A very dust anna a very warm welcome to bloomberg daybreak europe. This monday morning i am joined by matt miller here in frankfurt. A lot going on today after trumps world war i whirlwind tour in asia. Of course, that airbusboeing story. Anna were getting headlines. Oing through coming through the headline on the story around the fact that boeing seems to have beaten airbus on day one of this with the big deal. The emirates ceo saying emirates has the capacity. Could there be some upside to airbus on that story . Lets pause that conversation. Lets talk about the markets. One story i wanted to bring up is the pound. I have this chart here. The pound hasght been taking. Reports of tory rebels, a mini cabinet to. Cabinet coup. We have to wait until march until we get trade talks . A bill goes in front of parliament tomorrow. We have a host of data coming out of the u. K. It could be a busy week for those watching u. K. What else have you got in our risk radar . First off, the nikkei, a big drop for the japanese index overnight at the end of their day on monday. Really capping three days of big drops. It continues its trend down, even as the rest of asian stocks are mixed. The hang seng gaining. Take a look at the bloomberg dollar index. Right now im it is up. It has been up a lot more throughout the Early Morning session. Onto some gains, and the dollar is gaining against most of the currencies, at least in the basket of 10 i looked at. The aussie dollar was gaining a little bit against the u. S. Dollar. Interesting is the political continues around the dual citizenship issue. Bitcoin, really dramatic fall over the last week. It is down 5 . Still amazing it is trading for 6000 four 6,255. We will talk about that a lot throughout the day. Anna were getting breaking news. Oil to selltional at 10 of its distribution unit in ipo. Morningderstand this from the company. We will get further headlines as they drop. Lets get a bloomberg first word news update. Patrick harker has become the waste the latest policymaker to not to a rate hike over the end of the year. Speaking in tokyo, he said a move in 2017 is likely penciled in and that inflation is tight later to the market. We get the latest cpi data on wednesday and we will be speaking exclusively to Patrick Harker. Senior abia, senior official says king salman is not planning to abdicate in favor of his son. He said his application was unthinkable, especially because the king enjoys perfect health. The lebanese Prime Minister has dismissed speculation he has been held against his will in saudi arabia and plans to return home within days. He made his first Public Comments since his surprise resignation. To the be speaking governor of Lebanons Central Bank. The pound has weakened after the sunday times reported that 40 conservative members of parliament have agreed for a vote of noconfidence in Prime Minister theresa may. She is struggling to maintain her grip on power after the resignation of two cabinet investors. Chinas plan to ease Foreign Ownership limits on Financial Firms to strong praise from the imf chief. Bloomberg, christine the guard move as a positive development. Considering to remove at least partially those barriers and then gradually eliminate both thresholds, that is an indication of two things, openness and better strength and confidence in their own system. Ed global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Lets check in on the markets in asia. Lets bring in Sophie Kamaruddin. Investors have seen japanese shares leading that drop in the region. Despite yen weakness. Take a look at chinese shares. Sengng kong, the hang prepares for a reshuffle. Over 40 on its trading debut, back of life in hong kong. It is a down day for lines can indication in india. Some pain there. Anna thank you very much. Sophie kamaruddin in hong kong. Donald trump is in manila for the summit where he just wrapped up a bilateral meeting with his filipino counterpart. Joining us now is stephen engle. Bilateral, that is how he likes to do business, it seems. What was the highlight of the exchange . Again, we are in a summit that is so far void of news. We have to read between the lines and see what the interpersonal relationships are like. Earlier in the morning when we saw donald trump and rodrigo deter take, donald trump looked to be tired. There didnt think to because there didnt seem to be chemistry between them. We are getting word that im a according to donald trump, we had a great relationship. Perhaps the night before they stayed up too late doing karaoke, because they are calling it karaoke diplomacy with donald trump actually rodrigo to sing a song. They were chummy. Donald trump was actually a man of few words and then handed it off to mr. Deter take. A reporter shouted out a question about human rights, which is a very sensitive crackdown onthe crime and drug dealers in manila. This is not ad press statement, and then he referred to the pack of press as a bunch of spies. Dynamics interesting going on before they closed the doors and kicked us spies out. What issue with the Global Leaders be tackling a twoday summit at todays summit . Be talkinghey will geopolitical issues, but that is going to mostly be tomorrow when they convene the east asia stomach. East asia summit. The will be talking about South China Sea, which is closer to the hearts and minds of the Southeast Asian nations. Donald trump also had a trilateral meeting with shinzo abe and the australian Prime Minister. I will give you a few of the lines. They agreed to maintain the pressure on north korea. China is frustrated with north korea and has the greatest leverage to pressure. Was the exchange between donald trump and Malcolm Turnbull on trade. Almost everybody has deficits. [laughter] reporter donald trump thought the u. S. Had to deficit with australia. We did some digging. It is actually a surplus. Think you very much. The answer is in the data. Stephen engle joining us from manila. Donald trump on the final leg of his asian tour. Joins us here. In terms of the big picture, we have a different style in trump versus obama. Do you still see trump pivoting bilaterals and emphasizing the importance of other