anne: 19 against one. president trump leaves his summit with few prizes, finding himself isolated on climate and protectionism. tom: the ecb tells bloomberg's central bank will probably wait until autumn to set the stimulus policy. >> as far as the implementation of our monetary policy, we are not yet there. anne: a hard reset. theresa may changes tactics, common opposition lawmakers. reporter: and stocks rise in asia with futures higher in

europe and the u.s. anne: good morning and welcome to "bloomberg daybreak: europe," our flagship morning show from london. i'm anna edwards. manus: i'm manus cranny. the markets took a bit of a punching last week. investors must $868 billion, the worst week this year. put the two together, the bloomberg barclays aggregate bond index, and they lost $681 billion, anna. if you look at the losses here, the question is, was it an opportunity? the japanese scooped up u.s. treasury bonds. they came in size and plenty. we have the bond yields at the

bottom of your screen and 10 year government bond yields are rising in the u.s. and kuroda is there. anne: the biggest weekly combined lost since the start of this year, a landmark week. let's put up that risk radar and show you where the equity markets are. the asian session, moving higher. we have decent data out of china. global stocks are closing closer to all-time highs. investors should look ahead to the earnings season, not dwell on political issues. the s&p also is strongly up. jobsps, a goldilocks picture being painted by the picture from friday. that is what one trader had to say. manus: we also have the probability of a big rate hike from canada. let's have a look at the dollar-yen. you have got oil rising.

net long positions in wti, they rose by 12%, but that is because the short-sellers walked away. , up 1/8 of 1%. reporter: thank you. donald trump junior is said to have met with a russian lawyer asking pro2016, compromising information on hillary clinton. that is according to the "new york times." the white house chief of staff described the meeting as "n othing" in an interview with fox news. steve mnuchin says the white house is "absolutely committed to getting the overall proposal through congress by the end of the year, but he had at the plan will not include a 40% tax rate for the richest americans. a report last week suggested

that steve bannon have been pushing for the tax break, while mnuchin said the story was unfounded. theresa may will call on opposition lawmakers to help steer britain out of the european union. this is after last month's disastrous general election. she is expected to say social and economic reform is needed to make a success of brexit in a speech on tuesday. however, she will call for cross party cooperation. gainss producer price held up engine with factory inflation coming in at 5.5%. consumer prices gained 1.5%, just below forecasts. demand remains robust, even in the face of regulatory moves aimed at curbing excessive borrowing. analysts think controls on building construction could weigh on demand for raw materials. shinzo abe has maintained the approval rating for his cabinet

has the lowest ever. fell to 39.8%, the lowest since he took office in december of 2012. the biggest reason was a lack of trust in abe as a president. the world's biggest industrial metals exchange is taking on the most powerful players in the gold market with a launch today of the first futures contract since the middle of the 1980's. the london metal exchange and partners aimed to grab a piece of the action in a city where almost half of the world's gold changes hands. meanwhile, hedge funds positions on gold bullion fell last week. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . a positive start to the equity session after that pretty

disastrous and on friday. you can see the nikkei come up by 0.6%, a solid buy coming through from hong kong. we have the china cpi out today. china's stocks, fairly flat there. 200.n uptick in the asx we have seen the yen fall significantly in asian trade after kuroda said he is trying to rein in this rises in yields. in the shipping space, spending is up. it has been up by as much as 150% in the hong kong section. this is after the properties were agreed to be sold for more than $9.3 billion and samsung a showing a record high. just quickly, we heard that story about gold, getting out of the net long positions,

falling by half over the course of last week. gold extending the client. we are sensing a little bit of weakness coming through. we heard from u.s. bank management, think the fed is on track with raising rates. manus and anna? anne: juliette saly, thank you. donald trump has returned from the g-20 summit with little progress on key issues and the differences between himself and the rest of the world, bigger than ever. manus: the starkest difference was on climate with the g-20's final statement calling on the paris accord as irreversible. meanwhile, donald trump had his first sit down with the russian president but a, putin, which they agreed on a cease-fire in syria. anne: iran and ukraine were barely touched upon. brendan scott joins us now.

