on a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. anna: the great unwind. the anticipated policy decision is due today but what will they say about shrinking the balance sheet? manus: president trump threatens north korea with annihilation in his maiden speech to the yuan general assembly. fix the u.s. has great strength and patience but if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. agreeing on a european steel venture, creating the second egg is producer in the region. manus: a 7.2 magnitude

earthquake strikes near mexico city killing scores and reducing buildings to rubble. anna: welcome to bloomberg daybreak europe. i am anna edwards. manus: i am manus cranny. anna: we have numbers coming through and ebit numbers, one point seven 4 billion euros. a shade below what the market was looking for and on the net line, net income at 37. big question going into these numbers, to what extent the strength of the euro would hurt sales at this business in certain markets and some people are looking for whether the profit would be the fastest pace of growth in two years. that may not be the case.

what is that doing to the business, how much is that boosting the business? online sales in 45 countries, they set the bar pretty high in terms of delivery. they were seeking to maintain the momentum after delivering the strongest store sales growth. we will keep an eye on what is ispening and zara online launching in october. manus: we had the breaking news that after a year of discussions, the synergy said to be 406 million euros. 7:30lked to the cfo at a.m. u.k. time. those are the corporate stories on the move at it comes back to fx. we have jeremy stretch. this is sterling yen. we do not normally go for sterling yen. the market is slow to say that

november will be a rate hike. ubs jumped on bus as few others have. the question is this, are we beginning to talk about? that is the question for the market. we will pieces -- he' start with a lot of different numbers. will that be the same story by the end of the week, what does that do for sterling? boris johnson risking for sterling. anna: we are talking about the fed and geopolitical risk once again and on the risk radar, it has not fallen out of bed in the market cents overnight all given the rhetoric we heard from president trump at the general assembly at the yuan threatening annihilation to north korea, repeating his rocket man jibe against kim. how will the north koreans react? the markets managed to

keep their column. -- calm. u.s. futures pretty flat. manus: that one line, that promise of complete annihilation has not rocked the markets. the one story we are keeping an eye is, the mexican we. you have seen a concern. we're getting breaking news headlines in terms of a tragedy that is unfolding and the size and scale. you have the mexico peso declining and the dollar rising on the back of that news. anna: we should say that 149 people have been killed i the 7.2 magnitude quake. let's get an update with juliette saly. thank you. the u.s. secretary of state has confirmed the trump administration and tends to renegotiate the iran nuclear deal. rex tillerson's comments came despite watching european allies

and russia saying they think the accord is working and iran is abiding a its commitment. >> if we are going to stick with the iran deal, there has to be changes made to it. the sunset provision is not a sensible way forward. it is simply kicking the can down the road. for someone in the future to have to deal with. anna: a 7.2 magnitude earthquake has struck near mexico city come a killing 149 people. it is the second major quake this month and keep on the anniversary of one in 1985 that killed 5000 people. the disaster closed the airport, stop the metro, and ended trading on the mexican stock exchange. it plans to open is normal tomorrow. and the caribbean, hurricane maria has strengthened to a category five storm again and the top winds have reached 175 miles an hour and cost six that's on the island of dominica. irma caused as much as $1 billion on that -- damage on

that island. a recovery in trade appeared to gain momentum. exports rose by 18.1% from a year earlier, the biggest increase since november 2013. imports climbed 15.2% leaving a trade surplus of $1.2 billion. the uk's foreign secretary has backed way from his threat to quit and government. a day after boris johnson discussed the possibility of life out of office said -- he will attend the speech about exiting the eu on saturday. the financial times reports theresa may will offer 20 billion euros to fill a hole in the eu budget after brexit. 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 . we are awaiting the fed, it is range bound on the msci

asia-pacific index. it had the 2% jump yesterday. hong kong stocks holding onto two-year highs and a bit of a pickup in china while australia is flat as is the kospi. finallyatching stocks, clarity on the toshiba deal. --s includes apple and tell dell and ends eight months of negotiations. is said to be relaxing rules which will allow foreign carmakers to sit up electric vehicle businesses in its free trade zone and imax kong up.hong some big moves and asia-pacific region but surely -- generally fairly range bound. manus: in his first speech to the yarn general assembly president trump threatened to

wipe out north korea if it menaces the u.s. or its allies and reiterated his belittling nickname for kim jong un. president trump: rocket man is on a suicide mission for himself and for his regime. the united states is ready, willing, and able, but hopefully, this will not be necessary. anna: he vowed to crush "loser terrorists" and targeted venezuela and iran. a window into how his america first stance will shave engagement with the world. how is president trump's speech at the u.n. ring received on the world stage? they got initial reaction right there and then create and more broadly. -- there and then. and more broadly.

