guy: welcome to "on the move to come to thecounting you down european open. caroline hyde is in germany and this is what we're watching you figures from the royal institute show sales dropping the most since the financial crisis. you've got? the kiwi surges to a one-year high as the market signals today. on anniversary -- you on anniversary.

what does it deliver for china? we are delving into all those stories. notably today a little bit of risk assets. the ftse 100 managed to post gains. up .5 of 1% on the euro stoxx 50. still of worth -- wealth of earnings. also plenty of assets, oil driving the market today. guy: let's talk about what is happening in the other asset classes. a great place to start, -- your morning. you can see it right up here that new zealand dollar. a decision to cut from that reserves, not enough. you get a little bit of pushback from the bank saying the markets are misreading the story.

it is more the pboc rather than the central bank that had control of this currency. we will discuss that during the show. and the japanese yen on the move. let's get you caught up on all the news you need to know. david: let's talk about brexit here. it is undermining the near-term outlook for the housing market. sales dropping in july according to the oil institution of chartered surveyors. when you look at new buyer inquiries they fell while the index of sales is pointing to the fastest decline in transaction since the global crisis in 2008. deadly wildfires have hit hearts of southern europe and high winds are running the flames. for people have been killed. forcing the evacuation of thousands of people including tourists. in france, multipliers --

residents forced to flee their homes. "private wanted an audience" was donald trump. he climbed the tower using large suction cups. he climbed up to the toy first four before officers grabbed him and hauled him through an open window. posted a video on message to mr.ed " trump, why i climbed your tower." he said he had something to discuss with the presidential nominee. i am david inglis, this is bloomberg. caroline. caroline: thank you very much. now when you're on, and this is the chinese currency. value,c dropped its

rocking markets with the unseen move. how has it worked out? let's go to hong kong where our asia ethics editor is standing by. when you're on, what has changed? >> they have managed market expectations. the yuan declined 4.5% last year. and we had predictions of them stay and the end of the world, etc. so far it is down 2.2% and investors are hardly batting an eyelid. what is fascinating also is they have moved the currency from a one-way appreciation bet to a one-way depreciation bit. there is no panic. the pboc had succeeded in making itself more transparent even when it does not follow the market moves, investors do not pay because they know at some point the pboc will come back and stabilize areas it is pretty

stable at the moment. about fixing and the level of government intervention. the pboc has control and the market since to be accepting. how transparent are we looking at here? reporter: what the pboc has done is sent out some veiled missives on how it is fixing and it is pretty clear to an extent. we can predict the direction of the fixing. of the move in a certain range. as you saw last month, when they chose to strengthen the fixing come a when they should have gone the other way. they went opposite to what the market would have liked it to do. what they should have done. we had analysts and currency

strategist saying they were not incredibly surprised by this. s barelyency market moved. guy: thank you, robin. ,oining us now in the studio you're just back from asia. what are they saying about the chinese currency? guest: they want to go back to the route of doing the internalization. we did mention the story. this has come at a large cost to the pboc in china. the intervention in the market, they have had to move the torency policy away from -- a basket of currency which is down 4% on the year. i think very much what is part of this is the strength of the dollar forces the sea and why, the chinese government to devalue currency. the market is looking at 6% to 10% evaluation over the coming

12 months and the game in china remains the same, how do you get money out of the country? caroline: how much is china feeding into the oil style -- story we are saying and is that dictating when the overall mining spectrum goes as well? natural resources. guest: it is pretty clear that therebound we have seen in aussie kiwi, all the resources clearly,rld, i think china is still the most play, much more important than the fed which we know is going to feed every single mood -- move they support. for me my china will surprise on the outside. one of the stories we have had is that china runs at 20% roductivity of the u.s.

