>> flatlining ahead of the fed's. volatility levels had lows ahead of the fed decision. trump tells the wall street journal he is considering janet yellen delayed u.s. central bank -- to lead the u.s. central bank . manus: the rba governor says he doesn't have to follow his global peers as inflation disappoints, the currency slumps. next diesel dilemma -- >> diesel dilemma. increased scrutiny over possible dieselon with its emissions technology. ♪

anna: a very warm welcome to "bloomberg daybreak: european open." i am anna edwards. manus: i am manus cranny. a little pieces of breaking news -- little pieces of breaking news. you are watching for a little bit -- anna crowe -- anna: i am watching for orange. manus: we have numbers first of all it when it comes to fed, the numbers are rising. donald trump promises he wants to increase spending on defense by 2%, getting everybody on board. over 6 billion euros. they confirmed the 2017 target. that is the thing we have been seeing during this earnings season. 330 -- 336s for million euros. .heir orders arising

they are coming in that 10.6 billion euros. anna: let's talk about what is going on in the auto space. something.orting the second quarter operating profit. that was below the estimate of 1.54. the korean auto manufacturer, the net income of -- well below the estimate. something to explore as to why this business not living up to the estimates, the sales number. we have left irish. manus: we were talking about what to break. -- ebitda ahead of what the market was looking for. global recovery. the imf talking about growth.

the biggest summit makers in the world to deliver the 2017 guidance, operating comes in at 1.7. there is a new ceo come to the helm. he comes out of switzerland. that is the best thing to ever eholcim.o lafarg anna: a little ahead of the estimate of 38.1. the revenue number coming in ahead of estimates. $184 million. guidance on the third quarter sales growth and going into the numbers, that was going to be key. third-quarter sales guidance. this is second quarter, considered a little backward looking. when they stick to the 10%

operating margin target -- what we are seeing, they have given us the sales growth of 9% in the third quarter. look out for more details. how will they speak about the automotive sector, this is been an area where in the first quarter they disappointed. the stage was set. they need to deliver a better performance. manus: on the net sales for the second quarter, they did come below where the market was for the second quarter. he came in just a shade below on the sales. let's get into the risk radar, because where when for the federal reserve, waiting to see what they might say in terms of the balance sheet. that is what the market is focused on. the word which shows was neutral. if you look in the vick -- the vix. , volatilityo this

close below 10 for a stretch of nine days in a row. the fed is causing a flatlining at the moment on volatility at anna: it feels like the calm before the storm. -- volatility. anna: it feels like the calm before the storm. we filled up some the moves in the commodity market. the asian equity session a little flat but some of the commodities of related companies have been doing better because what we are seeing in copper. london, set its biggest increase since november. u.s. inventory retreating a little bit. that pushed the price up by more than 1% in this hour. manus: a quick line on syngenta. we just had a little bit of a release from them. up $6.9 billion, the second quarter. income ofion in a net

928 billion -- $928 million. strong savings are on track. that is the message they are giving to the market. this whole area along with the food area is really under pressure from those activist investors. productivity on track. anna: in the midst of m&a, as we know. let's get to juliette saly. juliette: anna, thank you. donald trump said he may real point janet yellen to a second term. in an interview with the wall street journal, he indicated that white house aide, gary cohn is a top contender for the position. yellen has declined to comment about her future at the fed beyond stating her intention to serve out her current term expires next year. u.s. senate has rejected mitch mcconnell's health care proposal that came at the start of several days of debate with no clear idea of what obamacare replacement plan will ultimately

be asked to pass. the house rebuked president donald trump whose campaign is being investigating by -- this is am from bank should be flexible and considering the u.s. and europe by normalizing monetary policy. the bank of japan may leave itself without room for policy responses in the event of another financial crisis. policymakersy said need to continue monetary stimulus as soon as possible. dollar desks lower-than-expected gains in .onsumer at the same time, the bank of australia chief philip lowe reiterated that the move to

remove stimulus has no automatic indication for the central bank's policy. >> just as we did not move in lockstep with other central banks is monetary stimulus was being delivered, we don't need to move when some of the stimulus is removed. juliette: global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . a little bit of a mixed session here in asia. you do have the nikkei a little bit stronger, up .5%, back above that 20,000 point level. energy players rallying it we have seen the copper players in australia and hong kong and china doing very well. you have asx 200 up 1%. kospi up by .4%. the stocks we have been

watching, the property developer hitting a record high, this after it indicated its profit is set to triple. shipping is at a 19 month high after optimism for its shipping rates. caterpillar one of the leading indicators were better than expected. seven group operates caterpillar and australia and china, up by 10.4%. being onlycpi data -- the trims mean when you take out seasonal factors coming in at 1.8%, below expectations. his band desk this band is where our be able to see inflation. this blue line is the official cash rate this is at a record low. if this white line doesn't pick up into that inflation band, it is unlikely that the rba is want to start talking about increasing interest rates down under.

