anna: french president emmanuel macron says britain's decision to leave the eu need not be final. the door remains open, always open until brexit negotiations come to an end. will soft u.s. inflation low the bank off course for the rest of the year? anna: and u.s. attorney general just session denies colluding with russia during last year's

election. >> a very warm welcome to "bloomberg daybreak: europe." our flagship morning show from here in the city of london. manus: back together again, we're back with breaking news for you. first quarter ebitda coming in at 1.1 billion. this is what the market will focus on, 58.2%. that is pretty much in line with the estimates. when it comes to the core million, little above where the market had it.

retailers, as europe is that real boost, all the way around europe, the employment situation in europe is improving. million anbang in line with market expectations. former partners among the gcc, it's not entirely clear but qatar saying that saudi arabia led measures against the country are a siege. qatar said it is an illegal siege in a violation of international law, cap. -- completely written -- rejects allegations that qatar has been funding terror. qatar doesn't need food art medicine and has taken needed measures. we will wait and see what

the -- in terms of a peace deal or is it something bigger. let's talk about the risk in the market. the daddy or mommy of them all, depending on what you want to put on the balance sheet area that is the fed flatlining. the question today will be about releasing the statement and what they say about balance sheet reduction. is what the market assumes you will get before you reduce the balance sheet that they are still well above the backup pan and the ecb but they're still in acceleration mode. will have detailed views on what they're going to guide towards, how much and by win. let's put up the risk radar, call between iraq and a hard place. the australian market going higher and the chinese market going lower.

s&p futures, we put this in as a focus on the technology sector on the broader u.s. equity picture. yesterday we ended at another all-time high. the debate is what comes from the federal reserve. they won't clarity from the federal reserve. the dollar is coming little bit softer. u.k. inflation jumping to 2.9%. what potential deal will the tories sign up, that's what the market wants to know. inflation, let's bring you up-to-date on another

story that were keep an eye on here in london. anymore as i said was the 30th : they continue to evacuate the from the massive apartment fire that has been very hours -- 200 firefighters and officers have been called in. manus: it really was quite incredulous, police say a number of people are being treated for a range of injuries but they didn't find any more specifics than that, saying that a major incident has been declared. anna: that's get the bloomberg first word news for you with juliette saly. juliette: in the u.k., a huge place -- blaze has an fashion

golfed a tower block in london. around 200 firefighters and 45 engines have been tackling the blaze near notting hill. emergency services were first alerted to the blaze at about 1:15 a.m. u.k. time. expected to announce an interest rate increase, and will probably acknowledge inflation declines. a first step toward unwinding the central banks $4.5 trillion balance sheet. u.s. attorney general has denied any suggestion that he colluded with russia to interfere with last year's presidential elections. jeff sessions was speaking in front of the senate intelligence committee. >> to suggest that i participated in any collusion, that i was aware of any

collusion with the russian government to hurt this country, which i have served with honor for 35 years, or to undermine the integrity of our democratic process is an appalling and detestable lie. there is the assertion that i did not answer senator franken's question honestly at my confirmation hearing. colleagues, that is false. >> jeffrey delaurentis set the establishment of washington is trying to undermine donald trump by running out the clock on his administration. televised senate testimony by attorney general jeff sessions. he called the political conflict aside slow -- sideshow being used to disrupt the presidents agenda. 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 .loomberg at top an interesting session here in asia, japanese equities up by .2%. the market up for a fourth consecutive session but look at 1%, despiteover china data be released today, there is some speculation that perhaps investors are looking away from the economic indicators on whether china is going to be excluded from those benchmark indexes. looking at some other stocks in detail, we heard that australia's network 10, 1 of the three major networks is up by 5%. there is speculation it will file some of those assets. on aba down 2.3 percent report that it may not update the market tomorrow is expected on its preferred buyer for its

chief business unit and semiconductor manufacturing the strongest in hong kong come up by 12% on an outperform by macquarie. up 10.7% year on year in may. have a look at this chart, the yellow line is the -- the blue line is the bloomberg forecast. we're seeing china's economy remain resilient, saying that expect a slowdown to six .5% gdp in the fourth quarter but the slowdown will be steady. u.k. prime minister theresa may is under increasing pressure to abandon what is referred to as a hard brexit as she tries to put together a deal coming as the french president

