>> cyber attack goes global. businesses, operators and government assistance. face speakers highlight rising asset evaluation as fed chair yellen signals the u.s. economy can withstand rate hikes. the dollar weakens, u.s. stocks dropped the most in six weeks. sweetener, the food maker announces a $21 billion share buyback. ♪

welcome to "bloomberg daybreak: europe." breaking news coming through on the bloomberg terminal. toshiba is set to sue western billion.or ¥120 this is lawsuits rising. toshiba seeks a permanent injunction against western digital. developed --y has talking about memory they delivered earlier. this is email saying they're 120 billion yen. we will get more on that story and bring it to you.

when it comes to rockstar central bankers, there aren't many that have the ability to move markets like mario draghi. have a look at this. this is the euro, and he's pushing it higher. is atoomberg euro index the highs level since 2015. look at the bottom of your screen, you will see that. you also see the bund market move aggressively as well. that's what rocks the market. , where on track quarterly gain in six years. he has shifted the dial in terms of what we can expect from the european central bank. the barriers to the upside of the euro are potentially getting busted and political risks are fading. this is what jpmorgan and rbc are saying. there are few resistance levels left before it levels off in a sustained way.

it broke through 1.13. let's talk about some of the other big markets. let's check in on the u.s. markets. yesterday we saw this morning shot come across the markets. the dow jones, the s&p and the nasdaq futures all continuing lower. speakers, the nasdaq fell 1.8% yesterday breaking that 50 day moving average. health care got a setback in the u.s., and that has caused the big question mark over the ability of the trump administration to deliver. roughly in line with where we've seen it recently. this is the question, are these overvalued?

is it the new risk on the table for the federal reserve? you've got the dollar dropping ever so slightly, the aussie dollar down by 0.1%. the imf warning they are no longer assuming that the fiscal push will be delivered in the united states. former member of the rba saying the potential for eight rate hikes to come. this is the 10 year government bond futures, to the downside in terms of price. the rise in terms of yields continues in terms of the fed agenda. to shery ahnoss with the first word news. suggest het trump had another speed bump with sam

republicans postponing a vote already health care bill. at least five gop members said the bill was drafted in secret by majority member mitch mcconnell. it's been a seven-year campaign to repeal and replace the affordable care act, or obamacare. >> were going to talk and see what we can do. we are getting very close, but for the country, we have to have health care. it cannot be obamacare, which is melting down. the other side is saying all sorts of things before the even knew what the bill was. this will be great if we get it done, and if we don't get it done, it's just going to be something we are not going to like, and that's ok. >> the president has blamed the former ally after police helicopters flew over a government institution in caracas and allegedly fired shots and dropped grenades. begin on state television, nicholas maduro denounced the incident as an armed terrorist

attack against the country's institutions. blamed an ally turned critic who previously served as interior minister. the u.k. prime minister's office is tried to downplay a row between theresa may's most senior officials over whether britain should have a transition as it leaves the european union in brexit. secretary david davis accused philip hammond of taking inconsistent positions on whether the u.k. should seek a bridging deal which could mean remaining in the union for years after britney is due to quit. warren buffett said he would never take credit for anything the market does if he were president. that's as the so-called sage obama hall was asked whether president trump was right to pat himself on the back of her rising stock prices. risingold cbs's oxygen since the worst of the financial crisis.

>> it's been going up basically since march of 2009. that's when it hit the bottom, very early in march. elected president, i don't want to be blamed when it goes the other way. >> 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 . not a lot to give us support in terms of the market here in asia. the regional benchmark losing ground for a second consecutive session. the taiex the biggest loser across asia. the nikkei is also being pressured right now and you see the japanese yen stronger against the dollar. sincenow to lowest level october of last year. the hang seng index also losing .4%. one of the few gainers is the

asx 100 which is gaining .7%. orerials leading gains, iron pushing back about six dollars per metric time. not surprising when you see some steel stocks across the market lines, you can see they are jumping as much as 4%. ask a holdings is now gaining .2%, we're hearing their withoping shale gas continental resources, according to local media. aska is moving 4% with operating profit gaining 270% on the year, but the stock has surged significantly in the past two sessions, so we are seeing that pullback. if you think there is not clear movement across stock markets in