manus: thank you very much. a u.s. health care proposal to replace obamacare has been rejected by the senate. the vote against a modified version against mcconnell's plan comes at the start of several days of debate. anna: jodi schneider joins us. good to have you on the program. john mccain helped secure the debate with a 51 to 50 vote but things did not go so well after that. they opened desk at this book to enable them to start talk -- they opened this vote to enable themselves to start talking and what happened next? back to a mccain came very emotional chamber. it was quite a moment in the chamber. they needed a tiebreaker to even get to this debate on the bill. once they voted on the bill, that particular version, which

was the majority leader's version was voted down. they have to debate and move on to another version. mitch mcconnell has said he wants a vote this week. it is really unclear what the path forward is, what the bill will look like and whether they will get the votes. the only have a republican majority in the chamber. no democrats. susan collins, a republican, is likely to vote against it. their margins are very slim and even if they do get it through, they will have to reconcile with the house bill which is very different. jody, what is the latest with donald trump's plan for his attorney general. -- his attorney general, jeff sessions? jodi: the president in a press conference with the lebanese prime minister criticized his own attorney general saying that

he was very disappointed in him for recusing himself in the investigation into russian meddling in the election, and when asked whether he would keep in on, he said he didn't know. time would tell. .t is unclear what will happen with the sessions has said he wants to continue to serve, but it is an awkward situation and very unusual to have a sitting president criticizing his sitting attorney general. it has not been known to be done. one would think that something is going to happen at some point, but the president has said -- has not said whether he will fire him or not p anna: we will see how that -- him or not. anna: we will see how that relationship lays out. trump says he will maintain janet yellen as fed chair. he wants rates to stay low. manus: he also indicated that the white house is also -- white also's staff gary cohn is

a candidate. we have talked about janet yellen been reappointed. welcome, by the way. yellen being reappointed, i don't know whether he noticed. he said she is a low interest rate fed governor. i would like to see that and she is a low rate person. the last eight years needed low rates, but the date -- the debate is:, yellen. what difference would it make? >> we wouldn't really know. at the end of the day, we expected an epidemic -- an academic press. you will have to see what happens. would janet yellen want to stay on in that role? having raise rates, and a solid normalization of the balance sheet process. it is all unclear it anna:

fairly unclear. saying let'sorting all --e down, just let's let's all calm down. the fed is giving us the latest interest rate decision on the balance sheet and the plan. the survey of economists suggest that we are expecting very little today. in september we expected timetable around the balance sheet. is that your expectation? david: broadly, yes. our colleagues in the u.s. expect the rates to go up and said timber. and perhaps december -- in september. perhaps december, the data for the u.s. were generally. difficult to raise rates in december. normalizing the balance sheet is a very uncertain process.

most central banks think about this whole issue, cut rates to a level. among to wait having a normalization -- i want to wait having a normalization process. manus: let's talk about that, because what we put together this is for our viewers out there. you wonder what i do -- you wonder what i do. rattling on. [laughter] .e have to give a shout out the tv 40. 100 basis points and climbing. you see this is the other side of the coin which is get on with it, federal reserve. be more aggressive. there you go. we are at 1.52%. that takes you back to the highs of 2007. there is validity in saying, get

on with it. david: there's truth in that. it may well be the case. where p risley crisis -- where previously there was crisis. there is an argument that gigi get rates back to the norm normal -- back to the new normal -- there is no argument that you should get rates back to the new normal. much.think you very i saw an interesting story on the bloomberg. fed, throws a little volatility. those in the markets want to see that. and your world, how does volatility factor in? some suggesting, if you added a little bit of volatility, that would be good. works.t sure how that david: it is interesting going into the winter months.

the ecb has been tried to save money. one of the stories is you've got the ecb and the bank of japan printing money and very low interest rates. the fed is slowly trying to further the exit phase. the bank of england is on hold but at some point wants to raise that defied that cut since last august yet this very divergent trend. the ecb will probably taper. interest rates more globally. anna: will discuss later in the program. david owen, staying with us on bloomberg. manus: we will bring you that u.s. federal reserve policy decision live on bloomberg television. anna: coming up, the boj deputy governor says worst endless is needed to achieve its inflation target p it will focus on japan and go around the world --

target. we will go around japan -- we will go around the world. this is bloomberg. ♪

manus: it is on 1:20 in the afternoon in hong kong. the hang seng rises. caterpillar had a nice upgrade to its numbers. a lot of industrial stocks rising in equity markets. as get it business flash -- let's get to business flash with juliette saly. juliette: hewlett-packard enterprises is said to be on shortlist become the next ceo of uber akoni two people familiar. -- uber according to people familiar. it's new the name leader by early september as it tries to steer costs during a turbulent period. going to people familiar with the maker. ae japanese company has built

