Analysts expect the u. S. Economy to add 160,000 jobs this month after a dire report last month. Will could a miss mean for the fed what could it mean miss for the fed . Iron ore prices slump the most since 2016. Keep an eye on miners at the open. Less than half an hour to go until the start of the European Equity trading day. We were without the u. S. The u. S. Was celebrating Independence Day yesterday. We are without that legacy to build on. We are waiting for the payrolls numbers, as we have been saying in our headlines. We are in a Holding Pattern. Ftse futures suggesting in the event of downside, but review the european suggesting a little bit of downside. Gmm. Have a look at the it gives us a picture of what has been going on over in the Asian Session and it is pretty mixed. The indian centex a little bit weaker, the rupiah a little weaker. The finance minister in india making a budget statement. Plenty about investment in the Indian Economy and where the priority for her is going to be. We are monitoring that. Lets have a look at the other side of the gmm. Iron ore pushed through 100, 17, up through 120, now down 110, up through 120, now back down. Those paying the price for this, the chinese is still mills calling for some kind of the chinese still mills steel mills calling for some sort of investigation. Heres debra mao in hong kong. Debra thousands of spectators packed the mall to watch president trumps fourth of july speech. He praised the u. S. Military and american people, but also put himself front and center of the Independence Day celebration. The event included tanks, flyovers by jets, and culminated in an extended fireworks display. President trump we celebrate our history, our people, and the heroes who proudly defend our flag, the brave men and women of the United States military. Together, we are part of one of the greatest stories ever told, the story of america. Debra china is sticking to its demand that the u. S. Lift all tariffs as a condition for any trade deal. Some u. S. Officials have insisted that they will stay even after a deal as a means to enforce it. President trump and president xi agreed last month to restart talks. No plans for facetoface negotiations have been announced. British special forces and seized a supertanker off gibraltar that was carrying iranian oil to syria in violation of u. S. And european sanctions. Tehran declared the action illegal. Madrid is considering a complaint over the seizure. It happened in waters that spain considers its own. Greece has to the polls this sunday. Tsipras is struggling to defend four years of austerity and economic upheaval. New democracy leader in the home alone favorite. Voters are liking his is the favorite. Voters are liking is message. Last nights boston pops fireworks spectacular is one of the largest and oldest public fourth of july events. It gave out 6000 u. S. Flags with 10,000 fireworks launched from three barges. Global news 24 hours a day, onair and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much, debra mao in hong kong. She set us up nicely for a couple of very important stories we need to cover from a markets perspective with mark cudmore, who is with us in london this week. Good to have you with us once again. Let me ask you about the jobs number. We have had conversations about how backward looking jobs data can be. It is being talked about as something that will make or break the fed decision in july. What lens do you use to look through this jobs number . Indicators a lagging of the economy. I dont think it should change anyones narrative. There are better, highfrequency indicators, things like that pmis, trade data. Last month, the adp was a good guy did that we would get a poor number. I think there is a chance of some weakness. There has been such a narrative of last month, weakness starting to seep through, we will start to see the slowdown in employment numbers. I think if we get a beat we will get a stronger reaction on the upside. Anna risk go. That is the function to use if you have a thought. Let me move on to the European Growth story. German factory orders, the drop of 0. 2 ,or a but it came in weaker by 2. 2 . This has been incredible, the slew of german data we have had recently which has been repeatedly disappointing on the downside. Germany is one of the Worlds Largest economies and the driver of European Growth. It is wrote export real export dependent. I think this partially feeds into a very much enhances my general bearishness on Global Growth. I think germany is at the front of that. The trade war in china is having an effect on economies that depend on exports in china. Droppedrman yields yesterday. Does that have great significance for you . It suggests the market is looking for further cuts from the ecb, i suppose. I think the exact level, given we have seen such a move in yields you know, could somebody said 10 years ago yields are below zero across the curve, that would be shocking. I am not sure if it is that much of a trend. Clearly, this massive move into negative yielding debt looks like a bubble that will end. I have no particular insight end badly. I have no particular insight into how it will end. Anna 25 of global bonds now negative yielding. That is quite a short time horizon you are talking about, next week, week after. It could be years away, couldnt it . It could be. I feel like we are getting very excited. The evidenceeen that they will be more proactive towards quantitative easing. Its not as if the fed has shifted towards qe yet. I think there is too much expectation priced in and that will end in tears. I dont have a call on the exact catalyst. Were looking quite stretched. Anna let me ask about