anchor: korean crisis. criticizing donald trump's escalating threats to kim jong-un as america's top general prepared to meet with south korea. the white house says trump abhors new notches he personally failed to dance them. a growth spurt to the economy for the sixth quarter extending along the street in more than one decade. chinese data disappoints. election campaigning gets underway.

welcome everybody, our flagship morning show from the city of london. matt miller is with me. good morning matt. it looks like the bond market may be less uncomfortable about the prospect of new year war which i think is a great way to kick off the week. >> indeed. thats confirmation we got nuclear war is not imminent as it comforts parts of the market. that in the risk radar and the breaking news out of germany in a moment. i wanted to look at what is happening with the dollar. back to where we were last week area we were seeing the reaction in fx markets and stock markets to what we were seeing on the korean peninsula.

where did that meet speculators and how negative they are on the dollar? speculation down the most in 4.5 years. it continued with all that geopolitical tension last week because we saw the yen. >> data out of rwe, become a producer coming out with an adjusted net income. the taxi below the estimate at 809 million versus 834. a lot of german investors tended to look more at the operating profit numbers and those were in line with estimates. 3.2 one billion versus an estimate for exactly the same and the most important part confirming its forecast in the upper end of the projected

range. it is all about the outlook and if that is the case investors have no reason to be concerned about rwe numbers. take a look, this is a couple -- confirmation that bond traders are not as concerned about nuclear war. we had the yield going down below 2.2. now it has bounced back up. 410 years. 2.21 it will bounce back as concerns lesson. investors get out of the safe haven aspect. of safe haven assets, one has picked up shining precious metal as of late. bitcoin soaring $4000 per coin trading at 40.44.

a market cap of $60 billion now. more than the food -- ford motor company's or barclays. it is important to keep an eye on. >> fascinating with the asian session and see that it does not reflect the data from china or japan but much more about japan playing catch-up when we are all preoccupied with what is going on in north korea. good morning sophie. trump has faced criticism after failing to personally denounce white nationalists and neo-nazis in a virginia that ended with a deadly car attack area following an uproar from lawmakers in both parties and civil rights groups, the white house released a statement saying the president condemns all forms of violence, bigotry, and hatred and that

includes what supremacists, kkk, and all extremist groups. mike pence made a similar remarks at a press conference in columbia. these -- mike pence: extremist groups need to be pushed out of the public debate entirely. discredited for the hate groups and dangerous fringe groups that they are. >> a presidential adviser has criticized donald trump's escalating north korea threat. jae-inal advisor to moon told news that he has vowed to unleash fire and fury with worry some. comes, came less than 24 hours after a telephone conversation in which she urged to tone things down. resistancehas met over donald trump's threats to use military action in venezuela.

he said he has repeatedly told hence that america must not even consider all of the reaction in response to venezuela's crisis. hence refused to rule out military action to resolve the ongoing humanitarian crisis in venezuela. the u.s. would much prefer what he calls a peaceable solution. japan's economy grew for a sixth quarter, extending belongs to expansion in more than one decade as gdp increased by 4% and three months to the end of june. china's economy showed further signs of entering a second-half slowdown and retail sales and asset investments missed estimates. global news powered by more than 2700 journalists in more than 120 countries. more countries -- more stories

at top . no nuclear war is imminent according to top u.s. national security officials. it helps to calm jitters with asian stocks. the cost be adding .5%. hensing leading with a rise of over 1%. chinese stocks are joining the party. the gdp numbers were not enough to spark sentiment among japanese investors who are playing catch-up. falling to the lowest since three months in. showing you some stock earnings as a key driver today. soaring to a record gaining over 13% as older gains demonstrate power for the online games member -- maker. one hotel urging in several gained 60% toek

cap 86 weekly gain. toshiba reversing gains and talks over the timing of payments over business and government issues. report, you can visualize the six straight quarters of growth they're. -- there. offsetting exports for japan there. update onhere with an things you need to know for the asian session in hong kong. top u.s. national security officials have been trying to calm fears that a nuclear war is not imminent between the north korea. mcmastereo and h.r.

both walks a fine line of talking tough against pyongyang while not lazy -- not raising the alarm at home. agreed on nations has a new round of sanctions. impacting everything from the countries report and coincide with a drought ruining crops. rising tensions on the korean peninsula between the united eight and north korea, everybody else who might be involved. covering the sanctions from hong kong, we will his thoughts in just a moment. the chairman of the u.s. joint chief of staff is meeting with today.orean leader moon what do expect from those talks? the chairman of the joint chief of staff will reiterate the message that was delivered by other trump administration officials over the weekend.

