>> family secrets. president trump's son says he did not tell his father about the meeting with the russian lawyer during the election campaign. the s&p 500 slips. >> yellen in congress. the fed chair faces the semiannual grilling from lawmakers, seeking to reconcile a strong jobs market and low inflation. >> and the hawks circle. canada will join the u.s. in raising interest rates. to the fired fuel of global tightening? >> a very warm welcome to the

program. this is "bloomberg daybreak: europe," our flagship morning show. i'm anna edwards. manus: i'm manus cranny. we have a pack show 40. we have the bank of cyprus ceo here with us. post,""the washington says a category five visiting the white house. a 94% probability of a rate hike. dollar, up she goes, which is the canadian dollar against the yen. the bank of canada will indeed go ahead and raise rates. the risk on the other side is janet yellen and her testimony in front of congress. anna: the markets are divided between what is happening in the white house, the latest from

trump junior, and the central banking story. this canada story does add to this, but how much of this is an idiosyncratic canada story? that, for how much is a global tightening? we will return to that. on the risk radar, manus, we've got the latest in the market movements in relation to the trump junior story. the s&p did wobble, but the a sian session looks pretty mixed. we are waiting for the central banking stories to crystallize. yellen speaking later. we have heard from parker. manus: the dollar is generally lower against the g-10 currencies. the dollar-yen and the jgb, and i'm looking at the five year -- the bank of japan is bringing the battle to the middle ground,

the shorter end maturity. they are raising their purchases in three to fiv e year bonds, capping out that yield market. the dollar is lower because of the trump junior story and what that means for russian relationships, but also because we are waiting to see what happens with the dollar with regards to janet yellen. will she turned hawkish in terms of lael brainard? 1.6%, which up by is interesting to see that move. people familiar say the saudi arabia and economy or production machine around oil has reached the production cap for the first time since that deal was signed. manus: the overall nation supplies have dropped. where are those supplies going? let's good crusted juliette saly, standing by with your first word news. economic national council is the leading candidate

to replace janet yellen next year. politico.cording to the report quotes one republican close to the process saying the theis cohn's if you want and he could easily get senate confirmation. senate republican leaders are dropping tents cuts for high income earners in a revised draft of the health care bill. this would generate $231 billion in revenue over a decade, which could cover expanded coverage for the poor. the senate is delaying the plan by two weeks to allow more time to debate the bill. house republicans have released the spending bill, which includes funding for the proposed border wall, setting up a clash with democrats. the appropriations committee wants to add $1.6 billion to homeland security spending, raising the total to more than $44 billion, even as other domestic agencies take budget cuts.

five of the u.k.'s leading retail banks have pledged more financial support to small business exporters. according to international trade liam fox, this will help "small businesses seeize the global demand for british exports." saudi arabia is said to pump more than 10 million barrels a day in june, exceeding production limits for the first time since brokering the deal to curb the global glut. they usually raise production in the summer. the demand was higher this year because of ramadan. crude entered a bear market last month. venezuelan's credit rating has been cut by s&p. the rationale behind the move includes a continued deterioration in economic conditions, rising political

tensions, including within the government base, and the government's worsening liquidity. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. yoyou can find more stories on the bloomberg at top . it is a mixed session here in asia, but worth having a look at this performance on the hang seng index come up by almost 1%. higher, aboves that 26,000 level, really led by this rally in banking and tech player.s the nikkei, down by 0.5%. we had boj intervention to control those rising yields. the nikkei come up by 0.5%. australia's market is being weighed down today, too. i mentioned hsbc, continuing to be the darling of the hong kong stock market, up over 20% this year. you could see some analysts change their forecasts on hsbc

higher, above that 26,000ahead of the earning. despite surging, the fact he will recall 2.7 million more airbags. analysts say it is rising because people are trying to get your positions ahead of the company -- trying to get short positions ahead of the company's d-listing. india's stock market is continuing to outperform, hitting another record high, up 20% this year, the best-performing market in asia. we couldudmore says, see this continue as we see money being put into india. the market is now almost as big as canada and germany at $2 trillion. anna: thank you, juliette saly, joining us in hong kong. let's turn our attention to u.s. politics. donald trump junior says he never told his father about last year's meeting with a russian