and german finance minister say the ek is still welcome back in the eu. here is macron at his press conference with theresa may yesterday. >> of course the door remains open, always open until the brexit decision has come to an in. that being said, some decision was taken by the british people and i very much respect the decisions taken by the people, by the french people are the british people. anna: macron speaking there with theresa may by his side. let's bring in stephen gallo. stephen, good to see you again. when you look at this conversation around how brexit i don't think people expect the u.k. decision is going to change on brexit as

this is still a very live debate for you in the market, or just wishful thinking on the part of some people who don't want to see brexit at all? say the odds of a soft brexit have increase, as just how you qualify that soft brexit. let me just say first that we revised down our outlook on cable as result of the election last week. one reason for that is the political risk premium for domestic politics, but here are the other reasons. before the arms -- two for the author higher of a soft brexit, are negotiating cards were stronger in brussels. anna: because of her majority back at home? stephen: because of her rhetoric on brexit, because of the negotiating styles you want to strike with brussels. anna: because she was compared to say no deal is better than a bad deal. absolutely.

before we thought that might of been more progress towards getting a deal because of the risk of assault exit, but a really good deal. manus: and you talk about the domestic issue, she's trying to put together a government, we don't know what cost is going to be extracted from that but the cost to the economy is in the form of inflation. did that tie into your view in starling goes on interest-rate differential as well? stephen: looking out to q3, we have to look to the prospect for a post-queen speech budget, and that is potentially, given some of the headlines coming out of the discussion are just generally out of the cabinet, it is potentially an upside event risk for sterling. i would say if you're looking at euro sterling, this is wait and see. my instinct says get long euro sterling comments going above 90.

there is the risk of this upside move in sterling from a fiscally positive budget. manus: he got the probability of a rate hike slipping away, it's gone from 52% to 33%. mark carney just cannot get a break. he cannot cut a break in terms of the moves. stephen: sterling volatility is something the boe is watching closely, if that's what you mean. inflation yesterday was 2.9%. traditionally, normally, you would be in a -- stephen: if it's driven by the exchange rate, i would say only in the event of an extreme scenario on the fx market would you look to respond to that with the interest-rate channel. for the most part, looking through the headline corporation, because wholesale

prices and producer prices have already turned, so are getting closer to the peak. a hard brexit is so bad for sterling, it's just all over. thatng another move in trade in pound lower like that, the peak is getting closer and the service sector inflation is below 3% in annual terms. anna: where do we peak on inflation and how tough does he get for u.k. wages to cover this? you mentioned whether there my be some fiscal handouts. the conversation seemed to change, certainly a lot of conversations domestically since the election about whether there needs to be more fiscal stimulus , where the cuts have been planned and where they go from here. how does that take the edge off for the u.k. consumer? stephen: by and large, i don't think there's a lot of demand pushed price pressure in the economy.

i think of what we seen in headlining core inflation is week pound and the rebound that we've seen in commodity prices. not this year, but in 2016. there -- i don't think there's a lot after that and not a lot of wage inflation. manus: did you help that inflation number? anna: i might have dabbled, i want to stick ontario in. -- stick my toe in. anna: stephen gallo, thank you very much. stay with us. manus: we will continue the brexit conversation. the major event for your day ahead is of course the fed decision on interest rates. we were being you that announcement at 7:00 p.m. u.k.

time, followed a half hour later with more. manus: china's consumers hold off as the global outlook brightens. the details next. this is bloomberg. ♪

anna: welcome back to "bloomberg daybreak: europe." 1:19 in hong kong. the hang seng underperforming the broader asian markets. >> that luber ceo plans to take a leave of absence without disclosing a return date. the company will be run by management committee as it tries to navigate a wave of scandals. they will appoint an independent chair to limit his influence.

disney ending a 27 year run as an independent company for the paris theme park. it struggled to match the popularity of its u.s. parks and itsto be bailed out by parent at least three times. disney hall's 97% of the -- euro disney. boeing's defense business is shedding about 50 executive positions. the move will see the elimination of a layer of management with the expansion of the operational role in paris, starting next month the defense units and businesses will be split into smaller entities and they will report directly to paris. the china's insurers says it's chairman is unable to perform his duties for personal reasons. the beijing-based company said other senior managers are authorized to carry out responsibilities and operations are normal. that he amid reports

has been taken away for questioning. that is your bloomberg business flash. manus: china's retail sales and industrial output remain resilient while signs have emerged that measures to cool the property market are having some effect. the annual review of china's economy and growth forecast will be released. we will speak to the deputy managing director. stephen gallo is still with us. what should the imf conclude about china right now? the chinese authorities trying to push back against risk lurking in the shadows of the banking sector. what is your take away on china at the moment? i expect the report will be laden with medium and longer-term risk that, financial stability and all that. the extra length on china is that the pace of reform is very slow.

