>> a warning from seoul. they caution the north against launching a missile towards guam. applying to safety. they point to a lower opening. it is time to reduce risk. says to be working on a potential offer for charter information. google engineer speaks out saying executives smeared him.

we will bring you our exclusive interview. you are very welcome. it is daybreak europe. it goes red on your bloomberg. 519 million euros. actual -- we're hoping to deal with that. the earnings before tax 232 million euros. target for both sales and earnings, what are the earnings? lines.re the top

we have achieved the minimum levels necessary to cover the cost of capital. company sees a turnaround in its industrial solutions business. just looking for one or two rises but that is rising. deco, have a look at a one of the world's biggest employers, temporary and full-time. they're telling us the top line number, delivering first off revenue of 11.7 billion swiss francs. that's for the first half of this year.

net income for the second quarter, $192 million. looking at a net income of $192 million. -- we willled in talk to all of these companies, will be joined by the ceo of forco in a few moments time his first interview of the day. a little bit of risk for you, the risk radar. some recovery, fairly short-lived. south korea has warned north korea, you face a strong response if you do anything. the taiwan index down 1.4%. reason i flag this, there was

such a rush into the frank. that was the haven of choice. you saw the swiss franc rise by 1.7%, relative to the euro. popped in the kiwi, that is the bloomberg dollar index. we dropped the kiwi off the original request. bullard saying there's a credibility issue for the federal reserve. will speakk fed later on this evening. those are the numbers, that's the risk radar. deborah has the first word news. hasouth korea's military warned its northern neighbor that it could face a strong response of a carry through with a threat to launch a missile for the u.s. territory of long. -- of guam.

the comments came after pyongyang responded to u.s. president donald trump's warning to unleash fire and fury by outlining a plan to target guam by mid-august. a message for investors, time to dial that risk. according to an allegation report by pimco, investors should pair u.s. stocks in high-yield debt. t. rowe price ago that view on prices as it cut the stock portion of its asset allocation portfolio to the lowest level since 2000. a former google engineer whose controversial memo has triggered a debate on gender differences and diversity efforts in technology has defended his music or speaking exclusively to bloomberg, he said company executives are searing him after the -- smearing him after the memo went viral.

>> i shared a with me viral diversity programs, and with individual googlers, but no one high up ever came to me and said no, don't do this. you know there were many people who looked at it. it was only after it got viral that ever management started shaming me, and eventually firing me. the former google engineer speaking exclusively to bloomberg's emily chang. and a statement saying the job is to build great products for users that make a difference in their lives. group of our colleagues have lesss that make them biologically suited for that work is offensive it not ok. find more stories on the bloomberg at top .

manus: thank you very much for that, breaking news coming in on glencore. .his is a company that -- cold just below theda estimate of its $.8 billion in terms of earnings per share. 7.8market had penciled in cents. you have a small miss on the headline ebitda there. the debate at glencore, the deal they really want to do, looking at potential real movement and metals these big heavy that glencore is involved in. that and some have walked away.

but that's the headline, it's a miss for glencore. let's see what he has to say to the markets later in the day. cco reporting second-quarter revenue that missed analyst estimates as well. we have the ceo joining us this morning. a very good morning to you. welcome to the show. -- to this set of numbers talk me through this set of numbers for the order. it is a miss. where were these elements that surprised you on the downside of these numbers? i would say we are very pleased with the quarter, this set of strong results. 6% growth, the third quarter in a row that we are delivering this 6% growth. , with was quite strong strong growth in france, iberia,

inly, and particularly france, we had 9% growth overall with a very strong performance in permanent recruitment. 13% growth. results.a good set of also on the bottom line, we are spot on on the consensus. so we are happy with these results. manus: let's dig a little deeper into france. is there a change in hiring? 9%, but is there a step change in sentiment and action since macron came to power? for sure, since the election of emmanuel macron, we see a lot of optimism. this is reflected in our results. growth to 9% growth. positive, a lot of