asia, you are seeing that the , the pboc strengthening by the most since four weeks. insaw that after the gain the onshore and all sort yuan in the last session, the last few's -- last few minutes of the last session. a lot of people attributed that to intervention from the pboc. we thought close at a premium for the first time in 18 days. where do they go from now, that is the big question. great round up there from shery ahn in hong kong. takeve our bloomberg asia editor, edwin chan joining us now. you.morning to in terms of the ransom ware

spread, what is the impact in your neck of the woods, in asia? edwin: so far, we haven't seen much impact, or i should say not much reported impact. maerskrd about the container terminal -- terminal in india and a cadbury plant in australia. mechanismsreporting are not as efficient in asia for cyberattacks, and that's why we haven't heard about anything, and on the other hand, also i think companies have stepped up their defenses. thes: in terms of proliferation of ransom ware, in terms of national health service , there was a big headline just a couple of weeks ago. why such proliferation in ransom where, is it because there is no one-off button?

edwin: i think there are several factors at play here. branson where's considered pretty lucrative, now that banks and financial institutions have shored up their defenses against credit card theft, information that. so rants and where is becoming the de facto go to for global cyber criminals. and also because, in the case of variant, it today's exploits an existing vulnerability in windows. so there is a hole for you to infiltrate. manus: thank you very much, edwin chan. the u.s. stock markets fell the most in six weeks. fed chair janet yellen acknowledgment equity valuations -- she spoke at an event on the same day as similar comments

were made elsewhere by her .olleagues in san francisco are somewhatations rich, if you use traditional metrics like price-to-earnings ratios, but i won't try to comment on appropriate ,aluations and those ratios that depend on long-term interest rates and of course there is uncertainty about that, so by standard metrics, some asset valuations look high, but there's no certainty about that. manus: janet there, the head of the federal reserve. take a grenade and check it out there. but you get the point, do you agree that -- what i've got for

trailing pe in the group. valuations are looking rich. michael: i think we've seen a bit of a goldilocks scenario where the fed has been delivering one thing, fixed income and equity market values have been going up. there's always a question, can that continue? markets have been incredibly on systemic. to the specific point, earnings actually have been quite good. there are definitely pockets of the market where violations do look stretched, but as a whole, the economic view has been ok. certainly not as stretched as

they have been in the past, i will put it that way. manus: technology took a bit of a battering for a variety of reasons. call it the google effect. talk about that. i've put together s&p technology and the broader index, the , but the this article guys over credit suisse have done is to talk about an equally weighted version of the s&p. the broader market still has a propensity to rise. michael: that's exactly the point. you can sort of see in the itmentary there, i said what wasn't is irrational exuberance, is just a response to a question that in her defense, she did --ch, about the uncertainty obviously were tagging a market

moved to it. the point is, valuations are stretched in some way. what impact fed policy more directly is a fixed income market. how do you justify the treasury strength, given the fed is tightening? me if i'm wrong but i think they're quite happy to see a moderately healthy adjustment in the longer end of the curve. michael: absolutely, you're not wrong at all. given the fact that they're about to begin -- begin balance sheet adjustments, the softer monetary positions had become, the more likely there need to bring that balance sheet adjustment forward. manus: janet yellen said it was much safer, much larger than before, following the fed focus on capital requirements. >> i think the public can see that the tactical positions of

the major banks are very much stronger at this point, this year all of the firms past the stress test. manus: we will get a little more detail tonight, i have a lovely graphic for you. dividend, have a look at the banks. banks will return $121 billion inthe dividend payments dividends and buybacks over the next four quarters. 85% of profit, up to 75% of the profit. i would never have thought eight me,s ago if you said to we've come a long way in the banking story and this is the delivery, isn't it? michael: and of course she is right. the financial system there is far safer than it was. trading likere

that, it's not just in the u.s.. about the story that began when we were talking about the italian banks. that,itial reaction to the systemic risk has been part because of the actions of the authorities about the stress test. and now potentially we will see the second wave that will potentially change going forward. the market is safer. the real stress test is that when you'll start to rise, 3% 10-year gilts in the u.s. that is a proper stress test. when is 3% achievable in u.s. rates? michael: 2018.

manus: we will hold you to that. that's get your highlights of the day ahead. u.k. time, theresa may faces her parliament for prime minister's questions. later mario draghi along with mark carney on the annual form in portugal. 9:30 p.m. u.k. time we get the results of those stress tests. dividends, that's what we want to know about. we check in on the health of china's banks, that's next. this is bloomberg. ♪

