anna: good morning. i'm anna edwards. this is "bloomberg daybreak: europe" and these are today's top stories. declaration against independence. president trump and coaches on the fed's territory. the greenback falls on his comments. yuan slides. china's currency briefly topped the dollar as the pboc weakens its rate by the most in two years. setthe u.k. prime minister to say the notion of a hard border in ireland is almost inconceivable, but can she convince the e.u. that her plan will work?

good morning. this is "bloomberg daybreak: europe." let's get straight to the breaking news. we are in the midst of earnings season. other headlines coming through as well. this is the stockholm-based telecoms company. it is buying barnier broadcasting for 9.2 billion swedish krone. in a littleming above estimates. bonnier willeo of become the ceo of a new business area. second quarter adjusted number comes in at 6.44. the numbers themselves look to be either in line or a shade above estimates and they are not

changing their outlook. they are making this acquisition within the broadcasting space. this is a telecoms business that operates throughout europe. just in the last few days or so, they bought qvc's norwegian assets. this is setting themselves up for convergence on all those technological developments. that is of interest. at theinquisitive telia moment. we are also getting numbers from talis, the electrical systems company. $7.45 billion. that is ahead of the estimates. order intake, $6.33 billion. that seems to be up 5% since the previous time. goal, 1.62% to 1.66%. that looks to be at the top end

or shifting higher. they say they see no impact from trade tensions. their acquisition is proceeding as planned, the company says. we heard other reports startingg the e.u. is a full-scale investigation. m&a very much at the center of things. see where we've been in the asian equities session. entirely flat. msci asia unchanged. that does not mean there are not exciting stories. there's plenty going on. tippingese currency through 6.8. the yuan than weekend by the most in two years. combine this with what we heard from president trump, not being happy about interest rates going higher, not happy about the strong dollar. you wonder whether the trade war is going to turn into an fx w

ar,. the dollar index did lose some ground on those comments. it did gain a little more after we had a walking back of those comments by the white house. cover is up a touch. 0.1%. loading at that 6000 mark. we saw it down for the six week in yesterday session. earnings season continues. a mixed picture. movement to the downside in the s&p and the dow futures. let's get the bloomberg first word news. here's juliette saly. in china, a slump has deepened after the central bank weakened its daily reference rate by the most in two years. the people's bank of china 6.71 to the dollar. make the yuand

the worst performer among more than 30 major currencies in the past month. the u.k. prime minister will today reaffirm her pledge to keep a border between ireland and northern ireland after brexit. -- will say,aid rather, that the notion of a hard border is almost inconceivable. she urges the european union to accept her proposals for a free trade area. indian prime minister narendra modi faces a no-confidence vote in parliament later today. the key test is the first such challenge for any india administration in 15 years. while the ruling coalition is expected to defeat the motion, the outcome will reveal which group has been more successful in pulling small parties into its fold. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . when you look at the overall regional picture, it is pretty flat in asia on the final trading day of the week. strength, meaning japanese markets are lower. we have the yuan weakness weighing in. more broadly, aussie stocks are higher for a third day. indian stocks, we just mentioned that parliamentary vote, still near a high. falling by the daily in hong kong and china. we can see the travel group in the a share market off by 10%. tsmc, we were talking about yesterday. there's been a few upgrades. nomura raising it to a buy. the stock has risen sharply today. according to bell potter here in sydney, it will be the next generation paypal.

they they it has potential to be one of australia's best stocks. $14.27. anna: thank you very much. juliette saly in sydney. breaking news from the tech sector. japanese, chinese investments. softbank's vision fund is seeking to invest almost $1 billion in china's sense time as it seeks a stake in the world's most valuable artificial intelligence startup. people familiar coming bloomberg about this. softbank and its vision fund, which has been active globally, making this move into artificial intelligence. we will keep an eye on that. let's talk about the geopolitics. donald trump criticized the federal reserve interest rate increases, breaking with more than two decades of tradition of avoiding comments and respecting

the independence of the central bank. the president said he's not thrilled. there have been five hikes since he took office. trump extended an invitation for a second summit with russian president vladimir putin in washington later this year. it is unclear if his administration new about that, or about what else happened behind closed doors in helsinki. joining us is bloomberg's david schneider. -- jodi schneider. your thoughts on all these things very welcome. what has been the response to the invitation to vladimir putin? not wholehearted enthusiasm, i was imagine. >> another surprise in what has been a pretty remarkable week following the summit with russian president putin and that press conference with him earlier in the week. saidthings the president

he misspoke on. he apparently has invited the russian president to washington this fall. members of his own administration were surprised. national intelligence director dan coats was on the stage at the aspen security forum and he was surprised. he didn't know about it. it is a surprise. again, the question comes up on capitol hill and among analysts and among some of his own advisors as to why he is extending this invitation. what is the reason to have the russian president in washington after their earlier meeting in helsinki? anna: indeed. threads coming out of that ,elsinki meeting about ukraine election referendum, but let's