optimism in the french market. there is a moment of truth coming in september with the reform of the labor market. it's important that france is succeeding in changing the labor code in france to become much agile.uid and more agility and fluidity will mean more employment and more business. manus: we speak to employers every day of the week. i know you're not going to whittle down 3000 pages of legal retirement -- requirements and france. what is achievable that macron can do to make it difference to europe? alain: for me, there are two key elements in these reforms which are very important. delay of point is that

cost will be predictable, and that is very important. cap, forl be a kind of the moment it's given at one year seniority. so that for every employer in france, it will be very predictable to know what the cost will be if they have to lay off, to reduce the headcount. the second element, which is thatimportant, means instead of having everything directed, you will have the opportunity to negotiate inside your company or inside your second or, the rule you want to apply regarding labor relations. much moreprovide flexibility to the labor market. manus: that's talk about the united states. there have been many iterations of what the president would like to do in regard to immigration.

impactun to decision-making. is that now trend, is that a trend negative? u.s.: what we see in the is that permanent recruitment activities have somehow rebounded. were pleased with the performance we had in the second quarter. recruitmentowth in for general staffing in a certain percent in professional staffing. the overall economic environment in the u.s., if it's low regarding gdp, there is activity in recruitment which is positive for the business. manus: i caught up with a security ceo yesterday, a big in thee -- employer

united states. he said there are pockets of tightness and is having to pay up for some areas. how would you describe the u.s. labor market in terms of an adjective? we see that in some areas , there are candidates, we see also a kind of low inflation, single-digit dig years of inflation. employment inl the u.s., and it mean some areas where you have a lot of companies recruiting the same kind of candidates, you start to see this inflation. itus: you describe it there, you think this is something we should be prepared for, tighter and higher wages?

increasing,e wages for the moment inflation in the 2%-4%, depending .n the area and the skills the perspectives are good. at that kind of level it should continue for the moment. >> just closing back here a little more locally, more and more announcements are being made about the potential movement of human capital to frankfurt and amsterdam. again, my question is, are you seeing a translation between prevarication in the brexit negotiation and decision-making on hiring here in the u.k. k, specifically in the financial area? alain: we have seen a lot of companies holding off from hiring because there has been a

lot of urgency regarding the outcome of brexit, but what we also see, some companies are -- you can hold off for a certain amount of time, but after that, you need to hire. int is exactly what we see the u.k., the uncertainty is still there. two yearsere will be of to negotiation, but we see hirenies starting again to . that's where we have the uncertainty. manus: thank you so much for joining us from switzerland. onuick correction for you the glencore numbers. is $6.74 billion, below the estimate of $6.8

-- it's a missre share that we had a little bit earlier. you can get everything you need on glencore, as the numbers drop, the numbers of their in the real consideration of what goes on at glencore and their aspirations will come through throughout the day. coming up, tensions arising globally, but nowhere more than the korean peninsula. pyongyang's threat to the u.s. territory. this is bloomberg. ♪

manus: it's 6:19 a.m. here in london.

hyundai is down 1.21%. the hang seng with the biggest loss in september 15. tensions are rising let's discuss all the issues and south korea and the warning to north korea. south korea's joint chiefs of staff reported the military is fully prepared for action by the north. let's get to jodi schneider. remind us what has been happening with the rhetoric levels over north korea with the past few days. we've had trump, tillerson, and now south korea. >> that's right, in that order. we started with president trump and his comments about fire and fury, which set off an exchange with north korea are they came with fairlyd

detailed comments about striking ing with -- striking guam coming weeks. within her back just today in the last few hours from south korea saying that they would respond to north korea. so there have been impetuous comments from president trump, his secretary of state did not even know about this, obviously the war of words is heating up among the powers. shocking thatite rex tillerson didn't even know that this was the way we were going to go. quite unprecedented in regards to previous heat exchanges over north korea reflecting on this as to whether was something very different to kennedy. hadn recent years we've u.s. presidents, clinton and ofrge w. bush, in the axis

evil speech, and president obama talked about strategic patients but also had harsh words for north korea. that has certainly been part of the rhetoric. it has been since the late 1950's. this does seem to be different in terms of both the level of the language and the fact that both of the powers, both kim and president trump seem to have this tempestuous nature to their comments and they don't appear to be reined in. secretary of state tillerson has made some comments trying to tamp things down as have some diplomats across the region in asia, but it does appear to be awarded words -- war of words that is not stopping and north korea is still making threats. manus: thank you very much, jodi schneider there.