rhetoric, thehe focus is still going to remain on diplomatic solutions as well as economic sanctions that the war is not imminent. an effort to calm nerves here that we are wrestled by trump's remarks last week of fire and fury. also he is here to be talking about the massive joint south korean mission that will take place next week. we are also expecting he will have a discussion related to thaad which has been extremely controversial. china to condemn it and protested. -- protest it. matt: you are bloomberg's bureau chief and soul. you have your finger on the polls of that country's

relations with the u.s.. how are they right now? on south korea and the u.s. the same page as far as donald trump's response to north korea? and they probably still are. however his off-the-cuff remarks , planned or not, clearly unnerved the officials here. according to the advisor you just spoke about, men had a conversation 24 hours before trump's remarks about fire in theory -- fire and fury. he asked him to ratchet down the rhetoric and keep things calm her than before. trump did the opposite. here as toed folks whether or not that would continue to create a rift area i think the joint steep -- joint chief of staff visiting at this time is double the good timing

on the part of the trump administration. to say we are on the same page here. let's hold hands together on this issue. >> keeping that in mind, thank you. you have been looking at the sanctions that are being imposed by the united nations. a broad range of sanctions. crucially not oil. how is this going to impact on the perilous life of many people in north korea? >> i think there is definitely a sense that the sanctions will have a significant impact on the north korean economy. coinciding with the worst drought in some time. it will hurt fishermen's and laborers underground. manufacturing makes up for 30% about that -- output.

it is certainly viewed as hurting the economy to it may tip the economy into a recession. you're absolutely right. the readings in all of this is oil. there are other components left out such as apparel and others but might leading oil out of the mixture the regime can continue with ambitions to take one of those missiles with a nuclear arsenal. even if they are recommended are not a james -- game changer. >> it is something that north korea can skirt around? they don't necessarily have to be pushed around by. >> most certainly. korea china north plays a key role in all of this because they are the greatest trading partner. china's record of implement and --ctions -- sanctions implementing sanctions. north korea has missed --

channels and forgetting industrial goods. there is a sense that they may be able to walk around the is to one example was a case of fish sold outorth korea but of china. there is another string of companies and networks that we have that are well-established to get goods across the border. when you consider china's mixed record, a couple of north korea's own channels into feeling that. they may not have the impact that would make you think. >> thank you both very much. joining us from hong kong, from the south korean capital. simon french, the chief economist. a very good morning to you. the u.s. administration trying

to rein back the rhetoric, saying that war with north korea is not imminent. drawn the comments i was over the weekend was on abc this week. he said we are not going to war less than a week ago but we are not closer than a decade ago. how do you put into perspective the way the markets have not reacted? >> i look at the weekend and warming of the imminent from one side we have not heard a lot on the other side. it requires two parties to function. the goal has shifted firmly into north korea's camp where they have the to determine whether they are going to respond around the threat. doing another test, effectively

calling people to see whether there is a concerted strategy .rom the rest -- the west oil being potentially help back to what the administration desperately fears is they will use all the rhetoric they can, use all of the sanctions they can, and when kim goes for a further test a don't know where to go. >> hard to know where to go from there. >> i'm just wondering. we saw them come down to below .4. we did not see gold rise that much even as we heard people say you should put 5-10% of your portfolio in it is gold losing its luster? >> we have been bullish for gold for the last nine months.

we don't see any reason that gold cannot push on and test upwards of 1400 by the end of the year. the strike risk, there are multiple around the world of which the korean peninsula is just one. i continue to favor that to the portfolio. ofhink gold as a result geopolitical headlines will continue to be a safe haven along with those others as well. you are paying a decent premium but i think given the lack of a suitable alternative, the rhetoric comes to pass and it needs to be in every investors portfolio. >> overnight we see less tension in the immediate asian equity session that we did thursday or friday. derivative around the south korean currency,

increasingly saved by geopolitical risk. sometimes we talk about rhetoric and it has not that much effect on assets. away perhaps from other countries that are more imminently or directly impacted by this story. >> a great point that the south korean economy is more approximate to the military risk them warm. south korea, you're talking tens of miles on the north korean border. much more approximate risk if you were to push -- if the combinations of rhetoric were to push kim jong eel into a situation whereby he felt he had to lash out. sensible addition that investors are taking given that we have complacency around the north korean.

matt: so much to talk about. we will keep you with us. the chief economist, here is what you should be watching this week. 72ndrow marks the anniversary of the liberation of korea from japan at the end of world war ii. keep that in mind. the next day we get the minutes of the u.s. federal reserve's meeting. he shows investors are on the fence as to which way they see the fed going this year. on thursday it is the european central banks turn as it publishes the town of its july policy meeting. less of a concern about which way they go there. on the same day on thursday, japan's defense ministers meet the u.s. counterparts to discuss missile defenses against north korea. maybe that talk will not be so important at the end of the week.