china disagrees, obviously. that is the external point of view on china. i think there will be a lot of points in that report that conflict with the recent of inity, they are kind congress, they don't go together. -- incongruous, they don't go together. the discussione now is the fed will probably hike today. will china -- stephen: we've been in the market too long. there is this debate that maybe they might not have the capacity to inch up their marginal rate at the same level as the fed which is what they've done in the previous two hikes. stephen: china and the pboc it made it clear they want exceptional stability for multiple reasons. the upcoming leadership elections in the party, they

have expressed this in a number of ways, first through some of their liquidity operations and the impact they had on short-term rates and also the change mechanism they introduced on the fix. they want to dilute as much as possible the impact of market forces on dollar rmb. meanwhile they make these baby steps toward the global currency. stephen: they are in a conflicting spot because on the , a trading nation's largest china typically would have a more flexible, open capital currency, but at the same time, they don't want to release the control that they have on the currency because of the amount of instability that

it could bring. i would say they are not into bad of a position because over the last few years, the international move toward unfettered free flows and no intervention by the central banks to manage capital flows if they can has moved away little bit. an organization like the imf has basically come to terms with the fact that things have been better because of the control china has exerted on its currency. manus: in terms of trying to debate the data we get, a credit impulse for want of a better word is directionally fading. they are making inroads in terms of actually getting a bit of control in terms of leverage in the system. the set aggressive enough for the world and for the market, or do you think they could do better on the report card? stephen: it's enough to buy

time, to keep the china bears away from the picture, from clouding the picture and the coming -- manus: so it just moderate inch by inch. it's enough to keep the bears away. stephen: but not enough necessarily to influence the reform path, that is the issue. anna: talked about the silk road a lot, the age of trump rethinking its global role and talking a lot about free trade. with the threat from trump to trade story, is it more bark than light? we haven't really seen it come into effect yet. cases, i>> in some would definitely say it's a good mechanism or circuit breaker that democracies in the west have on leaders that can get

carried away with statements that they make. but for the most part, at the moment there are huge delays and huge distractions from the russia issue. we need to get over this hurdle little bit and get into q3: and start looking at the tax reform debate. that's the next thing they will look at. manus: stephen gallo stays with us. anna: we'll bring you that exclusive interview with david lipton at 8:30 a.m. u.k. time. what will be said about china in that conversation? that will be interesting to watch. were contending to monitor the far that's engulfed a tower block in west london. eyewitnesses are claiming people are trapped in their homes. around 200 firefighters and 40 fire engines have been tackling the blaze on the lancaster west estate near notting hill in west

london. emergency services arrived at the blaze at about 1:15 a.m. u.k. time. this is bloomberg. ♪

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which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. emperor's palace, beautiful day, 2:30 in the afternoon. the dollar-yen, round and round she goes, where she settles, nobody knows. nejra: good morning, we are all gearing up for the fed decision later. it's a little quiet in the market today. gains in japan, losses in china. overall the msci asia-pacific index fairly unchanged. i want to take a look at what's happening in the fx market.

we saw sterling rise for the first time since the u.k. election. it's a little softer today. , markt this chart hatfield is saying investors may need to see confirmation of a very soft brexit before there is a serious challenge to the prevailing resistance levels. out u.k. real you'll perhaps making the longer-term outlook for sterling a little bleak. at the moment were not pushing through the resistance level, not seeing the low one 20's at some people were calling for in the event of a hung parliament. moving on to dollar-yen, no fear of the fed here. i have another bit of a technical chart here. high ishat last week's not suppressed on wednesday, this will go into friday's bank of japan decision probably

feeling the downtrend it could have. the bloomberg dollar index is twoing losses from the past days. if you look at what's happening in the treasury markets, the 10 year yield is fairly steady at 2.2% but treasury volatility is something to look at. this is dropped to taper tantrum lows, the lowest in four years all ahead of an expectation of that rate hike later. how is that all playing out in the markets? not much if you look at today. where were seeing big moves is oil, resuming its decline after three days of gains. below $46 a barrel. brent around $48 and this coming after the u.s. stockpile data. a new edition of daybreak is available on your bloomberg and mobile. let's look at some of the stories in today's edition.