china has the ability to grow themselves out of the financial mess. that would entail that you have more free market opening, more internationalization of currency. and coming full circle, china needs to continue to [inaudible] happen in october. china will pursue that policy trying to balance out the cost of the currency not getting out of control. guy: the objective is still to get money out of china and then you talked about the commodity story. we see it moves and you wanted this before we came on air, it moves in gold, etc. during the asian session. you talk about the fact they are trying to get currency out to the country. what is the mechanics of how this is happening because this is quite instructive. guest: the game in china is you run a dual account set up where you have a domestic account were you deposit money and a mirror which theyh the --

oversee in hong kong. what you then do is you take the high in the marketplace, oil, gold, and silver and you take high bets. if you make money the money stays overseas. if you lose money you funded from the domestic account. you have the ability to take money out of the country. guy: the flow out of the country will carry on and we will continue to see volatility. there is all kinds of different, they are picking on where are the volumes. guest: if you take a look it is important because the oil game was the old export-import trick. you got the money out that way. ais is far less dominant and smaller force because you have to make the money in the account to get money out. it is a shy away. what we have seen is the impact of this is asia is not trading in any volumes even close to

what it was in the past and i think asia is becoming undervalued relative to if you want to look at the terms and metrics in terms of valuation on up. china is just across the border from hong kong -- this area is the silicon valley of asia. they have this productivity that they came close but it entails if you have stated a few times to me, it entails they pass reforms. guy: stay with us. plenty to come from you. pile intocontinue to low yielding bonds. we will show you one key corporate index. bulls, weg with the discuss what is happening in germany. ever.pumps ever more than that story coming up. all of this. this is bloomberg. ♪

caroline: futures are up .5 of 1%. germanlethora of companies reporting. let's get you up to date. david: let's get started. which until come has reportedly made -- deutsche telekom has

made a profit but fell short of analyst estimates. earnings climbed 253 5 billion euros if you strip out taxes and depreciation and other items. offsetne unit helped revenue. zurich insurance says second-quarter profit fell 12% on higher restructuring charges and claims from natural catastrophes. net income declined to just under $740 million but still beating estimates. toio -- the ceo is trying make the company more efficient. we are talking global life and general insurance. third quarter profit falling 18%. germany's largest steel maker they dropped. that still beat estimates and the company reiterating its fiscal year traffic forecast

that exceeds "-- that is a clear sign of a recovery. a couple claim they have been threatened by people who refuse to leave even when asked. nintendo officials were not available. it is a holiday in japan. that is your bloomberg business flash. yield glds on 10 year ilts at a record low. bonds have plummeted. what happened with the bank of england is happening -- having a ripple effect around the world. overweight --

pimco is overweight now. and you were pretty hawkish on the fed at the beginning of this year. how is it working out because the bond market seems to be going from strength to strength. you made 30% on the u.k. have beenarly and we overweight fixed income and we moved to underweight for a number of reasons. it is a strain on the pension sector, the liability side goes to infinity. we have ago tory frameworks that can -- continue to make the banks have more fixed income on the book. we have the money market reforms coming online october 14. everything indicates that people want to be defensive in terms of the money market and the cycle has turned in terms of the u.s. interest-rate and the global

interest rate because inflation is coming back. caroline: give us a sense where this goes. you are seeing -- seeming a little more cautious. we saw a desire to get into u.s. treasuries particularly coming from foreign buyers. we saw 72% of the billions that were issued in the u.s. 10 year were up by foreign central banks by foreign investors. there is a positive yield on u.s. treasuries but actually the cost of hedging is rising higher . what do you say to this, where does this go? asst: we are seeing a change you are alluding to from japanese investors [indiscernible] into btb's. needle inmoved the terms of that. i was overweight fixed income. think if you look at the

senior survey officers in the u.s. which is leading the credit cycle, it has been tightening for the last three quarters. the regulatory capital is coming online. you have october 14 as the deadline for the changes to the money market funds which is a huge source of funding for non-u.s. markets. the market right now is playing on momentum, on yield. the income and change the comes to the monetary side and what is interesting also, it is very unusual but the three months [indiscernible] is close to the five year. we have seen a huge amount of may be driven by microeconomics and changes to the regular side is massively-rate rising relative to the long and. it is a game where you have -- and where the people who act from zero to two years is very scared about all the changes going on. i think the two years will win in terms of we have seen the low

end of the cycle. , both the central banks are outspoken. monetary policy is at an end, it cannot continue to support the economy, we need to see something else happening. guy: we are beginning to lose the effect of that. you talked about inflation going higher. this is china ppi versus the u.s. 10 year yield. we have this crossover here. is fact that the chinese ppi climbing back a little bit. inflation that could come out of china? china hasear is that been and massive inducer of inflation. last time they were positive was in 2012 when inflation in the u.s. was 3% to 4%. china has been basically exporting deflation to the rest of the world.