>> quite a mixed reaction. benjamin netanyahu came out and said it was a great speech, the best he had ever heard and trump pleased.eemed when you talk to others there is a mixed reaction. the president was doing several things with the speech. he went on, he was asking the u.n. to support him against north korea in terms of taking a reiterating he kept the primacy of national sovereignty line so it seemed to go against the notion that others should help with this. he mentioned the national sovereignty 21 times in a 42 minute speech. we had emmanuel macron come out later, he did not drink the criticize president trump but he was said to change his speech. a and president trump have diligence of opinion on iran. and others were not in the room.

angela merkel stayed home, theresa may who was in new york for the u.n. meeting was not in the room for the speech. the north koreans left moments before the president began speaking. manus: interesting how the iranian foreign mother -- minister responded, he called trump's mark -- remarks foolish ansett was so slogan like it did not deserve a reply. it was another major meeting emiren trump and the qatar . where we on this, we understand that the saudis may have wanted to accelerate the issue in the middle east but it sounds as if trump step in. do we have any confirmation? >> we are and others are reporting that president trump made phone calls to saudi arabia and the uae over not taking action in qatar and trying to calm things down. he had sided with saudi arabia but decided that there could be

real consequences including with the iran, it could strengthen iran is that was to occur so he tried to calm things. there have been some back channel talk trying to keep things calm there. it is interesting, the position shifted somewhat. much, jodi you very schneider with analysis of what we heard at the u.n. over the past 24 hours. jeremy stretch joins us this morning here on set. let's have a moment to think about how this geopolitics and everything we heard around rocket man and annihilation of north korea. -- how it affects markets. guest: markets are -- and they

have had diminishing reactions to the events in north korea and the diplomatic rhetoric which has been ramping up between north korea and the u.s. riskts are mindful of the but until there is a meaningful escalation, we hope that does not happen but until then, markets are keeping it on the back order and focusing on the relevant issues. manus: we seem to have moved on. the other thing is the fed and what they will say to the market and indicate. markets are in a perfect place and the user low stock markets are high. what the fed needs to achieve is -- they need a tapered tide, not a tapered tantrum.

guest: that takes us back to several years ago when we saw discussion of the changing of the strategy regarding the balance sheet. it is a scenario where we are seeing central banks cautiously and mindfully moving towards the reduction of their balance sheets in order to facilitate but without creating instability. that is a challenge and a communication challenges the one where central banks have been adapting their strategies very cautiously in order to pre-warned the markets to prevent the discussions and the decisions creating that instability and that tantrum scenario. anna: there are three areas of focus, one is the balance sheet, one is the future of janet yellen and intentions of fed officials. the dots have been changing. the officials behind these dots will change. but more in the short term we

might see some changes overnight create jeremy: there are transitional changes occurring, we do not know about janet yellen or whether she will or will not stay. it isart money is lopsided on her staying but we do not know. there will be the transition in terms of the members of the fed. that will impact the dot plots but markets will be looking to see what will happen to 2018. if inflationary pressures extend into next year there is that risk that we see a slight forction in the dot plots 2018. that is one issue but the other issue is what happens regarding another hike before the end of the year. intrinsic to the performance of the dollar in the last quarter. manus: you said to hikes are possible, not the three that are

indicated on the dot plot. with that change if the fiscal scenario changed? jeremy: if we rolled back to the beginning of the year, there is the dollar euphoria on reflation trade. that was -- rationalu called that dollar enthusiasm. jeremy: we have virtually nothing [inaudible] if we can see some structural changes in terms of the fiscal side that changes the dynamics and that would provide the dollar with a modicum of support. a provides another reason for dollar bull market. it moderates the case of depreciation over the course of the next 12 months. underlying inflation dynamics might be tricky. we will look out for any

commentary on what that will do. jeremy is staying with us. manus: we're getting more reaction to the fed decision. anna: when you are traveling to work you can travel with bloomberg television and radio live on your mobile device. analysis ofre trump's maiden speech to the u.n. general assembly area -- assembly. we discuss the outlook for sterling. anna: we are live in berlin. this is bloomberg. ♪

manus: a live shot of singapore. it has gone 1:19 p.m. in the afternoon. that is at a 10 year high. going fromhe year so under loved to over appreciated. this is what we're watching. anna: rex tillerson meets his iranian counterpart and ministers of five other countries that worked on the 2015 nuclear deal. what vision will we see their? -- see there? yellen,e have janet what will she say in her news conference? and -- : tyson group aresenkrupp and tata agreeing on a steel venture. atwill have 48,000 employees

