Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20170912

Welcome to bloomberg daybreak europe, our flagship morning show. Im anna edwards. We have great guests coming up, in particular from the frankfurt morning show. Bmw special representative joins us in about 15 minutes time for the first conversation of the day. That is followed by Stephen Armstrong at 6 30 u. K. Time. We will get into those conversations about electric cars, about diesel, about the future. Lets get to the markets, though. We need to tell you what has been happening over the last 24 hours. The United States picked up at risk on atmosphere we saw in the Asian Session and the european session yesterday. The snp, closing at another new record high. In fact, we have the snp here, charting its course through 2017, and pushing up against that green line, which marks where wall street strategists think the snp will get to. It was financials, technology stocks, insurers, all of those companies, quite a broadbased rally, bouncing after the receiving threat of Hurricane Irma. Investors have been favoring risk asset yields, well over 1. 2 . The dow, about 22,000. It was a very strong risk on picture for the United States, and that picked up in the Asian Session. We have the msci asia going higher, another one present gain for the nikkei. U. S. Futures, pretty steady as well perhaps we draw a line before the u. S. Session. The u. N. Security council an unanimously approved those sanctions. Unanimity was an important sign against pyongyang. One of the strategists from jeffries says there is a bit of a sweet spot. The inflation data is not Strong Enough to force a central bank hands. We put gold in there to echo this move back into the socalled riskier asset, and the dollar index, just pausing. We saw a bit of strength in this session yesterday, closing up for the first time in eight days. We should talk about comments coming through from christine lagarde, speaking over in asian, and comments on the strength of the global economy. Shes is incredible rebalancing in the chinese economy, making credible efforts to rein in risk. So says christine lagarde, speaking in china. Lets get a bloomberg first word news update. Reporter anna, the u. K. s government plans has cleared a major hurdle. Lawmakers agreed to allow the eu withdrawal bill to continue the progress through parliament by 326 votes to 290. That came after theresa may promised to discuss critics concerns before they have to vote again and to consider allowing more time for the next stage of debate. In the u. S. , the people of florida are assessing the damage of the countrys second major hurricane in 15 days. Eakened to a Tropical Storm and by one estimate, the total cost of the damage drops to 49 billion from 200 million. More than half of the population of the state was without Services Last night. Norways Prime Minister has become the countrys first conservative party leader in three decades to be reelected. Solbergs victory was narrow. The labour party had its worst Election Results since 2001, as joblessness boosted the prospects of the ruling coalition. Hong kongs financial secretary has warned potential buyers to be careful in purchasing property in the worlds most expensive property market. The comments come to unwind the u. S. Feds Balance Sheet. Our past experience indicates interesthe u. S. An impact ourll deftly Interest Rate. Reporter janet yellen met with Donald Trumps daughter and advisor ivanka in july. That is according to yellens public schedule. Eight days later, the president told the wall street journal, that yellen was absolutely in the running for a second term. Most economists expect the president to pick someone else. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. You can find more stories on the bloomberg at top. Still some very risk on sentiment across asia today. We are think japans nikkei index hold on to the solid gains they had yesterday, up another one point to present. A little flat in hong kong. And the asx 200 being boosted by generally firmer metal prices. Banks in australia also doing well. A bit more coming into the south korean market, holding about the kospi. The a lot of the apple supply is based in asia and tech stocks are rallying. Geely auto is doing very well at a 24 year high. This is on the back of what we heard from china over electric vehicles over the weekend. These lithium producers continue to rise on this move towards electric vehicles as well. Galaxy is a lithiumbased battery operator. As anna mentioned, we did have that passing of some of those sanctions from the u. N. Overnight. The won rising as some of these tensions ease, but these sanctions were deluded. The price of protecting against korean bonds has risen and is now actually outpacing those of protecting bonds in the philippines, which is the yellow line and china, which is the blue line. Still of course, very much at the forefront of investor minds, these geopolitical tensions. Anna thank you, juliette saly, with a nice round up. Tte was talking about the sanctions against north korea, so lets get more details. The u. N. Security council has in endlessly passed a fresh round of sanctions against north korea. The resolution will cut imports on Refined Petroleum products to 2 Million Barrels a year and ban textile exports. To win support from russia and china, the United States dropped a bit to ban all oil imports antifreeze kim jong uns s goods. Jong unsfreeze kimg jon goods. Demanding an end to the nuclear in the interest of a denuclearize i of the nuclear peninsula. The situation on the peninsula is deteriorating constantly as we speak, falling into a vicious circle. The peninsula issue must be resolved easily. China will never allow chaos and were on the peninsula. Anna scenes from the United Nations yesterday. We more on the sanctions, have our east asia Government Team for bloomberg news. A watering down of these sanctions, the end result in unanimity. Reporter exactly. China could veto anything they want. For the u. S. , it was a matter of, do we stick with the stop proposal they wont go with, or do we try to get a unanimous decision . In the end, they went for a unanimous decision. They are hoping to resolve this problem together. They are