Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20171017

Anna a very warm welcome to daybreak europe. I am anna edwards. Manus i am manus cranny. We have one spared we have one very special guest, tim draper who joins anna and i. Anna appetite for technology generally. More a foreign appetite for japanese stock. [no audio] manus this is your green line. These are the buyers that come. N, the nikkei ambassadors are buying japanese stocks. They bought nearly 6 billion in the first week, the most in 2. 5 years. The foreigners are still underweight and it could be the abe call. It could take you to 25,000 on the nikkei. Anna we watched the politics of there. The japanese stock market up by. 2 . Lets put up the risk radar. The Asian Session is really on pause. Near recent highs. Concerns around the korea coming back to the market concerns around north korea coming back to the market. Not shaking the markets excessively. Outover in the u. S. Geeking new alltime highs. On thes a lot of focus next fed chair. How hawkish is the next fed chair going to be . John taylor is said to have made a very good impression on President Trump. Is that because of what he would do with his role . Just his rule tackle his rule . Manus you have a couple of other Asset Classes at work. You have the real numbers to play. John taylor, rates would be three times higher than where they are at the moment if you. Pply his former economic you have fighting in cook. Guess you have fighting in kirkuk. Is on a bigger massive picture, rather than necessarily kirkuk specific. Anna a lot of thing going into prices. L we will hear from another fed prices. We will hear from another fed speakers this week from a number of fed speakers this week. [no audio] guess it hasnt stopped the dollar from gaining a little bit hasnt stoppedit the dollar from gaining a little bit of momentum. Hasette donald trump signaled increasing alarm about the situation in northern iraq. That is after forces loyal to baghdad seized that quarters instrumental in kirkuk. John taylor is said to have made a favorable impression with the president after an hourlong interview last week. Taylor is known to advocate a hawkish style. Trump is expected to meet janet yellen to discuss the possibility of a second term. President trump has Senate Majority leader Mitch Mcconnell has prevented a united front saying they are fighting for the same goals of tax reforms. The two appeared together at the rose garden and insisted they are closer than ever before. Trump told reporters that they are on the same page when it comes to tax. Government regional meets later in government meets later in barcelona to consider [no audio] thanks close branches. Airlines canceled flights through the storm slamming the south of the country. At least 350,000 homes and businesses lost power while School Remains closed today. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Anna and manus mentioned we do have those words from the korea that it doesnt seem to have a rattled just from north korea but it doesnt seem to have rattled investors. Throughhat rally coming in copper, but the rsi signaling that the asx 200 is overbought. He have the Hong Kong Market up by. 2 . We are seeing seoul holding onto gains. In terms of stocks, kobe still focus. N in it is rising desk kobe steel has been in focus. Kobe steel has been in focus. It is rising. [no audio] in tokyo. We are seeing sally gains coming through from korean recreational stocks on a media report that china could easily three focus. It issections in regard to cultl differences despite the missile issue, saying they will do the best to lift restrictions on culture. Manus juliette, thank you. Top story in theresa mays story to brussel tom story and theresa mays story to brussel. Anna made made the journey to try and break the deadlock. May made the journey to try and break the deadlock. Jones, a very good morning to you. What do we know about what was discussed over this dinner . Jones they talked about all the sticking points that are still there in these deadlock brexit negotiations, in particular the brexit bill. The eu has made it clear that u. K. Needs to comport with more detail on how it is going to address that and theresa may will be handed on the issue last night. E have no progress they continue to be deadlocked. They agreed that the talk should be accelerated in the months to come so the cake it take that back as a little bit of a something. A little bit of a nudge but it is a polite way of saying we havent made enough progress still. Manus a very polite way of communicating a position, a strength, i am not sure. When should investors start to look confident in the deal . One line in the story, some senior ministers are doubtful. That is game theory, is it . Peoplei am not sure but