good to have you with us. a lot of detail to get through. what was the g-20 then a bout? how is the world adjusting to president trump and america first? reporter: what we have seen is they are learning to deal with it, that donald trump is not going away anytime soon. that they have to cope with his policies, although they might be at odds with what the majority of the g-20 members want to see for themselves. they are dealing with it when they can. they are managing it when it's possible and when it's in their own interests as individual leaders, heads of state, they are attempting to push back. as you just mentioned, the paris climate accord on language about protectionism, they've decided to put down a marker and pushb ack against him. at the same time, we have seen a more personal approach on the part of leaders, like french

president macron, trying to show that although they might differ with trump on policy, they are not looking to put him in a box personally and have some of those personal differences present themselves by policy differences with the president. manus: good morning to you. the top tips, don't react at three clock a.m. flattery will get you very very. there is a bloomberg opinion piece in terms of charm. what were the results? 19-1 on climate change. a temporary cease-fire in syria. but on trade, what does donald trump go home with? reporter: well, he managed to get a little bit of leeway in the trade language to allow him the possibility to levy tarrifs. he also walked away with stronger language, calling for more immediate action against

steel dumping and steel overcapacity following on from the g-20 in china last year. so, he does have some marginal wins. as you said in your intro to this segment, there is no major trophies he can come home and wave before the public. anne: thank you, brendan scott, joining us with analysis from a we have seen at the g-20. joining us now in the studio. london, alan higgins, cio at coutts & company. there were some in a different items on the agenda, 70 bilateral taking the conversation in different -- so many bilateral taken the conversation in different directions. where would the focus before you as an investor? -- where was the focus be fore you as an investor?

reporter: from an investor point is view, what does thsi mean? a weaker u.s. dollar. the chinese yuan, very stable. but for currencies that have big account surpluses, and have trade, remain strong. for us in europe, it is all about the euro, and the huge trade surplus in germany and the euroarea account surplus. we are positive on the euro. it reinforces that we don't worry about tariffs. we are not worried about tariffs. even obama did tariffs. reagan was famous for his tariffs. 'etre, i raison de' thought with the g-20, was to boost trade. but the u.s. comes in with a phrase which is, the u.s. has

trade defenses. andare markets upset, you're not? >> markets have seen tariffs as well. manus: bonds are down as well. >> the is, but that reflect strong economic momentum in the eurozone. you're right. it's the g-20. of people.awful lot to get some kind of agreement, that is tricky. one reason emerging-market stocks struggled with the weakness in growth global trade we have seen, the fact it has picked up his encouraging. don't worry about tariffs. we have seen them before. anne: you don't worry about them because they should be small in scale and should not detract from global trade? ordeal not worry about them because they are -- or do you not worry about them because

they are ever present? >> they are ever present. reagan created tariffs to protect one company, harley davidson. investorsconcern for is that this is widespread, that the trump administration -- manus: there is no guarantee where he goes next with this. steel is high on the agenda at the moment. >> you are right. if we are talking about a full on trade war, you are quite right. but you have some pro-business trump.working for that would be a surprise to see a full on trade war. manus: let's go back to the chart we started the day with. the biggest losses, where are we, anna? the biggest losses, $681 million on the bonds. with losses for

the second time in 2017. they are saying, look, everybody, you're absolutely complacent. there are looming market risks. we are underestimating those risks. we are cautious on valuations, on policy uncertainty is high. are you sure that level of concern, even as equities march higher? >> less so. i read that as i was coming in the car. it is very interesting to hear. from a contrarian perspective, they are putting money into fixed incomes. manus: and they are up on cash, by the way. >> you know why? low vol is not correlated with equity selloffs. it means you should purchase equities. i know that sounds crazy, but that is how the math works. anne: well, they point out, the vix recently hit the lowest bustingnce 1993,

through the lows sooeen in the 2000's. in some investors' minds, the low vol is followed by a crisis. is that wrong? >> it is wrong. the danger area for the vix is in he 2the 20's. if vix is this level, what should i do? vix, at this low level, you should buy equities at a three, six month, one year view. vix in the 20's is much more dangerous because it could be on its way to 40 or 50 and that is a huge correction. vix in the 20's is correlated with market weakness. anne: alan higgins, thank you. manus: coming up on the show, a puzzling picture. stagnant wage growth in june's u.s. jobs report.

we break down the numbers and what is next for the fed. how should they respond? this is bloomberg. ♪ anne: welcome that, everybody.

a live shot of hong kong for you hongmorning at 1:19 in kong. the hang seng is up by just over 1%. fairly decent gains made by equity markets in asian session. let's get the bloomberg business flash with juliette saly. reporter: thank you. ed 150% inord it hong kong for over $9 billion. they will also collaborate on movies. expandedre has aggressively from operations in ith 44our cities in 2011 w in 2016.