helping these sanctions will get north korea to the negotiating table. Anna it might do that. It certainly brought them out in a rhetorical sense. How might north korea responded next . We have heard some very strong words. Reporter we are still waiting for the official response. They have already there was and is a vision last weekend that they would fire new Intercontinental Ballistic Missiles that could hit the u. S. So, you know, a test fire run of those. Theres always that possibility. They have that ready to go. That could come as early as tomorrow morning. They are not going to like it. They have threatened retaliation ahead of this and they will have a harsh response for sure. Anna meanwhile, north korea appears to be stepping up efforts to extend bitcoin and other currencies and this could be leading to the sanctions. Reporter that is right. The more they are cut off from the rest of the world through trade, through formal banking, the financial system, they are looking for other ways to do that. Aboutng un has an army of 6000 people, just dedicated to hacking and cyberwar affair. Part of this is going around the world and trying to steal money from Bank Accounts and other ways online. Theftsthe biggest reported lester was they had 15 million in oen ago. As they get cut off through these new sanctions, they are looking for alternative ways to raise money for the regime. Anna daniel ten kate reporting for us from hong kong, thank you very much. Joining us here in london, alan higgins. It is great to see you this morning. United nations, going for unity, figuring that matters, sending a strong sig nal to pyongyang. The response see from the north koreans, at least the rhetoric ratchets higher. How do you navigate this as an investor . That is a tricky one. We have a look at geopolitical risks, generally. You are right to be concerned because we have seen 28 examples from the cuban war missile crisis on earth. Crisis onwards. You should be concerned about a market fall. But generally, it is too late. You need to buy into it because one year later, the average return is about 13 . So, it is quite difficult to navigate and as you have got perfect political insight, do nothing. Dont try to be clever about that downside. Rather, tried to be stoical and buy into it. Atiously, we have risk relatively medium levels before you go in and not be caught in one of these geopolitical issues. Anna i got an email yesterday, joel a lot. Billy he talks about how outside events come and go, but patience matters, which is important to bear in mind. It is. This is exactly the point. All my career i have seen concerns about korea. Low,tly, it is really compared to previous situations i have seen in korea. All my career i have seen concerns about korea, south korea north korea and we tend to get through. As the north Korean People theirue to work on get smartphones and find out about the world, just like we have seen in other places, going from russia to years back to cuba, capitalism tends to take over. Anna if you take the long view here, i have heard investors talk about whether this is similar to tensions in the cable missile crisis. When you talk about the markets, traders are the most bearish on korean won since 2013. This is the korean won, but if you look on the s p 500, you see this generally. People are paying up for options. It is clear that markets are extended, that evaluations unchallenging, and there are things to be concerned about in the world. I know you dont see that in the vix in terms of volatility, but you do see this in the risk reversal. For us, that is a positive signal. When investors are very worried, it is not when you need to be concerned. It is what investors are not worried that you need to be concerned. Anna well bring you an exclusive interview with mexicos finance minister at 8 00 p. M. U. K. Time. This is what you should be watching out for alongside that interview today. s union leads against president macrons labor reforms. How he stands up to that union test. Philip hammond faces challenges from the law, the Economic Affairs committee. We also get u. K. Inflation data. And apple hosts their Product Launch event with the latest iphone and watch models expected to be unveiled. It could be the toalk of the day. We go live to frankfurt to speak to bmws representative. This is bloomberg. Anna welcome back, everybody. 6 18 in london. This is singapore. The asian trading day come up by 0. 4 . Risk on momentum from the United States. The s p closing at a record high. Lets get the Bloomberg Business flash juliette saly. Reporter volkswagen has announced sweeping plans to build electric versions of all 300 models. The comments from the ceo come as they accelerate the shift away from Combustion Engine and tries to draw a line under the emissions cheating scandal. Fromlkswagen has learned the past and over the last two years, we have understood what people understand by sustainable mobility. Have announced and what we have alluded to is a self commitment. Reporter an agreement to sell the paradigm contraceptive business for 1. 5 billion. The move comes as the largest maker of generic drugs works to turn the company around and reduce bids. Shares soared as it ended a sevenmonth search for a new leader as it named kare schuult. Apple holds the new Product Launch later today. The Company Marks the 10th anniversary of the iconic iphone and bloomberg will bring you special coverage of that announcement at supply p. M. U. K. At 6 00 p. M. U. K. Time. Anna thank you, juliette saly. Lets get from singapore over to frankfurt, where matt miller has driven in to bring us some coverage of the frankfurt motor show. He is joined by a guest there. Thanks very much. I am joined by the board member of marketing sales, ian robertson. Let me first ask about the electric cars we have here. You have three models behind you, whether concept or ready for the road. How much bigger did this push towards electrification get to the german diesel crisis. We have been growing it over the last few years. It is four i years on to the day when we unveiled the i3. We will bring 100,000 vehicles this year. The mini, of course, will hit the streets in the not too distant future and we have plug which tells you this