are already losing confidence. One of the problems is business and investors know theres a closing window when a deal can be done. Done. It looks like they know [no audio] i think some things are going on in the background and the eu is trying to prepare for that, that it has not come to the table yet and they are pushing the u. K. More details on the withdrawal issue before they make that shift. Anna jones, thank you very much. Tim haywood is with us here. Morning. Good no deal seems to be something that has been talked about a lot. Now it seems to be much more mainstream. Tim sadly, yes it is. Is between more consensus that we have been bearish on the outlook of gilts. Thinking that the yields would rise. This potential slowdown, driven by lack of confidence could cause people to be misaligned. Testifying,carney this is sterling month to date and there has been this reversal. If you are now rolling out the possibility of no deal, take me through your thinking in terms of sterling . Down in a month. Where do we get to . Tim no deal is 10 on trade weighted, so if the sterling were to drop by 10 against all of its trading partners, that would bolster the economy anyway that no deal would hurt it. If you were to not look at month to date but the summer on the trade weighted basis, the sterling has done reasonably well. Manus this is the sixth month view of w crs. Tim the story at the bottom is the weakness of the dollar and the yen. About the summertime 122 onh move up from cable has given future Inflation Forecasts a bit of a this inflation data should be a peek in coming months. Anna this will be the peak. D think it comes down because of this do you think it comes down because of the strength and sterling daca in terms of no deal and sterling . In terms of no deal, were talking about the ups and downs of negotiations, but really the deadline is not for another year. She wants an agreement in place before that to get the necessary votes that is needed. Againstot exactly up the hard wall right now. Another six months . Tim when you think of the work that needs to be done in the most in need to be had, i think it is a tremendous workload. I dont know if they have a staff to be able to put them into place. I am no expert on that. It is a hell of a workload. I think it is going to struggle. Without a transition deal, i think no deal is quite likely. Manus the damage for marks a deal with is mark carney. Willie hold the line will he hold the line . For the market, this is the forward view on when we might see rates hiked in the United Kingdom and the presumption is up. Rate hike is a step the market doesnt believe anything will come through until the First Quarter of 2019. How does he walk that line, in terms of i am taking a way a little bit of stimulus, but fear not, im not doing anything more than a balancing act. Tim across the world it is the removal of emergency measures. It is the vernacular rather than we are hiking Interest Rates. We want to be able to create some sort of symmetry going forward. At the moment, they dont have symmetry. To reduce qe, they have to increase it again. To increase rates [no audio] if they dont remove those measures now, how much better does it have to be before they do . When do we start to get concerned about when mark carney should be handing over the reins . Economists seeing another hike in 2019. That is beyond mark carneys schedule the parts are. June is very close to march. [no audio] for that qe shouldve stopped and in part reversed and policy hikes shouldve been at least tried in the longterm since we have seen one. Us. S tim, you stay with tim haywood, invested disinvestment director over at gam. Ata an exclusive interview 9 a. M. U. K. Time. Manus the communist Party Congress spreads twice in a decade gathering. Anna the u. S. President meets , johned chair candidates taylor is said to have made a favorable impression on trump. This is bloomberg. Manus a live shot. Stocks are flat. There seems to be that north korea could be seeking to have discussions in russia. You have this i ringing noise about nuclear war. Stocks are flat that we have had a run, a tenure hike more or ain the 18 year hike 10 year hike more or less in the trade. After 11 00 a. M. U. K. Time. Manus the beast of wall street. Anna lets watch up for the trading story. Alexis tsipras is in washington to meet with donald trump. Manus lets get to the Bloomberg Business flash. Juliette airbus has agreed to acquire a majority stake in Bombardier C Series jet program. Boeing over global aircraft sales. In a effort to circumvent the tariff, it will add another some to its factory another Assembly Line to its factory. The nations Second Largest Bank Credit Suisse according to a person with knowledge. Stake in Credit Suisse. They met with senior managers to discuss some ideas including a separation of the investment banks from the Private Banking units. Netflix shares have hit a new high in afterhours trade after the Company Posted its best thirdquarter ever. The service added another 5. 