china will go to positive pbi and become the next importer -- exporter in inflation. it is clear that it is not a perfect coalition. the monetary policy should leave the u.s. monetary policy, china being the bigger macro player. year. blue line is the 10 this is parallel, we have not seen these kinds of crossovers many times. how does it actually work? policy will look like coming off a? look at whyave to ppi is coming back up and that is because the chinese authorities are allowing the x x capacity to be reined in, there are allowing -- you see state owned enterprises facing at a bare minimum no more support but

also increased competition. china is improving at the margin. that is why we see the price going up. the rest of the world posterity will -- china will not be able to have lower prices. thatans fx to valuation china has done through the ppi. now you see a rise. have all continue to weaker currency. do not forget a lot of the ability of the consumer to consume is based on the fact a produce most of their goods in china. falling prices have maintained the disposable income for the joe smith in the u.s. inflation ind to the consumer sector. guy: thank you for joining us. caroline: we are minutes away from the open. next we will look at the

corporate mover in today's trading. telekom and others for you. this is bloomberg. ♪

caroline: 854 here in berlin. the futures market up .5 of 1%. some of the big cap's have been reporting. we could see the travel operator

rise. doing better than expected. despite the tragic events we have seen unfolding in egypt and turkey and tunisia, they are managing to send their customers to the western a trainee in instead, -- mediterranean instead. spain stands by their forecast for operating profit growth of 10%. that stock will rise. and rising 2%. revenue growth up 5% for this tech company which is a deliverer of your clothing in germany. on the downside, keep an eye on some of the utilities. down 2% missing on its earnings. profit up 10%. it was worse than expected create i leave you with one big laggard, kayla's. -- kls.

guy: the market open is four minutes away. ftsi is called lower them a continental markets higher. this is bloomberg. ♪

guy: welcome. i'm guy johnson in bloomberg's european headquarters, alongside caroline hyde in berlin. we are moments away from the start of european trading. caroline has the morning brief. caroline: yes, guy. brexit hits housing. figures show sales dropping the most since the financial crisis. we speak to the "london times." is that all you got? the kiwi surges to a one-year high after a quarter percent rate hike is in position. and happy yuaniversary. what does china deliver? guy: markets are just about to

open. as a quick note, a lot of stocks are on the london market today, which is where you may see what looks like ahead scratcher. let's show you what's happening with the market in europe. let's see where all the markets are trading. we'll see how the market makers are putting the story. huge moves in the bond market. the london market softening up as a result of what's happening from where we were yesterday, slightly negative. you can see the continental markets trading differently. i want to check my mrrc, hsbc at shell, all sorts of big star on the move. be aware of that. let's get the details, ftse and cac in different directions. elliott docket has only need to know. stocks areheck myelliott: euron

slightly higher at the open. we can see that energy is one of the only laggards, still a nice shade of green. we can go inside and see a little bit more detail of what's going on, the likes of shell and total and bp showing the drags on the market. if we look at the bond market, u.k. bond starting trading today. we can't see over the last few days we are down to record low borrowing costs. the u.k. bond says the bank of england is expanding its quantitive easing program. areers and investors falling over themselves to sell the bonds. it's just about off those record lows. we are looking at a few specific stocks, and we will start with william hill.

this is the betting by a group together togetting try and buy this company, as it stands at about 3.2 billion pounds. william hill has dismissed the beta so far -- the bid so far. we are getting details that talk about 100 million pounds of synergy, cost savings, and other abilities. looking to germany, where we have a big day of german earnings coming out today. we had earnings from the tour operator, reiterating it's at forecast, which is reassurance for a investors. sales were down, but they seem to be weathering the storm's of terrorism money and the plunge in the pound better than some of its rivals. that's what's going on in the stocks we are looking at today. for now, caroline, over to you.