verbosity can be a very dangerous game. this,rious, 48 hours into i'm looking at the markets and how they are reacting. the south korean won is not more aggressively punching out risk for the market. being grinchme like? >> it's a fair point. there are a number of scenarios going forward. in the confrontations between north korea and the west, where like that have several more days of heated confrontation in verbal terms at least. what the markets are facing difficulty with is hedging that risk.

risk andonlinear particularly difficult to price it in so there's a choice between underpriced politics and willity risk and on price escalation of economic uncertainty. manus: we all know what a black swan is, but this is potentially a grey swan, which could turn quite vicious. to that end, do you think it plays in terms of how would you hedge, how would you -- the market seems to be absolutely fervently focused on the swiss franc, relative to the move in again. market seems to be looking at currencies as its vicarious hedge. it's extremely difficult

to time the unfortunate choice and pricing with economic uncertainty which is ultimately where the market is gravitating towards at this time with the tendency to go toward emergency safety mode until there is some clarity. i think there's perhaps two ways to think about it in the near , a destabilization asia could potentially have an impact on the biggest story in the global growth story, and that is china. a sort ofealing with unsustainable cycle with all the hallmarks of a financial crisis potentially in the making. this could have a destabilizing impact on capital flows in asia. manus: do you really believe are

, aing a financial crisis potential financial crisis in china? set the flow of money? i thought that had been stymied. why do you think potentially we have a financial crisis on our hands coming in china, apart from debt? lena: there are three major hallmarks reminiscent to the almost a decade ago now. one is low risk his ability. the second is high-level systemic risk in the financial system. balance sheets funded through money markets, and the third being a huge asset and liability

mismatch. it resulted in the global economic shock. manus: thank you very much. more to come. ♪

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londonit's 6:30 a.m. in and 2:30 in the afternoon in tokyo. that's the emperor's palace. lackeding of fairly dollar-yen. -- a fairly flat dollar-yen. just waiting for some numbers to omb, the the pike on oil and gas producer. we will get those details very shortly. nejra: we've seen two days of

strength falling on geopolitical concerns. take a look at one week volatility and one month risk reversals. were still seeing some risk aversion elsewhere in the market. in asian equities, some msci-based losses, the down, the hang seng heading for its biggest decline of the year, among the biggest losers out of the asian equity benchmark. if we look at the korean won, after the new zealand dollar, comee got the korean won the second worst performer at of major currencies. but if you look at the three-month risk reversal, and this is where you see some bullishness on the dollar against the korean won, this isn't quite as high as it was back in april in terms of the

nervousness around the won. unfazedraders a little by the geopolitical risk. so a bit of a mixed picture versus what's going on under the surface. dollar-yen pretty much flat but broad-based dollar strength against most major currencies, and i'm looking at two havens. down stateas really against against on these worries over north korea, so much so that it's not just above the 200 day moving average, it's now above the 100 day moving average as well. manus: i love a moving average. as deliver their numbers follows. net income for the second quarter, 282 million euros.

the operating results and net income were negatively impacted by fx losses following the divestment, talking about a strong cash flow after dividend payment. talking about a strong cash flow in the six months of 2017 fully covering their investment and increase dividend payments. those are the top lines coming mv.m o we have to glencore numbers, this is our live blog on glencore. it would appear there focusing on the debt limit, falling at the end of 2016. that there hitting at extra payments to shareholders but there is no change in the

unit in policy. they are in the process of reforming that company. let's focus on the federal reserve. this time the federal reserve bank of st. louis fed president saying failing to get the 2% inflation target erodes their credibility. he spoke to bloomberg in an exclusive interview. i think they've been surprised by inflation coming into the downside during the amounts,d just by tiny or by large amount compared to the progress we've made through 2015 and 2016. bullardhat was james speaking with bloomberg. , and he a short snippet

add up overisses time and the market begins to 2% inflation target is enough. it's the greatest conundrum of them all. lena: the inflation normalization seems to be lagging behind the growth normalization story. overall, markets are prepared for a level that still very much in the pipeline. littleear that there's in the way of the fed launching of balance sheet normalization or producing another rate hike before the year is over. there are key elements to this model, one that financial conditions remain accommodative between the u.s. and globally.