5% stake in the massachusetts-based technology robotics firm. irobot has a market value of $2.4 billion. that is your bloomberg business flash. anna: earlier this morning, the bank of japan deputy governor spoke to business leaders in japan. he said the central-bank needs to continue monetary stimulus to achieve its inflationary target as soon as possible. manus: a few other lives as he talked about this 2% target as being crucial. 2% cpi data. price pressures to rise and the second half of the projected period. clearly, the messages coming from the boj this morning. david owen is still with us. .avid, your thoughts on japan they have been there and done that in terms of trying to

stimulate the economy. deputy governor given us some thoughts on white wages have not increased. he put some of that down -- on why wages have not increased. he put some in a down to waiting on the fed. the go all of these central banks grappling with the effects of -- david: all of the central banks grappling with the effects people have to keep real interest rates very negative. that means inflationary expectations at the anchored close to target. that is why they keep referencing 2%. at the end of the day, they want wages to pick up. the same is true here in europe and also in the u.s. is abe'se other risk popularity is waning. jpmorgan said we estimate the ball ability -- the viability of

the abe may administration -- does it prove a risk factor to abenomics? of the day, ifnd we don't get major traction in japan, what do central banks do? they have always tried everything. jackson hole coming in august. much more focused on other measures to stimulate growth. fiscal policy starts to reform. all necessary to boost growth more globally. anna: we are so far into this, the great extreme intention. .- the great experimentation concerning to other actors and what they can do. talking about systemax what they are doing. the rba -- talking about central banks and what they are doing. the rba hiking the aussie.

he probably wanted to move a little lower on that. the comments we heard from the deputy governor. this is an academic thought whether you have to follow. we have a divergence at the moment. david: absolutely. every country has its own issues. australia is very different from the u.s. this does confuse markets. markets like to have things moving. divergent trends are going to be -- no central-bank was to get rates at that high. even the u.s. has been struggling to raise rates. this is a long way from 2007. .e have never been here before manus: we started these conversations about policy divergence, leave the bank of japan to one side.

we start these conversations by changing policy. the next conversation is there is a higher terminal rate to be had. david: if we can get normal gdp growth in these countries much higher. the striking thing about the post financial crisis world is the weakness of investment globally. in part -- manus: mi to preemptive in saying that is the -- am i to preemptive in saying that is the next step? david: when can they really do it? the bank of england was hoping to raise rates and obviously they cut rates. it is difficult for any central-bank. anna: i saw president trump was saying yesterday, measures are not coming soon. we have that part of the jigsaw to add in as well. you. owen, thank manus: liquidity in the function

of the bond market are not very low. when you look at what the bank of japan has been doing in terms of keeping hold of the bond market. we will talk about europe up next. ♪

anna: welcome back, everybody. theo, the dollar against yen again with 111 handle. a little changed as we wait for the fed's rate decision a little bit later. keeping on the auto section is we're looking at numbers out of daimler. they will comment or not on the alleged competitive behavior in the sector. they have been talking to authorities already. manus: we are waiting for the number and where they are. they are going to have a special meeting as well as the w p it with some crucial headlines on the french side. they see the european car market

up about 3%. russia and let america will grow about 5%. -- and latin america will grow about 5%. this raises the market forecast for europe, latin america and for russia. if you think about the warning shots coming from the bank of england, about how much we're spending here in terms of the car financing. anna: we get numbers from nine miller just from daimler and they don't look -- from daimler and they don't look great. side, $1.2he revenue billion. that is just a -- i'm sorry, 41.2 billion. second quarter revenue, that is pretty much back in line. ebit comes in. we are seeing whether they will confirm in regard to the meeting

. the whole industry is plagued. there is the net income number, 2.5 one billion. in terms of outlook, 2017, they see significant growth. they have gone for a much sportier lineup. they are trying to get ahead of the emissions scandal. cars, they'reel are going to spend 220 million pounds -- euros, excuse me on making that fix. mercedes-benz, 2.4 billion. anna: let's take a broader look at the markets early this morning. nejra cehic joins us. nejra: the rally and commodities fueling some risk appetite in the asian equities session. let's take a look at the brakes out here. you have tech stocks underperforming, but

outperforming, yet energy stocks up more than 1.5%. above $42puty i going a barrel -- this is wti going above $42 a barrel. material stocks outperforming could we see the general increase in commodities on optimism about china. that is a fed too much into the shanghai composite. we are seeing japanese stocks. the yen weakening against the dollar and six days -- against the dollar for the first time in six days. i want to show you copper because we have hit a two-year high. we went above 6000 on monday. technicals, with this rally picking up, you are seeing copper in the upper limit .f its band we are seeing demand for that metal and where we are not seeing demand is for the aussie dollar. where down .5%.