caroline: elliott, thank you. we were looking at deutsche telekom as it falls today. rwe is also lower, down by some 5%. let's dig into the key movers on the dax. we are pretty much through earnings season now. sinkingplayers -- rwe as numbers in this, germany's largest power producer saw profits rise, although that was a significant miss. we also see steelmaker profits down 18%, sales down 11%. henkel is rising 3% on the back of its numbers, that have a look at my bloomberg. i want to show you what has happened in terms of earnings season. this is the earnings analysis function. 26 out of 30 are currently reporting. not looking very pretty on the sales front. out of 24 that have reported,

only six have beaten. most have messed to the tune of 8/10 of 1%. some are seeing 71% of the companies that are so far reported beaching in terms of earnings. i want to show you one interesting fact. maybe it is time to sell dax. we are potentially going to show daxthat the rfi oversold, picking 70 on the relative strength index, a technical indicator to say get out. our guest is still with us, the cio at sex a bank. -- sack sxobank. i agree with your valuation metric. most european trading markets are trading close and i don't think growth will accelerate. get support will very loosely, but in a place like to germany, china is the

biggest m&a player in the world right now, and they continue to buy both private and public companies in germany to get that hand on technologies they need back home. i think m&a will still go to with china and the other people. i think it is overvalued and i wanted to belong. guy: i know on bloomberg was concerned about this, one of the big technology messes when she was confronted with these amazing technology companies that were later being taken over. if you think about what a country has, its ability to differentiate itself, germany is engineering. after to protect that? >> first, it needs to protect its job integrity, its intellectual property. sharing after private

production, transferring that to china, they can only be win-win. it's a trade argument all over again. history, whenr in you try to micromanage an industry, you end up in a bad place, and that is only have seen a number of countries; turkey, russia, other places. i don't think germany wants to go that way. are they concerned? absolutely, anyone would be. but the corporation discussion is lost. think of bp, chevron -- guy: there are plenty thef things surrounding -- >> but i think intellectual property sharing is in any way going to be negative. i don't see germany climbing down. i think they will keep an eye on eroding strategic resources. but technologies technology and china needs it.

they will continue to do so. i don't think anything can stop the industrialist in germany. caroline: steen, you have just been on a trip around asia. what do they think about the politics that play within europe and how it's affecting the economy? do they see concern for growth outlook as we see the u.k. moving out to the eu, and what germany does within the rest of the politics of the eurozone? >> i think in europe you have a very centric feel ourselves. we think we are the masters of the universe. let's put this in perspective, there are 7 billion people in the world. 400 and 50 of them are in europe. when i was in china and hong kong, in singapore and australia, everyone wanted to know about brexit but no one is really concerned. what they are more concerned about is what is happening in isa, how the banking system

going to deal with the increased demand for dollars. certainly in australia is about the banks, it in china it is about productivity gain and getting back online. i'm sorry to say, it's not a major issue. something that the news media continues to ask about, but not something with investors and officials having a big question. caroline: are they worried about europe's banking situation? are you worried about europe's banking situation? >> worried about banks globally, end of story. i think it's pretty clear where you want to be concerned, where you have seen massive housing bubbles, certainly the u.k., sweden, australia, new zealand, canada. i think you have places where economic growth is not sustaining, such as italy, spain, portugal i see problems coming because the wholesale dependence on

foreign funding out of the u.s. remains in place for a number of institutions, and i don't think that has been done enough. i think this rubber band solution we find in italy and other places -- to be honest, i remain is the view that these constitutional votes in italy are more important. guy: we have already dealt with some of the reasons. therefore we find ourselves again in a world where central banks and the differentiating policies around the world tend to skew markets. how do i rationalize your concerns about the italian banking sector, which is a massive holder of btp, and the bgp market? foreign investors are piling into it. and youhink that believe that as the world has continued to expand infinity. , pre-brexitchart

and post brexit. everything post brexit has been a major inducement of fiscal deficits in monetary support, rba cutting for the first time in a long time. this is a government who promised to have the communication policy and the federal reserve continued to not hike interest rates. clearly we have seen a macro and it's only in 2008 or 2009 i can measure up to it. this comes from the belief in the ability but i don't think it works at the end of the day. you accumulate negative stores like the italian debt. the micro economy continues to work despite the macro intervention. a cautionary man,

thank you. staying with us. a post brexit survey of u.k. housing prices lows. is it inevitable? we will discuss. and china's uptick in commodity prices. we will take a closer look at the miners. and the new zealand dollar ignores a rate cut to search. this is bloomberg. ♪

guy: welcome back.