1:20 in the afternoon, a beautiful shot of hong kong. the hang seng down .4%. the ransom where story, and the concern from fed governors and

presidents about valuations. it's a hangover on the markets. shery ahn has your business flash this morning. >> nestlé has announced the $21 billion share buyback is is is looking for acquisitions just days after calling for a shakeup. the new ceo mark schneider said in february that of buyback was a low priority, that reinvesting in paying dividends. they were called to sell their stake in l'oreal and take a more debt. damages anduing for seeking to stop the company from interfering in its business. it was reassured is on track to complete the deal by next march.

deutsche bank is said to have courseplan to put it on to lose as much a 60 me dollars. the german lender has been examining whether traders reached a promise on the deal. it would be a setback for the ceo. and officials for deutsche bank in new york declined to comment. that's your bloomberg business flash. manus: shery ahn, thank you very much. we will get official data from china on friday. the bloomberg estimate indicates its slowest expansion in the sector since october of year, following the studying of the ship. is with us.alfe

we can debate, hard landing, .oft landing, growth trajectory they're moving heck and high water to make sure we slug it out at 6.5%. are you as optimistic on china as i'm putting the story forward? michael: i think there is an assumption that they can deliver. they said that all along, to be fair. how many times do we talk about the risk of china, and there are times when the market -- right now there's an assumption that we are steady as she goes, but this will deliver a very soft slowdown. manus: china may industrial profits rose by 16.7%, compared to 14%. if you look at u.s., europe, and china asset allocation, to what extent do you want to buy china?

michael: the one lesson we , there's as year strong preference for both emerging markets in general of which china is a big part, but europe as well. the interesting thing about europe, expectations were just so low at the start of the year. markets, there's more of the general longer-term allocation back to the yen. to you inhowed this the break, the yield curve in china. this is the yield curve in china. and this is the flow of money out of china. in classic economics, i can remember when i took the class in university, an inverted yield curve says recession is him.

that's what i mean heck and high water. what does the yield curve say to you, that flow of money out of china? they got it right, haven't they? concern about the slowdown is reflected in yields. there's also an assumption that short-term yields go up, we know that the long-term growth will not be as high as it currently is. the flat year was probably about right and you might begin to expect fears of the sharper slowdown on the outflows as well. manus: is that in sync with the fed? for every move by the fed, the pboc will match? michael: it will depend on how the markets react. metcalfe speaks with us -- stays with us. coming up on this show, could there be room for a pairing of

stimulus? unwinding of central bank pump priming. much more to calm. -- to come. ♪

thes: it's 2:30 in afternoon in tokyo. i would get your on brolin -- your umbrella. the dollar-yen is a little softer this morning with light risk aversion in these markets. there's a new edition of daybreak on your mobile if you know how to get it. this is the cover story, it's about the ransom where that has taken down computer systems across the globe, striking multinationals.

it's truly a global story, these ransom where stories are growing. bothtars uses similar when -- windows. it has disrupted shipping in rotterdam in india. it causes crypto currencies to unlock the computer. colleaguesn and talking about valuations, and stock markets up by the most in six weeks, and the dollar also weakened. plans for the balance sheets well understood. netflix, the $21

billion by that. this is days after the hedge sectors is looking into of where they want to make changes. should it make a sizable takeover? it may modify the repurchase program. a little more news coming through on phillips, let's just bring that to you. buy, doingginning to a purchase, i should say, of spectronetics, a move from fellow -- move from phillips, to buy it for $38.50. m&a and activism seemed to be the hallmarks of these markets along with the banking story. tender offer at

