Im francine lacqua. Lets check on the markets. Overall, a lot of these equity markets are a little bit higher. The dollar also tells teh story. I want to show you the msci develop index. After we saw that betterthanexpected jobs data on friday, we saw a rally. Then, the price of crude, 42. You can see that on the nymex. I want ted to show you something a little bit different. Now, lets get straight to the bloomberg first word news. Nenjra the japanese emperor has indicated he is ready to step down. The televised address came weeks after reports that he had expressed a desire to abdicate in the next two years. In the speech, he voiced concerns it would become extremely difficult for him to carry out his duties. When i consider my age of over 80, as well as the regularly. In fiscal conditions, despite being healthy at this moment, i have concerns about not being able to fulfill duties. As many as 5 Million People attended an anticoup rally in this dental yesterday. Yesterday. Bul meanwhile, moodys has left the rating on turkey unchanged. Donald trump is due to make a speech on the economy later today as he attempts to get his campaign back on track. According to Senior Campaign aides, is the dress will focus on providing regulatory relief for small businesses. On thursday, Hillary Clinton is also due to speak on the economy. German Industrial Production increased in june, beating estimates. Production rose 0. 8 from the previous month, compared to the a 0. 4 estimate of gain by a bloomberg economist. Global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. This is bloomberg. Francine . Francine european stocks are edging higher this morning. The s p 500 hit a record on friday. Feeling the momentum was the jobs data on friday. Fueling that momentum was the jobs data on friday. The odds of the fed raising rates by the end of this year rose to 47 . Our lets introduce guest for the next hour. It is great to have you on the program, as always. After thelking u. S. Jobs report and he believes the market is underestimating a september rate hike. I would say the u. S. Jobs data was encouraging, but when you ask people, what do you feel about the economy, 60 still say the country is not on the right track, we are not feeling the wage increases. They comes down to, how do they feel about their own outlook. Of course, we have had a good consumption number, as you have seen, but what is lacking is Capital Investment is dragging. That means the companies are still hiring cheap labor. Francine that is understandable, given that we are in an election year. Manish yes, but that has consequences. There could be a latent inflationary fear. Up. Growth is not catching we still are back in the same 2 growth environment. Francine i was concerned about was, because of external concerns, because of brexit, because of china, we are going to hold off. Now, the numbers add up to a rate hike. Manish i have a feeling they will go at least once this year because i feel this number will get better. I do expect that in the the campaign is very important. Rates pressure has to pick kick in. Francine they cannot use brexit as an excuse anymore because the outcome has been much more tempered then we had five. Manish exactly. The brexit is going to play up for a long time. The brexit is going to play out for a long time. Francine what do you make of italian banks . Is this worse than brexit if it is not dealt with in the right way . Manish lets talk about one thing. Trouble. Is still in look at the cost of the capital. Nobody has committed yet. It is only a plan. Francine it is such a small bank. See, this is the concern. They have tried this three or four times. In the great scheme of things, why are we worried about such a small bank . Manish sure. Europe has a singular regulatory regime, but we do not have a insuranceor a depository premium. We do not have that, like the u. S. Does. The fact that it takes such a long time, that creates the contagion we are talking about. Francine manish, thanks so much for now. Stays wit h us. We will be talking about more italian banks. Pboc promises innovation and more forward guidance. Can it deliver . And is the dollars gain asias loss . This is bloomberg. Francine welcome back to the pulse. Im francine lacqua. Lets get straight to the Bloomberg Business flash. Nejra Steinhoff International has agreed to purchase mattress holdings. Deal vaults steinhoff in to the u. S. Market, while creating the Worlds Largest bedding company. Dvs fell 6 . Net income dropped to 178 million. Losses related to the troubled Energy Services firm. Last week, moodys warned the massive amount of money set aside to deal with the energy withholdings is not enough. People have told bloomberg the founder will head the online. This will challenge amazon, thig by tapping into customer data. That is the Bloomberg Business flash. Francine airbus shares are down this morning after the company said the u. K. Has opened a criminal