government lawyer, who was said to have information on hillary clinton. yesterday he released his email exchanges with the publicist that set up the meeting and he said this during an interview with fox news. >> in retrospect, i would have done things differently. again, this was before the russian-mania, before they were building it up in the press. for me, this was opposition research. maybe they had concrete evidence about the stories i had been hearing about, but were underreported about. know where it was apparent that that was not what the meeting was actually about. thatwhere it was apparent that was not what the meeting was actually about. anna: we spoke to mark warner, the highest-ranking democrat on the senate intelligence committee, about trump junior's conduct. >> i have never seen an example where an agent of a foreign government, who is an adversary

that has been trying to interfere with our elections, has reached out in this way and then to have a campaign respond to it. any legitimate campaign officials that you don't take this help from a foreign adversary. anna: u.s. stocks reacted, falling off, not by an enormous amount, but then they rebounded. the asian session looks mixed. the u.s. dollar weakened off of this news flow. is peters now rosenstreich. are you turning more bearish on the dollar? >> i think politics does play into this. there are some -- the trump thatrowth story out there are holding to this idea that something donald trump is going to do will help the u.s. economy. we have dated that thinking a while ago. now they are playing on this idea that there is some fiscal

boost coming down, that the infrastructure spending will be that progrowth impulse. again, the political story continues to rear its ugly head. this is another example that donald trump will not have the capabilities of pushing the pro-dollar, progrowth story ahead. manus: we have a story from pimco, which is the likelihood of u.s. reform dims. the ability to get a 3% growth rate, the ability to get the escape velocity has changed. that escape velocity, and along with these politics, hurricane force five hitting the white house, what "the washington post" says, does that change the dollar positioning? we flipped in this dollar positioning. >> i think a lot of the traders in currencies already price in the fact that donald trump will be a flop. we don't see that as the primary

support. it goes back to monetary policy. what is the fed going to do? i think the market has gotten a little bit ahead of itself, trying to figure out what the fed's next move is. they're looking at janet yellen's testimony today. we expect the reiteration early in the morning of the fact that transitory, that interest rate hikes are going to be moderate, that exit strategy probably has a lower threshold for reduction in september than the dual mandate and the full employment and price stability. it's nothing we have not heard already. anna: and we will hear more from janet yellen later on. we have already heard from jamie dimon on the subject of what they will do to the balance sheet, unwinding the balance sheet, and what kind of market fallout we might see as a result. this is the jamie dimon had to

say. >> we've never had qe like this before, or unwinding like this before. obviously, that should say something about the risk. we have never seen this before. anna: we have never seen it before, therefore, we should be mindful of that when assessing the risks. >> i agree, 100%. with the fed by themselves reducing the balance sheet, we don't see that as a massive event, but when you have that convergence, especially with the ecb in september, we think that will have a profound effect on people's view of risk taking. we do believe that september, moving draghi forward, went yellen is moving forward -- anna: why does it matter if it is that coordinated move, or even accidentally coordinated? the fed is the biggest player. >> correct. the fed has been on top are quite a while.

so many other central banks are not in the normalization phase. mini-tapertantrum, which amounted to 25 basis points improvement, that was purely based on language. we can see how much the shift, when we actually see action, how it's going to affect the markets. manus: the other most read story on the terminal is the national economic council director is leading candidate to replace janet yellen. so, the market seems absolutely focused on yellen's the parter and cohn's ascendancy. markn once to leave her and that is decidedly higher rates and a balance sheet reduction. >> here is the thing. in the back of a lot of the republican minds is the idea of reducing the balance sheet as

fast as possible. the market completely discounted the idea of closing and liquidating as fast as possible. manus: you are saying the market has discounted that, or has not? >> has not. it is not going to happen. nobody would do it. but with the republicans is stepping into the head, and with house, wehe white have to start pricing that in, saying yes, that is a viable theory. manus: price that in for us, theoretically, into dollar and yields. saw, ir the tantrum we think it would be significantly 4.5%,r, more about 4% to if they start drastically cutting. as jamie dimon said, the uncertainty of removing this historical, unprecedented,

