u.s. confirms that -- the yuan meets today to talk about launching a missile. today's fed minutes may provide signals on when the central bank plans to start drinking -- shrinking balance sheet. >> the clock ticks down on and on dutch ultimatum. meeting the block later today reflects chancellor -- post china's president. that's ahead of this week's summit.

>> welcome to bloomberg daybreak: europe. i'm an edwards. manus: i'm manus cranny. --igion belligerent belligerent market moving markets, dollar-yen. continues, of words give rex tillerson talking about a threat between the u.s. and its allies. they go for more drills in response to north korea. this is what we were looking at this morning. you can see those short positions on dollar-yen are dropping, not aggressively, but the wi-lan shows you that we have turned up words on dollar-yen. the question for the markets, where do you want to be? >> continuation of what we saw

yesterday with the and and gold getting a boost. interesting how this props up against the central bank in conversation. money going into the yen. we'll talk more with jeremy stretch about that. i'll show you where we are on haven assets. talked about old in there for you. that's gaining ground this morning. , u.s. equityf this markets not expecting to go all the art at the start of their trade. yesterday things flattened out it eating july 4. income markets and oil as well. >> look at bond markets. as you say, u.s. treasury comebacks to look -- back to liquidity. treasuries. yen, the question for the fed, what do they say about balance sheet reduction? with a go for it for the next interest rate hike? number 2/10 of 1%.

we have broken those gains. >> interesting to see russians saying that they are opposed to any cuts coming from that opec meeting, looks set to us -- take place later. let's get bloomberg first word news with juliette saly. the u.s. federal reserve could give clues about whether it will begin reducing its $4.5 trillion balance sheet before another rate hike. inicymakers lifted rates june, signaled one more hike this year. this bulb out how it would begin to gradually unwind. while janet yellen said the process could begin relatively soon, she left the precise timing and secret -- in secrecy, a mystery. >> russia said to be pushing back at deepening oil production cuts and will oppose the idea at an opec meeting later this month according to russian government officials.

one said any further supply reductions so soon after the existing agreement would send the wrong message to the oil markets. opec members host and non-members. east, qatare extended to respond to a saudi inspired list of demands. answer toer their kuwait, but there's been no indication of what it contained. it includes cutting ties with karen and closing al jazeera. german prime minister says he expects the saudi led alliance to reject qatar's response, but they cannot be expected to simply back down. --the u.s., the july 4 fireworks spectacular has gone often customary extravagance.

the events honors independence day, with -- this year's program features singers melissa average and hamilton star leslie odom junior. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm juliette saly, this is bloomberg. seen a bit of a rebound in late afternoon trade here in asia. this morning was about responding to the nissan launch from north korea. you've seen in many cases higher by about 1/10 of 1%. the yen giving back some of its gains. australian market to the tune of one percent. it rallied strongly yesterday. turnaround on hong kong. above that crucial 25-500 level after it limited yesterday on concern that the run-up had gone too far too fast. selloff being a suggested. chem set was one of the biggest

decliners yesterday in the region. and rebounding a little bit the hong kong session today, up by over 1%. there a south korean dispense company. you can see it's down by almost a percent. back ofed 16% on the this want yesterday. flight center -- strong performing in australia up by $.10, after it expected four-year profit at the top end of its revised target range. a lot of concern about what's at the north korea geopolitical tension -- for south korea's stocks. #btvat these stocks, g 1041. if there's concern to the north korean launch could impact south korean stocks, they are coming up strong. this white line is the copy over the course of this year. the blue line is -- the world index. you can see that this has outperformed, also this yellow line showing foreign investment in korean stocks. over $9 billion so far has flown through from foreign investors. the kospi of course as we know

come rounded up the first half of the year at a record high. we could see downturn yesterday. it was off .6 of 1%, but it's coming up strong. >> juliette, thank you very much. the u.s. has confirmed that the rocket launched by north korea was anay intercontinental ballistic missile. rex tillerson called close -- a new escalation of threat to the allies, that will be brought before the un security council. session thislosed afternoon. north korea is expected to dominate this week's g-20. president trump will meet with his chinese counterparts. let's bring in stephen engle. good to have you on the program. how is this concerned i'd -- icbm test a game changer, that in this standoff between north korea and the americans? that's the big question. i've lived my entire adult life in asia, 27 years.