$38.50. they expect to close the acquisition by the third quarter of 2017. the see the revenue adjusted ebitda as being accreted to the numbers by 2018. on there the big issues hardcopy. the government will present a broad outline of labor reforms during a cabinet meeting later this morning. reformsly anticipated gave the party a comfortable majority. great to see you this morning. groundbreaking in terms of the project that will be put forward in front of parliament this morning. is that how we should put the headline on this? macron is what emmanuel is trying to do to go further in informing the labor market that

anything that has been tried before. it's been called the mother of all reforms. the measures we expect this morning is that the government wants to lower social contributions from both the employer and the employee. he wants to allow companies to negotiate wages and labor rules at the company level rather than the industrial level. in some cases we can also see a referendum in case of these agreements at the company level. also he wants to bring down the cost of firing someone by amounts in terms of dismissal. many french presidents have tried to reform the 3000 page

labor code in france and many have failed. many have faced street protests and demonstrations. has beenur week proposed twice over the last 15 years. macron also help draft labor reform and that actually had to be watered down later because of protests in the streets. move: just before we along, i just want to bring a little more breaking news, talking about phillips doing a cs.chase of spectraneti shareps has announced the buyback of 1.5 billion euros. sona's sleep and phillips don't buy back, how to protect yourself in times of perhaps

aggressive speculation about what happens next to your company. buybacks will be a big thing of this half of the year. what i want to know is, the challenges are very grandiose. the ambition is huge in terms of what he wants to do. i know you read all the pages of that labor law page by page. what i want to know is, what is the biggest obstacle? i want to know how tough the union is going to be. the french union is rather difficult. course they are, and it's very possible we will see some demonstrations over the next you weeks. however, of you things. -- a few things. many people will be on holiday, and the government wants to use executive decrees to bypass some of the extensive debate in parliament. so with the majority that macron

has in parliament, it might also be a little easier, but of course the unions have already expressed some concern. the head of the second-largest union in france said that claiming the labor code in france is the cause of unemployment is a pure lie. the government of course will possibleace demonstrations. the goal is very ambitious because they want to have this decree in place by the end of the summer, by september 21. this might sound a little ambitious. unemployment in france is still double germany and the u.k. and the jobless rate at the moment is 9.4%. macron wants to bring it down to 7%. the last time unemployment france was below 7% was before i was born, in the early 1980's. manus: caroline, you are the

elixir of youth. the latest on the macron debut in the french parliament. he repeated his mantra that the government needs to be patient and letting inflation pressures out in the euro area. all of this at the same time as he sees room for tweaking existing measures and that is gone. deflation >> the threat of deflation is .one since one of the drivers of inflation today is supply development, this should .eedback possibly in these conditions, we can be more assured about the return of inflation to our objective than

we were a few years ago. has morerio draghi ability to move markets then janet yellen. , is he right,fe the threat of inflation is gone? what did you make of what he said? he has a powerful momentum and it hit the market in size yesterday. michael: i think it is fascinating. we expected a change in language and didn't get it. arguably we potentially got it yesterday. the one thing we are slightly wary of his the idea that the deflationary term has gone. we track a lot of online retail prices in europe. the annual inflation rate has .ust that toward 1%

on current trend, it will go back below 1%. if one of the problems for the ecb is that headline inflation rate below 1%, even if it's driven by temporary factors, means you cannot be that confident that you are within the danger zone. it's near enough to be the danger zone. about removing easing gradually next year. it's interesting and had such a big market impact yesterday. manus: i wrote a quick note yesterday afternoon to myself, the difference there talking about policy whose rather than rates. butmarkets are one thing, this is a global issue. it's a variation on the theme , this is global,

weight adjusted cpi and it is trending lower. what you think both janet yellen and draghi are so convinced that these are temporary moments, something we need to look through? do you concur? michael: there are definitely parts that are temporary. fore are definite reasons inflation early on. , in theresting thing is u.s., inflation is rolling over from above target. it should not be a concern for the fed yet. and youase of the ecb, guys have done some nice stuff, the super core inflation rate. it's below 1%. the super core inflation rate has never risen above 1%. this is a real issue. are just temporary

hits to inflation, it could quickly become a problem for the ecb. let's say in two or three months time, you're looking at headline inflation in the eurozone below 1%. this is the quarterly performance on the euro, up 6.5%. he moved the bond market yesterday. would you concur with that, and what is the consequence of that from it equity story? does it throw any risk into the equity story in europe? michael: the pendulum in europe has swung from being very pessimistic all the way to being very, very optimistic. right now there is no reason to doubt it. , what doesthing macron economics look like? we need to see what that looks

like. expectations there are very high. the same thing for euro, the expectations around the euro are very high. manus: i share that, i think we are so rise in the euro and if the fed does go on continued momentum, i wonder if the euro can hold up rather than the dollar. mark carney never far from trying to influence our thinking in the marketplace. i spoke about monetary policy and financial stability. >> the view we have taken, and i think it is proven effective, is that monetary policy is the last line of defense to address financial stability issues. we have a fairly wide range of tools and we have an even wider range of influence that we can take to become a -- policy committee in order to build the resilience and promote financial stability.