strong leadership and chemistry, what significance does this have . As anhe impact for me investor in european equities is the focus the u. S. Is putting on asia and away from europe and the middle east and emphasis concerns of in terms of trade and military deployment. Over a couple of time, that is an important thing to take away. How does that affect your take on european equities . How does the pivot towards asia away from europe affect your Investment Decisions . Ben it is a longterm big jerk perspective big picture perspective. There were two pieces to it. Ne is the Economic Growth asia will be a power in the Global Economy for many years. The second is around stability around europe and the impact stability will have on your. On europe. You see that developing in places like poland, hungary, other markets. The willingness of the United States to act as a last resort of european stability from a military perspective is important in terms of how that framework involves. Framework evolves. Anna does that make you less inclined to get involved with assets in Eastern Europe . Ben we have seen a rise in the Political Risk that would be attributed to assets in recent in Eastern Europe. It is not long ago you would go back to see poland as the most interesting market to invest in with strong growth and a country that didnt go into recession during the financial crisis with a range of market friendly approaches. The recent political changes , a greater degree of Political Risk and a higher rate you pay for assets. , thank youitchie very much. When youre traveling to work, Bloomberg Radio is there, featuring matt miller and myself on occasion. Bloomberg. Ten to we will bring you that on television as well. Matt . Matt absolutely. Fascinating story over the weekend. Very dramatic. Coming up, sterling slides as theresa may faces fresh challenges to her leadership. He will discuss that next. A boost for boeing. A 15 billion order from emirates. President ar from the tim clark. This is bloomberg. Good morning and welcome to daybreak europe. I am matt miller in frankfurt where it is 7 20 in the morning, 2 20 in singapore. Nice and bright, even though the Asian Pacific index has moved down half a percent at the trade of closing. Lets give you your week ahead, what you should be watching today. Spending theis last 48 hours of his asian tour in the philippines. Flagship brexit legislation is subject to two days of line by line scrutiny in the comments, and then friday marks the deadline for cattle on particle parties tos just amid candidates to submit candidates. Lets get the number business flash. Ber has approved softbanks offer to buy a stake in the company, setting the stage for one of the largest deals ever. The deal could still fall through if there arent enough interested sellers. Emirates airlines has committed airliners at ags deal with 15 billion. That comes out of low to airbus. That comes as a blow to airbus. Bitcoin has plunged after the cancellation of its Technology Upgrades. It has lost a third of its value from last weeks record. Supporters of the Technology Upgrade announced that the switch in bitcoin cash, which allows it to handle eight times as much data as the original. Generated a record 25. 3 billion in sales as the company worked with more traditional retailers. The Chinese Company also hosted a starstudded gala with Nicole Kidman and for all williams. And pharrell williams. That is your Bloomberg Business flash. Sterling has slipped after report that theresa may faces a fresh challenge to her leadership. 40 conservative members of parliament have agreed to sign a letter of no confidence in her. That is just 80 lawmakers short of what is needed for leadership challenge in the conservative party. She is struggling to maintain her grip on power after the resignation of two cabinet members, mounting calls to second boris johnson, and as the e. U. Raises the prospect of brexit talks failing to reach a break there. Ben ritchie is with us. Lots of questions, any answer so far. In terms of the u. K. , what is your preoccupation in the shortterm . Until think she can last christmas, december, march . Ben it is stepping back and looking at what the risk the markets face. By a change of government, a flameless a seamless shift and perhaps what would it look like if we were to price in that . Ben it should be, because there is a real risk. A pretty unstable government. A potential leadership challenge, although that is some way away. There are a number of significant risks to the government. The market seems to be not yet ready to price and those risks. Anna the pound should be strong rhetoric we have heard from the labor government. Ben i think bond yields would be higher and inflationary outlook would rise as well with the prospect. T does not seem to be the that does not seem to be reflecting that risk. Matt you see the market misreading this. What are you telling adverting investors about european equities and british equities . Ben when we look at the wider market, we remember a large proportion of the u. K. Markets revenue comes from the u. K. That underpins the outlook for the u. K. Market. You have the inverse correlation with weaker sterling driving higher profits for companies driving revenues overseas. Within that and looking at the domestic exposure, i think one should be a little bit cautious around but certain markets would look like if we would see a change of government. That is something to think about. Anna do we get to some kind of crunch point . I am thinking of the pound. This chart is one month volatility starting to rise once again and the pound. The political sermons aplenty. Political concerns aplenty. Will there are want therapy enough progress made to turn the conversation to trade . Do you see that as an important timeframe for the pound . Short for a little us. Fiveyear increments as opposed to five weeks. Pound, look at the seeing a different color of government, there would be some Downside Risks for that. I think we should see higher bond yields as well. We see the trading mx play out over the next few weeks, im not sure necessarily what happens to sterling in the nearterm. To the am going