34 sides and be headquartered in the netherlands. toshiba's board has agreed to sell its flash memory chip unit. the consortium includes backing from apple and dell. the iphone maker played a crucial role in bringing momentum to the offer and plans to contribute capital. the deal would and a contentious bidding process that stretched over eight months. the billionaire owner of soft the -- softbank said [inaudible] group have been in group -- in talks since month. >> we have another company in a possibility that we may consider to do. we have not decided one of the other. we're looking at [inaudible] that was the chairman

and ceo and founder of softbank. the conversation airs on bloomberg television. that is your bloomberg business flash. manus: the report suggested the uk's foreign secretary force johnson could quit the government over its brexit strategy. as a it could be taken positive for sterling if he were to step aside and allow theresa may to step toward a softer brexit. is here, there is a lot of politics in the mix. let's do with the politics first. that is where we will kick things off and the bank of england is trying to manage things and that is part of the story. the transition matters for the pound. jeremy: this upcoming speech

really does matter because the negotiations between the u.k. and the eu are time sensitive in the case of the u.k. we have that 2019 and the date and we are moving aggressively toward that and the longer we go without any substandard discussion on what happens next, then the greater the risk to the u.k. and if there is a transitional deal which is a push back against by mr. johnson , if he is removed from that mix than the transitional deal is more likely and that reduces the cliff edge risk for sterling. is the biggest risk for sterling, inside, part of the deal, outside haranguing and virtually on the far right of hardest of hard brexit? jeremy: we cannot forget the fact that we are a week away from the conservative party conference. the markets were discussing would may last at the tory

conference. centrald still face a leadership challenge if there were to be a serious fracture in the cabinet relationship. mr. johnson is to be seen shouting outside the tent. there is a collective responsibility but having him sitting around the cabinet table is the least worst alternative after theresa may. anna: what is your thinking on november and how like you rate hike could be because february seems to be where people have landed but november is a possibility. economists seem to be on a different page, they are playing catch-up to the [inaudible] the money markets currently pricing in a 70% chance of a hike in november. jeremy: the next meeting on -- is not to november.

that is six weeks or so away. markets tend to move much more quick event economists and analysts, quite correctly. we need to look at the fundamentals. the bank is talking -- my argument would be that if their growth rate is when three report for -- .3 or .4, we tend to see a lackluster wage environment. the bank is talking about hiking rates and there is a squeeze on and comes in three years. that process is not going to alleviate. there are good reasons to suggest that markets moving toward november might be too aggressive. the data, the economy was cranking it out, the bank of england signed and they were going back to data which is about inflation over brexit, over the risk of the slowdown.

we have more data, we have consumer spending in terms of retail sales in the u.k. has this got the ability to move the dial on sterling? jeremy: it does. central banks should be focused on the data. they do not always do so. they have to be preemptive. if we are seeing pressure on the lastmer being maintained, year the surprise was the resilience of the consumer as they were drawing down savings to maintain consumption. we are seeing discretionary spending being impacted by the rise of prices. england may not have the absolute level of consumer activity when the maid the decision. this could turn the dial somewhat under the rate expectations. anna: thank you.

manus: we will be live to berlin. voters tokel warns stick to the center ground. these are the closing days of polling for the current chancellor. this is bloomberg. ♪

4:30.in tokyo it's will any of the questions be asked and what will we hear from the chair? a new edition of daybreak is available on your mobile. here is a look at some of the stories that have made it into today's edition. i was just mentioning the fed will probably confirm a start date for its wine down today. my first major reversal of

dead of easing since the financial crisis almost a decade ago. investors will be more focused on guidance around a potential december rate increase. manus: next story up, the powerful earthquake that struck near mexico city. the latest toll stands at 149. 32 years after the quake that killed thousands. anna: and we focus on theresa may's plan to offer the brexit payment when she lays out her divorce strategy on friday, according to people familiar with the matter, reporting in the financial times. she hopes it will break a deadlock and allow talks to allow a future trade deal. could it be money to meet a budget shortfall, will there be any money after transition? manus: and speculation of 20