manus: mark carney talking about the last line of defense. saying they need to do something. it was good news for sterling and it has shifted the thinking about rates and it's a great debate in terms of when they might move. what is your consensus? you were at a big conference with a lot of different people. what was shifting the gears there? michael: obviously the minutes started nd thewe've had quite a wide range of comments from the chief economist. we know thatne is inflation has come back in the u.k., growth did not collapse. it's about normalization of expectations.

the one thing we are watchful of right now is how consumers respond to higher prices. i think there has been a concern perhaps that now as we start to price it in, the economy is going to underperform. manus: 3% next year for treasuries. are you in the 2% camp? michael: you are not going to get me to say that. it's right to be defensive, i will give you that. stays with metcalfe the daybreak team. we've got senate majority leader , at least five gop senators said they would vote to block the current bill. mitch mcconnell need support from at least 52 republicans. moderates were concerned about medicaid sharp cuts to

and saying it does not go far enough to uproot obamacare. our first word editor for washington is standing by. thank you so much. here we are again, the second big right. how does the white house respond to the senate decision to delay the vote? is this embarrassing to the president in any way? senate majority leader mitch mcconnell announced his decision to delay a vote on the health care bill until after the july for recess, some senate republicans met with president trump in the white house to discuss the bill. o'connell expressed concerns about market reforms and the future of medicaid. donald trump intern said senators working very hard on this bill and he wants to solve the problem of obamacare. he also campaigned on

the promise of repealing and replacing obamacare. he conceded the possibility that this bill may not pass the senate. .anus: that is the risk thank you so much, jackie edwards with that roundup on the health care boat from capitol hill. companyd's largest food plans to repurchase $21 billion is hungry for acquisitions. we have the details. this is bloomberg. ♪

manus: nestlé announced plans for $21 billion share buyback. the world's largest food company wants to invest in baby food and ball water. the announcement comes days thomas,s get to

who joins us now. good to see this morning. this is important, we have a new ceo who is reviewing everything anyway. to what extent do you think this to whatressure and extent is he pulling the trigger on something he reviewed? >> it doesn't seem to be a coincidence that it comes just a few days after the announcement that they want a state. -- a stake. analysts are saying probably the buyback is something that was under consideration. the announcement has pushed that forward. so effectively what nestlé is doing is getting the advantage of getting that statement out there and pushing up the shares and possibly making it a bit more expensive if they're going to raise their stakes.

go ahead. >> the important thing is if you look at his demands, he gave a laundry list of demands. while this is a step forward, he is asking for a lot. he's asking for an operating margin target, he's asking for nestlé to take on even more debt than they plan to take on, and he also said that nestlé really needs to sell its stake in l'oreal. manus: they did not touch on that. what pressures and activist investor can exert. thank you, thomas. michael metcalfe is still with us. the buyback, whether it's pushed

over the line or whatever, it's $21 billion. -- i said in the summation that the theme of 2017, how important thing is it? it linksas you say, together a lot of things we've been talking about this morning. violations, about how much of the current byte rations are supported? the other question is for the economic outlook. it probably means it's getting taken away from investments. why the economic reasons that caught my eye was a tweet. through what this is, part of the durable goods survey. michael: it's not a pretty chart.

let me take my it is important. this feeds through directly into people's forecast for investment in the quarter. the last three releases of mixed -- missed expectations, the mate release mixed by quite away. that suggests that we been waiting for animal spirits to translate into hard data. this is where it should be coming through. volatile, but the is the coming through translation of positive business sentiment isn't hitting the hard data yet. if you are bullish on the is u., this chart is worrisome. menu. we have the full the imf didat what yesterday, they downgraded the gross estimate for 2017 in 2018. ties back to the tax

debate in the u.s. in terms of capex as well. thing thate one could catalyze what we seen in terms of positive animal spirit and hard data is that the tax plan became a reality. the interesting thing about people taking it out of the forecast means that the bar has been lowered significantly. when you look at things like term premiums in the states, the market doesn't price in the chance of anything happening. and so far, to be fair, it looks like they are right. i think were concerned that maybe expectations are too low. manus: i know you like the u.s., you have a call on treasuries. i want to circle back to the gilt market. i want to look at it from the brexit perspective. davis is saying