i've seen a number of these kind of redlands from north korea. we to get complacent, sometimes shrug it off, market do as well. it seems a is time, now that they do have the capability with icbm to reach u.s. soil with a potential nuclear warhead, that's a game changer on this table. the threat alone in the eyes of pyongyang's mind is, big are getting chip if you well. the question though, moves on to, does this -- lead to negotiations or does it lead to military conflict?\ that's the end game. north korea saying it will not discuss its nuclear or missile programs unless the united states scraps its threats the pyongyang burress -- perceives from washington. it even talked about sending a frequent gift to the united states in commemoration of the july 4 independent day celebration. there's a high possibility that

north korea will soon conduct another nuclear test. the u.s. is not backing down. the pentagon has been a number by theements -- north and the u.s. -- the salve not backing down. >> talk about that. what's really on the table, you've got rex tillerson calling for global action. what's a real possibility of movement on this? >> you have the status quote where the north will continue to build up its arsenal. you have attentional military three, you have a real push to get the six parties, or at least 2-3, to the table and discuss the un security council, they will convene behind closed doors

later wednesday, as requested by nikki haley, u.s. ambassador to the u.n.. china and russia have also issued a joint statement, as she and put meat. the call of dutch on the north to halt its nuclear test, ballistic missile launches, start -- stop large-scale military exercises. said the icbm test pilots u.s. security council resolutions. you can bet there's probably more sanctions being proposed behind closed doors later. but again, will china be on board, and how does beijing want to come down? how hard do they want to come down pyongyang? >> they you very much for the analysis. stretch, here with us in the studio. good morning. >> good morning. >> hauschild local tension play out in the markets? we've seen risk assets -- talking about at the top of the show. that you'd the yen is funny, the

central banking story also plays in here. how do you see the world through this geopolitical lens? bloomberg.com >> you're right, you're these two conflicting elements pulling markets. it was fascinating yesterday, when we do see the announcement -- the icbm -- came down briefly but it was -- a brief reversal. markets rebounding. -- it is something the market will keep in its back foot, back thinking. in the context of a broader perspective, markets are very much focused on how central banks are going to change policy direction. the concept for the bank of japan is stashed seeing this as a leader. accordingly, the and since this -- it will trade accordingly. shows the this which

past five days. the basket. it's behaving -- it's what i identified yesterday. the markets are not concerned about its imminent attack, but progress. diplomatic one thing that struck me, all of a sudden you have rex tillerson's -- quote, global action. america first and the movement away from the world. it's ironic. they need china, they need south korea, they need their global neighbors. >> and a sense, the u.s. you can maken -- lots of statements on the campaign trail, argue that making america great again or putting it first is the campaign which plays well with the base and gets elected, but once you are in power, political reality kicks in. that you cangnize make these statements. but political realities are rather different. you do need that.

clearly in the context of the g-20, it will be fascinating to andhow the negotiations relationships particularly between the u.s. and china play out. thea is a big player in context of north korea because of its support for the regime in pyongyang. >> we have trump meeting putin. there will be so much in this g-20 to analyze and ink about. there's also the trade story that grumbles on here, for markets -- and this is crucial. >> we see this coming to europe ahead of the g-20 to try and hammer out a trade deal to -- between japan and eu, four years in the making. >> it seems as the trump's opposition to big multiplayer trade agreements has galvanized enthusiasm. can they be material, can they make a difference? >> absolutely. there has been a difference here. there's the underlying fact -- we have a long castration for the multilateral trade deals.

