about the relationship between the u. S. And turkey . We know they are calling for him to be extradited to the United States. Is it april the that this man who was living in pennsylvania was behind all of this . Marc there is no conclusive evidence to suggest anthony there is no conclusive evidence to suggest he was behind this. Failedocu there are some that say that failed coup attempt was staged for the president to solidify grip on his target this is a sensitive time for u. S. Turkish relations. Washington released a very strong statement indicating that they should not implicate the United States in this in any form. But the United States will consider the extradition of us based on solid evidence. Seenurse, we have ,ashington and ankara at odds with washington supporting the Peoples Protection unit. This is the Syrian Kurdish military group, whereas power is against this group, which is effectively an extension of the pkk, which constitutes the most significant Strategic Security risk for turkey. We can expect significant friction and tensions over the coming weeks and months. Strained withrly the United States. Talk to us what happened with the eu and turkey. What about the agreement to do with the migrant crisis and visafree travel for the turkish . Expect those negotiations will continue. Perhaps not so visibly. Erdogan is likely to used the coup attempt as ammunition with his negotiations. Migrant deal is pivotal for politicians. You have to deal with the brexit fallout. You have to deal with the rise of antiestablishment parties. Erdogan will use the failed attempt to show that turkey needs robust legislation related to the fight against terrorism and robust legislation related to being able to scrutinize personal protections of data. Will use this as part of his negotiating platform, realizing the hands of european leaders have been weakened because of the European Union fallout. Of course, the reality is that awayy has shifted more from democracy, protection of human rights, checks and balances. This is a very clear area of concern and is a significant risk. The negotiations in relation to this migrant deal and visafree travel for turkish nationals in europe will fall apart. Guy thank you very much indeed. Anthony skinner, thank you for coming in. Up next, we continue the conversation with a guest who says the situation in turkey was deteriorating even before the coup. This is bloomberg. Guy 14 minutes until the European Market open. The turkish target is already open. Lets check in on how assets are performing following the failed coup. The stocks are down by about 2. 35 . Though the rest is going back a little bit. The cvseen a jump in and in the 10year bond. Good morning. Is turkey investable right now . I am not an emerging market thater, but i would say the impact on the other markets, it is not as significant. If things were to go worse in turkey, that would have an impact. Guy how does this impact European Investments . As we were discussing, europe has an ongoing relationship with turkey about eu membership. That is a very longterm relationship, but also has a shortterm relationship visavis the migrants. This is near abroad for europe. Spillover, it any is not made up now. It is similar to what happened a long time ago. It does play to the Political Risk. Maybe not at this stage. If things were to get bad, it would be a factor. Caroline in terms of where money should be going, if it is coming out of the tourism sector, how much can this hurt the economy of turkey . I think it would. See, if he takes this into account to boost his side of the argument, he is putting up a more president ial form of government and it takes more power. Lastly, that is the investors want. That could have a big impact on the market. I have pointed out before that india looks very attractive. China is doing its job of managing the economy. Where does this take turkey . . Hat kind of box i am trying to think about how i think about turkey. Am i looking at the current a doubt account deficit, Political Risk . Things were worse in turkey before. Things were Getting Better before the coup started. They have a huge current account deficit. It was the case before. Expert, butturkey what is the policy going to be . Are they going to go down the path of being autocratic as mr. Putin is in russia . That will take time to figure out. You are going to stay with us. Plenty more still to come from him. We are minutes away from the open. We will look at some corporate movers in todays trading. Armed is going to be a day story. Softbank is paying a massive foring for our premium arm. Why do they want it . What are they going to do for it with it . Will anyone else pay even more for it . It is all about the chips. Nine minutes until the market open. This is bloomberg. Guy it is 7 52 in london, 8 52 in berlin. Lets check in on some of the assets on the move this morning. Turkish stocks and the lira a big focus. As you can see, negative seems to be the story. Flight torman bunds, safety. The euro continues to drive ever lower. Stories this morning, absolutely fascinating. Caroline were going to see such a surge for one in particular. 45 because that is the premium that will be offered. On my chart, the market cap of arm holdings, more than 6. 