is a longterm trend, something we see will be a move that is going to get st ronger. Matt well you be able to ramp up sales quickly enough to meet your emissions target in 2021. It is already ramping up. The momentum is already there. Of course, as we continue the r d investment, Commission Sales are coming. Matt bmw margins are, right now, the dream of the industry. Will you be able to keep it that high with electric cars coming into the mix . We renewed our guidance. We think that is possible. Of course, we will bring more models to the market. Leave a big push into what we call the larger cars. You will see an eight series as well. The mix of products will shift. In the mix there, 8 to 10 , is the clear guidance. Matt if i were to purchase an x7 i would want a big diesel engine. In my the last of am i the last of a breed . We still see very Strong Demand for diesel. You will see diesel still in come,x in the years to and i believe we will pass the situation right now. People are beginning to understand there are older diesels and there are new, very clean diesels. Matt the reason the new diesels are so clean is because you have such sophisticated exhaust systems that you are able to put in a vehicle like an x7 or x5. Can you keep diesels in the smaller, lower margin cars . I think what we have seen in recent years is in the smaller cars, of course the turbopetrol engines, they have become more popular. In the they are cars, the diesels are still very popular. You have got technology, you have got particulate filters. All of those things combining to give you a great, very flexible field. Smallerright, maybe the cars will move more to the gasoline engines. Matt what about the investment cost to switch over powertrains, the focus from diesel to electric . How much will that cost you and we are you going to find those cost savings . We have a flexible approach. Whatever is diesel or gasoline, we are balancing this done similar production lines. In the same way we have installed our own electric manufacturing. This was an important strategic decision. We want to build our own engine technology. As such, that forms part of our overall strategy and gives us more flexibility. Same you havent had the and problemsals the other german carmakers have had. Could it be part of your strategy to separate yourself from the pack, to stand along e among the other german automakers . I cannot comment on what the others have been doing, but clearly, the culture of this business is a very robust one. We are very challenging to one another, but at the same time, we are very clear in our objectives and how we deliver those objectives. From the perspective of are we different, i would say we are and we will continue to drive our strategy within this company the same way we have done in the past. Matt thank you for your time, miller, talking to the bmw special representative there at different for auto show. Plenty more to come from the auto show. Next up, Steven Armstrong will be speaking to Bloomberg Television, coming up at 6 30. Up next on the program, we will also talk about norway. The country has reelected a conservative led coalition. What does this mean for Norwegian Oil and sovereign wealth funds . This is the reelection of Prime Minister solberg. Investors embracing her promise of tax cuts after a first term records shaken up by spending, dipping into that sovereign wealth fund. The green party were expected to do better than they did. What does this mean for the oil industry . Is the industry breathing a sigh of relief because the greens have been calling for an end to Norwegian Oil exploration. This is bloomberg. Anna welcome back, everybody. 6 30 in london. The dollar against the yen, pretty flat. Making the change from yesterdays session and fridays session. Getting out ofs the dollar and yesterday we saw them piling back in. Lets get an update on the broader session. Guy lets carry on talking about these equities at the moment. The ftse 100, trading in futures. The fair value pointing to a rise of 0. 2 , not as strong as what we saw yesterday, but you have to appreciate the risk rally rolling on. It looks like we will see a solid session. Pay attention to the gmm. The japanese nikkei, trading stronger this morning. The yen, under a little bit of pressure as this risk rally continues. Thats what we are seeing at the moment. The big story at of japan is what is happening with the japanese jgb 10 year, training one much as we have d earlier we were trading up as m uch as we have this year. So, thats what you can see there, the gmm highlighting that. Earlier on we were up four faces finesbasis points. You can see yields coming down over the last month. And then this bounce back up again over the last 24 hours. The yields popping back up again. It will be interesting to see how the boj will react. Curb control, something we will be talking about for a long time. Heres a chart i want to highlight for you. Chinese ppi has not always been the best predictor, in terms of the Global Inflationary story, but it is a predictor and worth paying attention to. You have seen the data this morning beginning to edge up. The yellow line here is u. S. Import prices and the two are reasonably correlated and that tends to feed into u. S. Cpi. Maybe a small fun of a turn upwards in chinese ppi. That could ripple out across the world. The supply chain sends it out to the rest of the world. Anna the factory of the world still having that impact. Hasesa mays brexit law passed its first test in parliament as lawmakers voted to allow the bill to continue to the next stage, but threatened to rewrite it later when the finer details are debated. The Sticking Point is henry viii powers. Us. Higgins still with u. K. Stories take us back in history, but rarely to tudor times. What do you make of where we are in the brexit story, then . When we have spoken in the past, you have always talked about the transition days and what it looks like as mentoring to investors. Transition phase and what it looks like as matering to investors. They want to trade as well. , so we are expecting that. So, we are expecting that. There are risks oalong the way. We think that would be positive for sterling. We have more time to get to a solution, if they can find a solution. Anna we heard some conflicting reports from Jeremy Corbyn just yesterday about whether he wanted to be in the Single Market or replicate something that looked like the Single Market from outside. Still,are shifting arent they, certainly in the opposition camp. That did not matter when theresa may was riding high in the polls, but now shes not. The legislation can get through. In terms of the labour party , slightly more probusiness comments. Of, somewhat more aligned with the mainstream conservative party it seems. Not really a factor. Youve got an ultralong grasp of sterling. Anna taking his back to tudor times. 