the chinese playmaker has won approval to start mass production of the regional jets but the first five due to be delivered by the end of the year. it has a maximum range of 3700 kilometers. the arj 21 has 413 orders for nine asian airlines, but still he does approval to operate in the u.s. and europe. cosco shipping has offered $6.3 billion for a container carrier controlled by the former hong kong leader. there is a 41% premium. this would push cosco into the world's top three. the family has accepted the offer, but still waits regulatory and investor approval. warned investors are being too complacent about looming market risks. the ceo said the funds phil for

the second straight year. -- funds fell for the second straight year. foreshadow a giant disservice done the road. there is a signal that the turnaround that began earlier this year' is continuing. bloomberg, the ceo said he sees the recovery carrying over into the summer. >> is good. reporter: that is your bloomberg business flash. manus: let's turn our attention back to the jobs report, a mixed picture that continues to puzzle policymakers. the 178,000 for the

estimate of wage growth. anne: that was the forecast is speaking to bloomberg. it was argued that the current low inflation environment makes each fed rate hike more risky. >> the risk of course, is they are cementing inflation expectations below target. inflation expectations, if you look at market based measures, they are very low. they have moved down recently and are below target. the risk is that the fed, in their attempt to look at financial stability, they cement inflation expectations below target and that could come back to haunt them once we get the next down term. manus: joachim fels, speaking to bloomberg in little bit earlier. alan higgins, our guest with us. joachim fels is questioning the validity of the fed going for

another hike. would you agree with him? the fed should not raise rates one more time? possibly it is fading a little bit. >> that is your white line probability of a hike. it is coming down from the 60% level with your fantastic function. i think the goldilocks data, it was amazing data. it shows strong growth in non pharm payrolls, and a slight weakness even in the rate. one thing i would say though, a bit of focus on the ex-goldmanh ihich is an sachs man. he is a huge fan of financial conditions. i know on bloomberg you do a version of u.s. national conditions. basically, there is a combination of tight credit spreads, a weaker dollar, the stock market doing well. he's a big fan of that.

up,can see they have moved indicating looseness. that 60% is a bit right. i think they are more likely to tighten than not, despite the low inflation. and they will not be upset with that 2% inflation. they are saying, look, 2% is far too precise. they are thinking more 1.5%, 2.5%. we cannot control it precisely. anne: we talked about goldilocks. the trader i was speaking with said this is goldilocks for stocks. we have these two conflicting signals from the jobs report in terms of job creation. and therefore, it puts the fed off of the rate hikes, but you don't think so? >> the goldilocks numbers for

the risk assets in general, yes. there is aggressive tightening coming through. that is clear. if it is high yields, it will be a close call. i would say financial conditions, the fact they are so loose, and knowing some of the voting members there, especially with the deputy there, i would say the 60% is right and it will be a close call. manus: it is interesting to you clarify thinking, and you begin 2.25%, but it really does shift. i found this quite interesting. this is the number of people showing back in from outside the labor force. what you have got here is net flows from outside the workforce, up four to six months. her long-held belief is there is a lot of unemployed people out there. but this is a measurement of

slack dissipating as well. >> it is. the issue has been a participation rate. it is a version of the participation rate. there has been less people participating in the economy. that is good news, but it does take away some of the slack. wage growth is ticking up there is slowly and has come back down again. if there is a tightening, i one, ite do expect is goldilocks-like. it is not a classic, very strong, 3% to 4% gdp. anne: are you purchasing u.s. stocks? >> the position in europe is even better with a strong economy and a 20% earnings growth. we expect earnings growth to be reasonable in the u.s. we are more buyers of european stocks. anne: alan higgins stays with

us. manus: we are going to talk about autumn adaptation, the ecb suggesting the banks coveting monetary policy will be taught a lesson. this is bloomberg. ♪ anne: welcome back.

this is "bloomberg daybreak." the yen is down for a second day. we have seen the latest core approval data from prime minister abe, one of the things in the mix today. let's get a look at the markets, more broadly with nejra cehic. seeing japanese shares rise for the first time in three sessions on that weaker yen. tiny shares are not reacting positively to that cpi data. overall, the msci indexes rebounding from the biggest weekly drop in four months. we do see gains on the equity benchmark, led by tech stocks. but can the bull survive the

signals?ish technical we see a drop below the 50 day moving average? looking at where investors are a little bit more positive here, leverage funds are piling into bets on the aussi and kiwi, the fifth time they have done this in the last 18 months or so. these leveraged funds are at odds with analysts calling for losses. the aussi dollar, one of the best performing g-10 currencies against the greenback in this session, though it is pretty much flat. one of the worst performing currencies to come back to the yen is the yen. this, after kuroda said the boj will tweak policy as needed, of course, after that curb control the cancer friday. 10 year yields are not going