to talk new coceo of deutsche bank. One of the things we talk about with bank ceos is consolidation. There were reports of the weekend that hsbc had been telling shareholders it was looking at possibly american assets. Does that make sense to you . Through a bigbeen process over the last six or and selling more marginal assets. We have a new chairman, new ceo there. , itink in north america could make sense to put that to work if it is not possible to repeat treated. Two repatriated. Repatriate it. Think abouto you other banks that are, for now, situated in the u. K. As we head towards this shaky brexit . Do you expect them . To move headquarters out of the city ben do you expect them to move headquarters out of the city . Ben i dont think so. That will aree quite small. It will it is what happens to the fabric, broader dynamics. Whether or not overtime that unravels. That is a longerterm picture. In the nearterm, the number of jobs and roles that would be moved to meet financial commitments in the e. U. Is relatively modest. Anna ben, thank you very much, taking the long view in the u. K. Staying with us on the program. Up next, we bring you our conversation with the emirates president from the dubai air show. Great reporting from our team on the ground. It was set to be a big victory , and then everything changed. It was in the deal airbus hoped for. We get some answers as to what is happening behindthescenes from tim clark. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. 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. Good morning. Welcome back to daybreak europe. 3 30 in the afternoon in tokyo. You can see a beautiful picture of the palace there. E are getting headlines it blows away the estimate. 316 versus 266 is the first net income number. When sewall still sees a full year net. Mizuho still sees a full year net of lets check in on what the markets are doing this morning. Just about an hour and a half away from the start of european trading. For that we go to nejra cehic. Fewa we are seeing quite a moves. Bitcoin slumping. If we look at asian equities first, we can is coming through, down. 4 on the msci asiapacific index. Pictureeeing a mixed across regional indices. Board. Dominating the industrials and real estate leading the losses among asian equities. That is the second day in declines among asian stocks. Sterling is down. It is dropping the most in more than a week. Also, one month volatility rising to it twoweek high. This is after some concern about theresa mays leadership with the sunday times reporting that we could see a vote of no confidence possibly by a large number of conservative lawmakers. Technical support for the pound may struggle on these challenges to me. Two may. Take a look at what is happening to the bond market. We continue to see yields move higher in treasuries and the european space. The 10year gilts yield to been seven basis points on friday. This anna another quick line. The Second Quarter performance ¥198. 4 billion. Republicans in congress are rushing to meet a tight selfimposed deadline to improve legislation by years end. House leaders plan a floor vote on their build this week. Senate leaders say they want to take Committee Action on the bill before member 23. Before a vote takes place, issues need to be resolved. Kevin brady told foxnews that the house it wouldnt lets bring in kathleen hunter. Good morning to you. What is it going to take to get the bill through the house this week . We have the two different versions of the bill. Ways, thein some challenge the House Republicans face is underplayed. There is a lot of focus on how to resolve between the house and senate, which will be a big issue, but i think it is not a foregone conclusion they will actually have the votes in the house this week. They will, but it may end up being one of those now biter votes. What of those nail biter votes. Of those nail biter votes. Theyl not getting will not get any democratic votes. That will be a challenge. Hear it seems every line i from this tax reform is an attack on the u. S. Upper middle class when it comes to reducing, for example, mortgage interested options interest deductions. Now reducing state and local tax reductions. Doesnt it hit hard at the constituency . Key reporter you have hit on a fun a mental issue with this tax reform a fundamental issue with this tax reform bill. The challenges are exemplified by the debate over eliminating or reducing the state and local sales tax reduction. That is something that is going to hit suburban high tax states, like the new jersey suburb of long island, places in california, places where republicans have constituencies that they really need to care about if they want to keep control of the house, it is what we saw last week in the off year elections is that in places like that, washington suburbs, northern virginia, places like that, republicans didnt do that well. Democrats cannot fairly strongly. Republicans need to be thinking ahead to 2018. When it comes to the state and local tax reduction, how that plays out. Howan have an effect on they retain seats in the house next year. Anna thank you very much. Ben ritchie is still with us. Lets turn our attention to the United States. Andcrucial is this tax bill the debate about whether we need this kind of the stimulus . Investor, weopean would like it if companies in the United States played last paperless in the United States pay less Corporate Tax. We see corporate doing at this stage in the cycle, we are quite a long way through. Perhaps this can give a stimulus. That ultimately has to be helpful. In terms of the outlook for the omy, matt a lot of people talk about the effect that tax cuts would have on doing more of the feds job for us. Anylikely are we to see substantial tax reform out of the u. S. . What would your feelings on the subject be . So far, it is a highly complex issue. May see the headlines reasonable. The details may be what really matters in terms of the longterm economic impact. Wille confidence we ultimately see reductions in the headline for Corporate Tax rates. In terms of the domestic picture, there are a number of pros and cons, and whether that adds up to