1971 is still pushing it. Weakest average price for the pound against the u. S. Dollar, going back to 1970. You have a good memory. Only going back 10 years ago. 2006 toerage faces in 2006. Things can change. Sterling is a reverting currency. We saw a 25 years ago. I was starting my career virtually. Marking was the deutsche int hose those days. It rose rapidly. Things that people miss actually , are the carry. The Interest Rates in the u. K. Are much higher than in germany. Anna what does that mean for the risk of the pound of the pound . We could be wrong. Anna is that because you think the politics is overstated . It is a pretty depressing situation for politics. The way wed categorized it would be to say, yes, sterling can go weaker. But they would have to be a disastrous brexit. We have these levels, as you show in your longterm graph, and they are depressed levels. We are pricing in that bad brexit, yes. A transitional deal will make make themssess and amk more comfortable with sterling. Anna we will he become conversation about the u. K. Th there. Lets bring up that norway story. Prime minister erna solberg has become the first conservative party leader in over three decades to be electe reelected. We are joined on the phone now from oslo by our norway editor oslo bureau chief. What can we expect from Coalition Talks . Yes, it was a really tight race. So, she will have to cobble together a working coalition for the next four years with a somewhat weakened group. Isalty was paid to her th morning. So, we can probably expect more of the same of what we have seen years. E last foruur the question is whether any of those smaller parties will join the government. It is what solberg wants, but to the smaller support parties want ti . Want it . Anna what does this mean for Norwegian Oil . Do we see Norwegian Oil producers breathing a sigh of relief . That was the big question ahead of the vote. It certainly looks like the oil industry dodged somewhat of a bullet since the green party did not live up to the hype and will remain just with one seat. Our friendly parties are still in charge. The election will mean stability for the countrys wealth fund, in terms of the divestments. The issue will not go away entirely and some of the smaller leftwing parties did gain support. Debates tothe continue on the front spoiler there. Anna we will look for that, then. Jonas, thank you for your time. Alan higgins, still with us. When you look around the world for opportunities, clearly we are focusing on norway today because of the politics, but the oil story is close to the market. One of my colleagues but this together, keeping the krona in check. It draws your attention to the fact that the euro against the way seems to move on the oil price, no matter what the government does. It does, and if you extend that, you will see how weak the norwegian krona is. It is really puzzling for the card account surplus. A bit of an opportunity, a bit like brexit. The way i would characterize this is it is discounting very weak oil prices. Anna in the white, we have the euro rising, all the way back to the 1970s. It is curious for a wealthy country versus the euro. We know inside the euro we have germany of course, which is powering ahead. It does look like a bit of an opportunity and i thought it had to do with the sovereign wealth fund, the fact they invest in overseas currencies and put downward pressure on the norwegian krone. And have managed to avoid it. But because of the election, i thought i would have a look and it does look like a potential opportunity with trading as such depressed levels. Remain positive on the Global Outlook with the euro area particularly strong. So, in terms of your overall away from the norwegian story and back to the eu and back to maybe the eurozone, what is your stance on the eurozone equities and that particular market . We see the s p touching alltime highs. Depending on the mandate, both the currency and the equities were overweight. Thats been good. Its been a little bit of a crowded trade, but a consensus trade. I am sure you have had many people say that. Basically, we had some inflows come in, but not as much as the outflows last year with outflows of 100 billion with european equities last year. Inflows of about 30 billion. We think there is a long way to go to unwind that. Anna but is it not threatened by the ecb and taper talks there . Draghi seems so cautious about tapering, doesnt he . He needs to because just the reinvestment of maturities is going to be very big next year. I think it is about 12 billion a month if they do nothing, just from maturities. Tapering in an environment of very clear strong economic activity, no problem. Where the markets get nervous is tapering when the market looks a little bit weak or the economy looks a little bit weak. I think tapering would be very enthusiastically received, especially from the banks. Anna take us inside your fixed income strategy with an europe. Portugal is something that has attracted you, the periphery of the euro, at a time when the eurozone is recovering. Portuguese debt is not natural so much for sterling mandates. Where we can have portuguese debt, it does look cheap. Yields are not that high, just under 3 for 10 years. In an low Interest Rate world if you look at the portuguese fundamentals, they should not be rated as junk. They should be Investment Grade. We expect an upgrade to Investment Grade deficits, andin they have gone away and they have done a great job. Unemployment is falling. When you bank in portugal, it is almost more of a credit story than a german bund analysis