billion euros. it's an opening south that perhaps allows them to begin making substantial progress. let's talk about progress with angela merkel, she's -- it's another whole topic we will cover. let's go back to sterling. 20 billion pounds might be on the table on friday. she will offer to bridge that gap in the budget, the pound has been doing quite nicely against the yen. take us to the inside of the story because it has its own dynamic. we're looking at performance over the most recent months and it seems to be weakening over the past months, isn't it? jeremy: indeed, despite the geopolitical tensions. over the course of the last couple of weeks, what's been

driving the yen has been that we've seen the bank of canada, the change of dynamics in the bank of england and the one central bank keeping its foot firmly to the pedal is the bank of japan. we still have that stimulus very much in play. we're talking about the election providing another term to prime minister abe potentially. splendid isolation in terms of monetary policy expansion. it's been the trade of the day in the past couple of weeks in particular. , the: again, the market approval ratings have come back. disagreement,an however you want to phrase it, is monumental according to trump .

to a certain extent it lends itself to this bump. absolutely. it seems as though his handling of the crisis domestically come his approval ratings have been going up. it provides them with an opportunity, sometimes you look at these factors. appears to be abe looking at the underlying dynamics and seeing it as an opportunity and utilizing it for another term. anna: thank you very much, jeremy, with thoughts on the yen. merkellor angela suggesting concern about poll showing gains by the left and right fringes at the expense of the two biggest parties. manus: she spoke ahead of

sunday's election. >> i tell everyone that this election is not yet decided. i believe the strength of our society lies in the center and that the policy of the ctu symbolizes this center. and now i hope for a high turnout of voters and for a clear vote. the policy of the center will be strengthened. matt miller is standing by in berlin. good to see you this morning. we are in the final furlong's of this campaign. what are the risks of a rise in the support for the more extreme parties? is what angela merkel was focused on last night in her interview come the risk for the rise. problems is that it sucks a lot of votes away from

her party. been holdinghad roughly 40% pretty steadily for months now has dropped to about 36% in the polls. she doesn't want to lose in more votes to either side. one be more socialist and one more nationalist. , theisk for the market government has presided over a strong recovery in the economy for not only germany but really europe. the market doesn't want to see that status quo thrown away. anna: and the other parties in the mix, where does all of this -- where were day bad result? leave them? that's one of the talking points heading into sunday. matt: they been polling pretty poorly for the past week. in one poll yesterday, they dropped down to 20%. that would be the worst result they have seen since world war

ii. , the problem is that a lot of germans don't see any difference between the parties, since the two have been governing together, a lot of members think it would be better to sit out of the coalition after the election and be the leaders of the opposition in the parliament for the next governing term. that would take a little of the wind out of the sails as well because if the std does join as a junior coalition member and the others do better than the greens in the boat, then they would leave the opposition. manus: let's see to what extent there is a shift perhaps to the right. matt miller in berlin. jeremy is still with us.

when you look at the german election, a whole raft of comments come through. hurdle tot a last euro strength. you have dollar weakness. hurdle if the chancellor is reelected on monday. does that shift the euro story or is it still focused on the taper? i think markets have been generally of the view that the election in germany was going to be largely 89 event. -event.ely a non junior coalition partners tend to perform badly from the -- from previously. that is a lesson to be learned

for junior coalition partners. ultimately if we move through this election with no substantial changes, we're back to focusing on the data. the eurozone data looks attractive. the taper is clearly the focus. i think it will add to the momentum behind the euro. anna: is there of colo -- coalition that looks stronger or weaker for the euro? carry the dayd to which is not what the polling suggests, but would it be seen as something more eurocentric? jeremy: there are some discussion about whether the greens would be joined to a coalition earlier in the week. that would add uncertainty.

one of the things that is interesting is because of the changing issues on nuclear power , the process could extend. over timeectiveness could be eroded. that could be seen as more tangible over the course of the upcoming months and years. manus: the taper that shall remain nameless, that's how we would help -- how we would monitor it. it could be $40 billion in terms of production. narrow that down for us a little bit. we've gone from 8260. think they will most likely reduce that in the first half of 2016 -- 2018, rather. think they will say or not going to give you an end date at this

particular juncture but as we get to the middle of 2018, in terms of continued growth and eurozone, that will be an opportunity to say enough is enough. anna: what are your underlying assumptions about the german economy? you have a divergent picture of some of the others survey. you have a different picture coming through on that one. what is your underlying assumption about germany? jeremy: we are confident that the german economy is in a good position. it's not the strength of the euro that we need to be worried about. the ecb are monitoring the fx rate. we've seen that in a number of comments. think it's more about the rate of appreciation rather than the actual level.