the cover story, the fed is widely expected to raise interest rates. thatbly acknowledging inflation is muted. janet yellen plans to unwind the 4.3 -- $4.5 trillion balance sheet. the statement is expected to show consumer price growth slipped that 2% in may with the core stuck at 1.9%. up, the story on uber. the company ceo is taking indefinite leave, surrendering management of the company to a committee and will give up some of his duties when he returns. they'veng the steps adopted to address allegations of harassment and an aggressive culture. another left the board after

making a sexist comment in a meeting. on macron andocus may and their meeting in paris. the doors open for the u.k. to stay in the eu until brexit talks are concluded. that's what emmanuel macron said, echoing earlier comments made by the german finance minister. he told theresa may he wants negotiations to start as soon as possible and it may be easier after she secures the racking up northern ireland. she started the conversation they are looking to conclude that today. let's talk about the u.s. and attorney general jeff sessions was questioned by the senate intelligence committee over the firing of former fbi cheap james comey and the russian probe. he neversion said

spoke with russian officials concerning any top of interference with the 2016 presidential campaign. not have any recollection of meeting or talking to the russian ambassador or any other russian official. if any other brief interaction occurred in passing, i do not remember it. to suggest that i participated in any collusion, that i was aware of any collusion with the russian government to hurt this country, which i have served with honor for 35 years, or to undermine the integrity of our democratic process is an appalling and detestable lie. i recused myself not because of any asserted wrongdoing or any believe that i may have been involved in any wrongdoing in the campaign, but because i department of justice regulation --

question you know if the president records conversations in the oval office or anywhere in the white house? >> i do not. is my judgment that it would be inappropriate for me to answer and reveal private conversations with the president. >> did you feel misled when the president announced that the real reason for dismissing esther call me was the russian and -- for dismissing mr. comey was the russian investigation? >> i would not comment on that. is most likely to stick to previous guidance for another right heck -- rate hike before the end of the year. anna: the former philadelphia fed president weighed in on the fence next move. is the fmo's he can look at any data it wants to and decide whether that is important for policy and change their minds. so i think it is important to be

data dependent, there's nothing wrong with that, but you need more information about what -- how they're going to use the data. manus: stephen gallo is very data dependent. when you look at the federal reserve, when you look at the propensity for their ability to do more rate hikes, we started the show talking about balance sheet reduction. which do you think will be the most important thing for the market, balance sheet reduction, or a hike? stephen: i don't think the -- affirm discussion of balance sheet reduction would be a big dollar positive. our house view is that it will not start to really appear concretely until later this year, around september. what the market from our point

of view is mostly going to be looking at today is the tone of yellen in the press conference, which we think will be kind of and the dots on the funds rate the next year and core inflation. anna: the function you need is. . three officials directed fewer than three hikes this year. the talk seems to be that of others shoot it down in projections published this week, we get that movement from the fed, they could have the market affecting if are going to see another move. i think from the fx market perspective, the pricing in fx and also in rates, it's

going to be neutral to dovish. but i think if they were to take just .2, asf it's do fort nextedian year falls, the movement on the top side would be larger, but i still think that would way. anna: so it could be dovish, but we got to prepare for that. i conviction level on that is only around 60%, so slightly above even. hillary clark, our chart -- financial conditions are loose in the night is states. the fed has the capacity to get these next couple of hikes away and in the bank. correct, from a market

perspective. i don't know exactly what the components of the index are but defense rate rises have to be having some tightening impact, for example mortgage rates or some such thing. -- fx specifically on interest-rate differentials flipped for the dollar and became significantly more positive years ago, many quarters ago. so fed policy is not the main driving force. not going to be whether or we see movement on the fiscal policy side in the second half of the year. the russialluded to talk of capitol hill distracting from the other talk that could be taken place on capitol hill. , it'sst crucial factor another delay in another reason why were not talking about changes in the tax system in the u.s.. >> indeed, and most of the trump

deregulation fiscal policy premium have been entirely removed from the dollar. from that perspective, there is more upside in the dollar than there is downside, but we have to wait and see. bill gross said don't be mesmerized by blue skies. he's talking about financial markets, saying don't be mesmerized by blue sky. loggedism's arteries are are blocked by secular forces. promising to stop u.s. and global growth far be line the norms. -- far beyond the norms. are we misreading, we've had a tech shake down over the past couple days. our risks rising from a global perspective, or is growth intact? stephen: i would say modest growth is intact.