we see that the contents of japan were we're talking about for-5-6 years of negotiations. cap -- this may prove beneficial in the trade side. that may harm to paid relations between japan and the eu. in the context of u.s. -- and the u.k., and future trade relationships, trade negotiations -- there are lots of issues in play today. also in terms of future trade negotiations, which will be taken from some of these agreements. >> it's a relationship of expediency -- maybe that's not the right word. of the in trade surface united states. >> exactly. if you look at that -- she wrote an op-ed trade when he talks about this, the country should intensify cooperation. toan a contributions security, stability, and prosperity in neighboring countries. it hasn't always been that way. germany makes machines, they

pluck them to china, china turn -- churns out to goods. it is a symbiotic relationship driven by fear. >> to an extent. i think there are similarities in terms of japan -- china and germany. offsetting that is the u.s.. in the context of -- there's germany, china -- whatever editor put together this morning. -- and vice imf versa. yellow is china to germany. >> clearly there is an important relationship. even mores but important for the two nations, how those trade relations are mutually beneficial. >> mark trade deals are designed to achieve -- to make things mutually beneficial, to provide aggregate growth which will

provide populations. that's what tourniquet negate -- trade negotiations achieve during the trump regime would argue bilateral negotiations -- of the best way to do that. bilateral relationship with the you are necessarily in a position -- that of course is one of the key issues in terms of trade negotiations. if you have a degree of holiday, you will probably both get a beneficial outcome. if you will impart much stronger than the other, that outcome may not be quite beneficial. >> one of my colleagues -- on the subject of china german relations, saying they will be wary to be picked off. obviously germany -- that's why conversations take place. thank you jeremy stretch. will be joined --

>> we have a ukrainian fryman -- finance minister coming on, it: 30 u.k. time. coming up on daybreak -- >> find out why theresa may's elections answer could pave the way for a more business friendly eu divorce. moving in on subject -- this is bloomberg. ♪

>> welcome back. that's a shot of hong kong. tensions whichal are rising in the region, you have some markets getting up one half of 1%. business flash. ceo has welcomed brussels -- giving gridlines to the state bailout to the world's oldest

bank. we spoke to bloomberg after the embattled -- former european approval to receive private -- 5.4 billion euros in age from italy's government. process, we did entertain talks with regulators for quite a long time. i think the outcome is what the bank needs to look forward. for the first time in 17 years, taking assignment of easy sanctions for europe and asia. the comic has signed a contract with a local importer to offer suvs -- mainly in the toronto area. this is the market leader in europe and china. that isg to rebuild -- your bloomberg business flash. >> thank you. u.k. prime minister theresa may greater leverage to lobby

softer brexit. affected by the interview to direct the eye of the -- about 60% of this the right to the citizens in the u.k. is a top priority, while 72% so the government's main challenge was to negotiate a new trade deal. >> we will get clueless on the strength of the british economy. registrations that might :00 a.m. u.k. time. jeremy stretch as the head of this at cibc. he is still with us area its interest -- it's interesting how every day talking of directors -- about the desire for members. i don't know who is more diluted. maybe you can tell me. the judges talking about the need -- spoke an agreement comes close to replicating this market. i don't see the europeans delivering something like that.

the markets perspective -- is going to lose friends. we have other to re-constitute -- sterling trading against the u.s. dollar. -- we are now in that range. you see this to the fore again, weakness in the data, services -- manufacturing. for straight month for the time in six years as well, that underlying pressure opportunity.

>> we still move on the data, how reassuring. >> sounds very british. >> i got this for you. >> in the bloomberg -- intelligence created this. this is domestically generated come inflation try to microsoft. bloomberg. the point is you need to .75% cgi to generate inflation for cpi at 2%. while this talk of rate hikes? >> if you think rates are not going to go lower, that means the next one will be a hike. >> it's been 10 years apparently today. difference are going -- here

and elsewhere, the next one will be a hike. the question is now markets are trying to look to where those hikes come through. i think now we are getting to a scenario where markets are too ambitious if -- in terms of anticipating hikes. the next move will be higher -- but there are a lot of headwinds. disposable incomes come all these variables are key elements in terms of the process. for once in a protracted -- run effects in terms of high wages come i think the bank can and should look through immediate inflation headwinds.