economy iss. extremely strong, labor market figures show the recovery is extremely resilient as determined by productivity and population growth. although there's an element of surprise to the downside, and there is disagreement with what pace ofns to the normalization, there is general concern that it marks any significant downturn in prices. that means the fed is on track for normalization. manus: the market doesn't believe it. they are not there yet. let's have a look at this, there is the s&p futures indicating

that the little lower. dollar, the bonds, and equity markets altogether. the point piece made that these markets are ill-prepared, unprepared for the central bank to remove -- if balance sheet adjustment goes on in the background and 25 basis points doesn't matter, then really our markets ill-prepared? it's just 65 basis points are so up from the year ago. another rate hike is in the making in the fed preparing to launch quantitative tightening which will have an upper effect. in other words, the markets are completely underpricing what is already in play and they are behind the curve. for a so should i look

market correction or a rally in the dollar? where do i look for a market move that runs in line with your thought process? one of them is the fact that the dollar has been tracking the shakeup the yield curve. in a world where growth could be -- it could explain the dollar weakness for now but it could not last much further with that. of course the bond market is the big bubble here. as long as forward euros are low and underpricing, the discount rates are also artificially low. that means we should be careful about equity markets that are

rallying. manus: the bond market is potentially in a bubble, that may suggest on yields could go above 3% in a unwinding scenario. where do you see a bubble, or what could a bubble burst look like in the bond market? lena: there are two elements here. in the short-term, it's clear that markets are being driven by behavioral rather than rational expectations. yields is in for part secular. it's to do with demographics, aging population, a huge influx of asian savings looking for yields in the world. that means the search for yields will continue and there is

another element which is liquidity inertia created by the fed extremely cautious progression of the normalization cycle. extremelys been cautious and risk sensitive with financial volatility. but it is not stop the fed from delivering three rate hikes in the last six months. it means for going to see probably progression toward high yields. i don't expect that to happen will get aned external shock. manus: we don't know if that there essentially

underperforming. these are the stocks with the high tax right -- tax rates. it's a big like candy, isn't it? you can have it, but you've got to pay at the checkout for it. lena: it's not over yet. truer words were said about the state of markets in the united states. that markse extent were hoping for reflation through a tax cut, is being i'm priced at the moment but there is still a chance that between now and the midterm elections there will be a lyrical consensus aligned to produce some kind of compromise or a health care bill that could unlock the path toward a tax cut if not tax reform. it's clear the reflationary

momentum that was priced in at the start of the administration is probably not going to be as powerful as first assumed. manus: i have some corporate's to deal with. let's talk about the german steelmaker, prices of raw 32% thes rose and down end of june from year earlier. us on they cfo joins phone. welcome to the show. euros, talk about this debt, why has it risen so aggressively and what are you going to do about it? >> thank you very much and good morning.

, weou've artie mentioned have the highest -- as you artie mentioned, we have the highest order intake since we started our journey. the underlying figures were very strong. inumes have risen sharply material businesses. that's why our working capital has risen sharply. seasonal reduction in that it will be passed on to the customers. with the delay in the materials businesses, this will pass through and we will see a significant reduction. reallys some time to digested and that's the main reason for it. on top of that, we will get closing of the csa transaction

so therefore the sales price of the sales price of that asset will come in as well and reduce significantly are net figures by q4. manus: what does significant mean? the negative three digit numbers. there is significantly more than a billion to come. manus: i need some clarity, that you are as a company looking at ipo-ing the elevator component. can you confirm or deny that today? >> no, i can't. this is what you see on our steel business. we have clearly confirmed that were in talks around that.