.5%. are down inflation was a little disappointing and the rba governor philip lowe made some dovish comments saying that any hawkish tones from other central banks not necessarily going to feed through to the rba. this is a more long-term look at the aussie dollar, because it is in overboard territory. look at the relative strength index. the last time that happened, the rba was hiking. it is interesting we have this aussie rally despite today's drop. the aussie near a two-year high within touching distance of $.80. manus: nejra, thank you very much. i am giving you the dime a numbers. desk in you the daimler numbers. -- giving you the daimler numbers. anna: michael dean joins us with analysis. help us understand what daimler is saying.

bit came in below estimates. second quarter will be higher. michael: there are 3.7 billion was below expectations of crude level. there will be significant one offs. that would bring the number back up to consensus. in terms of the focus, it will be on mercedes. mercedes reported a 2% margin. manus: mercedes is what proportion of daimler echo -- daimler? michael: it is is a nifty part. .- it is a significant part anna: in terms of the anti-competitiveness and what the carmakers have told us so the i was reading that justice minister in germany seems that the carmakers understood what is at stake.

others say germans compete with mobile car companies to some extent, some talking about some things used to be expected -- is to be expected. michael: there's a fine line between collaboration and collusion. i don't think we are going to hear too much from invested -- from the companies today. we have a journalist compass call this morning. -- journalist conference call this morning. manus: let's talk about the risk. this is a quick chart. these are the dividends. bmw, renault, porsche. the 2015 dividend was slashed from 4.8. we don't know. we don't know how big these issues might be for the automakers. out moreuntil we find from the authority, there are

potential fines that can be levied against the car companies . we saw this with the truck makers that were fined 2.9 billion euros in that included daimler. -- and that included daimler. given that there are other risks within the auto industry at the moment which means the sectors underperforming, if dividends were cut -- manus: dime a standout with more than 5% on a flat 2016 dividend. that is a heck of a dividend echo michael: -- heck of a dividend? michael: given that the market starting to slow, if dividends were cut in the future, this would indicate downside risk. anna: you mentioned the trucks case. the market shares that the automakers have in europe is not as high as the truck makers and

what they owed the european markets. therefore the treatment might be a little different. the diesel problems and this takes us back to where we started, the diesel scandal. cars.k. is the ban diesel from 2040. the direction of travel looks pretty bleak for diesel technology. michael: certainly in the u.k. follows last week but i don't think many car companies are -- even forduce rory -- even ferrari with its supercars. anna: even ferrari. analyst for, senior bloomberg intelligence waiting patiently. .avid owen is still with us let's turn our attention to the european economy, the eurozone

economy, david. we've got a lot of focus on the fed this week. your focused around the ecb. -- you are focused around ecb. give us an update. david: the good news is we are further way from outright deflation. we are not seeing any evidence of deflation becoming a major issue for most economies. we are stuck in this world of very low inflation. core inflation rates are converged around 1%. that is true across the world. price rise is converging at very low levels. even here in the u.k. and the u.s. inflation numbers are more disappointing than for the europe destined in -- then for your.

anna: that is decreasing. u.s. is not in a deflationary problem, but us, they are not entirely escaped a very low inflation. we have been here before in history, if you go back to dating hundreds. the 1800s.o back to on prices, very low inflation, maybe we are back in the world. manus: what is the risk -- qe we have been talking about. is this a question of when, not if? ?hat is the risk to the spreads italy, france, spain. what is the risk if qe is slated out next year? david: if the eurozone were to roll over. the eurozone is trending to around 2%. seeing some loss of momentum at

the moment and we are seeing some recovery slightly above trend. that is enabled -- that has enabled spreads to come in. anna: the bumblebee reference on the chart and manus: five years ago when mario draghi discharge. manus: favors ago when mario draghi said when euro is like the bumblebee, the misty of nature is -- the mystery of nature is that it should fly but it does. with that in mind, you have something quarters of a hike. anna: you remembered whatever it takes but you forgot about the bumblebee. manus: this is the divine risk, isn't it? a strong euro which is written off -- which was written off and people were talking about the demise of it. david: aging population and we have italian elections come

through in coming months. if the eurozone were to roll over, these problems would come back. not that we know the system is going to break up. it is not an optimal currency era. it is a bumblebee. it needs to grow. what we are seeing in the eurozone is improving labor market dynamics. manus: you talk about capital flow. this could be the next extension in the story, the capital flow into the europe from the u.k. david: the eurozone has an a massive amount surplus -- has a massive amount surplus. we have been talking about this for months. a lot of that has been diverse of, out of the eurozone into u.s. fixed income which is kept yields down globally. that trend is beginning to

reverse. anna: what is the driver? the ecb was slowing down its rate, but even before that, we saw less flow out of the eurozone into the u.s. fixed income space. some switch into international equity. is a move toward tapering, -- as we move toward tapering, we are going to see something else take up the slack. it won't be -- if the eurozone is running a long counsel, there will be capital outflows. anna: eva, think you very much. much.id, thank you very we'll talk more about the u.k. next. manus: stay tuned because we have a polish steady prime time.er at 9:30 u.k.