story. Anna alan higgins, thank you very much. If you are traveling in, you can also tune in to Bloomberg Radio. Joined to talk global risk as the u. S. Steps up pressure on north korea. You can watch Bloomberg Television and Bloomberg Radio, always available. Compete toarmakers unveil their versions of the electric future, we are live at the worlds motor show. We will speak to Steven Armstrong. This is bloomberg. Anna this is bloomberg daybreak europe. just getting lines of the parliament. The south korean Prime Minister lee is commenting in parliament, saying it is still not time to talk with north korea. The u. N. Secret he Council Resolution yesterday but an emphasis on the need for negotiation and pointing out that that was in the resolution, as well as the sanctions. Lets get an update on the Bloomberg Business flash. Reporter the former Deutsche Bank head of trading has been accused of defrauding investors in mortgagebacked securities sold before the financial crisis. A civil lawsuit alleges that he misled investors about the quality of loans and stole 1. 4 billion in such securities, resulting in hundreds of millions of dollars in losses. He categorically denies wrongdoing. Apple holds its highly anticipated new Product Launch later today. Ceo tim cook is expected to unveil three phones, including a premium model. The event comes as the Company Marks the 10th anniversary of its iconic iphone and bloomberg will bring you special coverage of that announcement from 6 00 p. M. U. K. Time. Volkswagen has announced sweeping plans to build electric versions of all 300 models in the line up. Worldsents come as the largest automaker accelerates the shift away from Combustion Engines and tries to draw a line under the emissions cheating scandal. Folks like an has learned from the past volkswagen has learned from the past and we understand what people understand by sustainable mobility. This roadmap we have announced, in which you have alluded to is a cell commitment and is going to be our commitment going forward. Reporter that is your Bloomberg Business flash. Anna lets go now to the frank for motor show. Matt miller is standing by with Steven Armstrong from ford. Matt thanks, anna. Im here with Steven Armstrong, running the business for ford. Was it hard to take over when this vehicle crisis was renewed . Can you manage to keep out of that, being that youre an american automaker in europe, youre a much bigger producer of the smaller, more ecological vehicles . I think we are doing a great job in demonstrating we have a range of options available to consumers, and putting our wonderful little three cylinder petrol engine, which you will see in the echo slot behind me. That gives us an advantage because we have got a range of economic petrol engines, that differentiate from the diesel engines. Matt there are concerns that carmakers will not be able to make their 2021 co2 emissions targets. Are you confident . I am confident and i am confident we will be able to make products people actually want to buy. The investment in good, petrol engines and as we start to address the electric vehicles in the coming years, and we will make sure we meet the regulations. Matt do you need to make a bigger push into electric vehicles . You have been doing hybrids for a long time now in many of the smaller vehicles. Do you need to redouble does efforts . I think we have got a good plan. The rollout of our first all of your vehicle will come in 2020. On the commercial side, which is a very important part of our business, we recently announced a partnership. So, we will be the greatest producer of every electric in europe, starting later this year and we are free trialing a hybrid plug in in europe. So, it is important to get a good balance. Matt you have got a new transit you are showing here at this show as well. Ford has been really successful inits van business europe. We are the number one Commission Business in europe. Thats a very important part of our business here, the real underpinning of what we do. The transit van is an iconic product in europe. Matt are you going to have to do some of because cutting that other big german carmakers are talking about . Will you have to do any belttightening . Matt it is important that our businesses are able to be efficient in everything that we do. We may tough decisions this week. We closed some facilities and restructure the business. We never really finished network. That is always ongoing. I am confident that our business moving forward will be adequate for us to have a strong business. Matt will you be able to take market share, as opul is in transition, as volkswagen has Consumer Trust issues, will you be able to take market share away from those other players . We are growing our share in germany, but over the last four years, we have continued to see growth in 2017. I am confident in the products we are selling, great cars. Yes, i think is the answer to your question. Matt thanks very much, Steven Armstrong. Anna matt, thank you. The conversation around electric vehicles continues there, speaking with the Ford Motor Company and we have plenty more big names coming. The lamborghini ceo will be joining the program at 8 00. He is followed by porsches ceo. A lot more to come on electric vehicles and other subjects. Carmaker hasargest planned to build electric versions of all 300 models in its lineup. Folks like an volkswagen will invest into the batteries needed. But will electric vehicles be Good Business for carmakers, and which other Industries Stand to gain or lose from this shift . With us this morning, an analyst from Bloomberg Energy finance. Alan higgins is the with us. Collin, lets dive into this. The winners and losers. Which companies are wellpositioned to benefit from this move into electric vehicles . We did some analysis looking at who is the most exposed right now relative to their size, not just in absolute terms. The Chinese Companies come out on top of that. Groups like byd. But that is mostly because of this domestic policy support. They dont compete as much on the international stage, but you see pretty aggressive announcements. Bmw. From daimler and v moreme ways, they might be vocal about what they are doing, partially because of this