>> how the market interpret a one quarter of a percent rise? let's say this morning in the guardian -- we should expect a rate hike at some and come all doesn't have to stay because brexit. it goes on to say the pickup an investment index words is roughly balanced. that's towards were carney flip flop -- flip-flopped over last week. there is this movement on the bank of england, moving towards potentially higher rates. what would one hike signal, the beginning of a new processor just market -- >> i don't think it would signal neustar. we have to member year ago we some emergency rate hike. in a sense of humor first that, the bank would necessarily be saying -- that's emergency policy stimulus put in place for fear of what could have happened, even though it's no longer necessary. it's not necessary same -- in exactly the same way that we need a deposit rate. it's removing emergency stimulus.

>> jeremy, thank you. on the program. >> coming up, latest of elements from qatar, responses to society block, to demands. ♪

>> welcome back. this is daybreak. the dollar is against the yen there is not an overwhelming sense, but a little bit more appetite with the geopolitical tensions. you look at the dollar yen and you are seeing some weakness, but don't want to overdo that. you see theit and

it is strengthening and the so slight there and and the racist point jump with a little bit of a flight to safety. we are seeing a turnaround from earlier on the index and a little bit of weakness in australia and gains. there is the industry group breakdown and you have the gains and a bit of there,s in the defensive withverall gains in asia

the yields. commentary,at the the trade and the treasuries may be focused on the fed minute. there is a two-year study and this is missing expectations over the past few months and that is a little bit of a flattening of the curve and thereis holding below and is a long run of games as the russians are set to oppose the the cityn cuts and

theysts are watching infits in the jump of prices the later half of the year. >> there is a new and edition of daybreak and this is the front cover. the united nations security council meeting is being held after the international ballistic missile test. we have kim versus everyone. me is that the markets are upset of that the lack of diplomatic progress. they think it will take war or recession. the political tensions failed

and we will see where volatility heads to with the crisis and moody's cut the credit outlook the arabncerns with neighbors. thist your clock set for and the official plans will .tart shaking the sheet will it be before or after another rate hike? repliedsaid they have to the rights time with the list of demands and the foreign charges that the nation supports terrorism. andt is important for us for the security of the rest of the region, but should not be

it is in the blockade and all under the banner of fighting they think they will meet this with international sympathy because of the anti-terrorism measures. >> good to see you. plans toa set of increase the production and this andhat hundred million tons one the big producers in the world. be doingears to messages and that have announced the have lifted the moratorium and i think they were doing a bit of sequencing and it has .een intensive

>> yeah. where having a problem and we're trying to speak to mohammed on skype. there is production in the eye of the storm and the plan is to cut off trade and diplomatic ties last month and they said againhis holds imports and this is an escalating situation and we want to see the response. >> the response have been sent blockss is amongst the and we will try to get mohammed back. plansals mapped out the and they have not laid out when the reduction begins.

with is from the minutes the parsing of these minutes here and he is the head of strategy. is whatte in the market to reduce the balance hike.before the next rate >> the next move came in september and we've been thinking about the move before the transition into the balance sheet and there was a lot of debates and we have to see about the shrinkage and we have to remember that the fed is chastised by the market reaction and the temper tantrum and who was in charge of the communications? janet yellen.

they would try to destabilize the market with the gradual reduction of the balance sheet facthis underlines the that we are not getting back to bething like this and it may a case of taking the balance sheet down. you look at the schedule of the balance sheet and there was a the allowance inl allow us with the stress the markets on the balance sheet. >> what is the latest thinking on what motivates the fed. are you convinced they are attached to the data? what does it say about inflation? is talking about how theyy markets and

are running on fumes. is this part of the narrative? you broaden this, they think about what the rates would thereyou can argue that isn't a great deal of justification and i think that what we're seeing is that this is creating avenues and it is and there is gaps this ongoing narrative that is a recognition and a realization of a long time of economic expansion and it is the third longest economic expansion and fedcould argue that the needs to create more latitude