definitely keep an eye on what is going on there. anna: let's talk about what is going on in japan. we said we had new data from various asian economies over the last 24 hours or so. japan's economy has grown for the six order, expanding for more than 10 years. 4.0% in the second quarter, beating all forecast by economists. domestic demand compensated for softer exports. let's see james, great to speak to you. job growth in private domestically in japan. now the story, the weakness in the currency boosting exports. >> we saw a big pickup in private consumption. there is also a nice boost from government stimulus into the domestic economy. all those things combined made

up for a week pitch. weakness of imports as well. the economy is doing quite well. sort of leaving aside the trading position. generally it looks like gross -- growth. throughnot bringing higher wage gains for japanese workers. the introduction 11 years. are people in japan taking this as a sign that it is working? this is a culinary release for gdp and corrections show the first release gets revised by an average of 1.3 percentage points. in six weeks times -- in six weeks time this is not going to

be 4%. the second thing you think about is good growth. you're not seeing good inflation. four more years of these policies on the boj with their methods -- massive stimulus. led to gdpy has growth but has not proceeded inflation. i don't know if it had a good inflection -- has had the effect they wanted on inflation? anna: thank you very much. in tokyo with the latest. sign french, the chief economist. i wanted to talk about japan and china as well. a different picture there. summarizing what james is saying, we are getting good guidance, convincing evidence on monday that japan has left the lost decade behind. that is the reading of one of our colleagues in tokyo. ifte a stunning achievement

that is indeed the case. this long run of growth certainly says that is within its sites. >> if you look at it from the perspective of great performance , a 4% print is very very decent. water on pour cold gdp deflates came in 0.4%. that will be disappointing for the bank of japan looking for an inflationary push. stimulus comeive through, yet we don't need to go back more than a few weeks then hoping to hit-- in fiscal year 2019. very little in this information that expresses the challenges that face the economy, that of

low growth because of poor demographic pictures, and the and two decades of growth subpar prices. it is actually going to leave the system. 2% inflation. matt: what do you think about the size of the balance sheet? is it economics? it is certainly been a big part of this and it has been massive compared to what even the ecb and the u.s. that have done. it's got -- is that going to weaken the country in the long run? -- trillionon yen yen is nothing to sniff at.

also, i think she said this very well in her intro. the fact that there are international factors that are driving bond yields to remain into the 10 year, there is no pressure on the bank of japan to withdraw stimulus. i don't think a financial risk of the kind of leverage their putting into the economy they can afford because of a deflated global economy continued test to continue to drive a kicker in bond yields. >> in japan it seems to be picking up there. the exports are sluggish. globallyo china, a interconnected confidence. data shows three indicators, 4956 joining retail sales and investment all coming in below where analysts had expected. one month worth of data, but this is the second largest

economy taking on deleveraging in the amount of industrial capacity out there. >> i think what was easy for china was that age 2016 was a few weeks. are to look good and i think the world economy took its cue in terms of the reflationary trade from this continual set of beats. it becomes harder for china because 2016 was the start of the recovery. stimulus, one road, one belt initiative to collectively they stimulate the growth of the economy this year. you're going to stick with us, the chief economist on a day when there is a lot to get through.

german, six weeks of election campaigning got underway over the weekend. how much damage will the latest row over the diesel cheating scandal cost? this is bloomberg. ♪

matt: good morning. 7:30 a.m. here in berlin. it is 2:30 p.m. in tokyo. a before shot of the palace. particularly nice weather they have in the afternoon. let check in on markets. thus go to guy johnson. guy: let's talk about where we stand. more risk on. it does seem we are die on down there north korea tension. -- we are dialing down north korea attention. north korea has a holiday. you may hear from the leadership. look at what is happening with u.s. fair value. looks like the ftse is going to open up .2%.

the number that came on friday for the united states -- this morning, an interesting story come out of asia. the market is being told to dial it back down. we did see rebar getting a little bit ahead of themselves according to some officials out in asia. the yen is trading lower. that is a risk thing today -- a gdp thing. tells you about what is happening after the meeting friday. take a look at your work screen. i have it set up with oas. you can take a look at the funds line, the drop down on your work screen. we are down to 30% when it comes to pricing in december. that is the real story. if we work our way toward jackson hole, as we work our way to where janet yellen sits right now, is that number going to rise?