investigation into allegations of bribery and theft. We are now joined from berlin. Thank you for joining us. What triggered the investigation . Reporter good morning from berlin. Actually, it was airbus themselves that notified the authorities about this. They have an interest in trying to get to the bottom of the issue. They have now hired forensic accountants, they say, to clean up what is going on. The heart of it is, how airbus does business in some of these less established markets. Very often, these companies will then use middlemen, agents on the ground who helped closea a deal. Allegations are that they might have taken kickbacks or bribes. They are trying to establish, what was the role of the people on the ground . What were they doing for airbus . Why were the authorities back at home not notified of the use and role of thsese people. Airbus has admitted they forgot to notify the authorities. That is what will be looked at going forward. Francine what are the implications for the business and staff . My has it had such a big impact on tehhe stock . The stock is down a little bit this morning, but only a smidge. This is not able fla a volkswagenlike scandal. This type of financing is only used ina niche of the market. Only 7 of the deals airbus d oes is related to this financing. Become a financing of a last resort for some companies that dont have any other means and therefore, it does not matter that much for them. It is not good for their track record, being a Clean Company doing clean business. There are certainly implications there. But in terms of pure business, there is not much going on for the time being. No deliveries have been affected, and that is what people ultimately care about, the Business Cycle and the deliveries. Francine thank you so much. Now, lets get back to our guest host for the first 30 minutes of the show. He is cross bridge capitals head of investment management, manish singh. Valuations . G good this is on the back of brexit and the back of concerns over negative rates. Or are we fairly priced . Manish we have been talking about banks just recently. But the problem is, if we look in europeer risks going forward, were talking about the referendum and a breakdown of relations between the eu and turkey, or at least becoming strained, and the less popularity of angela merkel. It is a bit of a bear market rally, which you can buy into, but youre not looking at a structural growth that could underpin francine right, but then you have other companies that might get sold off that are very skewed to the emerging markets. They do not make much money in europe. Manish sure. A fundamentally strong company. So, yes, the valuation is attractive. If you are looking to trade around it, it is ok. It is ok for the shortterm, but at the moment, when i look at valuations, i am more into selling the rally. But i am not bearish on equities. Francine selling the rally to buy what . Manish nothing at this point. To put it in cash. Francine is there a lots of volatility . Manish yes, i do see that in terms of the market. But i am not bearish. And i say that because in other market nations, the only Government Bond deal that is higher than 2 is in new zealand. You really have an overvalued bond market. He should say in equities. Businessundamental that will stay strong and go through the cycle. Francine i wanted to bring you over to my treasury chart. Look at the circle, we are almost at a four month high, versus a group of seven peers after that jobs report on friday. Is there anywhere that you want to be on any of these yield curves . Manish two things i would like to clarify. If we do not get a physical response, then you could see the 10 year bond yields go further down. By which i mean, a tenure bond yield could go further down to 1 . Francine which would be pretty incredible. Manish if you do not get a physical response, growth if you do not get a physical response, growth is going to disappoint. People make end up going into the u. S. Market to keep buying more u. S. Bonds. Francine overall, is there something are there any Corporate Bonds in europe you are looking at . Again, we were talking about negative rates and you believe there could be helicopter money in europe. Such a hugeuying part of that bonds. Manish that bond went up 30 . More happy being in equities. But if you dont get a fiscal response, people should not underestimate those bond yields. Francine we will be talking japan next. Also, the jobs data take the s p 500 to a new high. We talk u. S. Equities and political risk, next. This is bloomberg. Francine we are talking about the markets and the best corporate investments. Still with me is manish singh. Maisnish, i want to get your thoughts on how to invest in the u. S. In a second. But europes largest economy gainful mentum ahead of the brexit. Are there any companies you would be investing in in germany specifically . Manish i would say, not at this time, and not because i