unorthodox monetary policy has consequences that the market is not really understand and sitting here, i would never even prism that i could see what that tail risk is going to look like. anna: is somebody like cohn likely to make that kind of call? or are you suggesting he could do? >> i am saying a republican-backed fed chair brings into this idea. i don't really know cohn's the allergy as well as they should at this moment. i cohn's theology as well as should at this moment. but there will be other members that will be replaced with republicanesque candidates. that increases the likelihood of this. anna: he does not come from the same training state as many of the other fed presidents. manus: there you go. >> helping me out after the

fact. anna: he has the goldman sachs background. manus: a lot of goldman. >> at the lunch cafe he will have plenty of people to sit with. anna: thank you very much, peter rosenstreich. manus: coming up, a wager on wages. find out what the sterling traders are betting on. that is next. this is bloomberg. ♪ anna: welcome back, everybody.

hongin london and 1:19 in kong. the banking sector has become a standup performer in hong kong this week. here's juliette saly. investmentsdelity have cut hundreds of staff on tuesday, according to an unconfirmed report.

last month, fidelity's said that more than 1500 workers opted to accept a buyout offer announced in february. the company has made his reputation by picking stocks and has been trying to adjust to the wave of investors triggering low-cost index and exchange traders funds over actively managed mutual. the u.k. fraud office has opened an investigation into the company over a possible bribery and corruption scandal. the company said the investigation is not expected to impact the merger with john wood group. twitter has filled one of its empty executive positions. he is currently a senior vice .resident at a software maker noto has held both roles since november. takata shares are soaring in

tokyo, despite the company having to recall an additional 2.7 million airbags in the u.s. the inflators could exposed in a crash. the firm that filed for bankruptcy in june did not identify the vehicle models affected. that is your bloomberg business flash. manus: thank you. let's talk cable now. sterling traders will be keeping a close eye on the dieata at 9:30, the final piece of hard data before the rate decision. it's the average weekly earnings and they are expected to come in at 1.8%. anna: that is according to a bloomberg survey of economists. let's get to peter rosenstreich. this data is being looked at because of the hawkish commentary we have seen from the bank of england. i'm interested, though. the s&p said they see current ultra accommodative policy from

the boe as likely to continue over the medium-term. have we made too much from the recent comments from the bank of england? >> i am still relatively bullish on sterling. i understand it is a very difficult trade to execute, but our forecasts continue to see a stronger sterling at this point. we saw the consumer spending numbers decrease rapidly and i think that gave a lot of oomph to the sterling stories that are perhaps entertaining in their minds. this is the wave they are talking about, the consumer compression. this will lead to a contraction in domestic spending and so forth. that is what we thought would be a trigger. we still believe the end all is going to be inflation as a problem in the u.k. we see average wage growth, yes o month on month it is vol volatile, but it is an upward trend.

the boe will have to address this. anna: you are in the hawkish camp? >> yes, sorry, i should have said that. manus: socgen said growth is 0.9% and a rate cut. you think they will be pricing in a hike? 2019 expect in december of a rate hike from the boe. manus: this is the euro against the pound. and where parity, would you like to go in the context? >> we would like to go against the u.s. we still think the euro has a lot of uncertainty. we think yellen is laying out a game plan of slow reduction and even lower interest rate hikes. this sensitivity of that policy to the u.s. dollar, it is much lower.