the euro is still on the cheap side of fair value. it still providing a tailwind. if we look -- if we desegregate the eurozone, it would not be at 120. german industry has less of a tailwind overall. manus: you mention italy and -- this iso mind was reality. this is volatility, nine-month volatility. i just wondered to what extent does the italian election, the possible election by mayo next year, could it interrupt the ecb

and would it take us closer to a smaller reduction from the ecb? we don't know what's going to happen in italy. do you expect the volatility to rise with the italian election? jeremy: the question comes back to will it impact the ecb. you cannot totally divorced them, but we have to remember there may be some latent skepticism within the italian political spectrum. it's not likely to manifest itself in terms of the government that will facilitate the exodus -- exit strategy. i think it will get to the magnitude that will change the dynamics regarding performance of the euro. anna: thank you so much, jeremy stretch. don't miss our interview

with the cdu leader at 10:30 u.k. time. anna: and join us for live programming as the results come in on sunday evening. what it means for markets. you can catch bloomberg radio live on your mobile device and digital radio in the london area. morgane is sitting down with the team to talk about the fed. anna: a collection of top leaders and investors to discuss innovative ways to discuss challenges to economic growth. the owner of bloomberg news, michael bloomberg spoke with francine lacqua about the type of relationship there should be between the u.s. and china. ask we buy an enormous amount of ands from them and they buy

enormous amount of services and technology from us. we are both in this together. the chinese have gone from making low-quality products that depended on cheap labor, baseball caps and t-shirts, in enormous quantities. then as their labor force became and domesticcated more money, they were priced out of that market. it went to bangladesh in indonesia and other places, and then they started making more sophisticated products. what was a joke when made in china make cheap stuff, it went to, quality stuff. if you think they cannot make quality products, that's not true, they can. they went from copying everything we did too now inventing their own stuff. there is nothing that can stop

that progression. dojust have to make sure we not fall back, and we can fall back. easily we don't innovate, if we don't improve our public school system, which is getting worse, if we have immigration policies that keep the best and brightest from going elsewhere. we can square it up, but that doesn't mean we have to. no matter how much of a threat china is, we have a great hand to play. if you just put your cards down and walk away from the table, no. bloomberg, the founder of bloomberg lp and bloomberg philanthropies. we have world leaders and international ceos all in one. it's the bloomberg global business forum. we will bring you the

event live throughout the day starting at 1:30 p.m. london time. if you are bloomberg customer, you can watch a show using the tv function. you will get all of the added extras, the charts and graphics, you get access to all of those in news them in your own research however you see fit. up, johnson backs down. back in away from the threat to quit the government. the u.s. president threatens to wipe out north korea in his u.n. debut. this is bloomberg. ♪

has reach ofoup

framework of an agreement to merge the european group. anna: there is a memorandum of understanding for the joint venture that will equally be owned by both parties. us the phonens from them by. what are the kind of synergies the company is talking about here? the deal with the u.k. includes german assets. [indiscernible] about synergies of around 400 million euros and this would be held by capacity utilization. manus: thank you very much for

the update. let's see how the stocks perform the rest of the day. that's at 7:30 a.m. u.k. time. k policy front, boris johnson has backed away from his threat to with the u.k. government over theresa may's discussinggy after the possibility of life out of office. a person familiar with his plan said he would be attending a speech and forth on friday. theresa may will give what she calls an update on her brexit lan. -- her brexit plan. simon, good to see you this morning. what are you expecting, what does theresa may need to deliver in florence? >> we are a quarter of the way through the two-year negotiating period.

the speeches about how to unlock a long jam so that in october she has a chance of moving the negotiation forward. there are two things, really. she's got to give them an idea of what the british policy is going forward in a transition period because the negotiation will not be complete by march 2019. and she will have to talk about outstandingmade for -- settlement of outstanding obligations. manus: some say would be a smart a suggestion of being open to doing some kind of deal. >> the question is what are the obligations? manus: then you get the foreign it's not legalg obligations.

to pay he doesn't want for future access to the european market in the long-term. there's a difference about how long the transition should be and what the amount of the payment should be. that is what has to be sorted out in negotiation with the e.u. parties. that's what this speech, she's going to try to set the groundwork for that discussion. can seem quite detailed, the fallout between boris johnson and theresa may. cabinet cannot get on the same page about length of transition and money to be a. then how can they negotiate with europe? >> william hague road and article saying we need to get an agreed position so we can take that forward. it is an intensely political question. as time passes, the political temperature is going to rise.