a quick check of the markets to show you what's happening around the world. ftse underperforming today. rsbc, allbe aiaggio, going back to defend. that is why the london market is underperforming. elsewhere, european stocks are probably positive. let's get the first work with david ingles. david: thanks. let's talk about deutsche any .6% increase in second-quarter profit after surging sales went offset a in justdrop, sales came under forecast. as we previously said, the company listed profit estimates. wildfires have hit parts of southern europe and at least four people have been killed in , forcing the evacuation

of thousands of people including and informed the column that destroyed buildings and forced residents to flee their homes. amanda wanted a "private audience" with donald trump spent three hours doing this, scaling the side of trump tower using large suction cups. he got to the 31st floor before he was hauled to safety through the open window. police say the day before the ascent, he posted a video on youtube entitled "message to mr. trump: why i climbed to your tower," in which he said he had an important issue to discuss with the republican presidential nominee. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am david ingles. guy: thank you. brexit undermining the near-term

outlook for the u.k. housing market, according to the july residential market survey which saw demand and sales drop in july. further out things get interesting. steve joined now with jakobson. the chart demonstrates -- this is your data. is to do withis changes that we saw in the tax surrounding by second homes and -- andent properties what happened with the brexit? >> it was inevitable things would slow down but let's also not minimized how markets react to a big event, whether it's an theseon or a referendum,

sort of high-profile offense always lead to a degree of uncertainty. it has been visible in the and the commercial survey was even more noticeable because it is so dominated by investors. is the first survey where our members have had a little bit more time to reflect and what they are telling us now is that there is an immediate aftermath of brexit that was a little too pessimistic but they are still fairly cautious. out, there's a little compared toimism reading, and we

have had a lot of talk about money being made and i think that the support confidence -- it is too early to say with any comfort that this market is out of the woods yet because listening to mark carney last aek the economy faces significant number of challenges . caroline: it looks as though there is optimism on the price support -- that seems to be coming in from the lack of supply. are you anticipating a more rosy outlook to entice people to start putting their houses on because there were sales listings that fell by a record. >> if you go back the last few years they capture part of the market but i think they are telling us that we have been bouncing around historic lows in

terms of the supplies of existing properties that is a reflection of a lack of new shortfalls and also the nature of the new bias that came into the market. i think that is where the real that hass are because ramifications for transaction economy with the wider because we know how much .pending is linked guy: in some ways he was a full rental economy, so people can have flexibility in where they live and work. would you buy a house in the u.k. right now? i have beent, but traveling asia and they are all asking if they by u.k.. people clearly see fairly having

a big impact and down the line if you can get a discount on the , and he changes to the tax law, and i think he will be so from an economic perspective i don't think it's in great danger of the next few see you beingdo priced out in terms of disposable income attitudes although i don't see any immediate concerns. guy: let's pick up on the point you were making. do you think transactions will start to pick up? >> there's always a quiet period. i wouldn't expect anything in the near-term. perhaps a modest increase, but if you are constrained by what's out there to buy, i think that will be big issue. one or two

indications that there are some american buyers with discounts to be had on bulk purchases and if you go down with currency advantage i think there are one or two investments out there where you might be thinking there's an opportunity. caroline: steen, how much are we living in a london bubble? how much of the asian investors talking about the capital of the u.k. or talking about the u.k. as a whole? >> not a lot, to be honest. i think people were very surprised by the brexit vote turnout, but people have great confidence in the u.k. this is not unprecedented; we had the erm crisis, which i lived through here in london, and people forget that we had better employment, high gdp, and people counter with, yeah, but interest rates were cut. yeah, but now we have moved the bank of england from looking for

net hikes to carving interest rate. the scale is smaller but the direction is still the same, or fiscal expansion, or clarity, i think the u.k. will be just fine. i think we are going to see a shift in the way the policy affords housing -- it's always about nuance license that theresa may -- there is more of a holistic approach to housing. there was always talk about trying to get housing to play up but it must be limited to raising the rate. i think the recognition, pulling more levers, get housing , even talk about local authorities building more, we all want to own a home but

private rent is just fine. rent is something else we should be supporting. there's a more holistic approach and whether we see more incentives for institutions and a better way forward obviously time will tell. ultimately it is quite profitable for the market. steen, he has been spending plenty of time with morning. -- with us this morning. surges, rate cut was insufficient. this is bloomberg. ♪

guy: a quick look at my gmm. this gives you a great snapshot of the story -- one area you want to focus on is what's happening with the new zealand dollar where we saw a basis point cut, signaling clearly that it wanted more and the reserve bank saying that was not on the table. the new zealand dollar spikes on the back of that -- will he sees more to come. we continue to focus on what is happening in the bond market this morning and for the first time we don't have the market