talk about something else president trump has been busy doing, jarring financial markets with his comments about rates. how is that playing out? >> this is the first time in several decades that a sitting president has made comments about federal reserve policy. president trump saying he was displeased with attempts to continue to raise rates. thatis viewed as something presidents try to keep independent from the fed. some have said this could actually backfire on the president. larry summers and some analysts are saying this may give some fed members cause to go ahead and raise rates to show their independence from the executive branch. manus: anna: thank you very much for joining us. jodi schneider live from hong kong. trump watching president

over the last 24 hours or so. let's get back to the earnings season briefly. this is an energy business in johannesburg. seeing full-year eps, 1% to 11% lower year on year. the lower full-year profit is due to depreciation around 16 billion rand. they experienced operational challenges. we will keep an eye on it. see if there's any movement to the downside. joining us on set, lucy macdonald. very good to see you this morning. really fascinating threads to pull together. we've spent a couple weeks talking about trade wars. it did strike me, looking at what trump said yesterday and what we've seen from the pboc, that this trade war is moving into a new phase where an fx war

is front and center. >> it does look that way. it is easier to see from the u.s. side. andously trump is very open china isn't, but that is what it looks like. as far as being front and center, our expectation is this is going to be at least until november, and we need to get used to these kinds of exchanges. what it means for the corporate sector, so far there has been little impact on earnings coming through. but the currencies are going to be affecting the relative earnings in the u.s. and europe. anna: when you look at what is worrying executives, there was a survey that suggests trade wars are on the radar, but the sense that the dollar was cited more

frequently as a big concern -- is a strong dollar policy out the window, and is that anything new? commentss why the about the fed or trying to influence the fed are in that regard. it is going to be a bigger pressure point if the dollar keeps rising. that not a surprise that independence has been challenged by this particular president. it was only going to be a question of time. also, i'mid say letting them do what they need to do. not a surprise that he breaks with decades of tradition and does something unconventional. commentators talking about this have said the legacy of the trump economy rests on

the shoulders of jay powell. president trump has to be careful what he does here. they also suggest the fed might be more inclined to hike to show their independence if the president continues to express concern about higher interest rates. >> they may, or that could be rhetoric. i would have thought they are relatively relieved that there's only two or three more planned at the moment. is lesscase, there debate. anna: we talked about whether we've gone from trade wars to fx wars. in terms of the chinese response, the yuan as a policy tool, do you see them actively engaging that? this is yuan weakening by the most since 2016. you can find this in the gtb library.

is it clear they are using this as a policy tool, the currency, by allowing it to weaken in this way? >> it is never clear with china. you just need to watch what they are doing. or not doing. you just have to extrapolate from their actions rather than workout what it is they might be thinking. anna: thank you very much, lucy macdonald. coming up on the program, trade war tailspin. metals are in meltdown over fears that the fight between china and the united states will dent the remand -- demand for raw materials. all you need to know on the metals front, coming up next. this is bloomberg. ♪

anna: good morning. this is "bloomberg daybreak: europe."

over singapore, 1:18 in the afternoon, heading towards the weekend. msci asia-pacific up 0.2%. that is a bit of a turnaround. pretty flat at the top of the hour. fascinating stories with regards to currency markets in particular. let's get a bloomberg business flash for you. juliette saly is in sydney. juliette: thank you. microsoft earnings report and forecast, it provided further evidence that the company can increase cloud sales and squeeze more profit while cutting into amazon's massive lead. profit and revenue to the end of last month exceeded analyst estimates, as did projections for cloud sales in the current quarter. china's struggling hna group have slumped. airlines is flying toward

its lowest close in three years. group's extended declines after they resumed trading this week. three hna units remain halted. recover $3.5cts to billion of funds potentially lost through 1mdb. in an exclusive interview with bloomberg, the finance minister discussed efforts to find the estimated $12.3 billion siphoned from the troubled state fund. probably around 10%. perhaps if you are lucky up to 30%. at the very least, 10%. juliette: that is your bloomberg business flash. manus: -- anna: thank you.

a new round of trade war tensions have sent metal markets into a tailspin. here to tell us more, and murray. tell us more about this deepening selloff that we've been seeing in the metals . >> president trump's disputes involving multiple nations, most critically china, is hitting copper, zinc, and aluminum. cover prices have fallen more than 17% since early june, approaching a bear market. the red metal is carefully watched because it is often viewed as a barometer for economic growth. by july 10, short wagers outnumbered bullish bets on copper for the first time since 2016. look at the green. moving on, in the longer term, citigroup says prices have to rise because the metal is

getting much more difficult and expensive to mine. analysts see annual average prices at $8,000 a metric ton in 2022, passing $9,000 by 2028. they say prepare for a decade of -- [indiscernible] anna: thank you very much. lucy macdonald, cio of global equities at allianz is still with us. where does this fit into your portfolio? exposure toany mining companies? are you interested in the sector? for the reasons we've just been talking about, a lot of cyclical,n, highly and the difficulty of forecasting supply, experts can't do it. it is not a favorite area.