anywhere much today. there is some talk that japan might be back in focus. a lot of questions over what kuroda is going to do next. whether that yield curve control should shift more towards a jgb's, between the and treasuries. manus: these are the stories making the main edition cover story come all about the g-20 and the discord as it was. merkel said she was not going to hide away in terms of that. but it looks increasingly like g-19 made little progress at the summit on the priorities, which were trade, north korea, and steel dumping. the final statement did not mention north korea at all and called the paris climate accord irreversible. it was in a sitdown with putin,

that the two agreed to a syrian cease-fire. anne: the next-door a on "daybreak" is on barc lays. u.k. fraud office is expected to make its decision regarding the barclays bank unit within two weeks. manus: a final story, daybreak focuses on donald trump junior, who met with a russian woman, offering to provide damaging information on hillary clinton, his father's democratic opponent in tehe 2016 election. senior hadter trump secured the republican nomination. anne: the ecb governing council member has indicated that the european central bank will will just it's stimulus in the fall. -- will adjust its stimulus in

the fall. manus: they begin to adapt the intensity of the monetary policy as it progresses towards its inflation target. have a listen. >> our monetary policy is efficient. as you just mentioned, we had the negative inflation one year ago. april, 2016, -0.2%. we expect for this year, the average inflation of 1.5%. which is partly due to energy prices, but also the progress of implementation of our monetary policy gives results. but we are not yet there. our target is the mid-term of around sustained 2%. the monetaryment policy, the macroeconomic monetary policy. but what we have started to do

is to adapt the propensity of this economic monetary policy through the progress to up our inflation target towards economic recovery in europe. if you remember, what we did last month when they reduced monthly purchases of qe from 80 to 60 billion. we announced one month ago that we would not reduce our interest rate. in the future, and this will be our decision next fall, we will go on adapting the propensity of this accommodative monetary policy. reporter: do you think the discussions should move quicker? do yo uu think the markets are expecting the discussions to move more quickly? >> i think we have been extremely clear about the predictability of our monetary strategy. start ofmember, the

last december, we announced our monetary policy for the year to come. through december of 2017. we will see what happens after that and we will clarify next fall with no impatience, please. i don't say this especially for the financial market. i say this because we are independent and independence means being independent from political pressures, but also market invasion. reporter: are you also waiting for the political risk? you mention in your letter that protectionist politics will restaurant growth. governing why the council is waiting. reporter: this is an important characteristic of the european situation. political risk has diminished with the eurozone. if your member what was said one itr ago after brexit, there a e

was said that 2017 was supposed to be dangerous for the eurozone. we have seen the exactly the contrary. our recovery is solid because its domestic. there are political risks, but they are more at the global level, outside the eurozone. the brexit negotiation is a real challenge. there are uncertainties about the new american policies. what we have to do, and this is a very important stake of the g -20 summit happening now, to go along with international rules . these are the best solutions for global growth, and also, the best solution against any inequalities. villeroy.king with

still with us, alan higgins. one phrase he kept returning to was to adapt the intensity of policy, this idea that you could pare back stimulus in a way that does not tighten financial conditions. so, have the you take that, -- how do you take that? they want to tighten financial conditions as they pare back stimulus. how does that translate in y our mind? >> it sounded like a translation affect going in. it is well documented, most of the ecb are behind tapering rate increases later. that seems to be what they are saying. preparing the ground for that, if you came down from mars an saw the very strong european economy, ok, inflation is under control. you might think, low rates, that might be two or three, lead to see them still a negative, it is really quite incredible.

frankly, they should get on with it all stop the european economy is now booming, certainly in germany it is. frankly, they should get on with it. the european economy is now blooming, certainly in germany it is. they are focusing on this precise target. manus: maybe it is that precision, as he spoke with members of the fed, this is what mario draghi has managed to do. they are suggesting they look at a rate hike as far as december 2018. potentially, a rate hike at the latter part of 2018. so, the market has shifted dynamically in terms of the rate cycle. is it too aggressive? >> i don't think so, given the strength of the european economy. i tihink it is quite right. the question of, do rates need to be negative, should be looked at. that is 40 basis points straight

away. manus: they want to move from negative. does that suggest they are trying to get from abnormal? >> exactly. look, it seems to be pretty clear. they want to taper first. partly because they are up against limits and it is not a very popular policy in germany, this continual buying of german bunds. that will come first. anne: interesting to hear the fr ance governor making a point about the opportunities in the put it will cycle and what that gives the eurozone. he says, there has not been a time within the political flacco where there have been french and german elections for 15 years. he certainly sees the elections as the time when the work gets done and the reform agenda can perhaps take to the foreground. a be speaking about france, perhaps calling on germany. the article suggests using fiscal policy. -- suggests easing fiscal

policy. >> they are very cautious about spending in general. for macron, it is make or break . does he go for labor reforms, or not? so it will be very interesting to see if he does. that is what french business is crying out for, but it will not be popular. anne: there is a sense of an improving economic backdrop. >> yes, but french unemployment is circa-10. in germany and the u.k. it is circa-4. the grant government is not working for the people in that sense. manus: we have a few more bits and pieces to get through, but we have a new piece out on bunds. they are talking about 75 basis points.