emissions scandal. You dont hear as much from the americans with the exception of tesla, but they are doing a fair bit as well. Gm is pushing the bolt nationwide in the u. S. , but i think there is more to come from them. Anna talking about the United States, i have this chart here, showing enterprise value per car sold. What kind of market value is the . Arket putting on these cars you can see the winner here, tesla, against gm and ford. Tesla is the story that divides, even though the market seems to be backing it at the moment. It was a couple months ago, the u. S. most shorted company. They were people out there who hated it, frankly. But turning around, if you look at the valuations of the big oems, they are trading at seven times earnings, some even at five to six times earnings. What does that mean . Some say these companies have five to six years left before they disappear. Partly, i am sure the executives are looking at the current evacuations and saying, we have got it wrong. Anna so, a harsh message. What about toyota . The makers of the prius. They were ahead of this curve. Not such big, splashy announcement slightly. The interesting thing is, they have also come out with a plugin hybrid version of the previous and that, in our view, will be one of the bestselling plugin hybrid vehicles this year. That will be a very successful model for them. The big question is, do they continue to push for the past that into electrics . They said that they will in 2020, but they have not released a lot of details, are set but that will look like. Their main big bet is still on fuel cell vehicles. Anna and the opportunity in the car, or in the utilities, or batteries . When we look at these low valuations of the auto sector, with the likes of volkswagen embrace if they can technology, that will be the opportunity. Because there is so much that news priced in. Thend i think you do need big automakers on board. You can say, tesla will come and replace the entire auto industry. Anna thank you both so much. Colin mckerracher joining us from Bloomberg Energy finance and alan higgins. Thank you both. Remember, if you are a bloomberg customer, you can watch the show on tv. This is bloomberg. Anna punishing pyongyang. The un security Council Unanimously approves new sanctions against north korea after the United States drops some demands to win over russia and china. Brexit hurdle cleared. U. K. Lawmakers passed a repeal bill, but some mps threatened to rewrite the legislation at a later date. Victory. Ric norways Prime Minister wins reelection as voters embrace a promise to cut taxes. And vw voltage. The worlds biggest carmaker unveils sweeping plans to go electric. Warm welcome to bloomberg daybreak europe, our flagship morning show from london. 7 00 here in london, lets have a locket at the futures. Are we expecting to follow through on the bounce in equities from the asian section . E are up by around 3 10 of 1 we saw a very strong section of the United States closing in a new record high, we are feeling a little bit, investors favoring risk assets yesterday. That has to some extent pushed its way into asia, the dow topping 22,000. Financials, technology, and insurance were the bouncing sectors stopped lets push it into the Asian Session, it has really picked up on momentum although i should point out that u. S. Futures are pretty flat, linesting we could draw a after this Asian Session or european session where we are asked acting to see something of a continuation of that risk on attitude. Up isia session is strong, more than 1 on the nikkei in japan. The dollar is pretty unchanged as you see it, up in the u. S. Session yesterday, it closed for the first time in eight days and it breathes a sigh of relief after Hurricane Irma has receded. Gold is down by 1 10 of a it movingnd we see back into risk assets continuing into todays session. And are we seeing that echoed in the bond market . We did see bond sliding in the u. S. Session, investors favoring is the yield2. 1 on the 10 year and you have fact in france. Lets get a first word news update with juliette saly. Juliette the uks governments plan to take the country out of the European Union has cleared a major hurdle. Eumakers agreed to allow the withdrawal bill to continue its progress through parliament. That came after the Prime Minister promised to discuss concerns before they have to vote again and to consider allowing more time for the next stage of debate on the law. In the u. S. , the people of florida are assessing the damage of the second major hurricane in just 15 days. The fed award avoided the worst predictions of destruction but by one estimate the total cost of the damage dropped, still 12. 3 Million People is more than half the state population without services stop the first conservative party leader in norway in over three decades to be reelected. The victory was narrowed by the Opposition Labor Party had its worst Election Results since 2001 as an economic rebound and declining joblessness boosted the prospects of the ruling coalition. Hong kongs Financial Sector he has leeward potential buyers to be careful purchasing property in the worlds most ticks its of housing market. The comments come as bit Federal Reserve wants to unwind the Balance Sheet and mays shrink money supply. Indicatest experience that if the u. S. Interest rate , it will definitely have an impact on our Interest Rate and the consequence. Anna u. S. Federal reserve chair janet yellen met with Donald Trumps daughter evocative trump in july. Eight days later, the president told the wall street journal that she was in the running for a second term of the central bank. Most economists polled by bloomberg expect the president to pick someone else. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Asian stocks are higher for a fourth consecutive session in holding on to 10 year highs, after its biggest jump in three months yesterday. 