somewhererefer to be where the companies have more control. anna: you set me up with a nice segue. the metals space is somewhere that the macro themes we talk about on the program really can be seen to have an impact. you find other sectors more attractive, i suppose. they are insulated, like the tech sector. techere are areas within which are more cyclical, but certainly at the moment there are some good structural forces which should prevail. whatever happens with trump, currencies, and commodity prices , the move to the cloud, that is what we think very clearly. anna: microsoft saying the cloud margins will keep improving. is it the cloud margins you look to? >> the top line is growing 89%.

margins are starting to rise. that is an area where it should continue. not necessarily at that pace, but you can see why, as the world goes digital, it is still early innings of that. continue,ing to whatever happens. anna: why back microsoft on the cloud trend and not others? .> it is competitive there are only two or three companies that can really deliver at scale. anna: so you like cloud. do you stay away from other themes, social media, regulatory threats, or do you like those as well? >> i think there is some regulatory threat, but it is probably better understood and priced in now. there are many things.

there's everything that is happening with mobile at the moment. .nd capex anna: despite all of the concerns we hear executives talk about globally, there is still capex going on. thank you very much, lucy mcdonald. let's have a quick look at the markets. we can tell you a little bit about the asian session. on msci asia-pacific. that is a bit of a turnaround from the top of the hour, where we saw the asia-pacific looking pretty flat. trade war's turning into fx wars. that is something we talked about this morning. how happy are the chinese? what parallels do we see with 2015? the yuan is weakened by the most in two years.

raising questions to what extent china is willing to use their currency in this way. currency,es, chinese and the price of oil. oil holding on to its gains after the saudi's said they won't oversupply the market. given what we've heard from the trump administration, that seems of interest. let's have a look at the asian equity session. the shanghai composite up 0.5%. some suggesting that there might be some upside for chinese equities as a result of what we are seeing from the chinese on their currency. the hang seng is down, as is the nikkei. breaking news in terms of the opec organization. minister, russian oil this according to the news agency in russia, opec plus can return to oil cuts after 2018 if needed. startw organization may

on november 1, 2019. we will talk about media when we return. disney's dreams are coming true as comcast drops its bid for fox. this is bloomberg. ♪

anna: good morning. this is "bloomberg daybreak: europe." a live shot of tokyo for you where the dollar begins to see a little bit of movement. storya continuation of a we've seen a little bit already. breaking news coming through this morning. numbers coming through from remy cointreau. , $242from the drink maker million, broadly in line with estimates confirming their guidance. let's check the broader market action. maria? >> good morning. let's take a look at what the asian markets are doing as we wrap up the week.

nikkei down and the almost 0.5%, but the focus in china is now up by 0.7%. we could be seeing the first gains in a week. chinese equities have come under pressure this week. i want to move over to my next chart, but continue to stay in china. that is the yuan. i want to bring your attention to my yellow box there. it is the gap between the onshore traded yuan and the offshore traded yuan. this is the biggest cap in pretty much two months. we see this theme for about 22 days. investors outside china are becoming increasingly pessimistic, possibly anticipating more declines. i want to take it to dollar strength. this has been a theme in markets for quite some time.

the strengthening of the dollar, and you can see year, the greenback has outperformed emerging-market currencies for two weeks. the elephant in the room is president trump suggesting there should be no more rate hikes. is that the case? we will have to see. back to you. anna: thank you very much, maria. breaking news coming through from a business called becker. it operates in the steel space. thatrist activity around sector. revising their 2018 outlook down. belowhalf event is 20% analyst expectations. they will not achieve the same profitability levels as 2017. they manufacture wire products, steel cables, and the like. not an enormous business. market cap around $1.7 billion.

we will see how the market reacts later. juliette saly joins us from sydney. u.s. president donald trump has intensified the out roared over his meeting with vladimir putin by extending an invitation for a second summit as worries about what the two leaders discussed in helsinki are rising. details of what they talked about in the one-on-one session has been trickling out from moscow while white house efforts to clarify have been slow, vague, and at times conflicting. president trump has criticized the federal reserve interest rate increases. it marks a break with white house tradition of avoiding comments on monetary policy out of respect for the independence of the central bank. the dollar relinquished earlier gains. the fed has raised interest rates five times since trump took office last year.