last week, philip rose suggested we did not see one over the last few weeks, but the consensus seems to be at 75 basis points. you are looking at a stretch valuation in terms of bund yields, according to citigroup. would you agree with that? is there more leg work on the upside as far as the bund yields are concerned? >> we had a decent selloff earlier. your graph indicated decent returns. had a decent selloff. yields are still incredibly low. when you come back to the 1989 levels. toyeah, for german yields rise earlier, i think i said one month ago, 17 basis points. that is a target to start with. often i get things right -- more often i do. it's nice to remember that. stay very cautious on duration in europe. matt: let me ask you about

quality markets. we have great stories on gold on the bloomberg this morning. quite a lot of news flow about gold. buyers about gold playing a month after the bullish bets, the gold market is increasingly short. ties into the conversation about rising interest rates in the eurozone and the united states. >> i think you are right. rising interest rates and what we have seen in the g-20, the d ecline in political risks. we're out of gold. we used to be very substantial and gold, especially in the 2010 to 2012 period. now we are virtually completely out in for folios. -- in portfolios. anne: is that about european political risk? >> it is. before we really understood qe, it really did not turn out to be

inflationary, but there was a degree of inflation hedging in there. and then you had the political risk of 2011. it did look like the eurozone was breaking apart. but no, we are not in gold. i think you mentioned rising rates and that is a key negative for gold as well. manus: where are you on oil. we have a lovely chart called the leading energy. it was 19% the first half this year. let's put up the bar chart. we had today's story -- kuwait, nigeria, etc, brought into the cuts. is there anything that would draw you in there, in terms of oil? >> we do have oil related assets. we do have some russian assets. we have pipelines in the states. we do have some. so, we are exposed, but we do not have a pure energy fund, if you like, a pure long energy equity fund.

into the we buy concept that there's enough demand in china in particular to keep theshow on the road, but it is fair to say shale gets cheaper and cheaper. that the u.s. supply is increasing. it comes up at lower prices, more efficient. the only thing keeping on the road are two factors. one, saudi's are keen to get a big ipo away, and therefore, they seem to be keeping supply down. and there is demand. unlike other commodities, there is decent demand, especially out of china and india. so, we're looking for flat oil prices. deep assets like

russia. but it is nervous. anne: thank you very much, alan higgins, staying with us. manus: if you are a customer out there, you get the tv, and you can follow all the charts. we put these together in the morning and you can even ask a question. that is at the bottom of the screen. anne: coming up, may calls on the composition, looking for cross party backing to get the u.k. the best deal with the eu. we bring you the latest on brexit. that is next. this is bloomberg. ♪ anne: welcome back, everybody.

"bloomberg daybreak: europe," 1:49 in new york. the s&p will be a little bit higher at the start of the u.s. trading day. the asian equity session has been descent. the msci asian-pacific come up by .4%.

it's good to the bloomberg business flash. -- let's get to the bloomberg business flash. reporter: hotels rocketed 150% in hong kong on the sale of 76 properties and other projects. this was for more than $9 billion. they will also collaborate on movies. the stock has since pared some of those remarkable gains. the billionaire has expanded aggressively from operations in four cities in 2011 to four in 2016. asco shipping has offered $6.3 billion deal to a carrier. cosco's offer was a 41% premium to orient overseas, pushing cosco into the world's top three. the family has accepted the offer, but the requires regulatory and investor approval. singaporean sovereign wealth fund gic has warned investors

are being too complacent about looming market risks. the ceo disclosed that the funds main performance gauge fell for the second straight year. the warning from gic as investors worried that low readings in market measures could foreshadow a giant disturbance down the road. d-european stock exchange has $2.3 billion available for acquisitions as it seeks to double in size and diversify. meanwhile, the ceo told bloomberg how they plan to capitalize on the post-brexit world. >> i don't know how many jobs will come to the continent and how many will come to paris. i think a fundamental trend is starting. if you want to make money and do business with the company's and full of savings in this group of 27 countries, then, you have to

be located in that part of the world. reporter: that is your bloomberg business flash. manus: thank you, juliette saly. stocks in egypt dropped after the country raise the benchmark interest rate for the second time this year. let's get to yousef gamal el-din , joining us now with the chart of the hour. great to see you. we kick off this monday morning and anna put inflation in that country in context. anne: 28% annual inflation, 28% in june. that is quite a selling number, yousef. yousef: yeah, and that is what the central bank governor pointed out. that's why we saw the 200 basis point move by the central bank, taking the market again completely by surprise. only one out of eight economists surveyed expected that. they believe they can bring it