3 million prescribers beating estimates million subscribers beating estimates. [no audio] speaking with investment banks to study the feasibility of lifting the asian business on the hong kong kforce. They say it could belly the unit as much as 2 billion. That is your Bloomberg Business flash. Manus juliette, thank you very much. Caution is spreading through market. Financial chinas composition is up for a second day. Effect on your chart, you have a very high white bar for corporate debt. , it you analyze the so we continues to push the yellow and increase the white but we can get away from the fact that there is a lot of that out there. There t of debt out a lot of debt out there. Remarkable. Anna is this the only expectation . Even though she is going to be even though xi is going to be increasing the power in china, many economists might want to see my not follow. It might be more of a study, little more of what weve had. Tim i think theres the fact that there is no great crisis on the horizon in china. If you have been worried about the debt story, we have got to have phenomenal growth. Nominal Growth Numbers are not been too bad. When youre ago, you worried about significant slowdown in china could not only is china not slowing down come almost every country in the country on most every country in the country on most every country in the world is showing growth. [no audio] money goes on sure and in the event of the crisis, what is your plan on the money coming back. Compared thate, to the u. S. Which is half that number. Most curves are terribly flat. The level of yields are not superhigh either. It is not obvious that emergingmarket investors will sale will sell our move away from the brazils or mexicos. To focus onto focus on china. [no audio] anna coming back to some of the comments we heard from the pboc governor, sort of waking up markets to the increased urgency, the need to open up china to foreign capital flows. It is something he has been talking about for a while and he has been keen to talk about that ahead of the imf. Do you expect further opening up . Tim they need the money. Ndia and other places what Bond Investors want is something they can readily trade. Money there and get your bond without texas, nice and simple without taxes, nice and simple. That is what capital controls would be in china. You cannot have a really trading option of bond markets. Anna there is talk of whether that will follow this congress. John taylor is said to be the favorite of mr. Trump for the fed chair. This is bloomberg. Daybreak europe. Anna this is anna this is daybreak europe. We are pretty flat on dollar yen. We talked about appetite for japanese equities. Lets talk about appetite for european fmc g goods. Manus we have been talking aout dan and, that is just snippet below the estimate of 6. 45 billion. The market is penciled in 6. 46. Restructuring in terms of growth. Should exceed 12 including currencies. Eat have a higher profit. You have higher profit. Revenue in this quarter was the fastest pace in more than two years. Youve got revenue increased to 4. 7 . That beat the analyst estimates of 3 . This is a delivery, a tour de force. He is trying to resuscitate dairys yogurt and fresh which hasnt had a shipment growth and almost four years in almost four years. Anna it is brexit it is time appropriate to confirm in the target for the fullyear current operating profit growth. That is the downbeat side. Second Quarter Sales rising 6. 6 . Also talking about remi martin, the key to sales rising on inorganic bases more than 13 . Manus i dont know who has been buying watches. Reese more just richemont smart [no audio] other technicals, looking at the bloomberg dollar index, that is punching a oneweek high on speculation we could get a more hawkish fed chair following janet yellen. The bloomberg dollar index testing the 100 Day Moving Average after President Trump met with john taylor. Looking at commodities, it was a big day for commodities is today. Went approaching that golden cross or the 50 Day Moving Average looks like a good be close to going above the 200 day. Brent is already in the golden cross. It is a bullish indicator for oil. Gaining all concerns around. Raqikurd tensions Copper Holding above 7,000 a metric time after really spiking higher yesterday. Testing a key levels for the first time in three years. The lower this ratio is, the better the prospects for the economy if you see gold as a safe haven and copper as a sign of bullish prospects. Anna thank you very much, nejra. Manus theres a new edition of manus theres a new edition of daybreak. You get us online. Been faint spain has forced to cut its 2018 outlook to 2. 