.ggressively moving caroline: glencore says it is preserving its resources. this is bloomberg. ♪

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guy: welcome back. you are watching "on the move," 30 minutes into the trading day. how are things shaping up? this is will we see around europe. markets getting a little bit more negative, the ftse 100 and underperformer, largely on technical reasons. that's being priced out in terms of the point performance. the dax is trading lower. cac basically flat. below the surface, plenty going on. plenty we need to talk about. the other thing i want to mention is what's happening with the pound. it is trading against the dollar at 129.79. here's elliott gotkine. elliott: germany is in focus

today, fewer big corporate earnings after the last few days -- you can see we start with a tour operator today has cut its sales forecast but maintained its underlying earnings forecast. things could have been worse given what's happening with markets, but shares are rising shares up 3.3%, hagel coming out of earnings that beat analyst estimates thanks to rising profit margins. going in the other direction we have all the german utilities, just under 3% this morning, a second-quarter loss which missed analyst estimates. time to round up what's going on in germany. caroline: there is no output

freeze anytime soon, pumping at record amounts in july. we are joined from dubai with a .hart of the day >> it seems nobody is getting enough in terms of oil market views. they are telling the oil market that they pump to 6.7 million barrel per day. i me put some context there, the highest since june, 2015. i put this on a charge. what i have marked is the number that they filed, opec circled at the orange top right. and the line in yellow is the wti price. important takeaways from this report is that the main message is that the group as a whole is pumping more than 46,000 barrels july andn the month of

also that there are concerns about oversupply on the one hand and dwindling demand on the other, particularly pointing to weakening as a result of the driving season coming to an end. all of this is ahead of when opec is supposed to informally meet in algiers. it ists say so far unlikely they are going to come to a tangible agreement, but let's see what happens. guy: thank you very much. joining us out of dubai. glencore's output fell in the second quarter after the closure theome mindes, company saying they are waiting for a better price environment. let's get that share price. year-to-date, gaining some of the losses it made. an impressive performance in the entire space if you got a net the right time. but we do see some big falls generating gains. metal mining analyst joins

us now; good morning. walk us through where glencore is. we will get results of a couple weeks, with financials and what is happening with the trading business. from the fundamental point of view, what are we learning about what's going on in the mining sector? >> no question. glencore has certainly turned the corner. they were really struggling at the end of last year with balance sheet issues, and those issues were shared by a lot of their peers. what has happened over the first six or seven months of the year is china stimulating the local economy, focused on reducing his capacity and market conditions have been a lot better. balance sheet are in demand and it looks like the mining sector has turned a corner of the big question is whether it sustainable to the end of the year or if the exit capacity comes back into share prices again.

caroline: so you are advocating it is time to splash the cash in terms of acquisitions, though perhaps not in terms of production? >> yes. w well, this sector is obviously getting to a point where they are generating good cash. they have been retrenching from capex significantly. there really needs to be a guard against capital austerity today, compromising on growth tomorrow. the key questions and decisions around whether to buy or return capital to shareholders will become more critical in the months and years ahead. so what is going on -- if you look five years down the road, will there be enough to dig out of the ground? do we know where it is? are the geologists finding the stuff? give me a sense of the predictive force of what is happening now, to what that will

mean for commodity prices in the future. >> absolutely. commodities, it's a cyclical market. mining is a cyclical industry. the capex retrenchment, exploration spent over the last few years, it means that new projects probably won't be developed as quickly as they were in the past. that will likely lead to some type of commodity market further down the line. guy: where is that most pronounced? >> at this point, in zinc. we have seen very good performance from zinc this year. there have been very few investments in new zinc line capacities over the last few years. the fundamentals are quite positive, and we are looking for a deficit in that market for the next several years. caroline: give us a sense of who has the deepest pocket. who are we most likely to see starting to spend,and in your mind, putting it to work in acquisitions rather than upping the production scale? >> well, at this point, it looks