you're referring to some speculation you see in the media they could be part of a plan comes this is not to come. i can clearly tell you we have always considered various options to find out the best line. this is what we did in this case as well. going, see were this is because we think the highest priority on her portfolio to find solutions for the overcapacity it still europe and find a real solution for that. you had a supervisory board meeting yesterday. did the subject of ipo, in that board meeting? >> it was just an audit usual beforeat is we do our announcements about financial data. steel.let's talk about

the market is not waiting for a very long time for you to do this deal. is there going to be a deadline? who will you don't before the end of the fiscal year? >> what is more important is that week carry on responsibly the duty of doing a good job there. as we have always lined out a very important prerequisite is that a pension deal gets done. , soaven't seen it right now that's why it's a disappointing time which we cannot influence to a certain degree because they rely on regulators and other people they have to negotiate with. we need to see with these transactions look like before we can evaluate and see what it means for such a transaction, and then we will go on. people i talked to

yesterday in preparedness for having my conversation with you said the risk is this, that you do the deal, you have a heavier burden here in the united thedom in wales, and that burden of synergies is there to be had in steel, which falls to the german side. thatis a skew of risk falls to the germans to pick up the flag. what do you say to the people that say that is an issue? >> clearly it is important to talk about synergies and this is what were doing. we have to come up with a good and sustainable solution, otherwise it doesn't make sense. at this point, there's nothing more to say. manus: one other big issue where you had huge exposure is the auto industry. i've been dealing with dieselgat e. how much of your business goes to autos and is there a

possibility that you have a production gap as the auto industry goes into transition mode? >> overall, our share of the auto industry is about 25%, but let me clearly say here, there is an important but for us. out of our component business, were not so much related to the drivetrain itself, it's camshafts, crankshafts, we have strong positions there, but this is a smaller business and were very strong. therefore our exposure to the drivetrain and combustion engines is not so strong and whether we change to more automated ways of driving, this will be in strong support for our shopping carts, for active

steering, this will all become more important if you have full automated driving. doesn'ttric drive train impact so much of our business. therefore we are really looking forward to the opportunities coming out of it. the g20 took place in your part of the world. there was a lot of discussion around tariffs and protectionism. , inprospect of u.s. tariffs , in regard tok terrorists. how much risk is this to your business, do you think? have you run some of the numbers and can you give us a vantage point in terms of the risk from tariffs? in our steel business in europe were not relying so much on export to the u.s.. if you're talking about the terror of possibly for the u.s.,

we have to see what the situation with look like. it's peers speculation and there are different -- pure speculation and different rumors on what is about to comment when. what i can clearly say is we don't have such a big volume of exports from europe to the u.s. so therefore there is not such a high exposure. we try to produce in the region where we sell our goods. therefore the largest part of , where weoperations sell in the nafta region, we produce in the nafta region as well. there are some overlaps but we try to be as close as we can with our production. me,s: thanks for being with guido, speaking to us from

germany. debra: a potential offer to buy charter communications. according to from -- people familiar with the matter, the telecommunications company and its american subsidiary are yet to decide whether to bid for charter. they want to merge the cable operator with its struggling u.s. wireless company, sprint. toshiba auditors have signed off on for your earnings. the electronics maker reported a net loss for the year through the end of march, lower than analysts estimate. the announcement offer some temporary relief as japanese companies struggle to stabilize after an accounting scandal and legal spat that threatens to delay the sale of its chip business. recent headlines about sexual

rathmann at uber has put workplace behavior on the front pages. cooper has -- uber has struggled with a series of incidents. coo, sheryl sandberg, said companies and employees must step up to the plate. >> sexual harassment has been around for a long time in every industry. it is abominable that it still exists in this day and age. people know better. i think it will get people to not do it in the future, and it is a leadership challenge. there must be no tolerance for it. >> that is your bloomberg business flash. manus: let's bring you pause for thought. germany and's about

the election. it is coming, everybody. although it is seven weeks away and that is a long time. what do you do when you're the leader of a major company in the world? you take a holiday. this is where you go to relax. theresa may was strong and stable all the way through the campaign. angela merkel is off on a three-week holiday. deeper and little lena back into the conversation. that is confidence, it isn't it? four weeks away from the major election of my life, and i'm a way hiking. is it going to be an election like none other the west has seen in the last few years? , day-to-daycal risk