3 p at stocks continue to fall for a third day yesterday. We will be watching to see what happens today and we are looking at another deadline for catalan. Manus the pound is going to be in focus. Mark carney is in front of lawmakers. Will he hold the line . I will be asking him about the inflation data set to come in at a fiveyear high. That should hit 3 . Focuses in on john taylors star rising in the race for fed chair. Kevin warsh appears to be falling. Manus john taylor is said to have made a favorable impression on President Trump during an hourlong interview. The Stanford University economist known for his hawkish stance. Anna trump is excited to interview the current fed chair, janet yellen, on thursday. We do see the market move on it. We saw yesterday, we saw the bit. R, below does this have lasting impact, depending on the mindset of the governor . Is this more of a team effort . Tim i think it is more of a team effort, so much of the team is changing. Rates do seem there is an insensitivity. [no audio] you cant corral everybody around the one point. Yesterday, we emphasized 30 it tense. E got to tense. We got two tends. [no audio] curvecient issue for the could will it continue to flatten . Another, what will this curve look like in two years time that go two years time . Normally the yield curve is only this flat when yields are much higher. The fed has said 5 and then you could have a flat yield curve. It just doesnt get paid to extend. In unless you count negative Interest Rates yellen doesnt, then we are really in trouble for longterm bond yields. We think that bond yields, the curve. In overtime. The curve willis steepen the curve willis steepen overtime the curve will steepen overtime. [no audio] 50 countries rising industrial rates. 50 countries. There is no weak spot anywhere. Why would we need a much lower yields . Manus i want to go back to tailor because we blew up the headlines this morning. To fitting the bill. Together to where the taylor this is what is moving the dollar. This is what is moving the bond market. Where do you see the new terminal rates . The dots have faded slightly as a go out to 2020. As we go out to 2020. Tim wherever nominal growth is, should the 10 year yield be. Growth is growing at 2 . Fall. Es it ever seemed to two. N of what . To how quickly we get there, who knows. Someone like taylor might encourage a wholesale up in the yield curve at anna you would do that. We will see whether he is the person for the job or not as a janet yellen is in front of trump later this week. Tim haywood, investment director at gam. Manus if youre a bloomberg customer, you do to watch the tv show on tv go. You to follow all of charts and into the conversation and ask a guest a question. Anna use it wisely. Airbus has agreed to acquire a majority stake in Bombardier C Series. The move gives the plane a muchneeded boost in its battle. Ith boeing over global sales manus lets get to our reporter in asia, kind g park. How is it going to help bombardier . Reporter this is going to give a very big boost in bombardier and the Cseries Program because it has been overrun with cost issues and hence why bombardier has get financing help from the government. This is going to be very good news for bombardier because it is going to ease some of the financial pressures and having to market and sell those cseries so this is good news for the their. Anna what about airbus . What do they gain . Reporter theyre getting into a segment which is been left empty in their portfolio. This is going to be nicer area to go into where it is going to be more of a lower Market Segment in the narrowbody. Theres still demand for this kind of aircraft. That is going to give airbus more diversity in their portfolio. Manus lets get into it then. What does it mean for boeing, airbuss main competitor . Kyunghee for boeing, it is not going to be good news. One of the key challenges that bombardier was facing with the cseries and the pursuit to sell to the u. S. Was the u. S. Overnment imposing a tariff there was a major issue for bombardier is pushing forward with the u. S. Carrier. Airbus coming in and the completion line, part of the production moving into airbus alabama plant is going to ease the concern of tariff issues. From boeing, it is going to mean more competition. I am not going to surprised if it ismes up to try going to pose more competition for boeing. Anna thank you very much. Quick update on the kobe steel. The japanese steel manufacture has it got itself into trouble after declaring the quality of its steel which was not true. The department of justice has some information on their fake data. Theyre good to give a statement at 