commodities. They have been an interesting beat. Amongst the trade tensions, we have kind of seen them go their own way. Iron ore has had a spectacular rally, through 110, 120, now comes crashing down again. What do you suspect is up late is at play . Ore think the gains in iron is an incredible story. I think we have seen 60 70 gains from january. It has looked stretched. We are starting to see a bit of an easing on the supply side as well. This is probably the top of the rally. I think the pink might have been on monday peak might have been on monday after the g20. Anna we will see whether this chinese pro takes place. Mark cudmore, thank you. You can join in the debate today. Get involved in our question of the day. As more yields go negative, which assets look attractive to you . Reach out to us. Coming up, more on Deutsche Bank. Could the job cuts at the german banks u. S. Unit go much deeper than expected . We are live in frankfurt next. This is bloomberg. To bloombergback markets european open. We are 18 minutes away from the start of the trading day. This is the picture for European Equity futures. We are expecting a pretty flat open at the start of the trading day. We are waiting and watching for u. S. Data that breaks early afternoon european time. Lets talk about one european stock that is never far from the spotlight, Deutsche Bank. Job cuts in the u. S. At the german bank can go deeper than equity and rates trading. The lender board set to decide on a sweeping Restructuring Plan this weekend that is focused on eliminating as many as 20,000 rules. Joining roles. How likely are the cuts to be in the region of 20,000 . Is that what we are looking for come monday . Right, so what we are looking for is definitely a very big restructuring, probably the biggest Deutsche Bank has announced in decades really. We dont know how big the u. S. Cuts will be. We know it will go further than what has been reported so far, not just equities, not just rates. Those units in themselves are big enough. It will be even further. We cannot talk about a definite number yet but people should be prepared for some really big changes at the u. S. Unit. Anna what does this mean for the future of Deutsche Bank in the u. S. . They have always been clear that they want to stay big enough to service their clients who require a global business. Exactly. That is exactly the question Deutsche Bank will need to enter if and when answer if and when those cuts happen. Clients are already asking Deutsche Bank, what does it mean . Around fivell be years from now . When you implement cuts like this, the question is, what is your footprint going to be . The big cuts now that are imminent really would definitely raise questions. Just what operations will be there to cater to those needs that European Companies have. Anna what about the european side of the business . Do we expect that to be spared despite the negative rates environment, the weakness in the underlying European Growth story and the overbank nature of germany . I would not say spared. There will be job cuts in germany, for example. The retail unit will continue to shed jobs. It has been doing so for many years and will continue at the same pace. There is a big back office in germany and im pretty sure jobs will of there, too re,too. Of their anna thanks very much for the update. Lets get a Bloomberg Business flash. Here is the other Corporate News you need to be aware of. Here is ever amount hong kong. Here is debra mao in hong kong. Debra osrams supervisory and Management Board accepted a takeover bid from bain capital and carlyle. This and the german Lighting Companies relatively brief and contentious time as a standalone and a price. Bain and carlyle are offering 35 euros per share. The companys cfo says the deal is very good for the company. I think we will receive a very good support. And values the company on the base of the 2020 consensus. T is nine times ebitda we would be in the doubledigit range. From that perspective, i think it is for shareholders. Debra imagine grannies in Running Shoes delivering ramen noodles. That is ubers plan for expansion in japan. Now it might sound ridiculous, but stick with me. The chief executive says the elderly are actually signing up to be uber eats couriers. Now while most workers use a bike or scooter, he said that seniors in search of exercise are doing their deliveries on foot. China is sticking to its demand that the u. S. Lift all tariffs as a condition for any trade deal. Some u. S. Officials have insisted that they will stay even after a deal as a means to enforce it. We spoke to standards chief executive about the ongoing dispute. There will still be a lot of trade between the china sphere and the rest of the world. Europe, i hope, and will be well advised to maintain a middle position in that does all rather than side with one or the other in that castle than side with one or another. Debra make sure to catch the full interview next month. That is your Bloomberg Business flash. Anna . Anna thanks very much, debra mao in hong kong. U. S. Markets are due to reopen again today after Independence Day. Lets have a look at what the futures are telling us. S p futures pretty flat actually. U. S. Trade, as we are waiting to see what the jobs report has before reassessing what they think will happen to fed policy, and therefore 10 year yields and the dollar. We are going to speaking to larry kudlow, the National EconomicCouncil Director in the u. S. Dont miss that conversation after 2 30 p. M. London time. Minutes away from the open. Up next, we will take a look at your stocks to watch at the open, including the Mining Sector. Iron ore slumping after chinas Industry Group