7 billion pounds. This could leap up to the tune of 24 billion pounds. Of course, we see softbanks offer. This is a designer of chips that going to about 95 of all smartphones Significant Movement into the internet of things, taking on the likes of intel. Will it still get to do with the regulators . You have heard the chancellor of the United Kingdom saying British Assets three weeks after the brexit and they are still en vogue. Is it more about the expansion into the mobile sector . Softbank saying we look at this before brexit. It was already appetizing. Some commentary coming about what its clients, samsung, apple, qualcomm, how will they feel about it no longer being independent . The key stock to watch and all of that is arm holdings . Guy it is all about arm holdings. We will show this later. It may have been something they were talking about before. That is a nice correlation between those two. You think the brexit is a good idea. Is the market reacting rationally at this point in time . I think it is. Things are going to start looking up immediately, they were just naive. Slowdowngoing to see a and we have the reaction coming from the bank of england. The government is abandoning its policy for the right reasons. I think you will see the money being pulled by the government. Arm, is this opportunistic . Or is this a brexit story . They had a stake in alibaba. They were looking at this. Arm is a Market Leader in chip design. I think this is a good story for softbank and how they are positioning themselves in the internet of things. Going to come back and we will talk more in detail about that in a moment. The future story is positive in europe. 2 rise on my bloomberg fair value. London is going to outperform. That is the story we have been discussing. Arm is going to have a huge pop at the market open. We will take you through those numbers. The open his next. Guy good morning. This is on the move. Im guy johnson. Caroline hyde is in berlin. We are moments away from the start of european trading. Caroline has your morning brief. Caroline turmoil in turkey. President erdogan consolidates power after a coup sales to bring him down. Where does turkeys political athlete . Investors on edge. The lira strengthens. Credit default swaps jump. How will the crushed uprising impact Investor Sentiment . Arm and a leg. Softbank pays 32 billion for arm holdings. Is this a big bet on the internet of things are taking advantage of the pound on the back foot . Guy futures definitely higher. Arm going to be a feature of todays market session. This is the european open. Lets see how things open up. London could expect some arm benefits. Definitely some strongarm coming through here. Move ajust beginning to little bit, there we go. Negative from london. The futures definitely pointed to a positive start. We are waiting to see arm open. I think that is going to be the critical factor. Lets see which way we are going to go on this. Initially, the Market Reaction for the ftse is negative. That is the white line. We are trading down 0. 2 . Lets see how arm opened. It is going to be a big mover. I think the Market Makers may struggle to get a price on this one. The merger guys are going to try to run their slide rules over whether there is the possibility of a second bid. At the moment, london is negative. Manus cranny. Manus we are waiting for that. That premium is a 43 premium. The question is not so much about a counter bid, but whether theresa may, the new Prime Minister, blood consider letting the jewel of british industry get taken over by softbank. That is something we wouldnt normally talk about, but it could be about regulation. This is the stoxx 600. We rallied over 3 last week. You saw the banks and basic resources take the stoxx 600 up. Tragiced back on the news. You just put up the arm price. Information technology is the driver here. All ships rise on a big old tied. Softbank,s a deal for what does that mean for the marketplace . Energy is down 0. 25 . Our colleagues saying that 40 is where the market thinks we could be. This is the turkish lira. What we saw was the biggest drop since 2000. Weve managed to retrace near 50 of that move so far. The market is dealing with the aftermath of the coup. Commerzbank states that you could see the currency strengthen. Goldman sachs are more worried about the enduring effect, the ramifications in terms of hot money going into turkey. Goldman has moved their lira target to 310. Willis thanks will the Central Banks for a 50 basis point cut . We havent got it yet. We closed on friday night at 11. 89. This gives you a sense where we go. Keep an eye on the pound as well. Youve got this dramatic move post brexit. The analysts are saying morgan bnp paribas say sell cable. [indiscernible] the comment from the bank of england really summed it up for me in terms of the bank of england. I would rather run the risk of taking a sledgehammer to crack a nut then taking a miniature rock hammer to tunnel my way out of prison. What movie did that come from . Caroline ill pick it up from here. A quick sweep through the markets. Lets return to our crucial m a story. Breaking headlines out of our arm holdings ceo. It is unclear if Senior Management will stay on. We heard from softbank, saying they would look to keep the headquarters in cambridge. They said Senior Management would remain in cambridge and they would double the employee headcount in the u. K. In the next five years. Is this a bit on the United Kingdom, on the pound, or on the technology and the dominance that arm holdings has as a designer of chips . Also starting to make inroads into automotive, internet of things, and servers, stealing market share from intel. Lets dig in to this 24 billion billion,l of a