dont like germany, but i am continuing withth the u. S. I am waiting for the opportunity. If something was to go wrong lets say there was an a time referendum lets say there was an italian referendum. The financial signals are good. Look at the s p. These three sectors have really grown. This is where we have seen continuous earnings growth. People are so bearish on the american banks. I do see in the brexit discussion, if the u. K. And the eu was to fight, the big winner is going to be the american bamnks. I understand is the s p 500 touched a new record high and it does so almost every three weeks. It seems that in the past, one equity market went one way and the bonds went the other. We were mispricing risk. This is not true anymore. They do not follow each other. Manish sure, and this is where my discussion on bonds enters the picture. What does the fiscal stimulus and the tax cut do to equities . However, if they dont follow up, you will see 10 year yields decreased much further. That is a ballast you have to maintain that is a balance you have to maintain. Francine and that is a political. You mentioned donald trump and Hillary Clinton,a huge election. Manish there could be vastly different policies. We also have to understand, the anger that is there due to income inequality, that has been built up for a long time. Neither of them cant ignore it. They will have to address it. There has to be some kind of fiscal response that should help the country. It is not only required, but it is very important. Francine what is one thing you are selling off in the u. S. Of the moment . Manish i am not selling financials, but i am selling some energy names because i think there has been a good rally. Francine Energy Related to oil . Manish yes, because i do believe there is a glut in sp supply. Now, the capacity only goes down by 18 . So, there is an oversupply, which you have to be very careful about. Francine im going to bring up a chart. We are seeing so much more demand from india and china. Couldnt not make up for the shale desperate is theres . Could it not make up for the shale Gas Producers . Manish i think we could have a really high oil prize next year. Could create a shortage in the supply. Francine but that would be very shortterm, right . This is my oil price chart. In purple, you have brent. Oilhe white, you have the count. It seems like it is trading in a range that has been lowered. So, what would it take for this price to spike up to 60 to 65 . Manish even in the u. S. , they have a capacity of one million barrels. It is coming off and trading a shortage of supply. Where are we going to see helicopter money first . [laughter] manish that is the billion dollar question. I dont think what we have seen so far in qe is helping the economy. Saying, ikeep dont like negative interestrate policy. The bank is never going to pass it on to consumers fully. And to make matters worse, in japan, they buy etf. In europe, they dont buy etf. Francine so, it really does not help europe at all. Manish yes, and they would have a good equity buffer and take on more risk. It takes a long time. And takes a long time to make a political agreement. Francine in japan, there are so many concerns. We will focus on this. Thanks for coming on today. Jens Bjoern Andersen manish singh, joining us this morning. Up next, the pboc promises innovative Monetary Policy. What does it mean . We are live, to figure it out. After the u. S. Jobs report on friday, we focus on china and global demand. This is bloomberg. Francine welcome to the pulse. Im at Bloomberg European headquarters right here in london. Lets get to bloomberg first word news. He expressed a desire to abdicate within the next few years. In the speech, he voiced concerns that would become increasingly difficult for him to carry out his duties. When i consider my age of the 80, as well as deteriorating fiscal conditions, despite being luckily healthy at this moment, i have concerns about not being able to fulfill duties. Reporter as many as 5 Million People attended an anticoup rally in istanbul yesterday. Meanwhile, moodys has left its longtime debt rating on turkey unchanged and said it would continue to review it stance following the failed sales coup. Donald trump is attempting to get his campaign back on track. According to Senior Campaign nominees address will focus on providing smalltory lea relief to businesses. On thursday, Hillary Clinton will also speak on the economy. Germany Industrial Production increased in june, beating estimates. It rose 0. 8 from the previous month, compared to a 0. 4 estimate from a bloomberg economist. Europes largest economy gained momentum ahead of the brexit v ote. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. Francine now, lets turn to china. Deteriorating imports have suggested that the domestic situation is weakening as well. The pboc gave more hands as to its involvement in Monetary Policy. Now, for more, i am joined by robert. First of all, lets start with you. Have significant is this commentary from the pboc . Good morning, francine. It is quite interesting. The backdrop of course, in china, has showed a failure to get much traction. We had an example last week when agency put out a comment in a very long report that suggested perhaps, the economy would need more Interest Rates. That comment was swiftly deleted. They reminded everybody they have tools be on the rate cut. That is what they are talking about here. They are looking to see what is best effective in terms of trying to stimulate the economy. Creditnels the money, or , to the powers of the economy that need it most. It is a kind of targeted stimulus, rather than the blanket, onesizefitsall Interest Rate they have been trying. And that really has not succeeded in helping demand. Francine what are the Key Takeaways from the trade day . I am not sure if it is something to do with china, or the fact that we can see very tepid global demand. Nboth. S on the import side of things, it is looking weak, for wrappin reflecting poorly on china. Actually come overall volumes are holding up ok. And the same story on the import side of things. It looks like imports have come up more than they are. But when you look at it, it is hard to say that chinas Manufacturing Sector has necessarily turned a corner. It is still in the slow lane, reflecting the Global Growth story. It goes to show you how heavily the authorities have leaned on the tariffs. They have to keep that transition going if they are to have any hope of generating new global drivers. Francine thank you so much. Now, lets bring in robert, the head of asia fx strategy. What does this tell us about what the pboc will do next . I think the key thing, and terms of the currency is the chinese authorities are very keen to make your they dont give a very strong signal that they are easing Monetary Policy way. N aggressive i think the most striking thing, if i could talk a little bit about the trade data, the actual trade surplus in the month, which the commentators are not talking about, was well above expectations. Francine what does that tell us . That brings the 12 month he intuitive trade surplus from china over 6 billion. That brings the 12 month cumulative trade surplus from china over 6 billion. I just wanted to comment about the import weakness as well. I think it is important to note that part of the weakness is attributable to more activity on shore, importing copper, rather than importing refined products. Francine if we go back to what we saw in january and last summer, will we see that volatility return . They were quite clumsy in the way they handled it. Are you expecting a number three of that kind of volatility . They have made substantial improvements since the new year holiday earlier this year in terms of the way they are managing the fix, and in terms of the way they are communicating with the market. That is positive and has helped to reduce the risk premium in the market. But there is a lot more they could do in terms of creating more transparent policy framework in china. Until that happens, the fx market will be vulnerable to new volatility. Francine we had some pretty good u. S. Jobs data on friday, which means the markets are pricing in a fed hike a little thinner than they were one we a little sooner than they were one week ago. What does this mean . It will come back to the market. Are our perspective, they underpinned by healthy trading a account surpluses. Francine but it creates a headache for china, doesnt it . But the external positions are favorable. Nonetheless, the policy divergence issues are there as well. That is preventing us from being too bullish across the region. Francine we will go to the rest of the region in a second, but focusing on china, is there something the pboc can do . We have talked about an off the record agreement which would mean janet yellen would have to hold off on hiking rates. Are we ever going to see some kind of agreement between these two nations . G20 meeting the in shanghai earlier in the year as a meeting where we could possibly get a broader agreement, some sort of formal acknowledgment of the interdependencies in the global economy. After the meeting of course, we did not seem to get anything. They were very quiet. But everything since then really , has been consistent with some broader recognition. Will be potentially damaging for the World Economy and more fx volatility from china would also cause concern. Francine thank you, rob mink ikin. Meantime, lets go to over to nejra. Nejra it is very much risk on today. We are heading for our highest close in almost a year. On the stoxx 600. But it is heading for its biggest threeday gain in more than three weeks. I want to show you the grr on the bloomberg, which breaks down the energy groups. We really are seeing this risk on with Commodity Prices gaining as well, the likes of oil and industrial metals. If we look at currency markets, you can see some of those commodity currencies, some of the best performers among the g10. We are seeing a bit of a weaker yen against the dollar. Some of that seems to be down to the dollar strengthening over after that better than expected some of that seems to be down to the dollar better than expected hangover after the jobs data on friday. There is a likely rate cut from the reserve bank of new zealand on august 11. Lets take a look at the biggest gainer on the stoxx 600 today, it has risen 11. 