3 30 a. M. Tokyo time. Manus they are said to have likely try and reshore the market debts reinsurer the market that liquidity is not a problem. Position. Onsiders its this is about trying to reassure that the old misconduct dates. Ack to 2007 anna when youre traveling to work, you can tune in to radio live on your mobile device or on your digital radio. Coming up on the program. Manus tim draper joins anna and i. Anna we will talk a bit about bitcoin and later we are live in brussels for theresa mays lastminute visit. This is bloomberg. Manus it is 1 46 a. M. In the city of new york. It just keeps on going. Will john taylor be the head of the fed back of of the fed . That is the fate of the markets. Lets get the Bloomberg Business flash with juliette saly. Juliette thanks. Has agreed to acquire a majority stake in bombardier c has agreed to acquire a majority stake in Bombardier C Series jetliner program. [no audio] final Assembly Line for the cseries at its factory in mobile, alabama. Will Rudolph Boley find a new target in the nations Second Largest Bank, Credit Suisse . He has taken a. 2 stake in Credit Suisse with about 100 million francs. Worth about 100 million francs. Recent weeks to discuss some of the ideas including a separation of the firms investment banks from the Private Banking unit. Netflix shares have hit a new high in afterhours trading after the Company Posted its best thirdquarter ever. The service added another 5. 3 million subscribers during the period beating estimates and expecting another 6. 3 million to sign up in the fourth quarter. Under 3 billion beating under 3 billion beating forecasts. [no audio] according to a document seen by bloomberg news, the price each client pays will be determined by how much they used the services in the past. Reports ofced competitors cutting prices but it will not take that approach. That is your Bloomberg Business flash. Manus juliette, thank you very much. U. S. Stocks posted a record high yesterday. The s p 500 has hit records almost four dozen different occasions. Or the 3. 2 trillion dollars has been added to the market value of u. S. Equities. Anna lets bring in, tim draper , Founding Partner of draper associates. He joins us live from the World Knowledge Forum in seoul. He is an early investor in tesla and skype. As we look at his world of stock market records, low inches rates, how optimistic are you about opportunities in your world . This is a great time for tech vc. There is plenty of money around so it is somewhat competitive but it is an exciting time with bitcoin and all of the icos that are happening. Finance, andrming that is a finance, and that is a major [no audio] what we have got going, both in the private markets and the public markets. Manus you have unleashed the dog. Bitcoin is trading higher. My question is, youve got the bank of canada, david mccain talking about concerned about bitcoin and jamie dimon saying it is a fraud. Which one is it . I think it is neither. Both of them have a vested interest in making sure that these cryptocurrencies dont spread. If you ask me five years from now, what i think this is going to look like, i think people are going to laugh if you try to use fiat currency at starbucks. Cryptocurrency is much more transportable, much easier to use. All of these companies that are starting our transforming society. This is the most exciting thing that has happened in my world coming even more exciting than the internet was. Careful ofll be using cash at starbucks in the future. It is about competition, isnt it . Will government want the competition . Will they crush cryptocurrencies oneday . Tim d. i think governments are in competition for the great minds in theminds in the capitae entrepreneurs [no audio] bitcoin is a currency we accept here. [no audio] participate in those. Participate in those. This is [no audio] control and doing all the crazy stuff. China to what extent does s potential at hitting bitcoin . A are trying to interfere. Just they are trying to interfere. Where does chinas crackdown on bitcoin how big a risk is that to the volution . Just to the evolution . To the evolution . Tim d. bitcoin is going to continue to grow. There are many countries in competition with one another for all of these great entrepreneur. Global. Moved, it is it is not tied to some international relationship. It is in tied to some federal program. It is free and moves. The countries that ban it do so at their own peril. I think they are making a huge mistake. They should be open, excited about this new technology. Sure, it is a little scary. It could change things but it is going to make us all much wealthier. The world is going to get much wealthier because theres going to be much friction less friction to our currency. Gold, going from gold to the promise