we don't see rolling off the balance sheet giving the dollar a significant boost. in europe, we think draghi's actions could have a profound effect on the euro. three takeaways for the sterling is number one, the wage will continue to trend higher. the overall health of the u.s. economy will be good, helping inflation slowly grind higher. number two, the global recovery story will help the u.k., especially with the weaker depreciated sterling. third is we have seen may significantly weakened from a political standpoint, increasing the likelihood of a transitory or soft brexit. all of that will come into a stronger sterling. anna: setting up the counter to some of the more doveish comments around the u.k. and pound. let's turn to another potential

hiking story, and that is around canada. ifuld we interpret any hike, that is what we get, as part of the global tightening story come or is it idiosyncratic and very canadian? >> "very canadian," i love that. i think it would be a very dovish hike, at best. it has become a proxy for this global g-20 normalization. so, it is a good proxy. i think what we will see is a hike from canada, but if you look at the backdrop, i don't think they are in a position to continue to raise rates, to continue tightening. you have a stagnant wage growth. you see an external environment led by weak oil prices that will begin to drag on the canadian economy. it's quite ridiculous to believe that the boc will continue to raise rates. they are only a few -- they are

just north of the united states, which has been struggling to create -- refusing, inflation for the last five years. why do they think of is that an growth is picking up and inflation will follow? it's silly. manus: we started the show with the canadian dollar against the yen. the canadian dollar-yen. the mood is this on the chart. do you concur with that? >> 67 basis points or higher priced in for sterling over the next 12 months. that is a little tightening. the yen, not going anywhere. they are pinning the middle of the curve around 11 basis points. they are committed to this loose monetary policy, despite abe's position. it's time for that to contract.

anna: peter rosenstreich, thank you. manus: up next, we have the bank of cyprus ceo john hourican for a very special conversation on

>> welcome back. it is 6:30 here. we see the dollar against the a stronger yen on a combination of politics and other fact errors. .- other factors let's check in on the market and get the details. >> the dollar weakness is a egg theme and there is controversy over trump and the emails and dollar decline. the yen benefited from that.

you see the japanese stocks it goes up aat and level and we have seen real stock did and the drop to cover the change. bout thealking a mylar against the yen and colleagues says that the dollar testing against the loony shows the drop below the average. we have big decision from the

bank of canada and we cannot talk about that without talking about oil and keep in you and i on that relation. signs onrent above on gasoline stockpiles. >> thank you very much and you see crude storming away. looking at this story of donald trump junior and the backlash when he tried to to quell a scandal. interview with fox and said that the charges of collusion were ridiculous and overplayed. isthe other preoccupation the banking story in the united states. janet yellen is going to be

pressed on where calibration of response is and politico has reported that they are unlikely to nominate yellen for another term. have something for the bank of england officials pressing for a rate hike and a reduction in the stimulus at 4.6%. muted?e growth remained that is a question from markets. >> let's talk to the new stock market darling. traders are using options. relative to the torish ones, while the calls put -- and this isng by

about positioning and are the gains related to the globe will rally in financials? why does this stand out? >> you can make that argument, if you look at the financial weeks,er the last few there has been investor interest get a space and we may higher interest rate for borrowing cost in the coming months. that was signaled by central they give more ability to boost the margins. and is a pig business contributes revenue with interest rates links to monetary this and it isof

a macro reason. what about the coalescing around the mark gets? have the earnings coming out at the end of the month and there is a lot of people are starting to talk about the turnaround in and analysts were saying to us that they were expecting that to continue. some of that is getting baked in. aboutis a speculation whether they will do more share buybacks. this is a big contributor and it

is over the past 12 months. is there a sense from the analyst on the range from this? you look the indicators that iran in this and there is the this is on ag and short-term basis and is pretty basis and thethat highest since three years. if you are looking for a reason to take a short-term gain, it is not a bad time. focus on, we will

earnings to give a clearer direction the revenue and it will give a fundamental basis for that rest of the year. >> good to have you with the latest. let's stick with the banking sector. as aalk about the country financial center. we have a conference taking place and what do you think investors think of cyprus right now? >> we expect a broad recovery and it looks like it will behave well. study.ll be a case

about thealk long-term credit rating. where are we in that progress? tight and this very this was unheard of in the old days. are we getting the right price ?or the right risk there should have been more reform in labor law. >> this is something that is

much of this is done and will be done. below 50 going to be two about now and that is still charged topping -- chart topping. hads a slow march and we eight consecutive quarters of material reductions. we still have a monster stock. that the regulators need to push the banks for more timely recce mission. is that ongoing? >> it is quite a journey to repair them. 6% of gdp and these are huge numbers.