that stimulus in the right place will depend on how everything is structured. The treasurys of market, lets get your thoughts. I have pulled up a chart. Speculators at alltime records, shorts on fiveyear treasuries. You have seen the flattening of the curve over the last 10 straight sessions. Some investors to pile back into steepening traits. We keep seeing this letter picture . This flatter picture . Ben it depends. Path has fund itself against expectations. Perhaps if we had this conversation six months ago we would be talking about rewrites is expected next year. Now looking more for two. It really depends whether or not we see inflation go up in the system, which could drive expectation higher. Thosei think we will get key numbers in a few days, november 15. People will have that marked on their calendars. If we do get it, is a december rate rise a deadlock . What do you expect next year from the fed . Ben i will be bold and say we think they will raise rates in december. Anna that is a big call. Year, our economists are looking for two increases next year. Lessr, there has been much than people have expected for number of years. The connection between labor markets and inflation has been broken down and we will have to see where that reasserts itself. Anna are you interested in how the Balance Sheet unwind is going to work . We will be speaking to the Philadelphia Fed president Patrick Harker in the next hour. Any big picture concerns about happy that operate from here . Ben it is less about hubby fed operates and what happens Going Forward and impacts on risk assets. There is discussion in the firm about, what does mean for equities Going Forward . We just dont know how that is going to play. Will be same thing play out in reverse . We dont know. Interplay works out is most important. If we see a steady rise in rates, that can turn out well. If it is at a faster is, that can be disconcerting. Anna thank you very much, ben ritchie. He stays with us. If you were a bloomberg customer, you can watch the. Rogram on the tv function you can also follow long with the charts and functions we are using. You can also ask the guest to question with the button at the bottom of your screen. Matt were going to talk about boeing, a surprise order from emirates for 40 dreamliners. The carrier made the announcement at the dubai air show in a press conference where pretty much everybody, including executives expected the deal to go to airbus. The deal has a list price of 15. 1 do 15. 1 billion. Forl airbus held out similar deals and didnt get many. Yousef gamal eldin sat down with the airlines president. What did he tell you . To your point, i was at the press conference yesterday, and the expectation and the shock when the announcement came that it would be boeing and not airbus. It is still all to play for airbus for a comeback. With theversation president of Emirates Airlines, he made it clear that while the a differentor more, line was successful for the airline. The fact that they bought the willirliners means they serve more city fears, harness more pockets of growth that are still out there, and keep the momentum going in terms of doubledigit growth Going Forward years ahead. Anna what are the other orders expected . Although it doesnt seem like a good day for airbus, this isnt the end of the story. What else is expected . Won day one, we had another deal. Reasons for lot of that. The economics have shifted. The politics as well. Offending with the standoff with carter, tension with United States, laptop restriction, all of that. We are looking forward to a possibly the deal from fly dubai. 20 possibly big deal from fly dubai. That is probably why they have worked closely with fly dubai, trying to create some of those. Anna thank you very much. Our team on the ground has been catching up with tim clark. Thoughts on the big deal from boeing and weighing in on the oil price. Tim i cannot see it moving outside the 55 to 60 band. It is likely be followed price around that. Is likely the price will fall around that. Anna we will talk about the flight in sterling coming up. What is coming up on tv . Matt we will bring you our exclusive interview with Christine Lagarde. Here are take on the next chapter in the Global Growth story. Another interview for you from tokyo from Patrick Harker at 7 00 a. M. U. K. Time. This is bloomberg. Good morning. It is 1 50 in the morning in new york city. You can see the Empire State Building on the left side of your screen. Managing director sorry, the chrysler building. The imfs managing director has on Global Outlook growth. Christine lagarde says asia will mean thes leading engine for growth. Worldsremain the reading engine for growth. It is recovering. Catching up with prefinancial crisis growth. Asia, is going to continue to be the big Global Growth engine it has been. Compared with this 3. 6, asia will be generating at least 5. 5 . That tells you a lot about the role it plays in the region. Do you see evidence of inflation . It is a balanced situation. You have countries that are currently at relatively low inflation levels. Possibly onetary Monetary Policy must continue to support recovery and have an impact on price levels, but there are countries where crisis ands still at good levels. Banks in see several asia tightening in 2018 . Monetary policy will be tightened in countries where the economy is picking up sufficiently fast and where inflation is rising. This is going to be the case in the u. S. It is happening gradually, smoothly. The u. K. Has recently raised Interest Rates again, but in this part of the world, im not sure i am seeing it right away. We saw a big bank moment for china yesterday when it opened up further its financial sector. Is it more significant or more symbolic . I was telling you earlier that Financial Services have to be better integrated and more trade and exchanges. That is one indication. Financial services in china were fairly constrained, restricted barriers tof foreign direct investment. Consideringt it is to remove at least partially those barriers and above the threshold of 50 and gradually eliminate those thresholds, that is an indication of two things, openness