back under control, targeting 30% for next year. let me put into context in terms of how the country's treasury market has been holding up. take a look at this chart, dive into the bloomberg with me. i highlighted some of the central bank actions with those circles, but the key number is the 20% yields are irresistible for a lot of investors. it was pointed out by charles robertson, he said, you can come in and by the world's second cheapest currency come offering high yields. again, a lot of the increase here is coming from pressure from the imf, insisting the central bank needs to move on interest rates. a lot of the analysts doubt the transmission mechanism is working enough to be able to translate this to results. anne: thank you, yousef gamal el-din. let's turn back to the u.k. now.

theresa may will call on opposition lawmakers to help steer britain out of the european union. manus: a survey by the british chambers of commerce shows u.k. companies are overwhelmingly opposed to britain walking away from the talks to leave the eu. alan higgins, cio at coutts & company, he's still with us. the u.k. minister, we understand, we have the great repeal bill coming through. >> the repeal bill is no longer great. manus: i have written down here, she wants to reach across the aisle to help steer the u.k. in terms of the brexit negotiations. i have written down here "pragmatism or desperation?" >> a bit of both. we know the majority is not there. it needs a coalition. our view is it just has to be --

there has to be a transitional period. there is not enough time. and probably will involve the u.k. paying. that's ok. the people have voted for brexit, so we'll have to pay. there is no way we can get a deal done in this time. sometime of transitional deal where we would take "the norway approach" for two to three years, and then try to get a deal for the remaining years. matt: anne: we will see how the political calendar rubs up against that deal. can we get something around 2022? there was conversation around trade deals with the united states over the weekend. are there negatives in there for a trade deal between the u.k. and the united states? do you look at this with optimism, or fear for the nhs and the food industry, these are

points of condition and have been for the transatlantic trade deal. >> i'm pretty sure the u.k. as a rare surplus for the united states. a trade deal with the u.s. has to be good. but europe, it is very important. people talking more and more about trade, the customers union. as i program about this. it goes from germany to italy, back to italy and the u.k. again. that sort of thing. that's important. look, it's going to be difficult, but all logic points to this transitional deal. manus: sometimes logic does not prevail, though. logic always travails went alan is in the house. alan higgins, thanks joining us. anne: coming up later this morning, the chair of the eu subcommittee in the house of

lords. she is here to discuss brexit, 10:30. manus: still to come on the program, we talk about the g-20. what does this mean for trump? stocks are indicated a little bit higher in london, up by .4%. this is bloomberg. ♪ manus: 19-1, president trump

leaves his first summit with a few prizes, finding himself isolated on climate and reductionism. bloombergecb tells that they will wait until august to exit -- assess its policies. monetaryentation of policy gets results. we are not get there. manus: hard reset, a week may cost about leaving the eu. anna: stocks rise in asia.

♪ anna: welcome to bloomberg daybreak: europe everybody. i'm anna edwards. manus: and i'm manus cranny. we have a little bit of tpi data from china, 5.5%, all find in the middle of the road. janet yellen's speech to congress this week and the bank of canada might raise rates for the first time in seven years. this is how the futures look. strong equity market batting away the discomfort of g-20. that's the message i take from this market this morning. they are batting for weight geopolitics. anna: not focusing on a lack of progress with north korea. the risk radar, we will show you what we see.

that chinese data you pointed to could paint a picture of an upbeat global economy if that is what you are looking for. 2/10 of as is up percent. stocks, lots of jobs, wages looking soft. janet yellen speaks later on this. let's have a look at dollar-yen. nigeria, could it be cap's are introduced on african producers? they rose by 12%, but not be misguided by that. that's the cutting of the short positions. you are seeing kuroda come back out and say we will continue to tweak policy as it needed. their net yen

short positions the most since march 24. anna: this is where we close out the japanese and australian stock sessions. the s&p up by a third of 1%. manus: juliette saly has your bloomberg first word news. trump's eldestd son met with a russian woman offered to provide damaging information on hillary click it. according to donald trump junior, the meeting took place in 2016 after his father secured the presidential nomination. russianis investigating interference and whether there was collusion between members of the trump campaign and moscow. treasury secretary steven mnuchin says the white house is committed to getting his tax overhaul proposal through congress. but the plan would not include a