calls for an investigation after a recent rally. This is uber. This is bloomberg. Anna some sounds and sights from the boston pops. Aretha franklin, i think. I dont think you will have quite this many fireworks for the start of the equity trading day. Eight minutes to go until the start of equities traded. Lets get to your stocks to watch. Dani burger is looking at norwegian. Sam is covering chipmakers. Annmarie hordern is focused on the Mining Sector. The mining stocks on this iron ore roller coaster we have seen in recent weeks. Re trading at 108 per ton. Take a look at rio tinto. These stocks already done. The latest news that chinese mills are urging a probe into this rally. Miners are set to get it. Anna we will keep an eye on the Mining Sector and also on the chip sector. What is happening there . Samsung had preresults guidance out last night. The progress that profit in the quarter have the profit in the quarter halved. Not a particular good signal for the market. They not only make phones, but they also make chips. Whether they will move too much, although this may already be baked in, but we shall see once the market opens. Anna norwegian. It sort of collapsed as quickly as it exploded this morning. Dai these reports iag the first report said would make a bid for norwegian in as little as two weeks. Iag comments to a norwegian papers saying they are not interested. Their posture has not changed. Certainly, some backandforth. During trading today, it might be a case of buy the rumor, sell the news. Anna thanks so much for that. Lets talk about whats going on on these markets right now. We have spent a lot of time focusing on the weakness in well, the collapse in global yield. 25 of the worlds debt now a negative territory, global debt in negative territory. The downward march, germany is at record lows, others drop on dovish ecb expectations. Lets check what is happening on the bond markets at the moment. German bond is unchanged. 0. 4 . Interesting that it should be unchanged at this level. That is the ecb rate, the depot rate, the deposit rate. The fact we have been trading below that and we dipped below that in yesterdays session suggests the market is increasingly think them but thinking about further cuts to come from the ecb. 10year btps, 1. 63 is the yield on the italian bond. I talked to someone over at jpmorgan in paris yesterday. He was saying you look to the periphery at this point to find value. You wonder whether the value comes from these bond markets. 1. 95 is the yield on the u. S. 10 year as we await the employment report out of the United States. We are very global today in our coverage. We have pictures coming in of the indian budget announcement. The indian finance minister making this announcement this morning. Sitharaman delivering her budget speech. India needs 20 trillion rupees annual investment on infrastructure. Many announcements have been around revising investments in the Indian Economy. The government may consider further opening up of several sectors. Aviation being talked about quite a lot. Proposing measures to deep in the market, a longterm bond, so a host of measures coming through, and a lot of hitting of the desk. Lets have a quick look at what is happening on the futures. European equity markets are expected to be pretty flat, pretty range bound as we wait for the jobs report. The number we are looking for on the jobs, 160,000. Last month number was 75,000. If we get another negative surprise, what will that mean for the fed . Open is coming up next for European Equity markets. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Anna one minute to go into the start of cash Equities Trading this friday. Lets have a look at how the markets are shaping up. The guidance from the Asian Session is not very conclusive. Entirely flat on the asian equity session. We dont have to u. S. To trade off of yesterday. Fourth of july yesterday, which means u. S. Markets were closed. We dont have that to go on. We are also waiting for the payrolls number due out later on. Iron ore is a big mover. That is where we might see some action. We continue to slump after we raced through up to 120 on the Iron Ore Price. The u. S. Dollar it had stronger a tad stronger. We got we can data once again out of germany, this time on datary we got weak again out of germany, this time on factory orders. We are waiting for the u. S. To give us the payrolls number for last month. How strong or weak . Is that what does it do to the fed, to the market expectation for a fed rate cut . We have been in a bit of a Holding Pattern on the fx market. In todays session, the dollar it touches stronger, the euro the dollar a touch stronger, the euro a touch weaker. Ftse 100 is down a touch. Euro stocks fairly flat this morning. The French Market opening down by 0. 1 . Without the u. S. Yesterday, we had Little Movement in the Asian Session. Little way in the Corporate News flow as well. We had those numbers out of samsung, but absent any big drivers, we are waiting for more news float and that jobs report. We are not seeing a great deal of nothing really very conclusive. Health care is stronger, materials looking weaker this morning, an area of real red. I. T. Is looking red. Financials stands out as an area green. We will perhaps delve into what is happening there. Iliad is the biggest gainer today, up by 3. 4 . 3. 4 ld group up by John Wood Group up by 3. 4 . Schneider electric down by 3 . We have had some news out of Deutsche Bank. That was one of the stories we were tracking earlier on. The share price of Deutsche Bank up by 0. 4 as we wait for what is happening over the weekend and all of the meetings that seem to be about to take place at board level to decide on the level of. Job cuts Norwegian Air shuttle, which does not appear on the list, up by 12. 