and better strength and confidence. Anna Christine Lagarde talking to Haslinda Amin about global close Global Growth and inflation. Softbankan offer from to buy a stake in the company. Followed by a tender offer to buy 9 billion in shares from investors. Our reporter has been following this story. He joins us from tokyo. Tell us about the deal, what these companies have agreed to do together. This is a preliminary agreement at this point, but it has been weeks in the making. Softbank and a couple other inestors have agreed to put about 1 billion in fresh capital and there will be a tender offer to buy 9 billion in shares from existing shareholders. What they need to work out is exactly what price the deal will go through it. Is 70latest valuation billion. Fresh capital go in at that valuation. They need to negotiate what price they will pay for the existing shares. I wonder how uber can benefit from softbank support. It is is it purely financial or anything else here . Can use inverybody next are 1 billion in capital. Softbank has been an aggressive investor in right hailing companies around the world. It is not clear exactly how bringing uber in would benefit. They have not been successful in penetrating japan. Softbank could perhaps help them. Cooperation tighter among the right hailing Companies Among the ride hailing companies. The deal has to get finalized and then they can work out these details. These other companies have cooperated with lyft up until this point. You can see a shift in the balance Going Forward. Anna thank you very much. Peter with the latest from tokyo. Ben ritchie still with us. When you look at this story, this is a company that has been plagued by controversy. Softbank a big investor. General, i think that is an awful lot of money that wants to find a home in technology assets. Remain high. S we see that in europe is law. As well. Matt is uber unstoppable . You can see how much the population suffers at even the idea of taking it away. Ben they have to respect their regulatory obligations and issues around how they do business but how they interact with employees or partners. They have manage that situation carefully. Is it unstoppable . We see how these Business Models, when they reach kamas, they are hard to beat. When they reach critical mass, they are hard to beat. Anna lets turn our attention to another big story, the dubai air show. Fascinating theater around this. The you have competence in anyone Business Model over the other or does the customer just benefit . Ben i wouldnt necessarily see those as direct headtohead competitors. They reflect different visions of the future, dont they . Ben yes. More of a a pointtopoint plane. Theyot necessarily sure missed out on this particular offer at this stage. Anna ben, thank you so much for spending time with us this morning. Ben ritchie at aberdeen standards investment. Up next, all things fed. We speak to Patrick Harker. Talking about gauging prices for the pace of 2018 rate hikes. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Great relationship. President trump wraps up his asian tour with a warm welcome in the philippines. Harkers hiking plan. He lightlys penciling in one more rate rise this year. He joins us for an exclusive interview. Taking on theresa. Sterlings after a report that 40 lawmakers back a challenge for the Prime Ministers leadership. And emirates strikes a 15 billion deal with boeing. We speak to the airlines president. Welcome back to bloomberg daybreak europe. Im matt miller in frankford. Anna im anna edwards. The Asian Session has been mixed, negative really. Futures suggest we could be a little bit higher here in london this morning. Looking for catalysts as to how we get another le higher on global equities. U. S. Caused ahe little wobble in fridays session. We touched record highs on some of those markets. Look at these new catalysts. We heard from the fed marker in tokyo talking about penciling in december. We will get further thoughts from him. Matt, the wrist radar . Matt, the risk radar . Matt look at what we saw happening overnight in tokyo. The nikkei coming down for the third day in a row and that is in contrast to what we saw with other asian markets. Theres a mixed asian trade, but the nikkei has had three drops with the hang seng gaining. The bloomberg dollar index is gaining against most Major Trading partners and then you downitcoin, down 4 now, 1 3 from its high last week. Still a relatively high number for bitcoin, 6297. German bund futures right now looking to push the yields down. Go ahead and take a look there. If bund futures are up, that means investors will buy, which will push the yield down. The range has been so tight, hanging around 0. 4 . Anna Patrick Harker has become the latest u. S. Policymaker to announce a rate hike before the end of the year. In tokyo, he said a move in 2017 is likely penciled in and that inflation is expected to assert itself due to the tight labor market. We are joined for exclusive interview by Patrick Harker. You talked about likely penciling in a move in december. How weak with the inflation data need to be this week to decide that no rate hike is appropriate . Patrick good morning, anna. Thanks for having me on the show. Headline inflation, i dont think we will see a large move between now and december. It is really the underlying data that i am looking for, the wage data and the unemployment data. Anna sorry, you dont think the inflation data has the potential this inflation data this week does not have the potential to throw the rate hike off course . Its all about the job situation for you . Patrick i dont think we will see a large move in core inflation, but we could see an uptick with the wage increases and continued tightness in the labor force, which are the precursors to inflation. If we see those, i would become purple with a december rate increase. Matt the question is, what would make you uncomfortable with a december rate increase. And the been so weak trend has been down this year. If we do not see the employment you be there, would prone to vote against an increase in december . Patrick with that, if we saw that tick down again, we would be