acute risk with respect to the market, is very much a quiet one. europe is very much vulnerable to the escalating tensions between the u.s. and asia. political barriers are the driving force of deglobalization. in a world where nations are trading with each other, they depend on each other economically for supply chain and balance sheet financing. in the world where financial and bank liabilities are far in figures, it is clear that capital free flow and capital markets and the function debtserve in intermediate

and equity finance are essential. the emergence of nationalism or america first or germany first stents could have a negative multiplier effect on the future dynamic. manus: seems there has been a reprieve heading -- handed to europe in the form of macron, although his popularity is failing. it seems this moment of resurgent europe, angela merkel could be back in power, and macron is a reformer in waiting. there's a three-year window for europe to get right. lena: it's very important that europe gets it right. it is an environment where the economy is stronger, capacity

inflation this week and youth unemployment is still extremely high. it's clear that europe still harbors and unsustainable socioeconomic imbalance. we will go to jackson hole in just a couple of weeks and the world will hang on every word that mario draghi says. , hasn't to do something he? lena: mario draghi had a very interesting journey, test driving forward guidance by the market earlier this year. we saw the conservative warning from central banks that markets are too complacent. .hat did have an impact the last meeting he did signal he's confident about financial conditions. lena: thank you very much,

. glencore will be on display along with zürich insurance. this is the focus. ♪

manus: a warning from soul -- se oul. fight to safety. asian stocks fall, u.s. futures point to lower opening amid heightened cubicle pensions. t. rowe price have invested time to reduce risk. [inaudible] offerking on a potential to buy charter communications. diversity memo. the five google engineers -- fired google engineers speaks

out. we will bring you our exclusive interview. ♪ manus: you're welcome, it is dave break europe come our flagship morning show. it is a :00 a.m. in paris. open to new fulfillment centers, margin 9% for the first half, going into the second half, that comes in at seven at 4%. 1.8 million is the earnings even bit, below the market estimate of 41.4. the revenue 2.0 -- 2.0 8 billion. just below the estimates of 1.1. yesterday it was a slap down for

equities, the dax was off, paris was off 1.8%. wakess the way the world this morning. we have the glencore numbers so that will skew what is going on with the u.k. numbers. at the moment, we have the ftse futures bucking the trend ever so slightly. you're looking at slightly lower opening right away across europe . in terms of the dax, in terms of 1%.cap, down by 1/8 of the dax is down by 0.7%. london is hanging onto a small gain. it is the risk radar which delivers you a much daughter vision of what is going on in the world. you have the msci index i .51%. we have this moment of reprieve, the markets have reflected back. south korea is warned north korea, facing a strong response. the biggest law since december. december of last year.

swiss.oing into the euro you have a big move in euro swiss yesterday, the frank -- franc was the haven of choice even over the dollar-yen, the eu lost 1.7% of the value in terms of the euro, going up in terms of the swiss franc. the dollar index is up by 1/8 of 1%. we wait for the cpi data to come . equities are down, future prices, bond prices are slipping on the open. question ahead of jackson hole, concern about the value of the euro, a number of different facets going on. we are seeing the fund -- bund on the downside. let's get across to shery ahn. ahn: south korea and japan

warned north korea today. the defense minister said it would be legal for japan to intercept the missile aimed at guam. south korea illustrate chief of staff said his country's military is prepared for any action by north korea. kenya is sliding toward a political crisis over opposition allegations as hackers interfered with original vote tallies from tuesday's general election. protesters took to the streets of the capital after the results,commission saying the tallies were not official. the new zealand dollar is losing ground, after the country's central bank held it's official cash rates at a record low of

1.75%. the governor said he does not expect to raise rates for two years a midweek inflation and his death he is saying that her nation's currency is to adjust down. two of the bigger money managers have a message, time to dial back risk. according to an allocation report by pimco, investors should pare debt while shifting to lower risk assets such as treasuries and mortgage-backed hearings and t. rowe price the view on prices as it cut the stock portion of its asset allocation portfolio to the lowest level since 2000. former google engineer whose address you memo has triggered a debate on gender differences and diversity efforts in technology has defended his views. speaking to number, he said company executives are smearing him after the memo went viral.