treasuries are at 2.2%. it is going to be the trade that people are going to be figuring out. anna and matt, back to you. anna: more stability in the treasury market around the geopolitics than stocks. we will talk about sex whole. let's bring in -- talk about jackson hole. let's bring in another guest. brussels calling for more rigorous screening of european companies. prepared --ker is jean-claude joker is prepared to make an announcement. matt: brussels is seeking to address mounting concerns about . surge of chinese investment they are in a sense that we need to reinforce our arsenal and renegotiate with equal strength.

the commission is also considering and more controversial proposal to introduce eu level investment screening as well. simon, let's when you went and get your thoughts. it seems that we get a little bit of protection and rhetoric out of the anti-protectionist eu , always scolding the u.s. on this issue. simon: it is interesting to see the boot on the other foot. we can trace this back to the first press conference between and the merkel -- between angela merkel and macron when he talked in may about putting some of the meat on the bones of that rhetoric. some of it will be taking a more challenging stance around the way that it has been perceived that globalized capital has been able to buy up strategic assets fairly unfettered compared to other international markets, whether the response will lead

to the political earthquake that is some more 2016 of this protectionist rhetoric on the antitrust side. for the form capital to take stakes in key european companies at anna: the best chances to see this, politics is all that matters. -- we shouldll the not be hard to find some common ground with the chinese because in the germanw manufacturing space, let's talk about how the chinese do not want a lot of money leaving -- leaving china either. the germans didn't want all this and -- want all this investment into the chinese business. there should be room for common ground. the geopolitical power play,, ground is rare.

the chinese administration has been concerned of capital flight out of china with crucially german companies being very attractive prospects for foreign takers and if you start to get the push and pull factors in a coordinated fashion to limit that, maybe it will good for those of us who think globalized flows are good for efficient workings of the market. maybe you can understand why the two political agents at play might want to come together to limit that flow for strategic regions -- strategic reasons. matt: i want to bring in another eu politician. some would say the most important one, angela merkel kicked off her reelection campaign by launching an attack on germany's car chief. her challenger, martin schulz, also took aim at the car industry managers in the first weekend of campaigning.

they are only allowed to campaign for six weeks before the election. at a political rally on saturday, the chancellor said, decision-makers had swept violations under the carpet. decision-makers seizing control of -- that comment as they entered the last phase of election ahead of the september 24 of election -- september 24. test. he wrote the book of angela merkel -- you and alan crawford did publish a book on angela merkel a couple of years back. sales will be picking up rapidly right now. let's talk about her handling of this conflict. she went away on vacation over this whole diesel scandal for those who are not in germany, it has become a massive scandal. everyday we are hearing more about it. is she able to come back easily from that? she has been attacked by old

politicians. opening moments india campaign. .ermany -- in the campaign germany doesn't have a year of campaigning, only six weeks. this topic has been out there all summer. merkel very ostentatiously did not come back from what was billed as a big easel summit which did not solve a lot of the problem. but, of course, she opened thislf to the charge that is the presidential chancellorship. she isn't there when the house is on fire. is that really true? we will see in the polls when they come in. anna: tony, good morning. how is the north korean story?

chancellor merkel has criticized trump for some of the rhetoric in this row with north korea. how dangerous is this for her? tony: that is a very good question. of course, merkel is the chancellor. she has been the chancellor for three terms, 12 years. she has to deal with politicians with her counterparts, her peers. chomp, whether taking into account that most germans in polls will say they mistrust trump, whether or not merkel has to deal with him and also has to be seen with him at international summits as we have seen. anyway, it is easier for the opposition which is urging your partner. to take that as an avenue of

attack. matt: tony, thank you for your time this morning. tony cisco is -- tony should scuff -- don't miss our 30 minute germany decides special today at 8:30 a.m. u.k. time. we will bring you the latest analysis in the run-up to elections. it is a very important one, even if you think you know who is going to win. there are a lot of other important questions to decide, --ically four third-party that is a six party race. now, simon french, chief economist at p.m. -- at cameron gordon is still with us. let me put that question to you. how closely are you watching this election? everyone things that -- everyone thinks it is pretty much a done

deal. what does coalition look like? does martin schulz have a chance of coming back? things tend to change very quickly when there are so many parties involved. simon: matt, we are looking at it much less than we were six months ago. you take those opinion polls and just six months ago, martin schulz and angela merkel were net connect. nd-neck.neck-a martin schulz has made a decent start. what is most interesting about angela merkel, strong comments over the weekend. the sign of her renewed confidence. she is a politician that speaks when she feels she has to. she has the confidence to put rhetoric alongside what she does behind the scenes. when we had in toward the