anna: that will be interesting in the context what we have seen. out with the eu and amongst all of that. a lot to talk about. if you're a bloomberg customer, you can watch all of our ramming on irregular tv set -- all of our programming on our -- on a regular tv set. this is the way your screen looks. you get all of the added content. you can ask questions of our guests. manus: coming up, outfoxed by the chickens. the british trade secretary says u.k. conditions and food standards will be set after the public cries foul about concerns about america's chlorinated birds. this is bloomberg. ♪

anna: welcome back, everybody. "bloomberg daybreak: european open." the time is 1:47 in the morning. 6:47 in london. let's get bloomberg business flash. here's juliette saly. juliette: thank you. hewlett-packard enterprises is said to be on the shortlist become the next ceo of uber according to people familiar with the process. they're helping to oversee the search with assistance from executive goodman firm -- executive recruitment firm. it tries to steer a path through -- turbulentath period for business. the japanese company has built a less than 5% stake in the massachusetts taste technology robotics firm. the market value of $2.4 billion. michelin has reported a .9% decline in operating profit at

the raw material costs climbed. operating earnings fell to 1.3 9 billion euros falling short -- 1.30 9 billion euros falling short of estimates. by 2021.e 2000 jobs metro bank has said it will sell 277 million pounds of use stocks as it steps up growth. the u.k. bank led by vernon hill is selling as many 810 2 million shares.- 8.02 million it posted the second quarter profit of 2 million pounds. that is your bloomberg business flash. you.: juliette, thank let's talk about the trade sec..

-- the trade segment. britain will set food standards after his trip in the u.s. the u.k. and u.s. were in a good place to agree on a post-brexit trade deal. >> it depends on how much progress we make. a lot of the reasons why trade agreements can take a long time is economies are too far apart when they begin the process. our economies are relatively in similar shape in terms of services to manufacturing. we have got a relatively good trade balance. areas wherelot of we can try to maximize that. we don't know what -- we know how far we will have gotten by march 2019. anna: liam fox.

markets will get a key update with an initial reading of gdp at 9:30 u.k. time. i say economists as is there one person -- as if there one person. we have to hear. -- we have two here. you're expecting something lighter than 0.3%. explain what you expect. >> we think growth is going to be on to which is the same as first quarter. the interesting thing i think about what we see today is all of the greats are going to be explained by the services sector. production, construction and construction. what that points to is probably -- we don't get an extended breakdown of gdp but it can be seen as carried on spending again in the second quarter.

although it is very meager growth, it accounted for all of the growth. it really begs the question about sustainability. this is in the face of a real income squeeze. manus: that has been angst from the bank of england is we are digging into our savings to perpetuate a spending boom. you have done the analysis. typically you get a .5% and a rate hike. when you say the fans are shifting on that, this is the actual gdp at around the 27 forecast -- around the 2007 forecast. what a shifting? >> what is interesting is they have .4% quarter on quarter flat across their forecast period. what you have is a set of members saying if the forecast comes in in line, as we expect, we think we might hike rates. that points to a growth rate of around .4 as being good enough.

the question is why. the reason why is that growth rate appears strong enough to keep unappointed low just keep unappointed low and that -- keep unemployment low in the productivity growth is going to be exceedingly weak. that is a result of this brexit vote. we had poor productivity growth prior to the vote. anna: the sands are shifting a little bit in terms of how gdp in rate hikes move along with each other. if you get 0.2%, you don't expect a hike next week? dan: no we don't. they are really focused in on the unappointed rate in effect that there is no slack in the economy. in time, that will feed to -- feed into wage pressures. they concerned the growth might

be more protected. -- more protracted. there will be a downside risk to inflation. manus: let's bring david owen into the composition. we had warning sounds coming from the -- into the conversation and we had warning sounds from the bank of england. how complacent are we and should we be more suspect given the data? david: i think dan is absolutely right. i think from the banks perspective, brexit represents a slash. if you want to improve the structural performance of the economy, it is down to hammond and fiscal policy and structural measures. bank possibly the you. the bank elected the bank back to where was.

it is not there yet. today's gdp will not be strong enough to raise rates next week. the guidance they give next week will be very interesting. november, that is probably where they are thinking about. " is -- anna: do they want to get rid of that emergency back of talk more about the underlying data -- emergency? they talk more about the underlying data. >> everybody went to the bank of england and the guidance was very clear after that brexit vote, they want to do policies. they were really concerned about the economy. david cameron had left the building and no one seemed to be in charge. he had a situation where the active very quickly. -- you had a situation where they acted very quickly. the economy is not in recession. they were able to get the bank rate up. they can bring it back down again.