downturncan go into a wherever it may come and you are going to go back to conventional policy quick way. inthe markets are pricing less than that and there is a determination by the fed to raise the rates, even though the domestic indicators are not necessarily keeping the pace. question is if they are hell-bent on raising rates. they have started to normalize policy and provided leeway and you could argue that is trying to correct that and you look at the

thet-term numbers and is tightening and the labor market is tightening. there is enough to suggest the -- and be weak commodity prices and there are assets that could be vulnerable. >> we have seen hikes from the federal reserve and we have not seen markets get dislocated yet. this is why we're seeing the central bank talking about

tightening and preempting it and getting less overreaction. the reaction was almost nonexistent and, from a central bank perspective, is this the optimal scenario to achieve with rates? you have not created stability. >> thank you. he is the head of strategies and we have some headlines about bad loans. 28.6 nguyen euros worth about ands are going to be sold and is just more bad loans are we had a turning point? >> they are talking about the situation being a real issue for

european banks and we may need a variety of measures and national asset management companies across the eurozone and creative thinking going on. get back to the skype connection and talk about the withof demands sent fundamental changes. what can we expect in terms of the next step. >> it would be difficult to meet the demands with the other countries in the block. they will be continuing to cost.

the question is what the next embargocould be and the leaves not many options. there are sanctions on banks and businesses in that same way or they could try to force the international trading partners and the european partners to and thatd do business would have a lot more competition. it is not clear and i think we will hear more about what is happening in the coming days. >> thank you for joining us here with the latest and we have more on the italian banking sector.

have the equities and the liquidity ratio targets. >> that is a presentation of the plan and the finance minister saidit clear again and he to show the alternative at the european level. is it the letter of the law or the spirit of the law. >> we will talk about how government and business leaders respond to this and this is the opportunity to turn itself around. and this is more bloomberg.

>> welcome back.

we are here in london. theet is standing by with flash. >> the u.s. government is getting involved in the apple tax dispute. a person familiar has filed an application with a retroactive application and the european every paymentered of unpaid taxes from the company. carslkswagen plans to sell for the first time in 17 years, taking it to of losing sanctions. the carmaker has signed a sub vwt in the area of and is struggling to rebuild operations after the scandal.

lying a monogram trust that operates apartments. receive $12 aill share and that is a premium on the closing price. that is your business flash. >> back to the italian banking story. 5.4 billion in aid from italy. the bank turned to the government after failing to raise funds. isspeaking to the ceo, this the right deal. entertained talks with the regulators for quite a long. of time. i think the outcome is what the

bank needs. manus, let's look at the headlines and they tell us he will hit the return on equity's and branches will be cut and a headcount reduction is quite essential cuts announced. >> yes. indeed. convince, he had to the regulators that there is going to be a deep restructuring of the bank. and hed that the firings bel explain that these will design to reduce the branch

network at the bank and it is needed for the bank. analysts suggested that this was positive and we saw the italian banking sect were being dealt with and the nonperforming loans as something people are focused on. as this a sentiment you hear expressed often? >> yes. expressede minister this point and there are two liquidationss with and you have this in the last ao days and there is clearly mountain of nonperforming loans with and to be dealt

the optimistic scenario is that andcorner has been turned banks will focus on generation of revenue instead of the cutting of cost off of the books. >> thank you for the latest there on the bailout. this is a huge amount of money going into italian banks. thatng that strikes me is you get to the end of the italian banking crisis and italy will be freed up and significantly. this is the biggest nonperforming loan market.

is this a step forward? improvement sign of and one of the reasons is a lack of the rebuilding of the base and we see that providing some forwardr growth going and we think about the context of europe and the euro and the andtical risks diminished there is the macroeconomic orbit isce and the provides ad and it more robust backup. and. in the projection

that is a national asset management company across the they shouldnd enhance transparency and there is a lot of creative thinking going into that. this andthinking about the aggregate and we have to look at the sense of the issue broadening out and rather nationalistic and

this moves in opposite directions and moves towards the process. endhere is beginning of the of the great dilemma. they pray that the inflation andctations must improve there seems to be a temperance coming. is the euro fully priced? priced? >> you have ande a little bit cautious that will bebate reduced over time and i wouldn't

be surprised to see a different sequencing in the policy. >> great to see you. by the be joined spending commissioner for more on the banking story.