i think it's a great way of summing up where we are in the eurozone. modest growth is intact, but can we break outside of that range on the upside? no, not with demographic shifts underway, week investment. anna: stephen gallo, thank you very much. we'll get to our conversation with the allianz chief executive officer. anna: we'll have an of the fomc decision with the former president of the richmond fed and the former minneapolis fed president. that will be a half hour later. manus: if you are bloomberg customer you can watch the show

on tv on your mobile and desktop. question.k the guest there is a show producer there ready to help. anna: leaving out greece, the ecb is unlikely to include greek bonds in its next round of qe. we will discuss what is next for the cash strapped country. manus: and we continue to monitor this fire that has engulfed an entire block in west london. these are pictures from a little earlier today. eyewitnesses are claiming people are trapped in homes. it's near notting hill in the western -- in the west of london. authorities were alerted to the blaze at around 1:15 a.m. london time. this is bloomberg. ♪

anna: welcome back, this is "bloomberg daybreak: europe." you're looking at pictures from earlier on stay of a tower block engulfed in smoke and flames in west london. eyewitnesses claiming people are trapped in their homes. 200 firefighters and 45 engines have been tackling this blaze. these are now live pictures coming to you. it's on the lancaster west estate near notting hill in west london. that thisrove past morning. that is the scene of utter devastation, it's quite incredible. let's get the bloomberg business flash with juliette saly. juliette: the uber leader taking a leave of abstinence -- a leave of absence.

his exit comes after he made a sexist comment during a meeting intended to address goobers rampant gender bias. the company will be run by management committee as it tries to navigate a wave of scandals. walt disney is to do list is first and only allen in europe, ending a 27 year run as an independent company for the paris theme park. it struggled to match the popularity of its u.s. counterpart and had to be bailed out by its parent at least three times. disney now holds more than 97% of the capital of europe disney after it started public offer for the european union -- for the unit last year. the elimination of layer management and expansion of the operational role, starting next month the defense unit will be split into smaller entities

reporting directly to paris. saying the chairman is unable to perform his duties for personal reasons. normal, there statement coming amid local media reports that he's been taken away for questioning. that is your bloomberg business flash. , never far from a barrel of oil on this show. industry data show u.s. markets , will man that tracks it get to that in just a moment. show us your chart of the hour. yousef: in terms of the inventory, and the api pointing to possibly another surprise bill in terms of what's happening with the levels that are still considered to be the highest level we've seen in three decades of a seasonal

average. in terms of the bloomberg forecast, it still looking for a drawdown of 2.5 million barrels last week. i put of a chart to show you their is additional bearishness creeping into this market. it's a story of technical analysis. the last time we had that we circled it in green on your left. it was back in the early part of 2014. you can see where the moving average crosses the key point. ultimately what it tells us is the moving average falling below the 200 day moving average. the bp chief economist has chipped in and agrees with some of the oil ministers that we will see the drawdown accelerate in the second half of this year. that's what alexander novak has been saying. ultimately, the other story recovery on the ground here is what's happening with qatar. some renewed comments eating quoted through the qatar news

content, the saudi offered medical and food assistance and qatar saying there is no need for medicine or food, they taken all the measures required. they are completely rejecting what they call false accusations on terror in describing and illegal siege in violation of international law and saying this is how they describe it. argued lee further entrenchment in their respective positions. anna: some strong language coming from their from the director of information office of foreign affairs. let's shift years a little bit and get back to the ecb. a person familiar with the matter told us.

anna: it comes as european creditors are not prepared to offer substantially easier repayment terms on bailout loans. euro area i has ministers meet in luxembourg tomorrow to discuss additional relief measures for the cash strapped country. the ecb has said these measures are needed before they would bonds.r purchasing manus: greek bonds have yet to be loved by the ecb but the market likes the currency. the stars are aligning. i never thought i would get to this point on the euro. somethinging that very different. there has been a dynamic shift in thinking on the market. are you part of the biggest net long position in six years on the euro? higher. we see it going dip comingere is a for a six-month aces, little bit

more dollar strength, less as we get into u.s. tax reform over the summer and then some pre-italian election hedging, but we think the election will not be a major benefactor for the euro. it's accommodation of dollar strength and preevent risk hedging. anna: it's still around politics and specifically italian politics. a local election in italy did not have a very good showing. in some quarters that reduces on hows expectations they could lose in the next round. stephen: rates markets across the board and in the fx market, and at the same time, you are it'sg the ecb underweight