yuanina, a slump in the has deepened after the central bank weekend its daily reference than most in more than two years to 6.761 for the dollar. speculation the authorities are sanctioning the losses by not intervening helped make the yuan the worst performer in more than 30 major currencies in the past month. the u.k. prime minister will today reaffirm her pledge to keep the border between ireland and northern ireland open after brexit. theresa may will say the notion of a hard border is almost inconceivable. she urges the european union to accept her proposal for a free trade area. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more this is countries. bloomberg. anna: thank you very much.

let's go to the story in the u k. theresa may will reaffirm her pledge to keep the border between ireland and northern ireland open after brexit. may said the notion of a hard border is almost inconceivable. today the prime minister will urge the european union to accept her proposals for a free trade area. lucy macdonald is with us on set in london. i want to ask about what is going on in the u.k. and i'm going to pull up a chart which talks about the u.k. stock market and the way it has performed relative to others. you can see in the bottom, the ftse 100 outperforming msci europe. there's a few things going on. this currencies, energy, so i wonder how interesting u.k. assets are to you. >> there's still some value there. overvaluedlooking at markets everywhere, where can you actually see some absolutely

value? in the u.k. however we have brexit and we have political risk which is associated, but not completely dependent on brexit. , there are some stocks -- if theyrobably are overseas earners, and the energy companies are running on their own. anna: on the brexit story, are there some companies that you are concerned about what happens with brexit, and do you model what could happen with a hard or soft brexit, or have you managed to stay away from companies you think are going to be affected by what is finally decided? >> in global terms, it is not a huge deal. it is about 8% overall and not

increasing. in global terms, it is not the most important thing happening. you don't need to have risk their in a global portfolio. anna: in terms of the global story, we are in earnings season. you get to ramp up into the midst of it. we've had a few clues. talking to one of my colleagues, he was suggesting that trade is going to be the top concern for executives. some research suggesting that is a big concern for corporates, for executives around the world. at the same time, that is not necessarily reflected in the numbers. the outlook statements are reflecting something different. how are you seeing that develop? >> that is a very good overall summary. we've seen good topline growth. we've seen solid margins. we've seen some impact from currency. that is now beginning to shift a

little more in favor of europe relative to the u.s. what we are really interested in is what they say about trade, trade frictions, and what they are doing about it. this is another obstacle for companies who have a lot to deal with already. are they watching? far is their view about how the whole war could go? anna: they don't have necessarily any more insight than anybody else. they don't know what trump is planning before the midterms perhaps. are you seeing nervous thinking from corporates? i saw a few shipping companies deciding to cooperate on certain routes, perhaps trying to fend off pressure from trade wars. about, atrom a ceo the moment, even if customers

are reluctant, they are managing to come up with innovative products. are you seeing innovative thinking from ceo's? >> that is something we are always looking for. on this particular issue, the companies we've spoken to still seem to be watching and waiting, some of them thinking about where they could shift their supply chains, and some of them doing it already. anna: lucy, thank you very much. lucy macdonald, cio of global equities at allianz global investors. lucy will be considering the conversation with us on radio. a quick update on where we are on the chinese currency story. we talked about chinese devaluation against the dollar. erased itsn has --ses, trading at 6.7766

6.7767. weakest in at the two years. the yuan not far from its one year low. let's talk about consolidation and battles within the media space. comcast has abandoned its bid for 21st century fox. the decision leaves disney to take control as comcast turns its attention back to pursuing sky. a lot of moving parts in this story. rebecca joins us now from berlin. great to have you with us. what does this mean for disney? they have to pay up in the face of competition from comcast. it seems that battle is over. in forcingcoming disney to pay out 36%, a huge amount of money, but now disney

is left with most of fox. the big question is, what does disney do about sky? fox still has an offer on the table and disney is backing that offer. comcast is focused on sky. fox going to walk away from sky, or are they going to come back and try to beat comcast? seems like there are many possible outcomes for sky. sights onve set their sky. what are the next steps? don't know what disney's intentions are. we don't know what rupert murdoch will be happy to go along with. there are lots of moving parts. >> that's right. when you see what happened yesterday, sky shares fell about 1.5%. the market expectation is that

comcast's current offer is probably the highest one. there has been a ton of speculation that this is getting to be a very rich battle for disney and comcast. speculation they might come to an agreement. whether this move of comcast pulling out for fox, whether that could begin or not. from the beginning, comcast has had its sights set on sky. 2017 whenn december comcast was talking about going after fox, we knew that the ceo was very focused on owning this european distribution business. i seem to remember him discovering it or becoming more familiar with the sky brand in a

taxi. thank you very much for joining us with the insight on the media sector. rebecca with us from berlin. bloomberg users can interact with all the charts we are using. g tv is the function to use. usingose charts we were earlier on today, you can get all of those. use them as you see fit. coming up on the program, chinese stocks rally. we are talking emerging markets. we will bring you our exclusive interview with the malaysian finance minister. asian equity markets are making a comeback. around 0.5%. that is all coming up here on bloomberg. ♪

anna: this is "bloomberg daybreak: europe." : 46 in london.