domestically in britain, these issues are on the agenda. some suggest britain should perform a new customs unit with the e.u.. a interesting suggestion that new form of customs union, are we at that point of innovative thinking? >> i hope we are, but there's a lot of things to be done. it's different from the current arrangement. it would take a long time to do it. you cannot just pick it off the shelf. we do have to think about the different options for the access written will have to the single market in the european union when we leave. what about the german elections and what relevance that has? the poll suggests we will get something a little bit like

status quo. >> it's very important in one respect. one of the reasons we are not made progress, on the british side we've not had a very clear position. we had the french election and now we have the german election. only after that are the political pieces of the jigsaw puzzle in place to make political decisions. anna: will angela merkel be tougher after the election? >> i don't think she will be softer. i think that maybe overoptimistic. they will leave the european commission to lead the negotiation. manus: when you talk about transition, you have negotiated a lot in your life. is this an optimal transition, do you think?

>> i would not measure it in terms of time. manus: thank you very much, partneraser, managing of a business advisory firm. ♪

>> the fed policy decision is due today. what will be said about the shrinking of the balance sheet? >> the u.s. has great strength and patience. forced to defend itself or its allies, will have no choice at two totally destroyed north korea. anna: a 7.2 magnitude earthquake

near mexico city. at least 226 are dead. i am manus cranny. anna: we are getting some breaking news. and we have some kingfisher lines. adjusted pretax profit 494 million pounds. and thelf adjusted interim dividend of 3.3 pence. --first glance that looks the first half retail profit, 467 million pounds. and the adjusted pretax profit

is 394 million pounds. at 19.63%. on performance, they are reaffirming their views of mid-single-digit topline growth. expansion will be weighted toward the second half of the year, they say. operations continue to strengthen. and taking a look at where we are at the open, mixed european equities. manus: you have paris down by 0.1%. a 10 stocks are rocking at year high. it is interesting how markets a must shrugging their shoulders at the president of the u.s. who stood up and said perhaps one should wipe out an entire country being north korea. this lastalked about

hour how markets have not fallen out of bed as a result of the rhetoric from president trump. here is the risk radar. the asian session pretty flat. trump repeated his rocket man jibe at kim jong un. we are going to hear from the fed later, what they said about the dots, the balance sheet, and the future of janet yellen. futures are flat. manus: you have gold up by .2 of 1%. that is steady ahead of the fed area the market could be positioning itself for a lower -- lower move. the bearish sentiment could beginning momentum. anna: we did see movement lower on the mexican peso. some of that movement in the markets has unwound. a quick look at the markets. manus: what does the european

central bank do and that tape or that shall not be named the taper? with they reduce bond buying i 20 into 40 billion. trading. and oat's are anna: here's juliette saly. juliette: the u.s. secretary of state has confirmed the trump administration intends to renegotiate the iran nuclear deal. rex tillerson's comments came despite washington's european allies and russia saying they think the accord is working and iran is abiding by its commitment. ask if we're going to stick with durant deal, the has me changes made. the sunset provision is not a sensible way forward. it is simply kicking the can down the road for someone in the future to have to deal with. juliette: president trump has denied warning saudi arabia and the uae off military action

against qatar. two people familiar with the discussions said the nations were working out ways to remove the qatari regime which they accuse of sponsoring terrorism and cozying up to iran but trump is said to have told them that any military action would trigger a crisis across the middle east that would benefit to iran. a 7.2 magnitude earthquake has struck near mexico city killing at least 226 people. it came a the anniversary of one in 1985 that killed 5000 people. the disaster temporarily close the airports and stop the metro and ended trading on the mexican stock exchange. the exchange plans to open as normal tomorrow. japanese exports and imports surged last month with both being expectations. the recovery in trade appeared to gain momentum. rose sinceexports 2013. imports climbed 15.2% leading a

trade surplus of $1.02 billion. the uk's foreign secretary has act way from his threat to quit the government over theresa may's brexit strategy. a day after boris johnson openly discussed the possibility of life out of office a person familiar with his plan said he will attend may's speech on friday about exiting the eu and theresa may will offer 20 billion euros to fill a you -- fill a hole in the eu budget after brexit. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. it can find more stories on the bloomberg at top . closing out the session in japan and australia. pretty mixed asian stocks, fairly range bound ahead of the fed. worth noting that the nikkei that had the 2% gain yesterday still holding onto a two-year high. hong kong stocks looking good for you and we have seen a little bit of a switch out of australia closing the session down by .1 of 1% and the taiex under pressure in taipei.