like amongst the majors, rio tinto probably has the most firepower. they have gone on record saying they are looking at m&a, but it's more at this point about building and smart buying in their words,. i do think that a lot of the sector incumbents certainly will be looking at acquisitions. but the deals that has been done today for some of the quality assets that have been sold, they are being sold at what many consider to be a fairly attractive transaction multiple for the sellers and not so much for the buyers. this does seem to be a sellers market, making some of the bigger players reluctant to deploy their cash for the time being. but certainly, as that cash generation improves, and organic growth opportunities run out, deployed.will be

and copper as well as zinc appeared to be two areas the market is interested in. guy: where will i get the biggest bang? the bid that's being bought or the buyer? >> it looks like the sellers are benefiting the most so we are seeing anglo-american, ibm, earlier this year, a very good valuation of $1.5 billion exceeding most analyst expectations, indicative of this being a sellers market. so for the time being, the sellers seem to be in a good position. the key question is now, on the seller side, whether they are resolved to sell, because conditions have been better than expected. they are not in as tight a spot as they were at the beginning of the year. guy: great to see you. thank you for coming. purposes, the

chairman of bloomberg lp and the parents of bloomberg news are a senior independent director. political paralysis from francoise along faces a difficult reelection campaign. this is bloomberg. ♪

guy: welcome back. a few moves we were mentioning this morning. what's happening in the pound, we certainly have been paying a

great deal of attention to the gilt market, so let's show you what's happening with the pound. as you can see, we are lower this morning. 129.71. it is fairly negative. we have seen a little pickup and yields on the bond market, selling off a touch. yields,the 10 year gilt and you can see we have crashed lower toward the back end of yesterday. no qe in the market, which may have an effect. i am not sure you can tie back into what's happening with the pound story, but you are seeing some pickup in yield of such a significant lowering of those yields following what has happened with the bank of england. let's get you caught up on yields -- here's david ingles. david: thanks. a glut of earnings to talk about. deutsche telekom has reported an increase in second-quarter profits, earnings climbing to

just over 5.5 billion euros and that is a contrast to sales that offset a revenue drop in the bond market in germany. says theyinsurance will have higher restructuring charges from natural catastrophes. we are seeing income declining to just over 740 million u.s. dollars, beating analyst estimates. it is trying to make the economy more efficient by combining the .iggest units third-quarter profits fell 18% as records stored exports from china and continued to put pressure on prices. the largest steel maker dropped to 441 million euros through june, but that beat estimates from analysts and the company

reiterated that its fiscal year profit forecast were "clear signs of recovery." and nintendo and niantic are being sued by a couple for michigan who says gangs of pokemon go players made their local neighborhood are unsafe. they claim they have been friends by people who hide in the bushes and refuse to lead. nintendo officials weren't available, as it is a public holiday, while niantic did not immediately reply to an e-mail. and that was your bloomberg business flash. caroline: thank you. german chancellor on the government will reluctantly bolster security after state attacks last month, including expedited deportation and loosening medical record privacy. meanwhile in france, francois

holland worked between an seeking security and his old socialist party that wants to protect democratic freedom we are joined. from paris. the terror of placing the economy worries, the main issue no longer unemployment but social security. >> that is certainly the case. even after last year's terror attacks, that of people were asked what is the main issue in the next election, terror was up there but it was never the top issue. it was always jobs in the economy. just the randomness of it, the truck attack, slitting the throat of the priest, that pushed terror to the top of concerns. now it is a concern going into the next election. guy: who does this favor? who in terms of the political party lining up, the political

people lining up, has this given the advantage to? >> certainly the far right thinks it has an advantage, and i mean both marine le pen and people like nicolas sarkozy, running on a right-wing platform in the primary for his party. they have been pushing all sorts of ideas, accusing the government of not acting in a foreign war,. . but a lot of things they are calling for are impossible under the constitution; they talk about interment camps, rounding up suspects, things that are not possible under the french constitution. 10:00 in 11:00 bst, london, we will be hearing from the german interior minister, talking about possible acts that germany will put in place doctorslly easing up on being able to give information. there is even a call for a

berlin declaration to be debated next week, and that seems to be a whole list of rather more significant demands, wanting a reduction in dual citizenship in germany, wanting thousands of police. what are the actual forms in place being called on? what can hollande do to quell worries? i assume this state of emergency continues. >> yeah, we are under a state of emergency. the government has more power. there are several hundred people who have been put under house arrest by administrative order, because they are accused, suspected of radical activity. there are things they could do, they just have to deal with basic policing, not the required new laws. if you look at the recent attacks, the guys who carried out the attacks, one of them was being looked for by the police but clearly not very closely. guy had been in jail