u.s. futures pretty flat. the asian equities have come around a little bit. it was flat at the top of the hour. in the afternoon in asia, things seem more positive. we've seen a turnaround in the yuan. still that overall theme of the past few weeks very topical. for the immediate future, let's get a bloomberg business flash with juliette saly in sydney. juliette: thank you. reportft earnings provides further evidence that the company can increase cloud sales and squeeze more profit from the area while cutting into amazon's massive industry lead. profit and revenue exceeded analyst estimates, as did projections for cloud sales in the current quarter. two more units of china's struggling hna group have slumped on their return to the

market. heinen airlines is flying towards its lowest close in more than three years. other hna units extended declines after they resumed trading earlier this week. three hna units remain halted. softbank's vision fund is seeking to invest almost $1 billion as it seeks a stake in the world's most valuable artificial intelligence group. bloomberg understands the fund is still finalizing terms of the deal and could change. they declined to comment. they represent -- a representative didn't respond to request for comment. that is your bloomberg business flash. anna: thank you. let's focus on the asian story. malaysia says most of the missing 1mdb money is probably gone for good, but there is

still hope it will recover up to 30%. speaking to bloomberg, the finance minister said the total amount linked to corruption around the fund could be around $12 billion. he spoke to our chief asia correspondent, haslinda amin, in kuala lumpur. >> i would take a conservative estimate around 10%. at the very least, 10% of what they have stolen. it works out to around $11 billion, $12 billion, so you can get 30%.

10%.e very least, as i said, still not sufficient. why only 10%? what are the indications? what are you hearing? >> we couldn't trace where the money went. what did they buy? you cannot trace that. there's also questions of ownership. [indiscernible] cost.s also a question of expenses, how much is left? >> might you want to clawback from other players, such as jpmorgan, which was involved in a dollar transaction? >> we have to assess that in

terms of their fiduciary duty. goldman sachs is very clear. we need to look at that. i think there needs to be some. i do not want to make any projections. >> is it fair to say that you are not exploring other banks and their involvement in 1mdb? identify notave to -- you havengdoings to focus on the main factors. [indiscernible] down the main now players -- [indiscernible] anna: that was the malaysian finance minister speaking to bloomberg's haslinda amin in

kuala lumpur. now let's talk about what is going on in emerging markets. pboc officials signal there's lower to go for the yuan. the central bank weekend its daily reference rate for the currency by the most in two years. let's get more now on the energy story. we will start with china. he joins us here in london. great to have you with us. a nice chart here that asks the big question about the yuan. will 2015 repeat itself? how do you respond? >> developments over the past two weeks have suggested we may see a repeat of those events in 2015, when in august, the bank of china suddenly allowed the yuan to plunge, and trigger a selloff across emerging currencies. over the past few weeks, the yuan has been weakening substantially.

it is having negative impacts on other em currencies. that negative impact was especially quite strong movedday when dollar-yuan above 6.70. anna: does it make sense as a response from the chinese and do you expect more of it? we don't want to much weakening, accept lowerd volumes of exports, or lower margins for chinese businesses, or weaken the currency. >> when you speak about the yuan, what is important is the pace of depreciation. as long as the yuan weakens relatively slowly, then i guess chinese officials should be relatively ok with that.

the question is how far the yuan could weaken. got definitely spooked by the fact that the yuan weekend substantially in a few days. anna: talk us through the levels we need to watch here on this retracement chart. there had been this thinking in markets that maybe 6.7 was a line in the sand. spookedis exactly what the markets, this assumption that 6.70 is going to hold. , 6.80.e higher 6.80 is the important technical level. our view on the yuan is quite bearish. china signaled another round of quantitative easing. whenever a central bank launches qe, currency tends to weaken.

bloomberg reported today that one of the largest chinese banks perhaps selling dollars. we maintain bullish view. anna: we keep our ears open. we did see that not long ago. what about the dollar side of this? we were focused on the dollar against the yuan. in terms of the dollar technicals, how does that fit into your picture? strategy ishe em fx one of the most important charts that i monitor closely. throughout last year, we started bottoming in q1, and then in april, we broke higher quite convincingly. went through a period of

consolidation. this consolidation can be described as a triangle pattern. over the past few days, what the dollar has been trying to do on the back of hawkish comments from powell, is to try to break higher. it signals that the dollar may try to resume those trends. anna: interesting how the dollar didn't listen to the for now part. thank you very much. emerging markets fx strategist at rob lafranco. a few stocks we are watching, becker, the belgian company. telia, they are doing a deal, purchasing bonnier for $1.1 billion. there was another norwegian deal. sasol warning on full-year eps. citing poor u.s. operations in the second order.

we will find some bright spots later on. president trump criticizes the fed interest rate increases, breaking with white house tradition. more on that shortly. this is bloomberg. ♪ two, down and back up.