i and trying to focus on the transformational and the march down. the question is if there is enough power to do something more and it wins surprise you to know that we're looking at a serious transformations and we are not able to announce what they are yet. >> if we take that journey and is awith the loans, there coming to the end. you look at the story and are we in a dramatically better shape of banking around europe? the italy and spain story with countries getting

away with a lot more and they would not be allowed in the bank of cyprus. lose anyrchy did not money. the depositors lost a vast amount of money. >> the landscape is not what is isd for you, but is what good for me. >> this is irrespective of the statements on the playing fields and at that this was harshly treated and some of that was because of their own actions and made.f that is by choices it is not for me to comment on come what i think larger countries have powers in these discussions. >> it seems like some with say that the makeup of the bond

holders and the retail nature makes a slightly different taste and that is a reason why it got a differ and treatment. >> that is a view of the problem. gdp was destroyed in deposits related to pension funds and i think the the argument is reasonable to make, but i think you look at the context of the eurozone and the argument holds less water. but it's sounds like there is no banking union. >> there are growing pains. , from the vantage point of everyone, the treatment of one bank versus another can be seen or not there. we should try to make the rules consistent and make sure everybody gets the same

opportunity to do this for their own country. >> we have yield curves moving we're thinking about the domestic saviors and that has to be the next step. >> this will work. about thek evaluation. based on the value of the equity and the growth of the equity. that and thell for banking system needs consolidation that is capable of creating return on the equity. i would be a proponent of this

and the problem is that this onated debt and solutions balance sheets. to create mechanisms solutions for the european banking system and would put pressure on equities and it is a bit of a vicious circle. ist is standing in the way politics and nationalism. politics and you have the new balance of europe with france and germany, rather than the u.k. and a push from to be a-- from france financial center. the conversation and we have a major role in allowing the proper consolidation of the banking site or and not the

conversation of a national sector. with us andeep you continue the conversation shortly. >> we have more conversations and we will speak to the finance minister at a: 30, u.k. time will be -- andou can watch the show get the regular video stream and the charts and the functions and look at the questions on the screen. it's coming up on daybreak, crude on decline and can that last is the question for markets? markets. question for

>> welcome back.

the -- if fairly flat start to be trading day, despite donald trump junior. let's get to the business flash. hasidelity investments hundreds of staff. last month, they said that 1500 buyout infered a february. they have been trying to adjust be actively managed mutuals. company is investigating possible bribery and corruption. the investigation is not expected to have a merger. the company says they have to

recall airbags in the united states and said that they could explode, despite using a chemical added a first safety. bloomberg business flash. higheroil is marching and is up 1.6%. stockpiletent is the ?riven prices is higher today and i think that is on the back of the stockpile draw and we expect the government data of third the draw with

of the amount that we saw whether that is sustained. did see that they produced more than june and the markets didn't react to that in the prices were up today. it seems that they are looking more at the stockpile and the draws to see the additional demand and the overhang working its way through the markets. >> we heard goldman sachs yesterday and all of the factors that could push oil down. said, they were looking for more activity and they wanted to see a big sign where they took oil off of the

market or they wanted to see the additional stockpile draws out of the u.s. and the other eight areas that they follow and they want to see the oil continue to come out of the markets. the quotas are over six months and they stretch those out another nine months and those are the average. if they go over a month, it is not such a big deal and they have cup a low quotas to take the oil off of the market. we will have to see if they get back to the heavier intervention and this there will be more coming out of the meeting later this month to take oil off of the market. manus: thank you very much. conversationto our

with the ceo of the bank of cyprus. you tantalized us with the changing power between the u.k., german, and french alliance. where will the city be that benefits the most? the change ofwith politics and changing personal and business taxes is tantalizing to exact it is and to lose and france to when. germany is a place where you know you can do business, but it is less attractive and paris is tantalizing. frankfurt is less. >> you listed your business and