election, the 24th of september, you will see a bit of a flight to safety, because everyone has dismissed martin schulz's chance. polls will close in but expect merkel to win when it comes to being able to forge a coalition. that rhetoric around the renewal of europe being at the forefront . anna: one of our producers was saying to me, we had a done deal and u.k. elections, didn't we? it didn't go quite as well as we thought. in terms of where the eurozone growth story goes, this chart here around the financial conditions in the eurozone. the strength in the euro is something that mario draghi has not necessarily talked about in the same way that other central bankers might have. focus on the ecb have been writing about this -- folks on the ecb have been writing about this. ecb watches the euro impact on

the economy. euro?crease in the simon: mario draghi comes out of this looking quite good. he was under pressure and of months ago signaling yen. commencements slightly tightened policy conditions at the ecb, particularly from the dramatic wing of the ecb. yes, he is being proved correct thus far. the data has supported him. the inflation has been softer. euro has been strengthened. 2%.n moving back toward been right to hold his counsel. i think he looks at the emerging

dynamics regarding strength of the euro and go, i was right to continue with a very stimulative conditions and not put the markets on notice for a tapering of qe. matt: kind of a two-part question. have you think macron is doing? macron from the berlin vantage point is doing quite well, boosting the strength of europe, really boosting the sense of union that france has with germany. does that add to the euro strength? let's take the first part of the question. a lot of soft indicators out of france have indicated that the public remains -- particularly the business community -- remains with the macron agenda. how much of that has translated into hard data and the same

challenges that were faced by other politicians that have come with a radical program to the french economy have run into the challenges of union, structural rigidity in the labor market. how does that play for the euro? a much bigger story which is the other side of the trade which is the weakness of the dollar and pound and a number of other currencies, that combined with it was the most bearish trade on the back end of last year. the euro was so crowded. think it has further to run. he can push on beyond 120 but that presents problems in terms of six months down the line, the state -- the sustainability. anna: where does that leave the ecb? this was the end of june around where qe goes?

the amounts we are pouring over the details, the start of the beginning of the end of qe. what is your timeline? ,imon: you look at the ecb governing council statement. signals around what they have to do in 2018 regarding the tapering. we are going to move toward 40 billion euro, qe programs that will be hearing back on the 60 at present. if the strong to output indicators continue for next year, you see that tapering further in h2 of next year but it is a very slow taper. anna: simon, thank you very much. he stays with us on the program. as the u.k. government prepares to publish its brexit negotiating position, is the country ready to invoke talks

for the next stage? ♪

matt: welcome back to "bloomberg daybreak: european open." it is 7:48 a.m. and the sun is up in berlin. not quite yet in new york city 1:48 as is to: 48 -- you see there. i sometimes forget whether i am in london or berlin. anna: well done, matt. sometimes with my kids, the first thing we do in the morning is telling time. matt: i don't know what time it is right now although i can tell with the function in libya. libya's biggest oilfield is said to have produced crude production a 30%. supplies are being disrupted by security threats. for more, want to go to yousef

gamal el-din who joins us with a chart of the hour. yousef: good to see you. it is all about libya. this is quintessential to the to --- non-opec attempt people were saying, why don't you guys cut even more? libby is coming back with strength. they said, it just libya is coming back with strength. they said they doubt the rebalance story is sustainable. today you got your answer. the first of setbacks for libya. context.ow you the this is critical, pull it out on your bloomberg. what we have done is put libyan oil production which before this latest setback was over one million barrels per day.

you can do this calculation off the back of your hand. you can see the total of opec production lines there. where do we go from here? the libyan story is one to watch out for. take a look at this data. that is showing us that hedge fund managers are getting a little bit bored with the crude oil trade. reduced the net long positions ending augusteek 8. i point outs from cit is we are stuck at this middle range. justified by fundamentals where sentiment is not there. anna: thank you, very much. crucially, just below 40 degrees . hopefully yusuf will find some shade. let's talk about the u.k. political scene.

it will outline its brexit negotiation conditions in three crucial areas this week. that is after two key ministers ended the dispute. the government plans to issue three discussion papers ahead of the next round of talks in brussels later. your source, simon, it has been a busy weekend in terms of brexit negotiations. we have these three acquisition papers coming. we see a breakout of harmony amongst cabinet members around transition. simon: one word, unity. political unity the mystically is a concern -- unity, domestically, is a concern. philip hammond, the chancellor and liam fox who had very different positions from what the cliff edge actually looks like.

thatunday papers suggested the deal such as it is in 2019 will involve the u.k. leaving the customers union. departmentm fox is to go out to do fair trade deals. they were limited from doing -- anna: business might have the idea of transitional arrangements, the public business is going to produce two different transition dates. another type of transition at the end of the transition period that adds to the uncertainty and europe is a. >> most of the business leaders say, look, if we have two transitions with the brexit deal, we are going to transition to a new state.