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.anna: good morning from london i am anna edwards carried this is "bloomberg daybreak: europe." declaration against independence. president trump criticizes rising rates. the greenback falls on his comments. sliding yuan, chinese currency clause that losses after dropping to the dollar. may's val. the u.k. prime minister set to say the notion of a hard border in ireland is "almost inconceivable," but can she convince the eu her plan will work. -- will work?

good morning, everybody. 7:00 in london. welcome to "bloomberg daybreak: europe." let's look at where we are on futures. butxpect a downside move, not in the norma's amount at the trading day. for a long time, the asian session was fairly range bound, but there was plenty of news on the trade and currency fronts. all of that added to an unchanged picture carried through the session in asia, things have gotten more positive. let's show you where we are on the risk radar as we look ahead to the european market open. in asia, we are up iran .5%. after the lunch break, things turning more positive. are we seeing the trade war turning to an fx war? we heard president trump intervening in currency markets, talking about his likes and

dislikes of fed policy. we factor that into the mix, and then we factor in what the pboc is allowing to hapten -- happen to its currency. we saw the yuan slip through 6.8 and the bloomberg index down. we have seen it fall on president trump's comments and it seems to be down a little of this morning. all of the trade war talk had been really weighing on the metals and minors every copper down for a sixth week because of trade tensions. we are keeping an eye on that. .e are up by .7% let's get breaking news with numbers coming through from the french luxury goods company talking about brexit. second-quarter sales, 1.4 6 billion, ahead of the estimate. asian sales up 11.6% constant foreign exchange rate.

they see first half currency operating profitability close to 2017's record levels. sounds fairly positive. a have lowered prices in china 4% due to lower import duties. the ceo says a hard brexit would be difficult for the u.k. market. commenting on the possibility of a hard brexit. one of the many outcomes investors and ceos are having prepare for now. let's get a first word news update with juliette saly in sydney. thank you. in china, a slump in the bond has deepened after the central bank weakened its currency by the most in two years. the pboc weakened it by .19%. speculation the authorities are sanctioning the losses by not

intervening and -- have helped make the one among the worst performers in the past month. the u.k. prime minister will today reaffirm her pledge to keep the border between ireland and northern ireland open after brexit. on the second of a two-day visit, theresa may will say the notion is -- of a hard border is almost inconceivable as she urges the european union to accept her proposal on a free trade area for goods. the indian primary and -- minister modi faces a vote of no-confidence. it is the first such challenge for any india administration in years. to coalition is affected defeat the motion, but the outcome will reveal which group has been more successful in pulling smaller parties into its fold. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries

you can find more stories on the bloomberg at top . in asianret he day markets. we were high, low, now hire again. -- higher. late hong kong trade, speculation the national team is buying up stocks, which is not unusual on friday afternoon. again, higher. the nikkei closing by walton third of 1%. australia closing higher by one third of 1%. indian stocks holding their record highs. we have been watching asian day groups, resuming trade today. limit,s off by the daily we have been watching taiwan semiconductor, surging in taipei. numbers yesterday met estimates. analysts looking at its outlook for 2019 and the stock has been raised to a buy. -- slumping over 8%. goldman sachs saying it is tipped to drop materially the

next three years, a downturn coming through from that stock on the broker downgrade. anna: thank you, juliette saly in sydney. let's talk about what has been going on politically in the united states as donald trump has criticized the federal reserve's interest rate increases, breaking the ore than two decades of white house tradition of avoiding comments on monetary policy out of the respect to the independence for the u.s. central bank. he is "not thrilled by rising interest rate." there have been five hikes since he took office. he went on to say he was allowing the bank to do -- leaving them to do what they were doing. he extended an invitation for second summit with president vladimir putin of russia in washington later this year. joining us with analysis from hong kong, jodi schneider. let's start with the geopolitics. how has this news about trump offering an infant -- invitation

to vladimir putin and gone down in washington, given the reaction to helsinki? it certainly has been another surprise in a week full of surprises after president trump's store meeting in helsinki with president putin and the fairly remarkable news conference afterwards. he also surprised members of his administration with the news that he has invited the russian president to come visit in the fall. his national intelligence director, dan coats, when asked about it at a conference he was appearing at first didn't know about it. this was a surprise to a lot of people, and comes as more revelations have been coming out about the helsinki meeting. there has been criticism of that meeting and some of the president's statement about u.s. intelligence and about the russian meddling in the election, as well as the robert mueller investigation.