40% tax break to the richest americans. trump advisors stephen bannon had been pushing for tax breaks while magician said the story was unfounded desk mnuchin said the story was unfounded. -- the u.k. prime minister is expected to say economic reform is needed to make a successful brexit. in a sign of weakness, she will call for cross party cooperation to do this. a survey by the british chambers of commerce shows u.k. companies are opposed to britain walking away from talks to leave the eu without the deal. third want the u.k. to stay in the customs union. only 2% said no deal would be acceptable objective.

inprising gains held up june, coming in at 5.5%. 1%.umer prices date demand remains robust. analysts think controls on building construction could soon weigh on demand for raw materials. japanese prime minister shinzo approval rating for his cabinet climbed to its lowest ever. point 8%. 39 the lowest since 2012. the reasons given was a lack of trust in abe as a person. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. on the find more stories bloomberg at taco. -- top .

weaker yen. australiaid gains in for tenths of 1% and the turnaround on the stocks in china. -- we saw a little bit of weakness. having a look at stocks, a lot of m&a activity in these shipping deals, $6.3 billion overseas, over 19% in late hong kong traits. as 150en up by as much percent on this deal to sell assets. we've seen a lot of biting coming back to these tech stocks. it's at a record high. another big story of course we have been following his gold. we sought money managers the

most optimistic on gold this year, now they are unloading. we saw futures extend into a fifth week, the longest this week -- this year, i should say. say there is a bit of a lead on gold because the fed is on track to raise rates. we are seeing a sell down coming down in a lot of these gold futures. thank you, juliette saly in hong kong. donald trump has returned home from the g-20 summit with little progress on key issues. the biggest difference 2015n climate, calling the paris accord irreversible after trump abandoned the pack last month. trump had his first sit down with russian president vladimir putin and he agreed a cease-fire. anna: trumps concerns on iran

and ukraine. what did the g-20 teach us about how the world is adjusting to america first? there were a lot of threads to pull together, so what were the conclusions? guest: what we are learning is that the world is learning itself how to manage donald trump, how to adjust to his reality of him being president. he's not going to go away anytime soon and they need to figure out a way to live with his america first policy. that means adjusting when they can, pushing back when they have to and ignoring some of the things that might have caused them to react initially, some of his more direct tweets or some of his more off-the-cuff moments. there is a great story

there in terms of the world is learning how to handle donald trump. don't react to 3:00 a.m. tweet storms. works, isolation and restraint are also being used. what did he go home with? what can he take home to the united states of america having achieved? guest: after his rough outing in europe just a couple months ago, i think he can take some measure of pride that this g-20 summit went overall relatively smoothly. he did not have anywhere near the awkwardness that he experienced on the first trip. that said, and he could also asim a few policy wins such getting a little more leeway on tariffs and getting some fair trade provisions written into that portion of the deal to push

back on overcapacity in steel. but that said, he is not walking away with much. he does not have any indication that the world is embracing his policies, merely managing them. anna: thank you for your thoughts this morning. then, good morning to you. ben, good morning to you. some would hail that has more progress than the inevitable. did you look on the development segment over the weekend, something relevant to your investment strategy? guest: when looking at donald trump at the g-20, what do they

realistically want to come out of it? no disasters, some semblance of agreements, that's probably fine. as far as it plays into investment strategy, it probably makes a huge difference that there is not huge disagreements and a falling out. manus: we had a conversation with alan higgins and i want to hear your take on this. he said, stop getting preoccupied by tariffs. we saw it with ragan for holly davidson. from an investment perspective, ?ave you spent any time are you not bothered by tariffs? guest: as we move toward some sort of brexit agreement, how will that impact a company? it's pretty difficult to tell because companies are so obligated and moving parts are complex.

i'm not even short companies can tell you what the indications will be, so it's hard for investors to make good judgments about that other than simple statements that if you have complex first quarter supply chains, it will be more difficult to manage and a more fragmented world. anna: we also talked about volatility in the market. despite not think progress on key issues like north korea, we have this chart here with alan that shows areas of low volatility circled in blue. trying to tie them together, what doesn't low volatility mean for equity market investment? it probably creates more frustration because you have more homogenous markets. there may be higher risk, lower quality companies.