what we don't want to do is to have a halfway house that involves to transitions, -- involves two transitions. think, there is a requirement come, to have a line of sight between current customs and paris are -- and tariffs arrangements and the new world. these new papers need to lay out within deal looks like. matt: we saw a huge dip in consumer confidence after the vote. then recovered after the brexit vote. it really hasn't fallen much more than that since then. are they right? are they just alluded above the real effects of brexit? ae same could be asked about

pound at 1:30 -- at 130. simon: they are facing the same challenges that you do on a daily basis. no one is looking at this and clarity.have great stated andot been even if they were stated, it is likely that the great writ is consumer with process these position papers -- the great british consumer would process these position papers. the valley of my house, my rental, all of the key fundamentals would underpin consumer confidence would remain uncertainty -- remain uncertain. leaders we talked to say brexit is something over here which we are going to have to deal with, but until we have clarity on what material impact that has on key fundamentals, we are going to part it and look at the

fundamentals which are labor markets, fairly decent growth performers and favorable even by international standards which is driving consumption, the key tenets of economic growth. " britt -- anna: britons are being reminded. this is the pound against the u.s. dollar. the cause of some of the data we are going to get in the politics, we could get volatility reinjected. do you think so? we are looking for an indication either way to break to the upside a downside. the key measures which are going to push the pound in a different direction this week will be the inflation print in the u.k. which has been running ahead of the target. we need to start to see more

clarity without going down below 2%. anna: will that keep the hawks on hold? this is bloomberg. ♪ ♪

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matt: korean crisis. donald trump as america's top general prepares to meet with moon jae-in. the white house says trump abhors neo-nazis so he personally fails to announce them. .rowth spurt japan's economy expands for a sixth straight quarter extending the longest street -- streak in the decade. is abenomics working? the diesel blame game accelerates. and schulz attacks germany's carmakers including the ceos personally as campaigning gets underway. ♪

matt: good morning. welcome to "bloomberg daybreak: european open." our flagship morning show. i am matt miller. anna: i am anna edwards. a quick look at the futures. let's see where we are expected to open up at the start of the european equity trading day. the asian session and words from u.s. officials saying nuclear war with north korea is not imminent. that adding a little more calm to equity markets then we saw at the end of last week. as a result we are expected to go higher in the end of the european trading day. up around 16%. -- up around .6%. the asian session pretty much flat.

the markets playing catch-up on the japanese front. because of that confronting comforting wording out of u.s., we have something slightly calming. matt: it is always comforting on a monday morning to wake up and read that nuclear war is not imminent. that is why the bond market recovered a little bit. take a look at the risk radar. i have a couple of indicators that were less worried about total armageddon. a 10-year rising in yield, 2.2 basis points. there is an up arrow there. we colored it read. -- colored it red. less need for the safe haven. you see 1285.83. i looked at asian markets in japan is playing catch-up with last week.

the rest of the asian markets are up and you can see in hong kong, we are gaining by 1%. bitcoin, even though there may not be a need for a safe haven, bitcoin has been on an absolute care -- absolute tear. it is worth more than $4000 a coin. it has a $60 billion rocket cap -- market cap. very important to pay attention to what is going on in bitcoin. if a -- is a giant collapse imminent? anna: matt miller never missing a chance to give a mention what is happening with bitcoin. let's have a look at the bond market. we see a little bit of movement. the story comparing to what we have seen in fixed income markets versus fx and equity markets. so volatility in the latter and not much in the former. we are seeing more on the data

front. japan better than estimates on the gdp numbers. chinese data coming in weaker than estimated. all of that is going to factor in two where you start your trading week. biscuit first word news -- let's get first word news. yousef: i will talk about the data. donald trump has stayed more criticism after failing to personally denounce neo-nazis. following an uproar from lawmakers in both parties and civil rights groups, the white house released a statement saying the president condemns "all forms of violence, bigotry and hatred and of course that includes white supremacists, kkk, neo-nazis and all other extremist groups." mike pence made similar remarks at a press function. bethese groups that need to

pushed out of the public debate entirely and discredited for the hate groups and dangerous fringe groups that they are. david: a south korean presidential advisor has criticized trump escalating the freeze threats. a special advisor to the south korean president told news that trump about to unleash fire and fury if the isolated nation continued its provocations called it "very worrisome." he urged him to tone things down. met president mike pence the colombian president regarding president trump's threat to use military action in venezuela.