6 ,alia closing higher by a strong rally in mining and banking but a little more flat on the hang seng with a risk on up i. 2 in late trade. We are watching a lot of the supplies based in asia and you are skating a rally in taiwan, a maker of the apple watch. We see a move into electric vehicle in china and there are reports that they are in talks on electric vehicle joint venture. Galaxy resources will be one of the companies that benefits because it provides lithium batteries. , we had a little bit of tension eased somewhat overnight with diluted sanctions from the u. N. We saw the korean won rise against the greenback although most traders are bearish and you can see that the actual cost of protecting korean bonds is very strong, rising higher than in the philippines. Geopolitical tensions are still very much playing into the bond market in the currency market himself. Anna thank you. Juliette saly reporting on whats going on in the asian markets. News, this breaking they server and Construction Projects and rental equipment. We spoke to the ceo and they have an interesting line on the hurricanes. They say that hurricanes will result in an increase in demand. They say it is too early to quantify the impact accurately however it is evident that it will result in an increase in anand and we will provide update at the end of the second quarter. They have 83 of revenue coming from north america and it is still growing. America, heavily exposed and talking about the hurricane impacts this morning. Lets get back to geopolitics. The United Nations Security Council passed a fresh round of sanctions against north korea. The resolution seeks to cut imports on Petroleum Products to 2 Million Barrels per year and ban textile exports. In order to win support from russia and china, the u. S. Dropped a bid to ban all oil imports into freeze kim jonguns assets. Russia does not accept the claims of the dprk to become a Nuclear State and supports all resolutions demanding an end to in thelear province, interest of the day nuclear rising of the korean peninsula. This situation on the peninsula is deteriorating constantly as we speak, falling into a vicious circle. The peninsula issue must be resolved peacefully. China will never allow chaos and war on the peninsula. Anna for more on the new sanctions being opposed, lets bring in Tom Mackenzie from beijing. Good to see you. As chinas position changed . We got unanimity, something of an achievement at the un Security Council. The position hasnt changed radically certainly they can tighten the screws further on north korea. It is something of an unofficial redline for china and they have been cutting off oil supplies completely, something that beijing doesnt want to do because of the concern of potential regime collapse and the impending chaos it may bring. They supply the vast majority of the 10,000 Barrels Per Day across the north korean border, but they have also pushed and implemented the previous round of sanctions in august. It is difficult to know how much the sanctions are being implemented but we have had thingses suggesting that like the export from north korea of coal and iron or and led and seafood, that those sanctions have been implemented by china. But there are informal rooms but they are impressed theys foreign ministry, can put in place this bad Missile Defense shield and that speaks to the dilemma, they are concerned about whats happening in japan and south korea in terms of building up military muscle and support that pressure from washington and concern about a potential collapse of the regime. Anna we have seen the chinese and russians emphasizing yesterday the importance of the negotiation, even the Prime Minister saying while it is not the time for talks that dialogue is the answer. Away from the immediacy of this intense environment, north korea repeatedly stepping up efforts to secure bitcoin. You discussed bitcoin extensively what is the story . This is pretty fascinating. This is from a consultant around the cyber and they ares saying base he a big uptick in the south koreanks of bitcoin and cryptocurrency exchanges. There seems to be an appetite by the north korean government to bulk up on cryptocurrency, it helps them with Money Laundering and getting around sanctions and they are focusing now on trying to get her hands on not just bitcoin but also experience. They say they expect that to continue to pick up, another fascinating development. They have an army of 6000 Cyber Warriors in north korea and they are focused on the cryptocurrency space. Anna we will continue to watch that with interest, and the legislation and regulation introduced. Thank you. Tom mackenzie. Joining us live from singapore, the chief Investment Officer at the spring investment. She currently manages 170 billion usd. Great to have you. Lets given investors perspective. The United Nation is focusing on the art of a possible deal that shows unity at the United Nations against pyongyang. Have tensions cooled enough to enable you to add risk assets . We have been in a position that tail risk events were clearly higher around the north korean issue and the mother issues around the world given the monetary policies. , i thinkaw last night it is quite positive in the sense that despite the geopolitical recession or vacuum we have had in the last few tend todisagreements have a diplomatic approach and i think it is very positive, particularly because the demands that are made on china are a little bit irrational. I think this concerted approach will hopefully lead to a dialogue while continuing to put pressure on north korea. I think it is the best we could hope. Anna this is the best we can hope on geopolitics. I was reading comments that said maybe the irony that amongst tensions in korea and the threat of Hurricane Irma, in amongst all of that, the irony is risktaking is the sweet spot because they are not Strong Enough to push tightened policy. I agree, and if you look at terms as the short you can see the long is expecting rates to rise in the fourth quarter. But on the long end, expectations of inflation are very tame and we have some very important factors but you also have this Technology Advancement that is ongoing that if you want this agent digitalization and this age of technology, it is much more important than people expect. That is one of the themes i am exploring a lot and will be talking this weekend in singapore i think it is vastly misunderstood in terms of the impact on inflation it can have, particularly in terms of the speed of the impact that it will have. Molyneux, all