>> clear and present danger. the u.s. confirms an intercontinental ballistic missile. >> looking for crew -- looking for clues on when the central bank starts shrinking the balance sheet. andhe deadline counts down cairo posts a meeting of the block later. >> the german chancellor posts the president.

.> a warm welcome to use here i am manus cranny. we're looking at how the market we pricedopen and some of this into the markets and we saw this yesterday continuing to be a bit of a story. >> these are the lines that talk risk and geopolitical worried about a lack of progression and there is

the splendid isolation and the personification of where it ends are. we rallied in the first quarter gold as anes undernce cover and it is with the spd. we have the futures in here and they could be stable at the start of the trading day. last week andeld it was up on monday with a bit of a different story and we saw the appetite and the bond market

with the russians saying that they are opposed to any further and we will watch this. >> the environment is not conducive to prices to extend and we are waiting for this to come up. >> thank you. >> getting some clues about whether it will reduce the balance sheet before the rate minutes in u.k. time. andmore hike was signaled they on wound the bond portfolio. the prices could begin soon and

she left out timing and sequencing. pushings said to be and on proposals on cuts they said that the reductions was expanded and would send the wrong message. in the middle east, a list of delivered ahey have message, but have no indication what it contains. the foreign minister says that he expects a rejection of response, it could not be expected to back down. a customary and extravagant

style. is the u.s. bond and markets reopened today after being closed yesterday. by analystspowered in 23 countries. turnaround in the asian markets. we have the hang seng index and

the close is down by a 10th of 1%. gainsis impressive a front runner in australia. course, we are focused on the a looktical tensions and at this chart and this is outperforming the index with a there is mored

than $9 billion in that market. that is a treat on the back of we're seeing and there are some strong levels. >> thank you very much. let's talk about the u.s. and confirm the rocket that was launched by north korea. the secretary of state is called new- has called this a escalation of the threat to the united states and allies brought. is expected to dominate the g 20. the north korea situation is moving up rapidly. >> i was listening to what manus

had to say. is a test and there is no solution to ratcheting down the tensions or getting the parties to the bargaining table. the threat alone of a nuclear warhead reaching the u.s. soil is a bargaining trip -- bargaining chip. leadr or later, it could to military conflict. north korea says it will not orcuss the nuclear program the missile program until the and the u.s. is not backing down. they say they're prepared to use it for range of capabilities and

there are ballistic missile drills in defiance. i don't know if you can call it a dangerous game of chicken, but do we all trust that trump and kim will allow the cooler heads to prevail? this is my question. >> it is a frightening game of chicken. what is on the table? security council is behind closed doors and they could accept more sanctions being discussed. between president she and donald trump, there will be a lot of discussions about the next feasible solution. once we will watch for those. steve is joining us with the latest and we're looking ahead

we will talk some more about the strategy later. risk anda geopolitical expected trades coming through. does this have a long implication with a heightened geopolitical tension? there was risk assets very we saw the seven-year upgrades andre are june was basically flat. there is a fundamental picture that was getting a little worse and there are the geopolitical assets with other

not much risk. and one ofa debate the stories is the world recession. hedging andost of insuring yourself is higher. traded and that is the most since 2007. the highest in 2014 and the cost of insuring myself is beginning to spike. you i speak to you, i say want to be fully involved on the wealth management side, but it is an easy time. , the reason it is so low is because the s&p is not up or is the achievement

coming out of it and you look at the situation we are in with markets and there is the breck said vote and the treasury is down longer and could be lower for ever. we moved and the bond yield normalize and we saw a better economic growth and the profits turned. i think that we are in a better place than we were and we have moved a long way quickly. >> you think that the earnings stories can withstand a difficult geopolitical price? >> yes. in the medium-term. that is what matters. hopefully, there will be that as we go to that patch.