cautious. We would have to look at all the data, not just the core cpe numb er. Thats why i said it is penciled in. I dont expect that right now. I do expect i will be supportive of an increase in december. Anna you also talked about sorry, met, gmatt, go ahead. Matt i was just wondering about the yield curve flattening. From our view it is pretty dramatic. We have not seen a yield curve this flat in over a decade. It seems the fed continues to push up the short end with the long end trading flat. Wife the long end picking up at the same time same time . Patrick i think there are a lot of likely suspects there. Other banks, European Central bank, the bank of japan and others, they continue to be highly accommodative and that is one of the reasons we see the long end flattening out. I am concerned about that in that is why the pace of removal accommodation has to be gradual. Anna the pace has to be gradual. If it is gradual, do you think we will see any inversion of the curve . Patrick i would like to avoid any inversion of the curve. My goal is to remove accommodation in a way that we do not run the risk of inverting the yield curve. Matt does it concern you to see the yield curve this flat . Typically that is a sign the economy is slowing down. This expansion has grown pretty long in the tooth. Patrick well, we are starting to see really tight labor markets. 4. 1 . Sayineeing our forecast is we will did below 4 we will dip below 4 before coming back up. Has said, this expansion been quite remarkable for how long it has gone on, and the continued, steady pace of job g rowth in the u. S. Anna it has also been remarkable for what we have seen in the stock market during this expansion period. As the Balance Sheet of the fed and other Central Banks has increased, are you confident you will not see that correlation maintain as the Balance Sheet shrinks . Are you confident we can avoid triggering a selloff in equities . Patrick at least for our Balance Sheet normalization that is the speech i gave in tokyo we are trying to do this in a way that is as boring as watching paint dry. We want it slow, steady and on autopilot. Put that on autopilot and then use the control. Things we will either increase or decrease. I dont see playing with how we do the Balance Sheet and normalization. We want to keep that easy, clear, concise and communicate very clearly what we are doing. Matt patrick, markets seem to be taking it quite well. Markets are penciling in more inn lightly a rate rise december and you have a projection of three rate hikes in 2018, and even if it is boring, you are still unwinding the Balance Sheet. Its uncharted territory. Are you surprised with how will markets are dealing with this . Matt i think markets are anticipating it far in advance of our statement from the last meeting, and that is a good thing. Part of our job is to be very clear with the markets what we intend to do, and then execute on that. Anna patrick, you say you want things to be gradual, protectable and boring. Are there any things you see within markets, in terms of positioning, that does worry you . We talked about the positioning of junk bonds, those betting on volatility. Do those kinds of positions worry you . Patrick no, not at this point, no. Matt what would you see as an ideal terminal rate, patrick . With three increases this year that puts you at 2. 25 on the upper bound. Does the same too far away to you . Patrick we are heading toward a fed fund rate of around 3 . That is our forecast, but again, we will take our time to get there and we will do it in a prudent fashion so we do not disrupt the markets are run the risk of inverting the yield curve. Anna Patrick Harker, thank you very much, joining us from tokyo. Lets get the bloomberg first word news. Reporter President Donald Trump has said he has a great relationship with the president of the philippines. That came as he ignored shouted questions about alleged abuses carried out in the deadly battle against narcotics. A filipino long song was sung orders of the commanderinchief of the United States. King salman is not planning to advocate in favor of his son. He dismissed mounting speculation that the crown prince would soon ascend to the throne. He said application was unthinkable, especially since the 81yearold king enjoys perfect health. Speculation has been dismissed that he has been held against his will in saudi arabia and plans to return home within days. That is as he made his first Public Comments since his resignation. We will be speaking to the governor of Lebanons Central Bank at 10 30 a. M. U. K. Time. The pound has weakened after the sunday times reported that members of parliament agreed to sign a letter of no confidence. That is eight shy of the number needed to trigger a leadership challenge. Theresa may is struggling to maintain her grip on power after the resignation of two cabinet brexiters and as the e talks fail to reach a breakthrough by the end of the year. South koreas foreign minister said pyongyang must show signs it is moving away from provocation before any talks on start. Tarization can our sanctions are working. That might because in them to recalculate. That could also mean they are finetuning technical aspects of further provocations that might have appeared. But it is good. We had the spirit of no provocation. Ed global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Find more stories on the bloomberg at top. That go to hong kong, where Sophie Kamaruddin is standing by. Sophie that negativity that invaded markets on friday, that clinched the start of the week. The stocks are looking mixed, but we see a second day of losses in japan. We got bearish action at the last word he five minutes of trading. President parker discusses expectation for policy tightening a few minutes ago. Inhave a few bright spots shanghai and hong kong. Pet shares in china leading gains. In hong kong, stocks are at a decadehigh. In asia, we had Country Garden earlier inund 11 the session as it prepares to be included in on the hang seng. Take a look at some stocks on the board there, to show you some equity movers. There we go. Soaring over 40 as it made its trading debut, Country Garden. Reliance communications, a record low in india. Anna boeing has pulled in a supplies offer from emirates of dreamliners. Which has a list price of 15. 