in all, a very slow adaptation, and a very slow take back of qe which means risky asset borrowing is still the place to be. Anna ari is a theme you want to clearly we have ten harvey and irma destructive and deadly in many cases but on the other hand we got an update from one u. S. Business with u. K. Exposure saying that this will be a positive because of the construction that will result from rebuilding. Will back to add to the strength of the u. S. Economy rather than detract from it . I agree. I think the infrastructure is definitely an area of growth and an area where there is a need for catchup in the u. S. , even with the hurricanes. The one thing we talked about for a long time is the impact of ifmate change, and clearly you look at the intensity of the climate events the need for Infrastructure Investment around Climate Change will go beyond what we are seeing now and i think this is the theme we will see for the next 10 years in terms of better infrastructure and more around energy and how we use technology to manage Climate Change, definitely a throw definitely a strong. Anna thank you very much. Virginie stays with us, more from her to come. Breaking news coming through across the bloomberg, this from saudi arabia. Kingdom holdings getting an update, the diversified Investment Company signed a pact to buy 16. 2 of saudi frenzy which offers retail and Corporate Banking services. They are buying this stake from credit agricole. Kingdom holding is already exposed in the banking sector, real estate, telecom broadcast media and the like. An update on their exposure to the banking sector. Up next, lawmakers get the green light for the landmark law, then threatened to rewrite it. We will get an update. This is bloomberg. Anna welcome back, im anna edwards. Lets catch you up on what has been going on in the market. Futures suggest we will follow asia higher, the s p went for the record yesterday and we see that move back into risky assets. The stoxx 50 currently pricing in half a percent. 10 year german bond yields at 0. 34 in the market retreats just a little bit. Lets get the Bloomberg Business flash with juliette saly. Hasette volkswagen announced sweeping plans to build electric versions of 300 models in the lineup. The comments come as the Worlds Largest automaker accelerates away from Combustion Engines and tries to draw a line under the emissions cheating scandal. Volkswagen has learned from the past, and over the past few years we have understood what people understand and this roadmap that we have announced is a self commit it. Juliette apple holds its highly anticipated Product Launch later today. Tim cook is expected to unveil three phones. The event comes as they mark the 10th anniversary in an iconic iphone and bloomberg will bring you special coverage of the announcement from 6 00 p. M. U. K. Time. Anna thank you very much. Juliette saly in singapore. Mays landmark brexit law was allowed to continue to the next stage but was threatened to be rewritten later. Card Sticking Point is so the socalled henry viii powers which would allow them to amend without consulting parliament. The chief Investment Officer at the Spring Investments is still with us in singapore. What are your latest thoughts on u. K. Assets . I spoke to alan higgins in the last hour, and he said that pound is undervalued, in his view. He thinks the markets are pricing in a really bad brexit, and if theres a transition deal it may not be that bad. My view is there will be a transition deal, i think that dragging it out is a transition deal. The uncertainty is putting pressure on u. K. Businesses that so ieak pound is helping think all in all it will be fine. We should not expect a sharp rebound but i think from here the pound is quite cheap. The key thing is to understand how the transition will take place and where it will end. If you have traded deals in the u. K. That maintain those profiles, you basically have a parallel group. That would be the best we can hope for. Anna one former chancellor of warning we could see a lost decade in the u. K. As the result of brexit. You dont seem to be as pessimistic. No. I think after having lived there for a long time the u. K. Has a lot of resilience that offers a lot in terms of eating at the center of the anglo center finance situation. I think their historical ties and company ties it will not disappear overnight. I think it is a transition period but we cannot have political mistakes. We cannot have Monetary Policy mistakes stop that means it will be a very tight rope and businesses need to see some arm of cohesion within the government, which is another important element. But i think if we can have it the u. K. Will turn out ok. Anna talking of challenges to the politicians, over in france, we see protests on the streets around changes to the labor market regulation. Franceance chief in spoke this morning on radio, saying that the reforms will take time in the hope to see reforms within two years. What expectation do you have around france . Due for a veryen long time, this restructuring is absolutely needed in terms of giving flexibility the corporate sector needs. Will we see some response to the proposal . Needed in, but it is order for france to regain some of its competitive. Macron is in a period where he is not facing any immediate elections, europe is doing better in terms of macro economy, rates are very low. I think this is the time for him to strike however we should expect some level of response. Anna thank you very much, chief Investment Officer at east Spring Investments. Thats it for daybreak europe. Next, the lamborghini ceo. We are also live on Bloomberg Radio and on your radio in the london area. Bloomberg radio plus and bloombergradio. Com. Sports, yearend results on the upper end. This is bloomberg. Guy good morning, welcome. This is the european open. European equity cash trading about to start, im guy johnson in london. Where is matt miller today . He is in frankfurt. What are we watching . The risk rally rolling on. The s p rises to a record high, treasuries tumbled. Has the dollar turned a corner . We will discuss. The volkswagen ceo vows to offer electric versions of all 300 models by 2030. Can the industry deliver on its promises