purchases of some core bonds, causing spreads to compress. are a eurodynamics positive factor. i don't think it will dissipate in the very near term. anna: so the politics don't stand in the way of that. stephen: not at the moment. understand, and we talked about the peak in terms of the near-term peak in u.k. inflation. here we are in europe, oil is an integral part of the headline story, but mario draghi warned again and again, he was very clear. he explained on several occasions that it would protect the detailed risk of inflation. how do you look at the pulse of inflation in europe? stephen: the risk of deflation have dissipated significantly

but core inflation is still stubbornly low. if you look at a phillips curve the rate ofzone, inflation in the eurozone is probably a bit below where it would be predicted by the phillips curve. probably some of that is demographics, the impact on the wages. faithk the ecb is losing in its monetary policy impulse that it can impact inflation meaningfully. at the same time, the low inflation is no read -- no reason to rush. with so many other central banks expanding their balance sheets, the market is willing to jump in and get long on euros. they don't wanted to call second round effects for their inflation profile. they are in a very cautious stance.

they will get out the qe plan but in a dovish way over a very long time. what about the greek story? they'll be gathering in luxembourg tomorrow and talking about what kind of deal can be done in greece. is this something that once again hijacks the euro story? describe political risk broadly as neutral. italy is a factor, but it's the further out in the curve. this is a good element for greece, because it buys time. it probably means greece doesn't default over the summer but the sustainability issue is being delayed most likely until after the german election. manus: thank you so much for joining us. , i'm the only one who's excited about it.

up next, theresa may is under increasing pressure to abandon her plans of a hard brexit. will discuss that in the next hour. this is bloomberg. ♪

manus: theresa may faces pressure to ditch planned for brexit. the decision to leave the eu need not be final. door remains the open, always open until the brexit negotiations come to an end. anna: take a hike. markets see that fed raising rates but will soft u.s. inflation blow the central bank off course for the rest of the year? manus: u.s. attorney jeff sessions denies colluding with russia during last year's election. calling chart -- charges he

misled congress are detestable. >> i do not have any recollection of meeting or talking to the russian ambassador or any other russian official. ♪ manus: you're welcome to "bloomberg daybreak: europe." anna: a warm welcome, it has 8:00 :00 ind germany. we have inflation data coming from germany. cpi data up your on your against the increase of 1.4%. the estimate was 1.5%, decreasing 0.2% month on month against an estimate of exactly that so broadly in line for the

german inflation story. yen, hewe will hear from is speaking today and week before the end -- rate inflation this is not a flash in the pan. let's see what the germans have to say after that. technology recovered, just a .ote it may have been a flash in the pan. and flat lining at 0.6%. what was the score in the france thing? does that set up the pattern for the brexit discussion? -- dax is up so stocks are have a little bit of a reprieve. you have records. anna: let's have a look at the risk radar. we have s&p futures underlying

-- underlining how we are not expected to get too far. it looks pretty static. also flat. also in line give or take some concerns about the real estate sector. manus: the dollar is flat. what could happen to the dots? talking about the potential for movement down in the dots, that could reflect on the dollar, the fiscal story is the most import and think for the dollar. 127 -- 1.27. at we did not get that deal of yesterday. the conversations continue and we will see if we get news on that with the conservative party to form a government. a quick update on a story we are monitoring. the fire in west london in this tower block.

it has been engulfed by fire since after 1:00 a.m. attendance,gade in police in attendance and officers have been called to the scene. there are fears that people could have been caught in this tower block as it burned. the pictures were dreadful overnight against the night sky of this towering inferno. ap.s: an update from 30 people have been taken to hospital. majoryor has said a incident has been declared. it looks as if that is a different image to what i saw at 3:00 a.m. this morning. anna: let's get up-to-date on the other stories. the bloomberg first word news from juliette saly. juliette: thank you. at least 30 people have been hospitalized after a huge blaze involved a tower block in west london. the fire started at 1:00 a.m. an wasgency scene -- emergency

at the scene. people at the scene spoke of not being able to reach friends and family inside. in the u.s., the federal open -- --n market committee is it announcing an increase. it will speak to the previous guidance for another hike and the first step toward unwinding the 4.5 chile dollar balance sheet. we will bring you special coverage of that decision from six clock p.m. bloomberg time. customers can all all the live go.news on 2 speaking ins was front of the intelligence center committee. >> to suggest that i ,articipated in any collusion