while pence refused to rule out military action to resolve the political crisis there in the country, he told santos that the u.s. would much prefer a peaceable solution. as we mentioned earlier, lots of data coming through the asia economy. japan grew for a sixth straight quarter. 4%.increased by china, the economy has slowed entering the second half of industrial output. asset investment also weighing in coming in below estimates. industrial capacity begin to bite. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you find more stories on your bloomberg.

theop , you will find market here in the asia-pacific. it is monday as we get started. we were talking about the sort of coming back of risk appetite. the base was kind of low after the selloff on friday. the benchmark is a little bit lower japan, we are down 1% on the nikkei 225. taiwan down 1%. the volume perhaps stepping back off the yen in terms of what might happen when it comes to north korea. i should mention that when you look at what is happening in the equity markets, perhaps we don't see in south korea all until the -- south korea volatility. it is not quite back to levels or 12 month average levels. very quickly, have a look at the days -- the stories where following.

the stock mixers are very much in the mix. delistingoring because of the stalled talks in regard to it selling its chip business. i have tencent and sk hynix and here for you. oncent out with earnings wednesday. sk hynix was done with 5% on friday. reversing the losses we saw on friday in south korea. have a look at gdp over in japan. growth in thes 4% japanese economy, easily adjusted of course. we break down its components of gdp. what is surprising, during the quarter was the consumption which is this right here which made up the bulk of the growth. we talked to the chief economist over at nomura.

he is seeing a lot of that comes down to the fact that inflation is nowhere to be found. you're getting a drawing down in savings. maybe a one-off when it comes to this flight and consumption. that is a wrap of your markets. matt: david, thank you very much. two top u.s. national security officials have try to calm fears that a nuclear war is imminent between the u.s. and north korea. in a separate talkshow appearances, the cia director mike pompeo and national security adviser h.r. mcmaster both walked a fine line of talking tough against pyongyang while not raising the alarm at home. the chairman of the chief of staff said to me, south korea's

-- daniel ten kate joins us now. he is our south korea reporter. to is south korea reacting increased tensions? on the one hand, we have an advisor to the president lashing out at donald trump, but on the other hand, south korea and the u.s. actively on the same page in these defense issues. no realthere should be space between the u.s. and south korea when it comes to north korea. however, the rhetoric coming from the white house really spooked a lot of people in south korea. seoul is on the front lines of any attack. it will likely be an artillery attack that hits seoul. they have a lot at stake. they have the most at stake. trump's comments which were the view arctic related by the presidential advisor.

he basically said this is not helping us we don't want this. we want to calm tensions down could we don't understand while -- why trump would be fueling this tensions. anna: china's president called trump over the weekend. what is the view from beijing? kenneth: -- daniel: the same thing. china doesn't want a conflict to break out, so they are doing everything they can to dial down the temperature. china has supported you and u.n.ions -- supported sanctions. they don't want alan yang to be shooting ultimate -- they don't want pyongyang to shoot off missiles. they want the u.s. and south korea to step back. in a was an editorial statement chinese newspaper saying, if north korea fires off

a missile at the u.s., we are going to stay neutral, but at the u.s. comes in a text north korea, we are going to defend the regime -- comes in and attacks of korea, we are going to defend the regime. anna: joining us now, peter toogood. very good morning to you. how do you gauge the amount of reaction we have seen in financial markets around the story? i mentioned this, appearing on abc's the week, h.r. mcmaster saying, we are not closer to war but we are closer to war and were a decade ago. a little bit of a longer perspective. how much market should be watching the story. it actually impacting the market? yes. was this a part of -- i have come here relentlessly and said it is a struggle.

--kets already this year trump has raised the bar. i suppose he is a bully himself. why anyone is surprised? i don't know. anna: should the market take it more seriously? peter: what can the market do? [indiscernible] that is the reality. the fact is it will become down and trump response to a bully could what markets -- bully. what can markets do echo -- markets do? last week direction was moved down [indiscernible] it is a distraction rather than anything else.

anna: casher bitcoin? matt: i would say, you go the other way. if you think there's a possibility of a nuclear war coming, you buy the riskiest asset you can, because if you lose, the whole world is over anyway, right? if you win, you are in the money. peter: let's think of it that way. bitcoin, i know you're a big fan. little that can happen with the reaction function. bitcoin would be roughly the same. what cash is worth at that point would be another matter. [laughter] matt: i find bitcoin very interesting. it is not -- i am not long bitcoin, to be clear. long since am not november is the u.s. dollar. here's the chart of it year to

10% at howalmost much further does this have to go, peter? know, a lotu will of allocators coming out of the u.s. piling into europe. mutual fund flow, etf flow into europe has been dramatic. , the way it was emerging markets last year. part of that is flow. haspe relatively speaking looked slightly more compelling. it is still cheap. i can't say that about the bonds. it has been a flow argument. the dollar, it doesn't have to carry on doing this. the aspects of the euro will fade as the year progresses. the euro kicks the exporters in the teeth. see germany last month for reference.