>> he has talked about the inflation and we are talking about the real return in treasuries and it is turning higher and the market is telling me something about rates and something different with the bond markets and the rising yields. it is hard to marry together. >> the inflation is on the downside. was zerotion number and a had zero inflation recovered slowly. we are not really seeing inflation pushing and we are

seeing some of the economic factors in catching the data. >> how much is that threatened by tensions around trade? whether steelnd tariffs would be slept on and we see other parts of the world galvanized towards the free trade agreements and the japanese in the united states speed up their deal and replace and forge ahead with the narrative. is the trade under threat? does the rest of the world safe the global trade? >> the trade agreements take years to put together and that will happen over the long time. seen emerging markets be very open and the economies are

iposed to trade volumes and think they will try to accelerate gradually. if you are looking ahead and you see this move back into protectionism, that is bad news for trade. >> thank you. he is the head of european equity strategies that ubs. >> theresa may faces questions in parliament. saudi minister is going to meet to discuss this situation. >> we have the all important minutes for the feds last meeting. what will the tone of these minutes be and will they talk about alan sheet reduction? this is bloomberg.

>> welcome back. it is towards the end of the week in germany and there is the it isrt in germany demand interesting among the g 20. let's go to hong kong for the business flash. >> thank you. thousand over the next four years. the announcement comes less than a day after the lender got formal approval from the italian government. a ceo welcomed the decision. >> we anticipate talks with regulators for quite a long time it is what people need to

move forward. >> for the first time in 17 years, taking advantage of the the tehran area. rebuild operations and that is your bloomberg business flash. >> thank you for the roundup. and he has effective outlined his top three global investment opportunities. talking about real leveraging with thisvidend reason.nd this is the

>> this is for the eurozone and this is around about seven years and that means that companies auld borrow at 1% and this is andt for capital structure this is not a new story and there are three reasons why. and it allowssing for earnings and they are getting confidence and the third one is that someone will come along and do it for you.

take it up and give it up. sheet have the balance and we see the reactions. >> you see the news and i have the headlines of share buybacks thethey were supposed to be repatriation of taxes and this was written about gold. >> it has happened in the u.s. of the last two years buybacks. this is is -- a shrinking of the share counts and it hasn't that and itlead to

is a bit of a zero sum game. and not suggesting that there are buybacks that offset the share buybacks and the crisis. is a limited ryback. >> what about the immediate sector? there is the consumer confidence across europe and it underperformed. >> it is hard to be left behind. >> you are looking back a bit. >> we think things will improve definitely.

that is what it is. you know i love a graphic. i love a graphic. >> this is the adult and treasury care. there is a rise in yield curves. and yieldsrkets that youd telling me are trying to get ahead and the risks are rising. there is the rising treasury yields and it is good for stocks. why? where you are moving from, what speeds you are at, and the treasury flow. the 65s a move back to

through towe went the end of june until 265 and equities went up dramatically. thanks did pretty well. the growth is coming back and people are thinking about a trade from a low level. going andlking about it is manageable for the equity markets. if we fell all the way back to ago,where we were a year we would see less expectations they would be buying defensive assets. >> the pace matters. are you worried about valuations? their top and about the stock markets running on fumes. markets onthe u.s.

straight multiple. have a share buyback point and it is a little more stretched than europe. there are forward earnings and they are very depressed. we have six months of earnings what you are trading on is buried depressed and can grow. it doesn't help that the valuations are stressed. will meet with merkel today. that is good news for the equity story. in europe, more good news. >> one of the problems we had with the profit is coming from emerging markets. we need this to be strong and it feeds into the indexes in europe. >> thank you for your time. that is it for daybreak.

>> that is it for us. you off tomorrow and it is important tomorrow. the ukrainian finance minister joins the market opened team next. this is bloomberg.

guy: good morning, welcome. this is the european open. cash is about to open in europe, we will bring you the first trade went equity gets going. america confirms north korea did fire an icbm. investors are fretting about the impact the launch will have on sino-u.s. relations. for anket is looking excuse to buy havens? and expected to reject the