ofn his walk back of some those comments have gotten criticism on capitol hill, including by members of his own party. the latest thing to come out from the meetings, is the russian president putin has apparently told some members of his administration there that they discussed a referendum on the eastern ukraine and president trump said he would consider it, according to people familiar with whom bloomberg spoke. anna: indeed, we are gradually getting little-known get -- little nuggets. just translators were president. has been busyp shaking financial markets with other comments. what was he saying about the fed , because he was raising objections to the strength of

the dollar and higher interest rates, but would leave the fed to do their job. jodi: he did say that. he would respect that they needed to do their job, but by making comments about fed policy at all, he is breaking with several decades of presidential tradition of leaving the fed to do their job to be independent, even by commenting on this, it is unusual. aseral analysts, as well warmer treasury secretary larry summers has said this could have an effect perhaps of somewhat of a backlash from the fed if it is a decision. some would go ahead and do it because they want to assert their independence from the executive branch. it may end up doing what the president doesn't want to see done. we will have to see on that, but it was fairly unusual. -- bille predecessors

clinton, george w. bush, and barack obama did not take comment on fed policy. anna: breaking with tradition once again in yet another forum. he said he was leaving them to do what is best were the words he used. jodi schneider, live from hong kong. for analysis on this story, let's bring in jub huren. thank you for joining us. heardtalk about what we from president trump, breaking with tradition, unconventional manner, talking about fed policy, commenting on fed policy. are we surprised? shouldn't bey surprised, but it is important to differentiate between the noise and the signal. we know trump would like to have a soft dollar, probably boost

the u.s. economy. he would like to keep interest rates low because he is looking to borrow about $2 trillion as the fiscal deficit has expanded. for the fed, this won't steer them off course. they have a mandate that is very firm, full employment and stable prices. they haven't -- reached the employment mandate. 4% andyment is south of core inflation. he is looking at this data and it is kind of mission accomplished to an extent. he sees the path of rate hikes firmly in place. there is little at this point that could knock us off course. anna: for now. jub: that is a great point. the market picked up on that "for now" moment. it was taken as dovish. we think it is more of a hawkish signal. it inflation data looks like is accelerating, the unemployment rate is falling and unless we see a real change in these employment gains, that

will be the course we are on for the next 12 months or so. we going to continue to see the same from the u.s. economy? one thing to worry about. the philadelphia fed district outlook weakening, the growth holding up well but a lot of citations of trade concerns for the manufacturing sector there, in particular. jub: that is the big question. the key thing to watch next earnings season is, our companies reporting, ceos talking about the impact of tariffs, uncertainty around trade wars? to the steel and aluminum tariffs as having an impact on their business. if that becomes a theme, that would give the fed or cause for concern, but it remains to be seen. we don't know the impact of the tariffs. centralw do you think

bankers feel or behave when they think their independence is being challenged? that somed the view commentators suggested if the president speaks out on what monetary policy should be, it might stiffen resolve to hike rates at the fed. it could almost be more hawkish. do you buy that? jub: powell is such a pragmatist. he is very plainspoken, shoots from the hip. says it like it is. would be incredibly surprised if you let any personal emotions get his decisions or the decisions of the fy oc -- federal reserve. to a morets aggressive hiking cycle than they have priced in. we started this talking about president trump and what he is doing with the fed. it seems, given the comments from trump and the actions of the pboc, the trade war is

turning more into an fx war. would you go along with that? jub: at the moment, it is important to disentangle what in china is related to trade wars and how much is related to the domestic economy because china is going through a rebalancing over to a more consumption led economy from an investment comity -- economy. to gdp needs to come down and they are trying to do that by tightening credit conditions. wantey do, if they don't growth to fall off a cliff, they need to keep monetary conditions quite loose. that means low interest rates and a softer currency. while trade war headlines are helping the journey along, the pboc will be quite happy about having a weaker currency if it supports growth while the lever the economy. anna: there is this chart about ging the economy. this is credit expansion slowing, shadow banking systems shrinking in china.

do you see that continuing, supported by a weaker yuan, but do you see it continuing or do they use that as one of their tools to defend the chinese economy? jub: the chinese growth target is 6.5%. once it is printing above that, they will continue delevering. chinese government becomes concerned about a hard landing or decelerating too fast, they will take the foot off the pedal and it will be more of an opportunistic time approach. at the moment, gdp is about 6.7, the numbers are relatively healthy though they have come off. it gives them the green light to continue the deleveraging. it will take place years over decades and it will have to be done in that opportunistic fashion, but ultimately, growth probably remains the primary target. anna: thank you very much. jub hurren fixed income manager

at the aviva investors. a quick word on the asian equities session. you on extending gains, rising as much as 0.2%. this after it weakened in the chinese session. equity markets, things turning around. shanghai composite extending gains. we've got the shanghai composite up by 2%. the hang seng, stronger than earlier in the session. up, curve flattening goes global from the u.k. to indonesia. investors have been joining their u.s. counterparts in driving yield curves flatter. what that means for your portfolio. we will talk about that next. joinedoday, we will be by -- this is bloomberg. ♪