the u.k. is likely to quit the union on day one of brexit in 2019, whereas, you said, i would prefer to use the gilt market as a vicarious political trade. 1%spent four months below since the fed series began. as athat continue political risk vehicle? used to we've gotten so using starlet as a proxy. controversy,it sterling is undervalued. that's become a lot more collocated. recession, get the gilt looks really quite rich. on the political uncertainty side, is more government spending. michael, thank you very

much. street metcalfe at state . check in on euro sterling. we will talk much more about central bankers. ♪

manus: ciber goes global. the virus spreads from the u.s. and europe into asia. businesses, port operators and government systems affected. someone rich. a trio of fed speakers highlight rising valuations. the u.s. economy can withstand rate hikes. the dollar weakens. stocks dropped the most in six weeks area and nestle, the foot producer, makes its first concession to activist dan loeb with a $.1 million share buyback.

♪ tous: you're welcome "bloomberg daybreak: europe." picking up the concern that we have in late in the u.s., going into asia, technology came under pressure. a trio of fed speakers warned about valuations. they did not call it an irrational exuberance moment from janet yellen, that is what michael metcalf had to say a short time ago but this is the year of equity markets down .2 of 1%, day one of macrononomics in parliament. and the dax down .6 of percent. european equity fund it's are lower. let's check in on the u.s. equity futures. there was a trifecta of rhetoric coming through from the united states in terms of janet yellen

along with ym stan fischer. all making the point about valuations. it was not an irrational exuberance moment. that was the line that came through from michael metcalf as a valuations, janet yellen. the nasdaq down nearly 2%. and the health care bill not making it to the floor, did not do the sentiment any good. let's look at the risk radar. the dollar dropping and the aussie dollar bid and the dollar index is down. the imf removing its assumption stimulus from the u.s. growth trajectory. the aussie dollar isn't .3 of 1%. when a former rba member john rateds talks about the hikes to come through, the aussie dollar responded. 10-year government bonds are down. i like futures.

this is how the equity market finished off, driven by technology. australiaf 1% and point six of 1%. equities are going lower. the risk in the bond market has been reduced that you are saying a bit of a flickr in terms of the bond markets continuing after mario draghi's big speech yesterday saying i will be accommodative, neither market is presuming there will be a shift from the european central bank in regard to quantity. perhaps more aggressively and sooner than the market had anticipated. oat's up. if you are looking for the central bank it -- bank market , it isral market mover

mario draghi. market, who mostly shery ahn. hitting businesses and users. users being paid -- told to pay $300 in bitcoin. this underscores how rest somewhere is becoming a routine risk of being is this -- doing business around the world. president trump agenda hit another speed bump with senate republicans postponing a vote on a near -- new health care bill. they block debates on the bills which was drafted in secret by majority leader mitch mcconnell. it delays another setback on the republican seven-year campaign to repeal an replace the 2010 affordable care act or obamacare.

>> we are going to talk and see what we can do. we are getting very close but for the country, we have to have health care. and it cannot be obamacare which is melting down. the other side is saying all search of things before they knew what the bill was. great if we get it done and if we do not get it done it is going to be some that we are not going to like and that is ok. ery: venezuela's president has went the former ally after a helicopter flew over and allegedly fired shots and dropped grenades. speaking on state television he denounced the incident as "an armed terrorist attack against the country's institutions." he blamed an ally who served as his interior minister. the u.k. prime minister's office downplay a route between theresa may's most senior officials other -- over whether britain should have a

transition as it leaves the european union. excuse -- accusing philip hammond of taking inconsistent positions on whether the u.k. should seek abridging deal which could mean remaining in the union after -- years after britain is due to crit -- quit. the sage of omaha was asked if trump was right to put him -- pat himself on the back. had been- said stocks rising since the worst of the financial crisis. grexit has been going up since march of 2009. that is what the bottom early in march. more or less ever since then. become president i do not want to be blamed for with the