of gold. Anna what price do you put on bitcoin over whatever your investment horizon is . Give us a number. Secure . Ins place so far, it has been pretty good on this. I think i can predict. I said 10,000 by 2018 and i said that for years ago. We are getting pretty close. I think we are on the right track. I think that cryptocurrencies are going to completely transform our world. Over the next five or 10 years, i think i see us moving to all cryptocurrencies and we are all going to be just fiat is not going to be it is going to be like the dinosaur, the horsedrawn carriage. Whereas with the cryptocurrencies, we are going to be seeing the ferraris and teslas. This is an exciting time. Bitcoin as to fiat , democracy is the dictatorship. Society. O good for it increases freedom. It makes it more democratic. It is distributed all the way around the world. This is a great thing for society. Were all going to be a much wealthier society. This is an exciting time. Manus an exciting time. Tax. Change pact change when you look at dollar trump and policy and potential coming down the pipe for your industry, what more should we be doing to encourage investors like you . Well, i think the simpler is better. Simple tax code makes all of the sense and the world. I dont know we still have a fairly simple tax code and then people tweaked it and changed it and messed with it. Then all of a sudden your spending so much more time and effort thinking about how you manage your taxes than you are in figuring out how to run your business. It is bad for everybody, except the Tax Accountants and lawyers. Anna ok tim. Keep it simple, think you very much. Tim draper. Not a fan of fiat currencies. Joining us from seoul. This is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Meeting on stalled brexit talks. With u. K. Inflation expected to hit a fiveyear high, will mike carney hold the line when he testifies before lawmakers today. Economist john taylor is sent to impress President Trump. Up bombardiernaps. Manus welcome to bloomberg daybreak europe, our flagship morning show in london. I manus cranny. Anna im an edwards. Wards. Anna ed the headline, european card sales fell in september for the second monthly drop. Gains coming through in france, italy, and spain. , it means we are down on the month. Registrations declined by 2 for the month. Germanys slumped by 3. 3 . They had one less business day from a year ago. Eight straight monthly decline. Normally a pretty strong month. Ford, the uks bestselling brand. Selling 10 fewer vehicles and europe. Manus the u. K. Is your second largest car market. Lets talk about European Equity markets. We have rising equity markets in asia. We wait for mark carney in front of the select committee today the treasury committee. Futures slightly better this morning. Real opens later in the day. Anna in china we have the comments. Best put up the risk radar. Lets put up the risk radar. We had gains earlier this week on the weakness in the inflation data on friday. A little geopolitical concern, a warning from the north koreans about nuclear war could break out any mark any moment. This, coming after we saw the ing anotheres s p eke high. John taylor impressed donald trump. He has gone from wild to perhaps one of the key contenders. That is if you apply his 30 that rates will be three times as higher. There is concern that nuclear war is around the corner. Poll,ve the push and the with no clarity at all in terms of which story is dominant. Anna oil is down just a fraction, near the two week highs. We have a host of speakers later on. We have carney at the treasury select committee. We will have chinese data later this week. Sales those six months are up, but we have an indication from the free market that this stock is up 1. 7 . Ona lets get an update bloomberg first news with juliette saly. Juliette north korea has warned that a Nuclear War May break out at any moment. The comments come as the u. S. And south korea begin one of the largest drills. Korea claims it has become a fullfledged a nuclear power, and the entire u. S. Mainland is within range. U. S. President donald trump has signaled about the situation in northern iraq. ,he headquarters incur cook trump said the u. S. Is not taking sides in the fight. Oilrichput in the could cook has tumbled oilrich kirkuk has tumbled. The director of the iaea said the conflict between the kurdish havenment and iraq wont an impact on markets in the meantime. Say whattoo early to will be the result. And what the implications are on the markets. Seethe time being, we dont a major impact on the oil markets. Fed chair john taylor is said to have made a favorable impression on President Trump. That is according to several people familiar with the matter. Trump is expected to meet with janet yellen on thursday to discuss the probability of a second term as head of the central bank. Global news powered by 2700 journalists and analysts across you can find more stories on bloomberg at top. Those comments from north korea have not rattled investor sentiments in asia. We are seeing the markets fall a little from the decade high. It was a great session in australia 0. 