having a look at stocks we have been watching and detail, toshiba finally some clarity and an end to the eight month negotiation over who will i the chip business. it will be a bane led group which includes apple and dell. we learned that earlier. shares closing unchanged. byd -- china is relaxing rules that will allow foreign carmakers to set up electric vehicle businesses as and it's free trade zone. and tpg telecom the biggest lagger on the regional index. a little bit of stock fluctuations but we are seeing the regional index fairly flat. anna and manus. manus: thank you, the latest from singapore. it was his first speech to the un's general assembly and general -- president trump threatened to wipe out north korea and reiterated his belittling nickname for kim jong

un. >> rocket man is on a suicide mission for himself and for his regime. the unit -- united states is ready, willing, and able, but hopefully, this will not be necessary. he was also out to "crush the speechrists." offered a window into how his america first stance will shape engagement with the world. jodi schneider is in hong kong. speechpresident trump's being received? it was received i some in the room and it has received wider reaction since then. with hiswas pleased own speech. he came and did what he had meant to do in terms of calling iran inh korea and particular but also in trying to

make a point about national sovereignty and the primacy of national sovereignty. he made that .21 times in a 42 minute speech. it was well received by benjamin netanyahu who called it a great speech but less well received a other world leaders including emmanuel macron of france who later on when he gave his own speech made some changes to it to respond particularly on the issue of iran. others were concerned about the whole focus on national sovereignty rather than on the world body and solving things as a world organization especially given that the speech was given at the u.n. manus: this is another where [inaudible] what is the position, saudi wants to ratchet things up much

trump we understand wants a little bit of applause for thought in the middle east for -- in the middle east. jodi: saudi arabia and the uae have looked at, had considered military action with qatar in the early stages of that conflict and according to what we are reporting president trump made a phone call and ask them to hold off. he had sided with saudi arabia but was concerned that this could strengthen iran's hand if there was to be that kind of conflict. he changed his mind and apparently has continued to try notove things over there to have their be military conflict. issuets to the whole iran is of primary concern and looking at perhaps renegotiating

the iran accord that was signed two years ago. much, jodi you very schneider with analysis with everything we heard from the u.n. a good morning to you. we saw markets quite calm given the type of language we were hearing in front of the audience that was present at the u.n. yesterday. the market is calm and there were some defense stocks, this is a longer-term picture. with the military in here it shows that would get a boost yesterday as trump was speaking. the lack ofrised by reaction generally in markets to this kind of rhetoric question mark guest -- this kind of rhetoric? with trump there is a stall and substance. at the -- what he said was a u.s. would follow diplomatic missions and if the worst

happens and they would retaliate. perhaps the wording was not the most peaceful. when,ntiment was a clear the u.s. will defend itself. is there anything i -- surprising? the fear is he could say it something more inflammatory and that for him. manus: we reflected on the -- rhetoric. we're going to begin qt. you would maintain that the bond market and the equity market are sending us a couple of diversion signals. for the securities market the risk of balance sheet reductions, you have talked about this and you talk about it every month. what is the current thinking on qt quid pro quo for the performance of the u.s.?

guest: this is one of general economic recovery. this has been a fantastic global situation. it does not surprise me the fundamentals are dropping. the federal reserve had to balance sheet and it is against the background of accommodative monetary policy. you have had 11 trillion of financial assets bought by central banks. we are at the cusp of the -- and the federal reserve is starting to give us an idea how they will unwind the $4.5 trillion balance sheet. it is a first step in that direction. anna: on that chart you think that the white line can keep going up even as the blue line dips. even as the fed's balance sheet shrinks we get further movement higher in the u.s. stock market. the fact they are together does not mean they come down together. guest: we are talking about the federal reserve starting to

modestly and slowly unwind its $4.5 trillion share against the backdrop of improving fundamentals. we think it can. bond markets we think are underpricing the right path from here. we have one rate cut from the u.s. coming in december and we are looking at pricing in to over the next three years. manus: i found a new function especially for you. ts go plus.ck on do -- are theyident neutral and you have the arched ve which seems to be kashkari. the fed complexion will change and you made this point earlier. the obvious answer is the shape of these dots could become a

little bit more aggressive than where they are at the moment. or fade. nott: the docs -- dots have in great predictors, there has been a consistent over expectation that interest rate cuts would -- or hikes would come through. [applause] guest: there is going to be a lot of vacant shares. so the uncertainty over the makeup of the federal reserve being canceled increases. however, against the backdrop of the general policies of donald trump is looking to put in place, it is difficult to see the composition of the new fed being markedly more hawkish in nature. manus: the other thing is this. i'm going to use it again because i think it is a good line. what they are going to achieve