5 on that big story that was quickly rejected by iag. Lets leave it there for the stock specifics. Is thenside biggest father. Treasury yields faller. Joining us is bhanu baweja, deputy head of global macro strategy at ubs. Let me start by asking you what is at stake with the jobs report today. We are expecting 160,000 jobs have been created in the most recent period. Last months number was just 75,000. Is this the make or break number for the fed in july . Or do you think that decision has already been made . Bhanu i think this is an important number. If this number is about 160, closer to 200 and you see wages doing well, it is possible the fed does nothing or stays at 25. Our base case is that they will buy some insurance and they are in Risk Management mode and thats why they will be doing 50. If this is another weak report, and the adp telling you that the private sector not having that many jobs. If you get another week report, it is possible the fed it goes into Risk Management mode and gives you one cut up 50. Anna just to clarify, you are not expecting 50 in july . You can 25 . No we are no, expecting 50. Is this the driver for you . What is the thing that is cliching it . Bhanu i think the fed has moved closer towards thinking about inflation as a problem. The fed is looking overseas. , itooks at japan, europe sees that Monetary Policy is running out of juice. It wants to make sure it is in Risk Management mode enough to push and fleshy push Inflation Expectations higher. The details of the u. S. Economy are actually quite strong. They are in Risk Management mode. I think that is the key point. They want to make sure the worries elsewhere dont in fact the u. S. Economy in fact infect the u. S. Economy. Anna this 50 seem like too much does 50 seem like too much . Bhanu usually, i would agree with you. Symposium suggests if you want to ensure, you go hard and quit. Case thisy there is a time to be made that insurance will be 50. The markets is way ahead of that. They are pricing in 4 and above by the end of next year and three cuts by the end of this year. That is unlikely, we think. If the u. S. Economy is not to be in such bad shape, it must be that is because the rest of the world has really become very weak. China, europe. The markets are not priced like that. The u. S. Rates market is giving you one reality of the world. The volatility and equity market. , the credit market, the fx market given you an entirely other reality of the world. I dont think these assets. Are entirely speaking to each other. Within equities, underneath the surface, cyclicals are quite word. There is dissonance between volatility on the one hand and rates on the one hand. Anna you wonder which asset class is telling you the true picture, the best production. U. S. 10 year yields, prediction. U. S. 10year gilts, hollow do we go yields, how low do we go on u. S. 10 year . Bhanu the 10 year belongs to the world. The twoyear belongs to the fed, to the u. S. The 10 year is under the influence of gravity, bonds. On a daytoday basis, the bonds move drives that u. S. Treasurys move. In fact, the 10 year can go in there but lower. We think the risk i reward for 10 year yields is for them to go lower riskreward for the 10 year yield is for them to go lower rather than higher. The twoyear is where i think rates have much too low in the u. S. Anna ok. Does the dollar belonged to the u. S. Or the world . We will talk about that in a nice conversation. Bhanu baweja from ubs stays with us. We will bring you the stocks on the move this morning, including norwegian, the Budget Airline gaining despite iag denied a report it is considering a takeover. Iag denies the report, yet the stock goes considerably higher. , the stock is up there we are, the stock is up. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 10 minutes into your trading day. We were waiting flat for the jobs report later in the day. Now we have a slight downward bias to the market. Lets get your individual stock movers. Norwegian air is released biking at the open really spiking at the open, up more than 5. 4 . Looks like the market is ignoring iag. The market seems to think norwegian is back. Hexagon to the downside, down more than 13 . This Swedish Company deals with advanced measurement technology. They were out with a profit warning. They are citing trade tensions and weaker development in china. They will be cutting jobs. To the upside, osram. 3. 4board has approved that billion euro bid from bain and crl ityle. Bain and carlyle. China is sticking to its demand that the u. S. Lift all tariffs as a condition for any trade deal. Francine lacqua spoke to Standard Chartereds chief executive. Ofi think the period , whiched globalization is part of what characterized the early part of the last decade, was very good for Global Growth, very good for a global bank like Standard Chartered. It was very good for its subset of the population and left another subset of the population behind, in particular, middleclass in developed countries. The political will to go back to unbridled globalization seems to have passed. I equate a National Natural extension of the view that the population my small country is much more important to me than a population a much larger country. What does it mean for where you see growth, supply chains . Do they come back or are they permanently changed . It is always fascinating to pick up the soundbites about china becoming the force for good in globalization, having taken that mental from the u. S. Mantle from the u. S. What china be a globalizing on a superregional will