1 billion, is strategic for boeing as rival airbus held up for similar deals. Yousef gamal eldin that done with the Emirates Airlines president. Tim in terms of oil price, i cannot see it moving outside of 55 to 60 per barrel. It is likely the price will fall around that. Once you go above that shell, supply cut you of has changed a lot. The higher it gets, paradoxically, the better it is for some of our demand in the higheryielding sectors, oil and gas, banking, etc, etc. On the one hand we have a higher cost input, but on the other, it brings richer segments paying more money. sterestingly enough, it something we are grappling with. Am i concerned about it . I know we can trade the company profitably up by 100. We have done that in the past. I have no concern about that. Yousef youve been in this business for at least tow wo decades. When you look back at your time in the Aviation Industry and look at what has been happening during the last year, would you say this is the most difficult time for the company, the most challenging as well . Not just in terms of the geopolitics, but the rhetoric coming out of the United States, more nationalism and so forth. Tim youre right. Ive been here for a long time and as we grow this business, we over the has happened last 25 years across the planet, regionally and globally. I am proud of the team i work with. We have managed to navigate the business through all of it. The scale of some of these traumas and the rate of incidents has accelerated of these traumas. I used to think it was tow oo big ones a year. Now we can get one a month. Is that going to change . No, i dont think it is. We see a significant change in what is going on in the planet today. We have major shifts in consumer aspirations and demand, driven by all fourth of new things that have come into the market, the internet of all things within the last 10 years. Reporter that was tim clark. Imf managing director Christine Lagarde says globalization is not under threat, but acknowledges that more must be done to ensure the benefits are shared fairly. Lagarde spoke exclusively with bloomberg at the aipac summit. Lagarde from my perspective, leaders have focused on themes, such as inclusive growth, such as innovation to produce more productivity, such as creating jobs, such as adjusting to the digital economy. Those are leading initiatives, which we had advocated, and which we believe are in good synchronization of the development we are seeing around the world. Reporter we are also seeing divergent views, especially when it comes to globalization and trade policy. Is globalization under threat, even of chinas president says it is irreversible . Christine lagarde i dont think globalization is under threat. What is under threat and needs to be addressed is who benefits from globalization . And i think that is an area where Everybody Needs to pay more attention. Globalization, as well as the benefit of technology and innovation, must flow to all. And they cannot be groups of people, regions of the world, or regions in countries, which do not benefit from globalization, which are who are left behind and excluded, which is why they focus on inclusive growth. The second what i would make when it comes to trade, because it has been a big discussion in the last couple of days, is that trade needs to be updated. And by that i mean the framework, the rules based mechanism within which trade is conducted. Technologies, new supply chain organizations, the development of the digital economy, prevailing intellectual property protected assets all of that is new development. And the major trade arrangements, whether they are bilateral or multilateral, they back quite a few years. It is hardly surprising that some leaders are saying, this is not fair. Or, we need a level playing field. Or, we need to restore some order. Yes, there is a need for such updates and i am really pleased to see that some trade arrangements are including the issue oflabor, the the protection of the environment, the issue of the protection of intellectual property. Trade withressing those perspectives in mind is critically important. Anna imfs Christine Lagarde talking to haslinda. Where trump is in manila, he just made opening remarks. Joining us now from manila is stephen engle. What did trump have to say today . Stephen we are just getting a sense of Donald Trumps personality here after a long trip day, and also duterte. Somee run you through of the headlines. Donald trump seems to be a supporter of bilateral trade agreements, rather than multilateral, one of the reasons he got out of the transpacific partnership. During his Statement Today he says the u. S. Remains committed as its obvious role as a regional forum. He said he wants a free and open trading environment within the indo pacific region. He seeks fair and reciprocal relationships with u. S. Trading partners in asia. He said the trend of Companies Moving back to the u. S. Bodes well for the indo pacific region. I am not sure how that does that, but he said they had good measurements. Sarah Huckabee Sanders said trump and duterte talked about many items, including isis, Illegal Drugs and trade, and the subject of human rights did come up, according to sarah Huckabee Sanders, briefly during the trumpduterte meeting. Trump summarized the relationship as being great. Trump said new details on north korea and trade progress will be revealed as soon as he leaves asia. Matt stephen, the South China Sea dispute is also front and center, especially in the philippines. Any progress made on that front . Yes, we are getting word of this final communicate, the southtement on china sea. Tomorrow they will pick up on a lot of these geopolitical issues, where today it has been a lot about trade. The statement, which we have gotten a copy of it is a joint statement from the various 20some leaders here. We welcome the positive developments between the u. S. And china on the south chiana sea. While the situation is calmer now im quoting from the document we cannot take