and i am talking about the ecb, bank of england, and the fed the fed. there is something interesting. they have to take the view that inflation could be on its way back. avoid a paper tantrum. they want a mellifluous movement of markets. but good luck to them. inflation, where do you look at inflation as a story on a global perspective? manus: central banks are targeting the consumer. this is a key risk for markets. effectively saying consultant -- consistent multiyear deflation prices in china. we are getting a bit of deflation and that is positive in terms of access capacity. in inflation we did see a bit of a upside rise. that is against the backdrop of multiple months of disappointing

inflation. we are a long way from the fed's having been forced. you. thank simon smiles is staying with us on the program. you have to send group -- thyssenkrupp and tata. we are watching kingfisher , we have an update from them on anothersiness and also update. we will keep you updated on the stories when we come back. this is bloomberg. ♪

manus: it has gone 8:20 a.m. in the city of london. of rather great day.

euro is holding its ground against the dollar. let's check in on the markets. currencies are flatlining ahead of the fed. the euro stoxx 50 indicated down 1/8 of 1% and dubai down 1/8 of 1%. it is waiting to see what happens. anna: little movement on donald trump's speech. let's get a business flash update. here's juliette saly. thyssenkruppa and have signed a joint memo of understanding. have 48,000 employees and 34 sides and headquartered in the netherlands. toshiba's board has agreed to sell its flash memory chip unit to a group led i bain capital.

it includes backing from apple and dell. the iphone maker played a crucial role in swinging momentum in the options and plans to contribute capital. the deal would and a contentious bidding process that stopped -- stretched over eight months. 1.2ating profit rose 9% to -- 1.7 billion euros. that is the strong euro eroded the value of clothing sales. that is your bloomberg business flash. smiles is with us from ubs wealth management. you have a report, business with impact. what you said during the break was playing it. this is about investing, impact investing and anna said impact investing with activist investors on your back can be a challenge.

who is asking for impact investing, how much more prescient is it question mark -- is it? the waye are looking at we deliver impact investment trying to find investments that have positive outcomes and measure the outcomes verifying it is coming from the investment. , theretake the same lens are strong parallels. it is moving from the traditional corporate social responsibility where you are trying to minimize risks to maintain your profits to actively trying to target positive social outcomes and not doing away if it, my's is your profits but tries to maximize problem -- profits. investors want investment impact. is it also a way of trying to fend off some of the criticisms that have been made by the fringes of european politics around wealth accumulation.

is this an attempt to impact on of maybe stopping wealth taxes in their tracks or stopping development in european politics? simon: there is a much larger degree of altruism. when you look at the growing needs in society, there is a huge amount of talk about how to reach the 45 trillion dollar funding gap. private a role for individuals with investments to play and governments to play. is backdrop as you -- highlighting need. election inis the germany and the debacle in the u.k. we have an election, it is acceded that merkel will to power. what does it mean for germany

and european investing and the march forward for europe? simon: in the midterm, very little. who the the medium term cola shown partner or partners are, what that means is finance ministry, if the ministry changes, all of these are open for debate and that could impact the direction of the eurozone integration. that is medium term. we get through sunday and it is pretty much a nonevent. wouldthe coalitions encourage you to all the money to work in germany. simon: we have the modest risk on stanton eurozone as a whole area -- as a whole. the election is unlikely to change in the mid-term. we will find out from theresa may on friday, my sheep put something on the table.

-- might she put something on the table. there is a direct correlation and you are beginning to see that relationship shift. you shifted in terms of the rate hikes. this is not a one and done for the bank of england for you guys. simon: we expect a rate hike and another in the new year. we think it would be very modest and moderate. -- not the start of a aggressive rate hike and cycle. --a: do they sell it of the as the unwind of the five basis points or the start of something? simon: it is a lower probability. anna: thanks for joining us. that is it from anna and i, the daybreak europe team.

matt miller and guy johnson will have a conversation. deal.ees to do a what does it mean to the company? ♪

guy: good morning and welcome. you are watching bloomberg markets. this is the european open. the first trade of the day in 30 minutes time. the cash open in europe. i am guy johnson alongside matt miller in berlin. what are we watching this morning? investors will find out if the fed will deliver another rate hike this year. it is a 50-50 call right now. welding metal. tata and thyssen