>> i-30 with many of our diversity programs -- i shared it with many of our diversity programs and individual googlers. no one ever said do not do this. you and there were many people that looked at it. it was only after it got viral that letter management started shaming me. and eventually firing me. shery ahn: speaking exclusively to bloomberg's emily chang. they issued a statement. to suggest a group of our colleagues have traits that left -- make them i logically less suited to that work is not ok. 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 . let's get your check of the markets in play, and if we're seeing the downward pressure as we see the sentiment spread across asia. we did have some of that risk of sentiment in the asian session. the msci regional benchmark at the lowest level in a few months. when we take a look at the nikkei, not a lot happening with the japanese index because we're seeing the japanese yen fluctuating between gains and losses still a 110 but after two days of strength and they are holding steady. one that is falling is the hang seng index. this is the stretch mark. we saw them rally at 20%. it is a reason or an opportunity to unwind those. wonkospi losing, the korean

also the biggest loser in asian markets. take a look at the stocks we are following in the morning session. we did get earnings results and analyst ratings and that has affected how the markets have traded in japan. the rising 14%, profits outlook was raised at 22%. they did pretty well in today's -- falling ineing hong kong with an 6%. they are rearranging some of -- some of their business as we hear from nomura and morgan stanley that their rating has been cut. some really -- we organization of assets happening. what is interesting in this flight to safety, monument -- momentum we are seeing in asia, it is acting like a safe haven, gaining ground all week and at

the strongest level since september 30 of last year. almost a year there. manus: thank you very much. tensions rise over north korea and south korea's military has warned pyongyang it would face of strong response of it launched a missile toward the u.s. territory of guam. is appeared for any action by the north, they said. peter.oined by this is the south korea morning shot. rex tillerson was not consulted before president trump made these statements. what do you make of the north korean statement overnight? here: north korea was reacting to trumps fire and fury comment and called it nonsense. and then reiterated their plans themunch missiles, four of

and they got into incredible detail as to where they were going to launch this thing, what flight path they would take, and landing about 30 or 40 kilometers from guam. challenging thing for south korea because they thed literally fly across south korean see. it would fly across southern parts of japan and of course, japan responded by saying that when it does, they will have the legal means to shoot it down. to rhetoric continues ratchet up a most of the hour. -- almost by the hour. manus: where are we in the scale of crises? rex tillerson told the religiously easy. he is trying to walk it back and the proposition from various commentators is the for varsity

and bellicose rhetoric from pyongyang'sing verbosity. is that under playing risks here? peter: it could be but i think south korea, it has been ready quiet. the sentiment here is that it is as is usual. over thet of anxiety comments that trump made mainly because they never heard that from trump, they have been hearing this for decades from north korea. the rhetoric coming from the u.s. is creating this anxiety. i would say that the needle has moved a little bit to the -- more of the anxiety side. it is not as we would call it a crisis mode my at least not here in south korea. manus: thank you. putting some context in terms of

the war of words. we have toshiba giving a news conference, we will bring you some lines from that. qualifieda [inaudible] this is the news conference, $8.8 billion loss on the nuclear write-down business and forecasting traffic, they have an adverse opinion in terms of controls. they could fix a delisting. chipre trying to sell the is this. more on that as we go through. our guest helps manage 3.5 billion assets. watched,listened and the north korean and south koreans, trump, and tillerson. are you in observe mode as ubs are? asked we have been producing a

off theit of risk, table that the court positions remain intact. the underlying drivers for what is keeping the market where it is a very strong. we have a voyage profit earnings and a cycle involving a whole sector, the financial all strengthening their balance sheets. we have a lot of the utilities doing the right kind of thing, very good cash flow generation coming through all of the place. manus: focusing on the geopolitical aspect for the and the u.s. was much less aggressive in its reaction. do you agree that, are you surprised to month this is the

risk reversal for the south korean won. you surprised that markets have not reacted more aggressively? guest: the markets are very overboard, they have been very strong since the beginning of the year. this is a good chance to work off the physicians and seasonally speaking, all this is new the holidays. we tend to get corrections anyway. that thisrprising happened more aggressively. the trading is very thin and we have to give it a couple more weeks. now it is not the time to put on more extra risk. it is the time to take of risk area the fundamentals continue to remain strong. the court leverage is coming the underlying fundamentals tend to be improving here and now. that does not give you a reason