market does. 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 . it is a down day for markets across asia. we are seeing the downward pressure, tech stocks continuing that selloff from the u.s. into asia. the taiex index was the biggest user among markets across asia. we are seeing the nikkei seeing the pressure, it closed down half a percent. the japanese yen strengthening, the dollar index right now at the lowest level since october. the hang seng index has two .ours to go, down by as much as the asx 200 which gained .7 of 1%, materials leading the gains to my iron ore, futures back above $60 per metric 10. that helped also other stocks, steel stocks across asia surging as much as percent. down.t holding trading

it was the biggest user on the regional benchmark. following that selloff. and losing more than 9% in trading in japan. operating profit. it has surged up to this way. entering overbought territory on the 14 day rsi. we saw that pullback. now here in asia, we saw some clear strengths when it came to metals, minerals and trading gaining around riyadh not surprising given that not only do we have a lower weaker u.s. dollar but also comments coming out from the premier saying the chinese growth is that economies on track. you can see the index as well as the industrial profits grow in

china and pretty solid territory. manus: thank you very much. let's talk about nestle. 1.4% higher on the market. the moment on the back of that news yesterday evening on the $21 billion share buyback indicated. also check out euro sterling and you are looking at the highest doubles, 45. at 2.5%.ed dividends we will talk about that with our guest very shortly. let's talk about the u.s. stock market created to a battering yesterday. fed chair janet yellen acknowledged that valuations at other asset markets have risen noticeably in recent weeks. she's woke at an event in london on the same day that similar comments were made also by her

colleagues, the vice chairman stanley's is your -- fisher. richluations are somewhat if you use traditional metrics like price earnings ratios. i would not try to comment on appropriate valuations and those ratios, what to depend on long-term interest rates and this uncertainty about that. metrics, some asset valuations look high. there is no certainty about that. janet yellen there, the head of the federal reserve. saldanha. now is an irrational

exuberance warning from the fed. what did you think? richard: i concur. when we talk about yellen comments it is interesting to reflect on that. this boils down to this hard versus soft data debate we have been having for quite a while now. the strength in terms of business surveys, pmi's, etc. not necessarily feeding through in gdp numbers, inflation numbers, etc. that will happen, it will take a little time to feed through. from a corporate perspective things look quite strong. the earnings were continuing to be good. the hard data is earnings and that has been good. will be interesting from a needrate perspective is we more investment. janet yellen has been clear on that. from a company perspective a lot of that is dependent on policy certainty including what we saw with a health care will. as you see a bit more policies

from the trump administration you will see that investment coming through. manus: with the faltering of health care, does that we can your belief in fiscal reform because it has utterly changed the imf's perspective on the ability of trumps administration . they have removed fiscal stimulus from their forecast and downgraded 2% -- 2.1% and next are they have downgraded the growth forecast as well. they are shaky, are they? richard: these things will take time as i said. what happened yesterday was a setback that question. a lot of what the administration announced is ambition -- ambitious especially when you think about the tax reforms. iny need the short support the republican party. we expect tax reform will come in at some way next year. that is dependent on the health care bill.

we do think these reforms will happen. it will take time. manus: that is take me to [indiscernible] this is about variation and valuation. a still think there is substantial effect, how would perimetert putting up around the risk and reward and taking more exposure to the u.s. estimate richard: when you are feeling the u.s. debate i go back to the earnings argument. that momentum is coming through. europe is more of an interesting opportunity set if we're honest. if you look at it from a valuation respective the u.s. looks more attractive. manus: hold that thought. europe is more attractive than the u.s.. janet yellen was talking about the wider financials and saying it is much safer and sounder than before following the fed's focus on capital permits.

-- requirements. >> the public can see that the capital positions of the major banks are very much stronger at this point, this year, all of the firms pass the quantitative part of the stress test. from: a stronger statement janet yellen. we will have more detail on the stress tests. we have a nice graphic that sums it up to $121 billion returned to dividend potentially. the same question is ahead for metcalf. to what extent do you like he was banks relative to the european scenario where we started with cleanups anonymous in italy. ants market for me, we are expecting $121 billion to come through. bank of america could return 63 percent more to shareholders. these are staggering numbers. richard: this is an interesting debate going on. we have the dodd-frank stress

test which the banks passed fine. theyone's eye will be on announcements. the likes of jamie dimon and jpmorgan have an clear, they want to return more capital back to shareholders. if you think about u.s. banks in terms of your competitive at crisis levels, capital levels are in far better shape. return toset to shareholders. manus: our guests days here. -- guest stays here. the world's largest food company plans to repurchase $21 billion of stock. is this the concession for stakeholders? this is bloomberg. ♪