knew that the conversation was ongoing and must have known that was something they possess. >> london is a financial center and should be for the next decade, but it is disconcerting to watch a hapless british government to the negotiations with europe. the days go past and the city gets more at risk. ofreform and regulation thinking are themes i'm trying to cram in and you are talking about the slow down of growth and there is the repeal of dodd-frank and the banking regulation. is this the next to play out in the banking sector? >> the regulation becomes intrusive and it causes us to we neede expenses and

to see a rollback of that and some of that will happen through consolidation. i think there are conversations that are mature and the supervisory relationship is less than two years old. >> you talk about the less onerous regulatory environment and you talk about that based on size. >> a don't think it is political we deliverable and the smaller more, as much as i would like that to happen. what has happened is a return to larger banks. >> you said that you know wilbur -- and that is some pain >> what is the expectations around the trade story.

you listen to what he says about trade and the threat of protectionism. you know him as you do and you listen to his words. does it concern you for the global economy? >> globalization has been a name. those who voted for trump did not feel the benefit of globalization and nationalism became a major theme. some of the policies will back are sensible. that cost issues for global trade. wilbur is a clear-thinking individual. i haven't spoken to him since he took over. the policies make sense, but the manner in which their being discussed is a little less. manus: thank you for speaking with us. he is the ceo of the bank of cyprus. >> donald trump junior, the

president's son, is trying to quell the backlash. to janete a look ahead yellen speaking later. berg.

manus: presidents trump's son says that he didn't tell -- the markets are rattled. chair federal reserve takes -- and canadas circle is going to join the u.s. in adding -- raising interest rates. will it add to the global fuel of tightening?

welcome to bloomberg's flagship show. >> we are getting some breaking news coming through. >> people have been getting products and you have first quarter comparable sales of and the markets is looking at 2.5% and this is a significant improvement. thenarkets have it pencil and you are seeing a significant comparable sale and they have a new ceo there and the market was expecting the title of the uneven set of sales. down inbit of a break the geographic region and you have that amount of tourism.

have pressure from they are rankled over pay and the amount of reelectionn and the of the chairman. you have a little bit there? this is a specific issue and they expect a modest growth of completion. this is the u.k. housing story. and the a mixed session one and wea positive

see the futures here are a little bit higher. there is the trepidation politics of donald trump junior and what he did or did not get involved in. thexx put that away and crude oil is higher. dropping andlies the data with the biggest drop since september. >> they say they should prepare prepare for the price controls and this is the picture with the yield and what

yen and weing in the have seen the yen stronger and the dollar is weaker. move towardsthe this is the picture of -- let's get to the bloomberg first alert news. gary is said to be the leading candidate to replace janet yellen. he says that he will easily win senate confirmation. arete republican leaders said to be dropping tax cuts and thatuld generate revenue

would cover expanded coverage for the poor as demand of by moderates. byy are denying the recess two weeks to allow more time to debate the bill. house republicans have released a spending bill that includes funding. the appropriation committee total that -- a five u.k. at leading retail banks have offered more support for -- the global demand was seized for exports. cuti arabia is said to have

10 billion barrels in oil, exceeding the limit to curb the global glut. that demand was higher because ramadan. dropped 17% this year and entered it bear market. on the find more stories bloomberg app. there has been a muted so should mixed.at is very yen goes higher and the weakness is on the close. third center as the banks rally.

little and our it is ahead of the earnings and there is the announcing of the recall and this is on a broker of trade. highcheck at this record band it shows the stock market reflecting the yellow and blue lines. with local the rally

investors and the pro-business agenda. >> thank you. thate younger trump said in a interview with fox news. >> in retrospect, i would do things differently. this is before the mania and they were building it and the press. this was opposition research and there may be concrete evidence that was underreported and i wanted to hear it out. it what nowhere and that is not what the meeting was about. this intensified and spread through capitol hill. rebounded and the dollar

weakened. good to see you this morning. are the latest revelations and are they noteworthy? russian collusion into the campaign? >> it gets closer to donald trump. emails and he it knowledge is them. it shows that there is a written a turn in the investigation and appears to be. what is the mood in washington and elsewhere?