for 10 months and was let go by a judge, who was convinced he was no longer a threat. that is not the sort of thing you need emergency laws for. that is just application of existing laws. attack, this was just some simple local policing in terms of blocking access to pedestrian areas for cars, and again, it is not a question of emergency law. i think what is really hurting is that there seems to be sign of incompetence -- that may be too strong a word -- andthere were simple things that is what's hurting them, that the authorities are not always up to task. caroline: great to get your opinion, live from paris. up next, the low yield paradox.

investors are being forced further down the yield curve, even as rallying government debt reflects deteriorating macro conditions. more next. ♪

guy: h: 51 in london. let's check in to see what is happening. we have a london market that is underperforming. g-- a wash, with stocks

the european markets are flatlining, to be honest, and they have since the get-go, in and out of positive and negative territory. it's the wrapping up of the dax reporting today, trading up by 1/10 of 1%. a quick look at what's happening with sterling. we had qe today in the market for the british pound, weakening against the cable rate. as you can see we have a 129.68 handle, pushing below quite certainly. caroline: you want to keep an eye on the pound. here are some highlights you have to keep in your head. at 1:30 u.k. time, we get jobless claims out of the u.s. and as wall street opens, first-quarter earnings from alibaba. billion dow chemical-dupont merger ruling.

guy: that continues to have ripple effects across the whole industry and what is happening with the chemicals. eye,hing just caught my the pboc putting out a statement. it is saying it will keep the yuan exchange rate basically stable. the is coming out of nationalization report. it will reduce the flexibility of two way moves. on,ere reporting earlier the move toward this -- right. let's talk about what's happening in the world of credit. joining us is the first word credit strategist, simon ballard. good morning. we see what is happening in the market; the bank of england is also acting in the corporate credit market. in this world where we

are chasing low yields because they are low yield. how was that rippling out across credit? simon: credit at the moment seems to be living with it blind faith that goldilocks will continue. we have the chase down and sovereign yields forcing investments further out of the quality curve in order to get returns it to their portfolio, at a time when, is sovereign yields are declining, you have some residual concerns about anemic macro conditions, that could be triggering a defensive strategy. you have something of a paradox coming into the way investors are being forced to play the market at a time when liquidity/activity is fairly muted because of the seasonal effects. you are seeing an overreaction, perhaps, and it is difficult for the next couple weeks. caroline: simon this would always be the time, you would desperately try to find things in your notes on the banking side of the equation. i was trying to go out for lunch with the source when i was

covering the corporate bond market, and in september, we braced ourselves for a wall of issuance. are we going to get the high-yield issuers just to satisfy that demand? simon: we will get a pickup in september, but we haven't seen a closure of the primary markets at all, manus many people were predicting. but there always is that traditional pickup, and now we are hearing the rbs and standard chartered being lined up for september. different slanta to who will come in early september, many more financial center traditional ssa. but for the time being, demand/supply dynamics remain strong. there is cash on-site. guy: the bank of england down the road having a big effect. walk me through what it is going to be doing in credit, how it

will work, what the story will mean for corporate yields. simon: if we look at what the hit a verye, it has strong and positive effect across the corporate curve, not just investment grade, but into high-yield. it remains to be seen to what extent the bank of england will bonds between 2009 and 2013. same time it was the rally at the end of the year of the financial crisis. we have yet to get details about exactly what the bank will buy. it looks like it will be secondary. they will leave open talks of buying primary, which the ecb can do. that door is open but they won't buy directly through primary. but it will be a positive impact on credit spread and another reason for investors to chase liquidity. guy: always a pleasure, simon. thank you for your time. staying with us on bloomberg. i will be moving over to radio and carrying on a conversation

with jon ferro. next, "the pulse." francine lacqua keeping up the conversation with the chief european economist at bank of america merrill lynch. this is bloomberg. ♪

francine: brexit has housing u.k. properties go low. not dovish enough. the reserve bank of a new zealand cuts. and crude oil below $42 a barrel. oil holds its losses. welcome to "the pulse" live from