to sell off the market aggressively. manus: one of our headlines is pimco entry were price are warning it is time to reduce risk. you are doing it at the margins. t. rowe price at the stock allocation to the lowest since 2000 and pimco said elevated isis have little room for error. are quite big position adjustments. t. rowe price cut its stock allocation to the lowest its 2000. the chorus of voices is rising. that also seeing take risk off the table. are they overstating the potential for the downside? the downside will materialize if we have a policy error. if the fed continues on its path of training interest rates and against the contraction of the balance sheet than you're going to see a double tightening happening. the economy grew three will

subside of it further. and then the corporate earnings are going to be much calmer and the market is building bullish expectations of the earnings growth. if this fails to materialize the market will overlook more ground than it is giving up now. manus: would you say the -- that is a combination of holocene, does equal policy error? guest: this complacency in the sense that everybody assumes that they u.s. economy is on a strong trajectory. it is not that strong. one of the reasons we had really good growth in the first half of the year is that savings [inaudible] have been coming down. the underlying momentum is fragile. if you go through a double tightening you could go through a expansion. you could bring the and that

much nearer and the risk will continue to rise in the marketplace. manus: our guest is staying with the daybreak team. coming up, we had the earnings, -- the engine for future growth. we discussed. this is bloomberg. ♪

manus: this is how the markets are looking. every good day to you. this is how the markets looked, let's have a look at the euro stoxx 50 and the tenure government bonds. is down by 30 hits. glencore andout their numbers. unlock theing to

future. reporting slightly lower than expected earnings. was seven point $4 billion. let me bring it to you first of all. on the mliv blog earlier, one of the lines coming through, there has been progress on cutting the debt. and we're down, there has been progress on cutting the debt to $13.9 billion. there has been no change in the dividend. policy. he dangled this is a rhetoric character. what do you make of that? guest: we are thinking are they saving up cash for takeover?

a dealmaker. he is the lesson you learned during the downturn was having a massive get was not going that well with investors so they have been aggressive about down the debt. he dangled this possibility, it has not materialized. desolate as on the couple of lines, he sees robust momentum in the economy. had quite a lot of share buybacks from a variety of ceos. wherever robust level of economy . he favors cash distribution over share buybacks.

trading business is going to be the other area. were bornere they from. they were born from the market. next couple years where they is people because they made that assumption. that they would he on the side of the trade and they were not for a couple of years. when you compare it with the competitor, the big trading houses, this is a good result. manus: iron ore is jekyll and the holy grail. when you set of numbers coming theugh, are you bullish on metals or that minors? massive price recovery of the last two years. in china.taking place

importing materials have picked up. the current share prices indicate the strong recovery that have. it is the continuation and that is what one begins to get doubts about. manus: you have quite constraints, coal is done well, zinc is doing well. it has been a shift on the supply side of that story. but --e has been a shift the isis are resilient for the next year. the new production is going to come and hit the market. you are seeing the best the sector can produce and maintain, their advantage to strengthen the alan sheet. dividends for a few but not everybody. .

you write right now to engage in an manus: the other huge deal which is not in your -- charter and altus. is about here reducing debt. there is potential for $2.5 billion dividend going into 2018. this is the ceo on the conference call with investors as we speak. battery gate and tesla. story ishrough the safe and the will. result in the

market. what he is reflect in the rhetoric we have seen in the commodities industry so we had the big oil producers come out and talk about the demand and decades of the oil. now it is demand. they have white. it is going to be a big deal in this market. manus: thank you for being with thank you for being with us. a senior independent nonexecutive director at when core. that is it from me. you have the tougher opening on the equity markets, you will see individual names through the different story, could it be down, london is down 0.1%. you're seeing futures integrated that much lower.

mario greco will be with us in the next show so stay tuned. a.m..s after 7:30 the european market is up next. ♪

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markets, this is the european open. cash in europe about to open, 30 minutes until that opening trade. we will bring it to you. i guy johnson in london. matt miller is in berlin. when we watching this thursday morning? the french billionaire patrick draghi is lighting up for a dead for the company charter. will they play ball? and we will talk about what it means for the credit