not a good thing to have the euro rallying to strongly. -- too strongly. anna: the growth numbers coming through suggesting a continual .eries of growth it looks good compared to recent history. abenomics. peter: i wouldn't get too excited. the value and of japan is a cheaper part of the market. it is back to your traditional let's go by the most expensive in japan. if you have any believe that there is any kind of continuous recovery -- no wage growth? the same problems that are plaguing the said -- that are plaguing the rest of the world are plaguing japan as well. you've got a strong the story there. abenomics, the corporate forms

and unreal. you see liquidity pumping through from the bank of japan and they are making things slightly nicer than they were two of -- they were two years ago or the is ago. i wouldn't get too carried away. matt: i noticed that you favor value stocks over growth stocks. hillary, our chart mistress has put together a chart that has shown growth overvalued stock performance you can see, this year to date, the growth stocks have been clobbering them. do you sell growth stocks here? is, if youpoint think the world is going to have a second recovery. if you're one of those ambitious optimists that inflation is going to come back, we finally reached the turning point, then why would we by value? disruptors also another problem. that make an argument

alphabet is a value stock. that many of the disruptors are value stocks. cyclicals and the energy mining sector but there is no evidence that real gdp growth will go through the roof. questionngs it to the where the get a global gdp growth rate. we've got more data overnight from china and it shows that industrial production, fixed investment have been weak in estimation. is that your perspective on china at the moment? .eter: they are not pumping they are not doing what they did last year. a big fiscal stimulus program in big-money. the effects can be seen. they are getting nervous. anna: --e credit peter

credit. anna: peter, think you very much. up next, german elections campaigning gets underway. this is bloomberg. ♪

anna: welcome back, everybody "bloomberg daybreak: european open." . 8:22 over in berlin. let's get a check on the markets . euro stoxx 50 futures suggesting that we would see some strength at the start of trade. that continues in the last 20 minutes, we have seen those stock 50 futures being higher at the start. a little bit of calmness the sending on markets from some the words we have heard from the u.s. administration over the weekend suggesting that nuclear

war with north korea is not imminent. that has been taken as positively by investors. the japanese market is still playing catch-up in the asian session. a slightly different story. checking in on the bond market, fairly flat. the yield on the german ten-year bond. showing you where we are where we are -- what we are on the middle eastern markets. a little weakness coming through. matt? matt: a tense contest in france. german voters are faced with what may be their biggest decision this year, whether to give angela merkel a fourth term. the leader of the eu's most powerful country faces martin schulz and others september 24. saysuest, peter toogood, merkel is the inevitable winner. what if thoughts on the importance of this election? as an investor, d have to pay close attention to see how the

-- do youows itself have to pay close attention to see how the outcome shows itself? peter: she will still be the majority. as you said, she is the inevitable leader. that is not to be blase. if you could to germany in look of the elections, it is not raising the temperature anywhere. it has not been natural to have hostility, but even by their standards, this one is quite muted. germany has been in a great spot since it took the decision of the creation of the euro. it has been a shining example within europe. that is the point of where its success come from. surplus and ite can do with upgrading its roads and do some infrastructure

spending. it could be doing more to help itself. anna: we are happy to see that. the stress and the euro has been one of the things we talk -- the stress in the euro has been one of the things we talked about. the rights of the euro, and the blue, puts that against what we have seen. revenue per share coming through on the euro stoxx. this is european stocks. a stronger revenue picture. where do you see european stocks heading? tense they could be a point now -- they could be pinch point now. prestigious in 2015 and most of 2016, so there is a base effect. there is an element of aspects.g, certain some are booming.

it has been for a while. time thatis elusive what has -- and one through the hands in the air and checked the euro out the door. i think at this point, we're reached inflection with the euro. in might be reaching the peak and it will be impacting the exporters. matt: draghi, what do you expect from him when he goes to jackson hole that go peter: he's -- jackson hole? peter: he's got the conundrum. ofis a was been the problem one fixed monetary policy for region. i suspect it will still be the same. extract himself from the monetary policy. at the states, it is still the case.

anna: we will watch that. thank you so much for your time. that will do it for daybreak. germany decides special, that is coming up later. this is bloomberg. ♪

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manus: you are watching bloomberg markets, this is the european open. castle open in europe for the first trade of the day. i guy johnson and matt miller is in berlin. what are we watching this monday morning? a u.s. president has backed to d.c. of it tensions home and abroad. nowwill the markets focus turn to the fed? japan's economy has expanded for the