manus: summertime in berlin, 8:18 a.m. the euro is on the march. a bit of france and germany quite you get on the march, point 13. one we have notvels seen since last year. let's get our business flash. : thank you. toshiba has sued western digital four $1 billion in damages and stopping the company from interfering. it needs more time to reach final agreements over the sale of the business but reassured

that is on track to complete the deal by next march, it has wanted and agreement with other investors by today's annual general meeting. buy [inaudible] the dutch company will offer $38 .8's -- $38.58 a share that is 27% above the closing level. $1.7 billion of stock. deutsche bank is said to have made a u.s. inflation that that puts it on course to lose as much as $60 million. the german lender has been examining whether traders breached risk of its on the deal. such a loss would be a setback for the ceo who overhauled the risk and operational controls and officials for deutsche bank

in new york declined to comment. that is your bloomberg business flash. manus: thank you. it is on the hunt for acquisitions. it is the world's largest food company. funneling more investment in coffee, baby food, and bottled water. it will pursue opportunities in the health care space. this comes days after the activist investor dan low disclosed a $3.5 billion stake in the company. global services fund manager. when you see the new ceo at nestle coming out and delivering such a quantum share buyback days after an activist investor pursuit the company, what does that say to you? richard: it says it is power to the activists in many ways. that is the same you have seen throughout this year and we will continue.

what is interesting is when you look at the proposals dan loeb put forward, and operating buybacks,get, share stream around your portfolio, this is pretty much exactly what unilever said word for word in their strategic review that they announced. to me that is taking a lot of the elements we have seen before . what i would say is do not underestimate the potential raft taking k companies out. that focuses your mind. you need to come up with an operational argument to your shareholders about what you are doing. kraft be still an aggressor? richard: they have taken steps. they are there, we know that. meet: you used -- said to keep an eye on joe kaiser.

francine sat down with joe kaiser and we will hear more of that later. he warned about the short-term aspect of activist investing. an important is acknowledgment. more often than not when we see shares gowe see the up. from an investor perspective you need to question the intentions of the activist area from our perspective it is long-term shareholders. we want to ensure the activist is aligned long-term with what we want to see from the company. the comments yesterday were quite prescient in terms of what is going on. you need to look after long-term interests, not necessarily for short-term fixes. manus: perhaps a shift in gears in trend. this is buybacks in the s&p 500, buybacks in the stoxx 600. you made the point correctly. what extent will we see a cultural shift? less in theueur,

u.s. historicallys. with no share buybacks with -- have been an important tool in terms of the capital allocations toolkit. in europe there is more focus on dividends. share buybacks are getting used more as a tool and for activist investors it is part of the argument. european balance sheet is indecent shape. manus: your -- you were in the by we talked about phillips news. to a certain extent, they're going to be forced into using capital and share buybacks .ather than is it trying to we a pod i use the cash in my balance sheet? seeard: we want to

companies using capital in the most efficient way. it can be m&a, buybacks, internal investment. since phillips announced the m&a deal and that is their focus, the country has changed its spots quite a lot. from electronics to a health tech company. manus: a couple of other lines coming you -- coming through from phillips' ceo. you may have a disclosure. the has been no public andlosure from third point they plan a capital update. we had caught up with the ceo and that is one of the standard questions we asked him all the time. low -- danfrom dan loeb. and there is the amazon deal and

the disruption that has had. in terms similar trend of being victim to pray? amazon are anow disruptor. is shootthe reaction first and ask questions later. we saw a massive impact from the european companies. our holds -- amazon and whole foods does not change the dynamic short to medium term for these companies. if you think about the whole foods customer is different to walmart. this does not necessarily lead to a price hold. manus: thank you for being with us. fund manager at aviva. thank you for being with us. the european market open is next area -- next.

we are seven hours away from the meeting. if you want to know who has the fo for markets, that is mr. mario draghi as the high hits the levels that highest level since november against the pound.

♪ guy: wednesday morning, good morning. markets, this is the european open. cash is opening an half hour. i am guy johnson. matt miller returns to berlin tomorrow. let's talk about what we are talking about. i read somewhere virus spreads across the globe. doing enough to protect investors' money against this routine risk?