that i was aware of any collusion with the russian government to rate this country which i have served with honor for 35 years or to undermine the integrity of our democratic process is an appalling and detestable lie. related, there is the assertion that i did not answer senator franken's question honestly at my confirmation hearing. colleagues, that is false. jeffrey good luck has said the establishment in washington is trying to undermine donald trump by running [inaudible] televiseduring a senate testimony. he called the u.s. political conflict a sideshow or entertainment that was in use to obstruct the president's agenda. 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 . closing of the session in japan and australia. in what has been mixed as investors await the fed decision. the nikkei flat, the sx 200 has had a good day up for a fourth consecutive session. the weakness in china, there is a little bit of speculation about what the pboc will do after the fed. and looking at the msci. china will be excluded from some of those benchmark indexes. detail,at stocks in network 10 has entered voluntary administration. competitor closing under. this is on the report that went to get it may disappoint the market and not eight the preferred buyer for its chip

unit. and the best performer in the region up 11%, mccoury updating the stock to an outperform. we have had that china data coming through showing the economy is still fairly resilient. this shows you the white line, the bloomberg monthly gdp toimate and that could fall 6.5 percent in the fourth quarter. the slowdown they say is likely to be steady, not spiraling. the pboc could be down for its tightening for the time being. that blue line is the annual gdp you're on your target. -- year on your target. let's focus in on theresa may. together a deal and that came as france's

president and germany's finance minister said the u.k. is welcome back to the eu if it changed its mind. >> of course the door remains open, always open until the brexit negotiations come to an end. that being said, a sovereign decision was taken by the british people and that was to come out of the european union and i respect the decision taken by the people. by the french people in the british people. our correspondent is traveling with theresa may. great to hear from you this morning. what are you hearing about the brexit negotiations as you travel with the premise to paris? >> the prime minister was keen to stress last night in a press conference that talks will go forth as planned next week. caveat to the a line we just heard.

ite you start negotiations is hard to backpedal, to go back on the process. government have a yet. it is -- its own domestic position is not clear making they'll process very up in the air. manus: how strong is the push for her to moderate the brexit? right haves on the been calling for a hard brexit. john major and david cameron have been saying she needs to moderate her position. any response, back chat on that or any sense of moderation? that 1922utside committee on monday and a number of mps as they came out of the meeting which allowed theresa

may to carry on for now. i spoke to a number of pro-remain tory mps who said ae'd knowledge there was broad range of views and the party. crucially, those remain mps feel emboldened. course you have these conflicting forces. you still have the diehard brexiteers who want the hard push. those mps who want to have a soft brexit originally did not want brexit at all. they feel their voice can be heard because they could cause some serious trouble. we have a majority in lance with the dmp -- dup. shaky ground. we have our guest ashok

shah. anna has been on the green. she has been listening to the voices outside the 20 -- 1922 committee. are away from hard brexit in any case. even if we decide that go she should, we going to have a change a year from now? way is openink the to stay in the custom unit -- union or some other strategy for softening the brexit? not: a question of staying in the union. the question is how the negotiations, the timeline. which means things are happening in a rapid sense of return.

you get agreements that allow for everybody to get used to the fact that they are coming out. we do not have a hard brexit, we have a soft brexit. there is a lot more time to build everyone's projection. anna: the former chancellor suggesting the non-way pattern is a holding position. manus: we just had a conversation with stephen gallo talking about soft brexit and hard brexit. this is sterling this morning. we are breaking a little bit lower. data did a little bit to help the market but it will not fundamentally change the direction of sterling. of movement to softer brexit over the next six months, what does that do to markets? >> basically it is positive from a market point of view. we have a slowdown and there is

a new rate of growth, inflation will calm down after the devaluation works its way through. the bank will be sidelined and waiting before they can do anything. in that sense the monetary policy remains steady as we go. if you look at what was driving sterling, we had the current deficit which is huge but that it isme down and narrowing further. if you take the longer term view, sterling is a 40 year low. it is already very low, below the neutral level. is high level of uncertainty recovering in the shorter term. it should regain its strength. anna: what does the bank of england do with investors seeing a 40% probability of a rate increase down from as much as 80%.