china be a a superregional scale . The china globalization ecosystem is very big. It is a big proportion of the world economy. It is a big proportion of world growth. That is the ecosystem we are operating in come in the china there operating in, in china sphere. We want to make sure we are facilitating that flow. There will still be a lot of trade between call it the china sphere and the rest of the world. Europe, i hope, and would be well advised to maintain a middle position in that tussle rather than side with one or another. We are obviously a european bank. Want to focus on is how we can promote trade within that china sphere but promote trade across that sphere. Anna that was bill winters, the ceo of Standard Chartered speaking to francine lacqua. Still with us is bhanu baweja, deputy head of global macro strategy at ubs. Trade tensions seem to be fx tensionsto at least, if not outright fx war. President trump has had a lot to say about the manipulation of currencies. Is he suggesting we will see the treasury intervene in the dollar . Or is it just more pressure on the fed to cut rates . Bhanu i think it is the latter, more pressure on the fed to cut rates. He wants lower rates, a weaker dollar, neither of which he will imminently get because he wants. Hem find it quite difficult to see how if the treasury were to intervene unilaterally, by which i mean boj is not involved or ecb is not involved or other governments are not involved, and if they were to interview, i dont know how sustainable any losses in the dollar are going to be. ,ypically, joint interventions think about 1999, everybody propped up the euro, those are interventions which are sustainable and successful. I think going unilaterally, i suspect may actually be bullish, foolishm fullish , even from a weaker dollar perspective. You will torpedo the Global Financial system and global trade system. That is going to meet that mean that risks increase massively, the Global Economy weakens. When the Global Economy weakens, the dollar is strong. You might lose out eventually by going for a weaker dollar. Six months later, you might find that the dollar is stronger than your starting point. That might be a losing proposition. Im not sure that the treasury has thought that through, which i think it is unlikely and certainly likely to be successful. In the bottom 30 percentile, the dollar is hugely quite strong, which is what this year the dollar has been reasonably strong. This is the year that everybody thought would be the end of u. S. Exceptionalism, and it has been. The dollar is strong because Global Growth is not picking up. Anna and yet this chart shows you currency traded has been building short dollar position. Maybe they are thinking well, maybe they are just assuming the fed cup. Cut. Bhanu i think it is the natural tendency to think the dollar go through a natural cycle. We have to look at the dollar not just from a fed lens, but from a rest of the world growth length. That is a much lens. That is a much bigger driver of growth for the dollar. If china is not able to pick up steam in a big way, if europe is not able to, then the dollar cause in strong the because the other currencies cannot strengthen. I think the mistake investors often times make is to think of the dollar as the dollar is a consequence primarily of growth and the rest of the world. That is why you said the u. S. 10 year does not belong to the United States anymore and the dollar does not belong to the u. S. Right. Absolutely both of these belong to growth in the rest of the world and growth in the rest of the world is stronger. Asset managers in the u. S. Feel that much more confident in buying european financials or australian dollars. That is when they want to go to the rest of the world, the growth is not strong. Anna thank you very much. Bhanu baweja stays with us from ubs. Coming up, talking about the u. S. Economy, it is jobs day of course. We will be speaking to larry kudlow. Dont miss that conversation at 2 30 p. M. London time. We. Have the jobs report a little before that. Lets check out whats going on in the markets. European equity markets losing their footing as we go through this European Equity session, down about 0. 8 . Basic resources to the downside. The collapse in the Iron Ore Price probably something to do with that. Which assets are you looking at as most attractive amongst this slump in yields . We will discuss. This is bloomberg. Oomberg. Anna welcome back to Bloomberg Markets european open. We are 21 minutes into your trading day. Losing our footing in little on this European Equity session. No guidance in the u. S. Or Asian Session. Were waiting for the jobs report. Investors will have to get used to risk in the hunt for yields in europe. German yields held at record lows after factory orders fell by 2. 2 in may, keeping them below the ecb deposit rate. Even greece looking more attractive now. Still with us is bhanu baweja, deputy head of global macro strategy at ubs. Lets talk about the European Growth story with all of these negative yields. You, the that mean for extent of the weakness we see in german yields . Bhanu i think the biggest question for europe right now is as you know, european domestic demand is famously strong. There is no problem in consumption but trade has been extremely weak. The numbers released in germany worrying. Ng are it has been such a long time since we have seen this degree weakness. Weakave remained extremely in trade. At some point, that trade weakness will impact domestic demand. That is what the bond market is smelling. That, plus the fact that inflation is going nowhere because of china, because ation processes the only kind of inflation that