7 . The kospi is ignoring those 0. 25 . S, up china imports have surged. Steel pulling back a little. The department of justice in the u. S. Has asked for more steels datan kobe falsification scandal. China potentially lifting restrictions on korean movies and concerts. Juliette, thank you. The top story, u. K. Prime minister theresa mays lastminute trip to brussels yielded little with both sides issuing statements that entrenched the previous stances. Journeyy made the anding with Angela Merkel french president marcon. What do we know about what was discussed at this dinner . It is pretty clear that theresa may was disappointed in her ambition to unlock the brexit talks. They talked about the sticking points in the talks, they remain sticking points. It is difficult to see how they will be resolved in the shortterm. They did say they would accelerate the work on brexit negotiations, which theresa may can take back is a semipositive sign. It really means we are stuck here. Manus stuck and nowhere to go, no sign of movement on transition or in trade. At what juncture in your opinion countenancegan to no deal . They are already becoming worried about that. If we dont see some positive indications from these talks, then it is going to get worse. They already know that a trade deal, negotiations have been pushed to the future. That makes the transition period even more important. You dont have a period where you can finalize arrangements. Nobody wants that on either side of the channel. Anna thank you. London us here in ,ichard Richard Saldanha Global Equity fund manager, aviva investors. You . Is the timeframe for we are not in the last chance saloon. If we need to leave time for all the parliamentary approval . Richard we are not in the last chance saloon yet. Looking at the next few months, if we are not getting signs of progress by investorson, i think will have to start to begin price this in. Investors are going to have to start to question this. No deal is our base case scenario. We have come to some agreement, but we are at a deadlock where the u. K. Wants to move with transition talks in trade talks, and the eu want to see that sequencing in place first. Manus the one thing mark carney has to do is walk the line between reassuring the market that anything he does is about taking away emergency accommodations. He talks about the global equilibrium. How does todays testimony impact the markets . Its certainly important. You take the testimony, is it going to be a big week for u. K. Data . When you put that altogether, expect to see sterling remain volatile. Mark carney is caught between a rock and a hard place. The numbers recently out of the u. K. , you got the backdrop of relatively high inflation. Backdrop fromdeal that perspective. Out andt the 3 to come him to press forward with a hike in november. It is not hiking in a position of strength. One of the swing factors in there, we tracked and 9. 3 slide. What does this tell us about the . Onsumer it held up better than expected in the immediate aftermath, but now things have changed . Richard youre absolutely right. We are starting to see some tracks. Of sluggishckdrop to near zero wage growth, and a backdrop of inflation, the expectations were that was going to squeeze consumers pockets. Far,ve not seen that so but the numbers we are getting out of car sales, a squeeze is starting to take its toll on the u. K. Consumer. Manus on inflation expectations, wages are getting theyzed and squeezed, think inflation will top out, but it expectations are still in an overall upward trajectory, arent they . Richard they are. This is the tricky part. You have inflation at a relatively high level. We are one year past brexit happening. From our perspective we expect inflation to creep lower. Certainly expectations are priced in. This november hike, you will see a long pause after that. That will be time to see what happens with inflation. Economists dont see another hike until the first 2019. R of we are on pause all the way through 2018. When you look at the markets, and what they are pricing in, theres going to be a hike in august of 2018. Do you go with the markets, or do you go with the economists who say we are done until 2019 . Richard we still expect to see a large gap. November, and it will depend on what happens to inflation. 