rates, it wille be to five bits and it will not be next week. it will be something they think about the next year. fox's talking about trade between the two. anna and i find this piece again and again. they both said we have surpluses. u.s. says 11.9 billion. how good is a trade deal with usa for the u.k., dan? dan: yet to put it in the context -- you have to put into context. u.s. trade deal is going to compensate in some way. it is probably a bit of a stretch. the u.k.'s comparative vantage is in services. also high-tech manufacturing. and chickens. [laughter] both.thank you

dan hansen from bloomberg intelligence. david owen. if you spots we need to watch. -- a few spots we need to watch, daimler. will keep an eye on that. -- we will keep an eye on that. ♪

manus: flatlining ahead of the fed. volatility levels at record lows and head of today's fed decision. president trump tells wall street he is considering janet yellen and gary cohen to lead the u.s. central bank. anna: aussie low. the rba governor says he does not have to follow his global partners if inflation distant points -- disappoints and currency slumped. manus: the automaker and its german auto part -- counterpart face charges over diesel technology.

tous: you're welcome "bloomberg daybreak: europe." anna: we are getting breaking news. from themard recently. off, adjusted pretax , 381 million in pounds. beating estimates, an estimate of 6.9 pence, the first-half revenue 1.46 billion. the three estimates we carried on the bloomberg, this is a business that -- the outgoing ceo has [inaudible]

the commercial that castor is in the midst of a management changeover. he has seen that reorientation of the business away from at sales and more toward production. itv studios production. interesting to see where carolyn mccall takes the company especially with brexit looming and many people including group m talking about tv advertising to drop in the u.k. this year partly because of the brexit story. are confirming their forecast that they gave to the market on july 17. anna: on july 17 they had given us the headlines of all of this performance and increased their four-year forecast for the second time in two months. makerrman sporting-goods the sports leisure wear

into profits. and revising the costs,ear cash sitting raising the target $650 million from $500 million. always better when you turn it into billion. they are saying in the first half they had a post tax loss after their impairment of $309 million. that is versus the $30 million profit last year. you want to understand the revenue side of the equation, first-half revenue, $788 million and in the million first half in terms of capital expenditure they spent $77 million. most important topline for them as they are revising their cost inings from the business and terms of revenue, that is up to

788 million from 541. anna: let's talk about where we are going at the start of their up in equity trade. this is with the futures suggest right now. ringing us to the right screen. just turning to the downside. a little weaker on the european equity market. u.s. futures mixed to flat. the asian equity session was flat but not going anywhere. commodities was one of the things that was driving the asian session, stocks getting a bit of a boost but volatility very low. the vix at an all-time high. that is the mliv blog talking about the single-digit vix is something of a joke on wall street. in the midst of this earnings season, will keep looking to the fed for any clues and maybe a little volatility. four and closed at 10 a presented stretch. at some of these facts together. you will see a slightly different complexion, that is

the msci asia. very little to boost the overall sentiment. 6349. at i love the line in the daily prophet, china has had its crash per se, that is one of the lines there but you're looking at a two-year high in terms of copper. what is that going to do and some of the miners? hedge funds boosting their bullish decisions on copper to a 20 week high. crude is up 21%. anna: we are keep an eye on that and getting a few headlines coming through that, the ceo of time are saying they are facing negative news. on the bond markets let's put up where we are trading across the bond market for you right now. let's get a hamburg first word

news -- bloomberg first word news. juliette: u.s. president donald trump has said he may real point federal reserve chair janet yellen to a second term. in an interview with the wall street journal he indicated that white house aide gary cohen was the top contender for the position. yellen has declined to comment about her future at the fed. the on stating an intention to sit out her current term that expires at the start of every next year. that u.s. senate has rejected majority leader mitch mcconnell's health care proposal that came at the start of several days of debate with no clear idea of what obamacare replacement plan centers will be asked to pass. the house has voted to strengthen sanctions against russia and rebuked president trump, the campaign is being preventing them from unilaterally lifting penalties. japan's former currency official said the central bank should be more flexible and consider

following the u.s. and europe by normalizing monetary policy. warning that the bank of japan may leave itself without room for policy responses in the event of another financial crisis. the boj deputy donor said policymakers need to continue dietary stimulus to achieve their 2% inflation target as soon as possible. spain, the first sitting prime minister of the country's democratic era to give evidence in a criminal trial. he will take the stand this morning in a national court probe into his parties financing. partyple including former -- the former party treasurer are accused of writing a bribing ring. the australia dollar slipped against most major peers as's lower-than-expected gains damped expectations for an interest rate increase by the central bank. the rba chief reiterated his global counterparts move to