is picking up his services inflation. That by itself is not enough to raise inflation. That is why i think yields are where they are. I think a lot is priced. I think a lot is priced also in europe. If you look at european fiveyear, inflation levels, extremely low levels. I understand it is a disinflationary world. It is a difficult place for us to go and received inflation swaps, just because we think inflation is already priced at a very low level. You could see rates coming down modestly in the front en perhaps d end perhaps. Anna interesting the distinction you make between the domestic european economy and the external there has been a lot of talk about the slowdown. The ecb saying we need a better mix of fiscal and monetary. Christine lagarde has called a lot in the past for fiscal stimulus. Does that work . If the problem is not domestic but the external trading government trade environment . Bhanu thats the only networks. Monetary thats the only thing that works. , and im suremost shes very smart with economics as well, she is a very good communicator, perhaps a good negotiator. This is an admission that Monetary Policy is running out of juice. This is not about whether you take the next five or seven basis points down. This is about being able to communicate stability and being able to negotiate with different Central Banks and government. It is about slightly higher, a greater place for fiscal policy. The big question is germany. That does not happen right away. That would take much further weakness. That is not ecb point. Anna it is something even mario draghi, and he is not a politician, even he has called on fiscal actors to do more. Yet, investors keep lending essentially, giving money to the German Government to look after their. Cash flow. Still, there is a lack of investment in the german economy. Bhanu i do not think that would change in the shortterm. Germany is doing fine. The factory orders number is the manufacturing slump. German Unemployment Rate set record lows. It is very difficult unless germany starts becoming much more european. Not everything that mario draghi asked for has been given to him. He asked for structural reform in europe. I think it is a little bit difficult to get a massive fiscal stimulus. That you will get a better fiscal impulse, that fiscal impulse will improve, yes. If you will get a massive fiscal spent in europe driven by germany, anna anna we will talk about emerging markets and Indian Markets have been reacting to the federal budget. The finance minister, sitharaman , focuses her attention on infrastructure and an investment drive. She is saying india needs to sell sovereign bonds overseas, so not just domestically, but overseas. We will have more on the indian story and the broader emerging Market Opportunities next. This is bloomberg. Anna here are your headlines. Bank mays at deutsche go deeper than just great staff. To u. S. Economy is expected add thousands of jobs after a dire report last month. What did a miss mean for the fed . And a chinese probe into iron ores recent rally sends prices plunging. European minors selloff. Welcome to Bloomberg Markets. Week,t matt miller this he is over for the boston pops celebration. Lets talk about what is moving around in these markets. Downside,ias to the 367 moving lower, 223 to the upside. The moves are not that significant. We have lost strength of the markets. The payrolls number could be crucial, i hear, in terms of fed expectations and therefore in terms of treasury and dollar expectations. Movers, weve got a mixed bag. John would up by 2. 6 . Up, moving on expectation of a deal. And it moves today on the agreement to the deal by the managing board. We spoke to the ceo earlier. Lliad is up by 1. 54 . A profit warning out of hexagon, but it is a day when the jobs data in the United States really matters. It sets us up nicely. Will it be another week month . Lets get first word news from debra mao and hong kong. Thousands of spectators packed the mall to watch president trumps fourth of july speech. He praised the u. S. Military and american people, but also put himself front and center of the Independence Day celebration. The event included tanks, flyover jets, and culminated in an extended fireworks display. President trump we celebrate our history, our people, and the heroes that proudly defend our flag, the brave men and women of the United States military. Together, we are part of one of the greatest stories ever told, the story of america. British special forces perceived as seized a supertanker off gibraltar that was carrying iranian oil to syria in violation of u. S. And european sanctions. Tehran declared the action illegal. Summoning the British Ambassador to explain the action. Madrid is considering a complaint over the seizure. It happened in waters that spain considers its own. The strongest earthquake in 20 years has rattled southern california. Buildings in los angeles shook after the 6. 4 magnitude earthquake hit around 170 miles from l. A. Multiple injuries and two house fires were reported in the town near the epicenter. Los Angeles International airport says operations were running as normal. Greece had stood the polls. The Prime Minister is struggling to defend four years of austerity and economic evil. The new leader is the ite, withing favor voters liking his message. Boomers plan for expansion in japan may sound ridiculous, but stick with, the chief executive says the elderly are actually signing up to be uber eats couriers. And while most use a bike or a scooter, he says seniors in search of exercise are doing deliveries on foot. And last nights boston pops fireworks spectacular is one of the largest and oldest fourth of july event. Flags and fireworks launched from three barges. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna deborah, thank you. Lets talk about india. Indias new finance minister outlined the fiscal deficit and Borrowing Program in her budget for 2020. Inflation is below target and unemployment reaches a 45 year high. Focus is and how the new finance minister will reinvigorate the economy. Lets talk about opportunities in emerging markets. The head of global strategy at ubs is still with us. A real focus on infrastructure. It has been talked about as the opportunity in india. Thats right, and i think this budget has the right focus. In indiahe budgets have been about payrolls and wages to cash wages, subsidies. Wages, and subsidies. But they are moving away from that towards the private sector. You have to whether investment can pick up in a big way at a time when you still have trouble in the bank market and the credits market. Liquiditybeen typed tight liquidity and it will mean that investment will be slower in the next six months. So dont expect the Indian Economy to go much stronger from here, but we do think that the budget does have the right push. What about the opportunities for investment in emerging markets . I know you like emergingmarket equity. I wonder about emergingmarket debt. We have got dollardenominated emergingmarket bonds on this chart. Some have been talking about how the hunt for yields has driven em bonds into this rally. Have a driven it too far . Bhanu perhaps, but across the hardrum, without a doubt, currency debt would be the preferred asset class. Now, we are currently tactically long. We have been for a month and a half. We will probably remain long for a few weeks longer, expecting more liquidity from china. But this is not a structural position. We see this as a tactical, liquidity driven trade. Fundamentally, we are not looking for much better earnings growth. We are not seeing much better growth overall. Growth has been quite subdued. , but are several factors the single most important reason withat a long along flattening globalization, you have a significant decline in intensity in china. So china is moving away from consumption and construction towards infrastructure, which is not that important. , not is helping china australia, indonesia, brazil, or europe. That is interesting, because that reflects what that has been a structural positive along with the rise of the chinese middle class and the rise of the service sector. But you are saying that actually holds negatives for the rest of em. Years, if iast 20 can oversimplify, chinese growth has been about exports and construction. Both have been hugely positive for the commodity complex. As commodities go, so do em earnings. As you move towards consumption, sure, by Consumer Staples and companies, do we want to buy a barley or do we think rio and bhp are going to go 2x . So in those sectors, we will see the accrues diminish. For thank you very much joining us, the deputy head for global microstrategy at ubs. A great day to get his insights. A fed rate cut is all but certain but that could all change when the u. S. A jobs report. Dani burger was saying this is very important. The strays too far from consensus, he could send analysts scurrying to adjust outlooks. With just how crucial this is, here is bloombergs dani burger. The jobs report will be one of the most important data points considered by the fed as they mull Interest Rate cuts. That is especially on the heels of the weak may numbers. So there are a lot of moving parts, but broadly, there are three scenarios we can break down. So the first scenario, we could get a blockbuster report of gains topping 20,000. Employment drops and wages exceed forecasts. In that case, bank of america says the fed would probably hold , but thats if they can push back market expectations. Or we could get a payroll that comes in near consensus of 160k. Ds to cap of this is where the current Market Pricing likely will become reality. The hurdle is too high to forgo easing, say strategists, who also expect an equity relief rally. Week scenario where hiring falls in below 100,000. Cut could look more like a 50 basis point cut. Analysts have told bloomberg bond markets are already pricing this in, but with equity at euphoric levels, this could be the start of a correction. , danithank you very much burger with reflections on the payroll numbers. Up next, well bring you some stock movers this morning. This company is considering options, including a potential sale. This is bloomberg. Anna welcome back to the european open, 44 minutes into the trading day. Down. 2 as we wait for the jobs report. Changed since the greek Prime Minister resigned in 2011. , theunder four years later Firebrand Party swept to power on a wave of sentiment. A bailout later, greece heads to the polls again after a driving for Alexis Tsipras is tsiprass party. Leading in the poll is one of the pillars of greeces political system, led by the son minister. R prime the party has promised reforms and investment to jolt the economy after years of recession. It has also pledged to reduce greases surplus greeces surplus. The bounceback has already begun with falling from almost 14 to touching an alltime low. Investor enthusiasm is also reflected in the stock market. The index in athens is the worlds best performer this year. Buildup,ll of that lets get to athens. A senior economist and Research Development at the overseas Development Institute joins us. Great to see you. If we do see him as successful in his bid for power this weekend, what would you expect greek economice priorities . That he it is likely will win this weekends elections, if polls are