investors work -- were more convinced about the rate. now they are less convinced but you talk about how further balance sheet expansion may move higher. what is the next movea? we have 1.25w percentage point. the inflation probably by the end of 2018 is going to be below 2%. if the bank of england was to tighten because of the inflation it would end up being a policy mistake and they will end up reversing it. the question of the bank of in terms ofsponse where is the economic trajectory going to be and if it feels like they are drifting near to a recession it is likely that the bank of england has room to expand the balance sheet to ruby

-- to reboot the economy. is it how high a risk that we have had a number of guests, talking about the risks rising. how real is the recession risk because that is the gilt market. you chatted earlier about the fiscal, there may be more latitude in the fiscal story. ashok: that has not been driven by the increases in real wages. come downs significantly. where we are today, we cannot do what we have done in the last 12 months. the consumption cycle will be at the slower it. the capital spending cycle is

going to be very [inaudible] so that means that we are talking about a much lower growth trajectory. therefore the room for it to get because of unknown -- that means chances of getting there have increased. the bank of england does have a lot of room still to reboot the economy. anna: we will see if there is any fiscal response. thank you very much. up next. manus: decision day. the markets are looking at rates, u.s. rates heading higher. inflation stopper the feds hiking cycle? this is bloomberg. ♪

anna: this is "bloomberg

daybreak: europe." 30 people have been hospitalized, the fire started at 1:00 a.m. u.k. time and emergency services were still on the scene. people at the scene spoke of not being able to reach friends and family who had been inside. manus: as we get more developments we will bring that to you. let's get an update from juliette saly. thank you. over reeling from its ceo taking leave of absence has been hit davidhe resignation of bondman. he made a sexist comment during a meeting attended to address uber's gender bias. it is trying to navigate away from scandals.

while is delisting its first and only outlet in europe. it struggled to match the popularity of its u.s. counterpart and had to be bailed out by its parent at least three times. -- 97%holds more than 90 dizzy --pital of euro disney. boeing's defense business is shedding 50 executive positions. it will see the expansion of the operational role. be made businesses will into smaller entities. chinese insurer said its chairman is on his to perform his duties for personal reasons. are authorized to carry out his responsibilities. the statement comes that he has

been taken away for questioning. that is your bloomberg business flash. talk about the fed, expected to raise rates despite softer inflation. the first step toward unwinding the balance sheet. shah. ande are balance sheets they are itching to get this done. my question to you is, i read a raise phrase, do they rates and begin to teach us how to reduce the talents she without wrecking the market? absolutely. if you think about the -- the raterom rises so they are interchangeable.

we know from the features that the market does not believe that the fed can deliver on the forward dots. effectively it did, there can be risk rising. we are nine years into this cycle. it is already a very long cycle and toward the tail end of the cycle the signs are about inflation picking up. [indiscernible] that means the feds hands get tied up as it gets toward the end of the cycle. dots can they the not deliver on, the hike in december or in 2018, where do you see the stopping? ashok: is more about 18. it is dependent on whether trump can get his physical push into the economy or not.

the economy will run slightly sewer. pressures toary wages will be lower. we still have the benefit of the stronger dollar of the last two years helping us keep inflation under check. to that extent, for now, the inflationary pressures are well under control. however, we are now tapping into the hidden unemployment, we're trying to get the participation rate to go up. we do not know much space we have. the participation rate fell by 4%. the other was disincentivize workers which the fed is trying to pull back into the net. manus: we're working and living in a full employment market. this is the bank of america. nearlyhe lowest in

four years. that is your blue line. are we underpricing two things, the fed could get more aggressive and trump could get a fiscal stimulus. >> that is right. those things are what the market is focused on. if you slight trump's policies are on the back burner in terms of the magnitude of what he can deliver and the time interval. to the extent that everything is getting delayed the market is coming to the view that it is not happening for a while yet. in terms of the fed and its reaction and functions and inflation, and is much more crosses, it is better to be cautious later. anna: thank you very much. director of investment of london capital group with us on the program. manus: the european market open

is next. we have david lipton coming up, the imf deputy managing director at 8:30 a.m. this morning. ♪

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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. guy: good morning and welcome. you're watching bloomberg markets. this is the european open. your first cash trade of the session coming up shortly. i am guy johnson. matt miller is in berlin. what are we watching? the fed is widely expect it to raise rates but will janet yellen provide any clues on the trimming of the $4.5 billion fed balance sheet? avoiding a hard landing. british business