>> there are two sets of reaction's. one is about the investigation and there is a lot of talk that is very interesting. what does this mean for the agenda? it is hard to get much else done. help amongeen such the republicans that this was the year they were going to get tax reform done or do something with infrastructure spending or with health care. now, we are seeing that this is all about the investigation and that is what the talk has been. the frustration is that they are not getting to the legislative agenda. inre talking about every day the investigations as to whether

there was collusion and what we knew and when. that is another set of reactions we are seeing. >> thank you for the very latest. this is from broad bench and he said that he is not ready to and will this help or hinder the rate hike in the united kingdom'? he says he is not ready to support a hike. >> he gave a talk where he did not address the interest rates. he also said a new warning in his message about the reduction

and ite being damaging because this is where his concerns lie. let's get back to the u.s. story. show.come to the is a day in the u.k. and what is more important is what janet yellen says in her congress testimony. how are you looking at the fed and are you planning a hawkish tilt? how do you look at the fed? fed was inaw the line with the market expectation and we look at the path of

short-term rates and they are calling for the rate increases -- rate increases. .> that is in the dots >> exactly. the market assumes those rate increases and we saw those andctations more in line we're sitting setting ourselves up for volatility in bond markets. fish insounded more of june. do unwinding of the balance sheets. >> that is a good point and is a the monetaryending

. the unwinding of the balance going to cause the yield curve to increase. the fed would like to normalize the longer and. that being said, they are watching the news and the market decline is that the bond market is not the leading the initiatives. giving morehey are cautious. about a discussion thisssion planning and tilt ande a republican be more aggressive than

anticipated. what would that do to yields? : the question is if he will hawkish?dovish or this return to a more normal situation, the question is how it occurs and what would be offered. is whatever trump's success may be whether he implements legislation or not and you look and we areear and the market

this.es now?ere does that stand andeads to big questions this russia story is a distraction from what should be happening. this andill look at the investor expectations. i would say that i thought that this was overshot. i expect the inflation is on the low slide. >> you expect more? >> yes.

and it is a rough chart goes from the september time and ratchets up. go. we curve and giveld us your view on the long end and the momentum. , i think we have weancial assets here and talk about normalizing it. it is certainly reasonable and i

would say that in a certain training range and it is certainly possible. anna: that raises questions about what would be on that balance sheet. stay with us on the program. to look atre going -- he says he is not in favor of a rate hike at the moment. this is bloomberg.

>> this is bloomberg daybreak and we are at the start of the

european trading day. the asian story is a little next. the data is going to hit the have -- we is reason the committee moving in that direction is and there areghts a lot of -- >> we will have the wage and unemployment story later on. your focus is on the united states, but we have talked about the ultran tides and low levels. globally andhigher why are you interested in fixed

income? what's the fed has made clear it wants to raise the balance sheet and the rates at the short end and we see the ecb winding down rates. oncould put upward pressure the yield and the role of the fixed income is the equity the continues -- there continues to be low yields and the fixed incomes will not reduce the risk in the equities. it will exacerbate them. andave several strategies andr were bank loans

investors get paid higher yields. even at the end of the credit cycle, it would be an absolute return strategy and these are designed to do well. correlation with the markets and there are lots of strategies that called themselves that. if your return manager doesn't focus on risk, watch out. that the your phrase equity markets are at a nosebleed level. this is europe, australia, canada treasuries. they are all going higher and the momentum continues. how does this move in the yield

curves present themselves? done them studies and have looked at the second first there are active strategies that you better than passive in the index. that is different from equities equityis different from sectors. better?they be the answer is simple. what is the top stock? apple. is can debate whether it underweight or overweight.

one market number cap rate? it is the company that issues the most debt and they could be the best opportunity. >> thank you for taking the conversation in new directions. over 34 minutes to go. andave the luxury retailer ruckus over the pay their. >> the finance minister of cyprus is going to be a big focus for us. the modest growth

watchingion and we are amick foster wheeler. about in the next few hours of programming. this is bloomberg. these days families want to be connected 24/7.

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welcome to "bloomberg markets." firstl bring you the quote of the day. i am guy johnson. matt miller in berlin. what are we watching? sonl show the president's welcomed and offer of information that could damage hillary clinton 3-d information where next