anything to go by. He has made it tax cuts the focus of his reform agenda as well as a focus on entrepreneurs. I think we are likely to see an increased focus to the private awayr and a way and from the private sector public sector. Anna what difference will this make on unemployment and those areas of the economy that are ove that still struggling still struggling. That is an interesting question. It looks like the pathway to reduce the Unemployment Rate will be through boosting , making itrship easier for people to start and maintain his innocence businesses. He has made that a pathway to reducing unemployment. What kind of reaction do you expect from a greek markets . Im talking about the performance of the greek stock market. Bonds have done well and there seems to be expectation that there has been more qe at the periphery in general. Any of those factors supporting the greek story at the moment . I think so. There has definitely been an and on thehe market bond markets. May is not clear and what be a cause for caution for the markets is what sort of fiscal leeway the new administration will have for those tax cuts. They are looking for very optimistic growth, i heard a 4 growth rate talked about. Leewayot clear where the , where the fiscal comfort will come from for the tax cuts he is talking about. The Market Reaction has been justified, to a certain degree, but it is not clear whether or not this sort of market move will continue. , how should we interpret what is expected to be the result here . In terms of how they had experienced and feel about austerity and the left of european politics. They have experimented and rejected and are now going to the centerright. How should we see that move . Polls areell, the key indicating that people are hopeful with the new administration. What is really important is what you mentioned before, the Unemployment Rate and incomes. Theyre going to have to engage in reforms that feed into higher incomes for people. The little improvement we have seen in the labor market has been in temporary employment or seasonal employment. Longterm unemployment increases are still high. Yes, the focus on the private sector is important and entrepreneurship is important, but we will need to see secondary reforms enacted to boost the labor side of things. And unemployment for the under 25s, still very high. Phyllis, senior economist and Research Associate at the overseas development to joining us from athens. We will have plenty more on the greek elections. We will be speaking to the former greek finance minister. Dont miss that conversation after 10 a. M. London time. A real important part of that greek theresa story. Lets get to the individual movers this morning. Annmarie hordern has those. Annmarie i am kicking it off with fin tech, up more than fintech, up more than 11 . Seeking valuations giving the company a boost. Ag to the downside, they are u. K. Construction company that provides supplies to a lot of buildings. They said they saw a marked deterioration in u. K. Construction, the stock is dropping the most since 2016. And basic resources, they are under pressure today. He sector alone is one of the biggest losers and they are really under pressure amidst of the second day of big pullbacks. It went through 1. 1, it went china, a. 2, and in steel Industry Group is asking the government for a probe into the rally. Some say it is overdone. Anna annmarie hordern, tracking the miners in the session. We are a little weaker, weakening as we go. Up next, battle of the charts. Remember, bloomberg terminal users can see all of the charts we use. Gtv go is the function to use. We will have more charts for you during battle of the charts, that is next. This is bloomberg. Anna Aretha Franklin rings out across the charleston river. The boston pops fireworks display for independence today. If you are wondering where matt miller has been all week, he has been there, hosting that event. Lets check in with u. S. Assets stateside the day after some in the market have come back to work. U. S. Futures are flat to negative right now. Time for battle of the charts. Annmarie hordern is going headtohead with dani burger. Is u. S. Jobs day, and instead of looking at the service numbers, i am looking at the whisper numbers. This is a function on the terminal, and if you are a client, you can put in your vet. Bet. It is coming in a bearish at 1. 33. Whatever the job number is, it will be so important to the feds next move. Anna we have already been through some of the details of what the fed might do in various scenarios. Dani, what have you picked . Dani this is a topic you have been discussing today, just how on fire the em bond market has been. This is a good reason why. When we look at the spread of you can see it is the so you since late 2017, are getting an extra 3 from the em aggregate. Why is certainly a reason investors keep flooding in and buying emergingmarket bonds and why it keeps a ballooning in size keeps ballooning in size. Dani, im going with yours, people have wondered if em has been driven too far. Our guest said it was the bond market dollar bond market he was looking at for opportunities. Thanks for playing. Gtv go is the function you want to use to check out those charts. Larry kudlow, im sure he is familiar with it. Dont miss that conversation at 2 30 p. M. London time. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Nejra bloomberg learns that deutsches u. S. Cuts will stretch far beyond equity and rate divisions. You investors get set for todays job number. And a slowdown at samsung. Operating income plunges at the worlds biggest mobile phone and chipmaker. Welcome to bloomberg surveillance. Lets get a check on