anna: this is "bloomberg

daybreak: europe." 7:19 in london. let's get a bloomberg business flash with juliette saly. she is in sydney. microsoft's earnings report forecasted -- investors as it provided evidence the company can increase cloud sales and raise more profit while cutting into amazon's industry-leading. profit and revenue till the end of last month xt did analyst at -- exceeded analyst estimates as it did for cloud sales in the current quarter. looking tofund is invest almost $1 billion in china's group as it seeks a stake in the world's most valuable artificial intelligence startup. bloomberg understands the fund is still finalizing terms of the deal and the details could still change. representative for softbank

didn't immediately respond to our requests or comment. malaysia expects to recover three and a half in dollars of funds potentially lost through one mdb. in an interview with bloomberg, the finance minister discussed the government's efforts to -- the dollars siphoned from the troubled state fund. aiken -- very conservative estimate. 10%. perhaps, up to 30% but at the very least, 10%. your bloomberg business flash. thank you, juliette. let's talk about the flattening of the yield curve from u.k. to indonesia. global bond investors have been joining the u.s. in driving yield curves flatter.

federal reserve rate hikes kicked off the trend, but other central banks are tightening policy and developing economies have had to act to support sliding currencies. jub hurren, fixed income manager at aviva is with us. we will go global in a second. let's stick to the u.s. for a moment. the yield curve, continuing to flatten. this is showing fives, 30's, two's, tens all flattening carried i have had many different interpretations as to why this matters or if it tells us anything about a recession looming. do you think it does or does it just tell us about the need at certain parts of the curve for investors to be buying fixed income? jub: everyone focuses on this chart because it has been reliable an indicator on future in session -- recessions. when the yield curve inverts, anywhere between six months and two years before we and up in a recession.

things are different this time because the central bank policy we have seen post financial crisis, which has been widespread qe, buying this asset class in large quantities. that has a dampening effect on a lot of premium in the natural interest -- steepness of interest curves. that is one thing possibly keeping the curve flatter than it otherwise be -- would otherwise be. the policy is largely coming to an end. the fed is winding down their balance sheet and the ecb is slowing purchases the end of the year. anna: does anything stop this from being the picture? do i get to talk about steepening of the curve at any point, and does it stop short of an version? -- inversion? jub: the fed has been vocal on inversion. we getossible that as closer to inverting the curve, they will try to take measures to slow. this is a signal of the next

recession. the thing that could change is the fed estimates of their long-term neutral rate. one reason bonds past five years are pinned at 3% is that is where the fed has signaled their estimates of the long-term neutral rate. in some ways, they are signaling the curve should flatten and then invert by the path they have laid down their 40 -- forward guidance. that number has come down 100 basis points so after -- over three years. forever, will stay low interest rates will stay low forever as a result. that looks broken now because inflation is starting to accelerate in the u.s.. two. at realm ofll within the higher inflationary environment now so the possibility of the long-term dot going up his light. the: because of the role of

u.s. treasury market, how infectious is what is going on in the united states and other markets? this chart shows the u.k., it is suggesting the flattening phenomenon is helping elsewhere. jub: the currency -- happening elsewhere. jub: the currency is the variable. indonesia has been hiking to protect their currency. as the fed titans policy, that back to the u.s.. if the emerging market economy wants to protect its currency, it needs to keep similar pace as the u.s. in terms of hiking interest rates. that would flatten the curve for emerging markets. there is a currency effect we have seen and it is quite symptomatic of this behavior were developed markets -- emerging markets come under more pressure and have to take policy steps to calm the market. anna: all clues are in the dollar, then?

the dollar moves and whether it continues? jub: that has been the key driver. last year, we were in a soft dollar market. -- environment. as soon as the dollar went up this year, that is when emerging markets started selling off. it is a misnomer that this is all about trade wars. when you look at argentina and turkey, they are not big exporters to china or the u.s. but they have sold off a lot this year. stronger symbol of the dollar putting pressure on economies that have borrowed a lot in dollars. that has been more a driver -- driver. , fixed incomeen manager at aviva investors joining us on "bloomberg daybreak: europe." let's check the market half an hour from the start of trading. the shanghai composite up by 2.3%. yuan. back at 6.7 on the

weakness in the chinese currency has been the story in the session but things pretty flat right now. that is it for "bloomberg daybreak: europe." we will report on mid-caps. the european open, next.

guy: friday morning. welcome to "bloomberg markets: the european open." we are live from london. i am guy johnson. cash trade, less than 30 minutes away. fixing the yuan, the pboc weakens the reference rate by the most since 2016. trump fights the fed. "notresident says he is thrilled" about how raising rates. was he taking aim at china?