withdraw stimulus has no automatic application for the central bank policy. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . fairly range bound in the asian session ahead of the outcome from the fed. you have the nikkei looking pretty good on the close up by .51% closing above that 20,000 point level, a story is market also closing and the rally in metals and copper lifting the asx 200. it closed higher by .9 of 1%. weakness coming out of the large cap stocks in china and hong kong has managed to turn things around. we have seen some gains in energy players there. looking at some of the stocks in detail, a new record high in hong kong with the half-year hasit fit to triple up, it been up by as much as 15%. cosco shipping heading the other way, it was at a 19 month high , perhaps a bit of

profit taking in the latter half and seven group holdings doing well. it operates caterpillar's dealerships in australia and china, we have that number coming through from caterpillar in the u.s. session. us trillion cpi, the aussie has fallen on that and take a look at this chart. the yellow bar here is rba's inflation target of 2.3%. the white line is out of that range now and we have interest rates at record lows well off 2008, 2009. saw in a lot of analysts saying you're not going to see the rba even start to talk about listing interest rates if they -- lifting interest rates if they have inflationary that target. inflation coming in at 1.8%. manus: thank you. this is the no comment of no comment, daimler declares -- declines to comment.

the allegations are carried going back as far as the 1990's in board meeting technology, emissions systems, brakes and transmissions so there is no further comment. they came out with numbers this morning and confirmed the numbers for this year would be significant growth in unit sales and significantly higher growth for the year. that and analyst told us the numbers do not look too bad. we need to talk about what is going on in the u.s. political sphere. the u.s. health care proposal has been rejected by the senate. the vote against the modified version comes at the start of several days of debate. jodi schneider joins us from hong kong. great to see you. john mccain help to secure the debate with a 51-50 vote. -- an floor with it

emotional speech, a significant moment for congress but angst and not go so well. what happens next? jody: john mccain came back to the congress, to the senate in a very emotional return. he was just diagnosed and had surgery for rain cancer. cancer.- rain he was welcomed into the chamber and help to get the debate started. it was a -- mitch mcconnell's version of the health care bill failed and did not get enough votes. what is next is a little bit unclear. mitch mcconnell the majority leader says he wants to debate this and get a bill passed this week but it is unclear what the contents of the bill will be or whether they will have enough votes. the republicans have a slim majority in the chamber, only if you chew-48. they are almost certain to lose, susan collins a moderate republican has said she has a home with the bill.

it isn't clear but it would be a big victory for the white house if they were able to get this through. the other issue is the house passes a bill, even of the senate were able to get something over the finish line they would have to reconcile the bill and that would be tricky as well. anna: so let's to do on health care. news items wer need to address. the latest for donald trumps plans for his attorney general jeff sessions who he has publicly criticized. that left jeff sessions in an awkward spot. di: yes. when he was at a press conference with the lebanese prime minister he said he was very disappointed in his own attorney general, mr. sessions, for recusing himself from the investigation, from investigating russian collusion into the election last year. and when asked if he would keep him on said time will tell which does not exactly sound like a toy affirmative statement

mr. sessions' future as attorney general. it is an awkward situation, somewhat unprecedented where a sitting attorney general is being openly criticized by the president but still remaining in office. mr. sessions has said he would like to continue to serve. one would think that it has to be resolved at some point in the near future although we do not quite know yet how. manus: thank you very much. anare potentially unprecedented times. jodi schneider with the latest on capitol hill. dime i said they were not going to comment on the ongoing investigations but daimler said systematically investigating those diesel allegations. beforehis is a crisis this crisis for the auto sector. the ceo of time are saying daimleruture is -- of

saying the diesel future is worth fighting for. in terms of legislation we hear is pending. in onewe had an article of the broadsheets talking about the end of the death of diesel. it is a hot topic and hot for debate. we will talk a little bit more about president trump and he has said he could reappoint gelatin yellen -- janet yellen as the fed chair. anna: he says he wants rates to stay low and added the white house aide gary cohen is also a top contender for the job. joining us to discuss strategy, managing 26.9 billion swiss francs. great to see you this morning. let's start with the big picture , an interesting sector story later. on the big picture with the fed and the -- we wait for their

decision and little change expected. on the subject of who runs the fed, does it matter greatly to you to steer the course for balance sheet reduction or to think it does not matter too much? julian: there has been quite a transition. the u.s. election campaign last year, donald trump said that janet yellen should be ashamed of herself because of her monetary policy, the dovish approach to interest rates and it has turned around and he is highly encouraging. what i would say without getting into politics about who should be running the fed is the u.s. needs lower interest rates for quite a while longer. the labor market is fundamentally still quite weak. the economy is not growing as fast as it should be. u.s.mf has noted that the economic forecast is 2.2%. we need all the support we can get from the central bank. ofus: we have done a survey fund managers who suggest that