3 is uncomfortable from that perspective. You want to see that ideally come down before you start thinking about expectations going ahead of that. Mention the to currency, against the backdrop, sterling is volatile, trading like ayearold on a daily basis yoyo on a like a daily basis. On a no deal scenario, we saw sterling drop. That is a dovish call. Richard id suggest so. It is, people are starting to think more about it. Stagenow we are at a where things continue to stall. We expect sterling to remain weak. You, Richard Saldanha, Global Equity fund manager, aviva investors. Sixmonth sales are up 12 . Taking the battle to boeing. Higher earnings this year, we will keep an eye on all of these stories. Manus it is 8 19. The dollar flies a little bit higher, predicated that john taylor could be going from wild card to perhaps one of the top spots for the federal reserve. With that mean anything for rates in the United States . The aviation session was pretty flat. In,markets are factoring will it be yellen . We got the dubai market heading a little higher this morning. Manus keeping an eye on commodities as well. The move gives the plane a much needed thatll in the battle with boeing. Good morning. Airbus walked away from a deal to years ago. Fascinating story, what has changed . What reignite it their interest in bombardier . Sprung a surprise on his fairly early in the morning. We got a call that this would be happening. We all got on the call with the ceo. We put this question to him, two years ago you personally vetoed a similar deal. Why now . Time,sponse was at the bombardier wasnt in service, did not have a track record we were looking for, we had our own issues ramping up production on our larger planes. Now the stars seem to be aligned. Bombardier is in a very difficult situation. If they wanted to strike here, now is the time to do it. Good to see you are holding his feet to the fire. Lets see how the market reacts. Is a globalanha equity fund manager, aviva investors. Deal, didnt like this construct a couple years ago. See more of this in the airspace . This airbus , i think airspace is in a pretty good place. The numbers remain pretty strong. From our perspective we think boeing has been doing pretty well in the u. S. They are in a good space as well. As sales accelerate in china, china is part of the good news story. Chinas trying to revive the nuts and bolts. As an active investor, how much is that moving the dial for you . Danone, if you look at topline growth has been hard to come by. Weakness in the numbers in both europe and the u. S. If you look at the deal they did, they need to reinvigorate growth back into the business. That is starting to come through. The activist, this has been a hot debate this year. Not just danone, nestle has been an activist side. Management are well aware of this. You saw the operation market targets up there as well. This is american activists. Is it peak activist . And doesnt influence you when you see these stories . Richard i dont think it is peak activist. The staples sector has been the one that has been in the target line. Growth has been sluggish. From an investor perspective, we are keen on the longterm focus. Some of the measures that come improvements,n cutting spending, they look good on your shortterm, and they do much to reinvigorate the topline growth. The focus is what can you do to drive that topline . Anna that take us to the question of how do you define activism. And pushing for some improvement on some kind of agenda. You dont see yourself as an activist, but do you like the role that they play, shaking up of management . Richard there is always a role to play there. There is always a roll to engage with management. Activists, and youve seen in terms of management response, it highlights what nestle did with that capital market. Grinch has come out. Saw a crash in 1987, we are 20 years on. Anna more than 20 years. Manus more than 20 years, excuse me. Are we seeing crazy markets . Us thate laureate warns the threat of nuclear war doesnt seem to unnerve anyone . Are you worried . Richard i think there is a lot are. Tigue in where markets we cycled back to where earnings, you are reasonable earnings as we start the season about 5 . Companies are relatively relaxed despite danger points. From our perspective, as long as earnings he coming through, there is potential for some sort of reform. That is one thing that is pushing back. You want to see clarity coming out of this administration. We have another two days before we get to the 30 year anniversary. ,hank you, Richard Saldanha Global Equity fund manager, aviva investors. And thats it for anna myself. Good morning. Youre watching Bloomberg Markets european open. Im guy johnson. Matt miller is in berlin. What are we watching this Tuesday Morning . The taylor role. Havetaylor is said to impressed President Trump and the search for the next fed chair