the current progress for granted. Framework ofe the the code of conduct, which was signed in august of this year, they see that as an important milestone and they will soon announce the leaders here. They will soon announce a formal negotiation, which will begin soon on the quote of conduct for the multiple claimants to the mineral rich and fisheriesrich and critical sealdand in the South China Sea that has multiple claimants. Trump yesterday, before he came to manila, speaking in vietnam, he offered to mediate any differences, to be an arbitrator. Some of the things like the vietnam delegates, they did not comment on that offer. The philippines was a little more generous, saying, trump is the master of the art of the deal. Te was very. Duter blunt. He said last night during a press conference that the South China Sea was that are left untouched. Nobody can afford to go to war. Of course, china opposes the u. S. Having any involvement in the settlement of any differences in the South China Sea. Anna stephen engle, thank you. Trump throwing his hat in the ring. Howee how popular much he gets for that offer. Lets check on the markets, then. Matt miller, it looks as if we are expecting to go a little bit higher at the start of the european trading day. The asian equity session has been a weak one, really, down about 0. 5 . The japanese market, the south korean market really looking catalysts this week, trying to take the global stock story any higher. Lets get over to yousef gamal eldin. We have had a lot of news out of the emirates and airbus and now we will turn our conversation to bombardier. Yousef lets get straight into the conversation. Thank you for joining us on bloomberg tv. Talk to me little bit more about demands here and how that is shaping up. Where do you expect this to go in 2018 . We have a lot of positive momentum on the program. The entry into service with our two customers is going really well. The industry is starting to take note. So, the reputation of the aircraft is building as performance and is even better than our own specifications. We cannot be havoppier about coming here to dubai with this positive momentum behind us. Yousef what about at the dubai air show . Will you announce any new deal, or is the atmosphere more muted . I think it is going quite well and it brings unique opportunities here to the region. The airplane itself has got a wide body of feel to it and creates opportunities. For us, i think were pretty good. Im not going to predict orders just yet. We had a few more days to go. Analysts have pointed out you will be able to generate a lot of cash flow within the next three years. What will be the major catalyst for bombardier in 2018 . What would you point to specifically that you are excited about question markfred t . Specifically, the partnership that allows us to reach the potential of the c series. We have this positive momentum at bombardier. It will be exciting for the aircraft and that is the primary thing we are most excited about at the moment. Yousef could you envision more partnerships like that, like the one you have had with airbus as well . Fred thats all you really need to get this aircraft is part of the family now, all the way up to 220 feet. Yousef would you be opening to deepening the relationship with airbus as well . Fred i think we have a lot of capability within bombardier. 4,000 of our employees are in belfast, where they built the wings. There is an opportunity for people to come in and great opportunities, as well as in canada. The u. S. Partnership can open the door for more opportunities with canadian aviation. Yousef investors have pointed out your tie up with airbus and thec series puts market at risk for your competitor. Should be present a challenge to the conflict you have stirred fred we see a Market Opportunity for about 6000 to 7000 aircrafts. Fact that we have got an airplane that has unmatched comfort, unmatched economics, we feel like the market share opportunities for the c series is going to be phenomenal. For us, we are focused on what we can do for the program and with airbus coming, unleashing that as well. F what would you say could turn to be an achilles heel for the bombardier story . Are in the wrap up phase of the deal, but im more of an optimist than a negative. Yousef where do you see the strongest pockets of growth. Termsms of geography, in of people who are going to put money down for your airplane, wheres it going to come from. The aircraft, and we have been open about this, has appealed around the globe. It can have opportunities within the traditional environment, it does well with. Point to point, we have the swiss using it out of geneva. I think the appeal from a regional standpoint is around the globe and certainly here in the middle east, that is one of the primary reasons we are here, to continue to advance his program. Matt yousef so, would you say europe will see more demand and more appetite than compared to say asia or south africa . Fred there are some reasons it is growing a little bit faster, it depends on the size of the base. Early november we announced in order for 61 aircrafts in europe. I think we will see some opportunities in europe and the u. S. As well. Clark does not inspect the oil price to move farther away than 55 or 60 a barrel of oil. How much of a difference does it make to you, the oil price . Oil price is something important to the airlines be cut is their number one expense. If Oil Prices Remain low, it means good things for the industry and therefore, good things for bombardier. You very much for joining us on bloomberg tv. We have plenty more coming up. Guy . Guy yes, thank you very much indeed. Yousef gamal eldin speaking to the ceo of bombardier. The cash equity is about to start trading here. Im guy johnson. Im in london. Matt miller is in frankfurt today. Were watching president Patrick Harker saying he does not want to see the yield curve inverted, but are we moving in that direction now . Sterling slumps as theresa may faces yet another challenge. The Prime Minister speaks at e, and a. U. K. Tim rival takes a bite out of bitcoin. 150 in its fifth year, a surge. Is that beginning to come to an