the s&p could drop by toy ofcent by the fourth quarter 2018, 1 of the biggest risks for them is central-bank policy and this is the perpetuation, this is the msci world index and the fed, the ecb, and the balance sheet expansion, this is the risk as we inch my neatly toward normalization. towardly normalization. julian: a lot of bankers wanted to clear history and say i presided over normalization, i was the one who did it. i am hoping that wiser heads , al prevail and in the u.s. cool assessment of the labor market and the challenges that have faced the market, the fentanyl crisis or dissipation, it is not the same labor market as it was pre-2008. you are not seeing inflation coming through, the phillips

curve is broken and we need a federal rate policy that reflects that. anna: do you think we will get volatility injected into markets by the fed? traders want to see some volatility, many investors may have a different view but what volatility assessment do you have at the moment given how low it is? julian: it is a function of the investor makeup. the return investor is not participating in this rally. it is an undemocratic rally. it is mostly high net worth institutions that can take a long-term view that can brush aside plutko worries and that is what we have seen from late 2015 and the vix no longer responded to spikes and uncertainty. manus: what is the bond market telling you? bid to cover ratio since 2015, the choices this, a little believe that the fed will raise rates or the bond market

expects modest growth and modest inflation, which counts? julian: modest grooves -- growth and modest inflation, there's the point about wages so ice that i would say that is appropriate. .nna: thank you staying with us here on daybreak europe. manus: we will dig deeper into the european auto story. of widening allegations collusion and we focus on the prospects for the industry. this is bloomberg. ♪

anna: welcome back. :his is "bloomberg daybreak europe." an eighth of a percent. in dubai markets look flat to negative waiting for the fed,

the calm before the storm feeling. you have -- just because you have calm does not mean that you are following by storm. manus: a couple more lines coming through from the daimler ceo. comment anyeclined further on cartel allegations that he goes on to say that he expect cooperation with other carmakers to continue in terms he plans toed pact, continue with those in business. the debate is between -- cooperation and collusion. this story is yet to unfold as to what has been going on behind the scenes. vw said it plans to convene a special supervisory board meeting to address the concerns. let's get julia howard still

with us on set. you look at these latest scandals that engulf the automakers, reaction in equity markets when this broke from the german media. do you steer clear of carmakers, do you buy the suppliers and hide there for now? it looks like a bargain but we do not know the size of the fine that will be coming their way. if they find wrongdoing but that is a risk you have to take. if you look at the eu antitrust authorities, they are mandated to find up to 10% of sales. they did not do that with google . d 2.9%.ne you have to do -- assume they are doing the same for the carmaker. there is quite a big risk for investors to take on. it looks at a bargain but there is so much uncertainty out there. manus: the risk you saw in feet

of 2015, they were forced to cut their dividend. to dividend, is that a risk factor that you would agree with? julian: yeah, i think it is absolutely valid. you see the carmakers with repeatable earnings into the future, the find could be so big that it hammers earnings and the other issue is that let's say we will standby diesel so it is not a visionary response. we will keep defending this old technology and throwing money at compliantget diesel it is complex technology. there will be a break even point where diesel is so ask that -- is so expensive electric seen -- seems sensible. metriceighing in on the where the problem lies, it is regulation and what regulation

-- regulators impose on the sector. also cities and what they do. by 2040, we could see diesel and petrol being banned in the u.k., that sounds alarmist but 2040 is a long way off and carmakers are turning elsewhere. julian: there was an announcement by 2020 everything will be hybrid or not a single combustion engine from that point onwards. the move to electric is inevitable and the sooner these carmakers can shift across, the sooner this goes way but the problem is they have got this legacy now, it is a most like a tobacco moment. they're going to have to deal with the agassi when what they need to do is concentrate on shifting to the new technology. manus: how do you look at europe at the moment, this is the risk but it is the euro, it is rising and there is a substantial

amount of european equities from overseas. the euro's acceleration, does it can -- disconcert you? julian: i was running this yesterday. ands not a lockstep correlation going back to infinity. i am not that worried about a strong euro. a lot of what -- that is value added. cars are part of that. value-added is more in itself. it should not be too damaging and the consumer, it is a good advantage. studied separate legal structure for divisions, there is the horse and cart but in terms of looking at restructuring at daimler, it is a different division, that is interesting in terms of what they are doing. anna: this is a media call following the results of the daimler ceo speaking. thank you for your time this morning, julian howard.

that is it for daybreak europe. stay with us for an exclusive interview with the deputy prime minister of poland at 9:40 a.m. u.k. time. this is bloomberg. ♪

♪ manus: you're welcome to bloomberg markets. we you the first trade of the day. i am manus cranny. alongside me is matt miller. the fed decides with a policy announcement how long can yellen lay low on plans for shrinking the balance sheet? emergency brake. allegations they colluded on a