we don't necessarily enjoy this from of relative perspective. people enjoy rising markets more than following markets. dust falling markets. -- falling markets. manus: we are going to start the reporting season in earnest at the end of the week and then we go into overdrive. are you still of protagonists in market --sus the euro u.s. market? they are saying we are complacent and they had inched off slightly on tax, 1%. that has purpose. guest: if you are an investor in europe, it's difficult not to be optimistic. this backdrop is as good as it's going to probably get. the economy is recovering, we are seeing dovish market policy,

and we are generally seeing a global economy very supportive of your opinion court -- your opinion european corporate's. -- european corporate's. anna: we will talk a little bit more about europe after the break. in terms of risk liking the economy, we have not dealt with north korea getting airtime. it shaped markets in the last couple weeks, no solutions there. the u.s. and china are perhaps on different pages. but we have turned a page on economic risk. is that more important? a more stable environment in europe is more helpful. in terms of economic performance of those companies, it's less important because it's generally

quite global in terms of what they are doing, but in terms of internal perception, clinical risk in europe is key. manus: thank you very much. he stays with us on daybreak. anna: ecb's real roi suggests monetary policy will become less intense. here what he has to say next. this is bloomberg. ♪

manus: good morning, berlin. --s a: 18 in the morning and morning.he the governor has indicated the willean central bank

adjust its settings in the fall. anna: leroy says he starts to doubt the intensity of economic policy toward policy. >> as view just mentioned, we had inflation a bit more than one year ago, 2016 -02%. we expect this year of 1.5%. it's partly due to energy prices, but also to the fact that progress of implementation of our monetary policy gives results. we are not yet there. our target is a midterm --lation, sell something sell sustained, close -- self -sustained, close to 2%.

what we started to do is to adapt the intensity of monetary policy to the progress to ever to theon target and world economic recovery in europe. if you remember, what we did last month when we reduced the purchases from 80 to 60 and we announced one month ago that clearly we would not reduce our interest rates. in the future and this will be our decision next fall, we will go on adapting the intensity of the monetary policy. >> do you think the questions quicker?ve liquor -- giving the markets are reacting quickly? >> i think we have been extremely clear about visibility -- predictability

about our strategy. we will see what happens after that. fall,l clarify that next but no in patients please. i do not say this for the financial markets. i say that because we are independent, meaning independent from political pressures, for market inlso patients. >> are you waiting for clinical risk? -- political risk? is it also what the governing council is waiting to see if there is political risk involving for the rest of this year? >> this is an important europeanistic for this union. after brexit, they have 2017

dangerousproves to be . there will be a weak recovery, etc.. we have thought the contrary. our recovery is solid as domestic-driven. there are political risks, but they are more at the global level outside the eurozone. what we have to do and this is a part of the g-20 summit in hamburg happening now to go on withs different policies with international rules on financial regulation. these are the best solutions for global growth and also these are the best solutions against inequalities. manus: been ritchie is here with

us in the studio. here with use is in the studio. times in theree interview that adapting the monetary policy. the debate is about rate and qe and he warned that the debate is not around a winding down at the moment. does that add fuel to the european stock fire? have seennever we central bankers over the last three or four years discussing how we unwind the qe, they will almost invariably decide that it's part of valor and lead stimulus on. given where europe is in its recovery, somewhat lacking in the rest of the world, it would be surprising if they got any other stock -- start.

it's beinghink accommodating, but we have a chart here that says yield is good, stocks are starting to benefit. hawkish,ing more getting some sort of bond rout or something that looks like that in the last couple weeks. as a result of that, where do those bond investors put their money in stocks? value, financial services companies? guest: it's been driving up financials and civil stocks. the value of growth becomes less in a market where people anticipate more reflation. it becomes less valuable or companies might have the prospect of some growth and it becomes more attractive. that's what we have seen in the last couple weeks. it feels more pronounced in the chart you have there. manus: we created this out of

the story that european and investors are selling their bonds and buying undervalued stocks. of it is made up of financials. we saw gip warm about risk, but one of the things they did was they stole their position, still their position there and said there are opportunities in emerging markets. would you consider emerging markets an opportunity? guest: those two things are not necessarily contradictory. if you believe in a rising rate that is global, then that ties into maybe modesty -- modestly rising rates. you can see that come through, that's not completely hundred and three. feel there is more possibility of that in emerging markets. anna: do you look for corporate

change, what other kind of companies delivering on the corporate change? morning, it's a no that hassted is this moved toward more consumer products over time. it's a big change for those guys. nestle is another one off people's radar, but it was interesting to see the third point intervention. i do not think it was quite in the vein of what you would usually see, but nonetheless giving those under mark schneider. it's one of those areas within europe that not only the company benefits from an improving backdrop, but there is an efficiency manus:.

-- efficiency. manus: thank you very much. that's it for anna and i this morning. anna: european open is up next. have a good day, everybody. this is bloomberg. ♪

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which is why comcast business delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. welcome, everybody. this is the european open. let me tell you what we're thinking about this morning. president trump's son had a pre-election meeting a russian lawyer that said to have damaging information on hillary clinton. theresa may changes tactics, calling on opposition lawmakers to steer brit