3 . This is the most it has risen since december of last year. It is postnl, and what seems to be driving these shares higher, a forecast dividend resumption of Dividend Payments in 2017. Francine a message from japans prims emperor suggests he is ready to stand down. And what we have to expect from Donald TrumpsEconomic Policy speech tonight. Is is bloomberg. Francine the dollar is back. Jobs number mean for the emerging markets . Well, still with us is robert minikin rob, we were talking a little bit before about what it possible fed hike would mean for the dollar. What doesnt mean for the rest of the asian currencies . Rob actually, it reinforces the policy of divergence thm emes and it would be dollar constrictive. I think we need to keep in mind, it has been a much bigger dynamic. We have had a very powerful bull market in bond markets globally. We estimate that roughly half of the developed bond markets are trading on yields between 1 2 . That is supportive for the emerging market currency. Francine remains intact until we see inflation, and that can reverse very quickly. Rob the inflation seems to be relatively subdued globally. We had some uptick in energy prices, but that has now stalled out. It is very difficult to see a specific spark for much higher global inflation. Francine i guess the problem is isf this hike, even if it december or september, could spark a dollar rally, which could hurt some emerging markets. Rob yes, the view we are taking is that the bigger dynamic is one in which we see Monetary Policy globally. That is not just about the fed, but about the Central Banks in europe and japan. Support should influence into highyielding currencies and highyielding markets. Francine so, lets say the fed hikes in september. Is there a danger that we could see this kind of temper t antrum that we saw two years ago . Rob the best way to think about it is, a good prompt a short lived episode. It could prompt a shortlived episode. Francine so, there is no meltdown. Rob some of the underlying macroeconomic dynamics need to be kept in ind as well. Kept in mind as well. Francine because of policy reforms . Rob some of the policy reforms have been favorable, that we are starting to see moderate surprises. Also, we expect global trade growth to pick up a little bit later. This should help insulate the environment. Francine so, thai stocks have advanced on a result about a new constitution. Rob i was actually in bangkok when we got news of the u. K. Referendum. I think this is positive news fo thailandr. We have been buried bullish on the economy with 4 growth this year and 5 growth next year. This is not the best way to play that because the bank of thailand does not want to see any local fx appreciation. Francine robert minikin, thanks so much. Now, lets go straight to japan. Is emperor has signaled that he wants to step down. Because of his age, he is concerned it could become difficult for him to carry out his duties. When i consider my age of over 80, as well as regularly physicalting conditions, despite being luckily healthy at this moment, i have concerns about not being able to fulfill duties. Francine lets go straight to tokyo and bloombergs managing editor from japan. What is the historical significance of this event . Well, this is hugely important. No emperor in japan has abdicated since 1817, so 200 years or so. Today, he said he cannot stand down. He hinted that he wants to step down. Now, it will go to pry minister abe to take it from here. Now, it will go to Prime Minister abe to take it from here. Think about his father. He was a god. People were not even able to look at him until he denounced is godllike status after the war. By doing this, he is emphasizing that while he is an important symbol of unity, he is also a human. Francine is there any reason why he should not be allowed to step down . Are there any political issues that could complicate the situation . It is hard to say. Abe came out right after the emperor spoke and issued a single statement, that he wants to take what the emperor said seriously in think carefully about what can be doene. 85 of thed that people of japan support him stepping down. However, there could be some traditionallyminded people who might like to see the emperor elevated once again to divinelike status. The might resist and some of them are probably in the deep pockets. Francine does it have an impact on the markets, or is it just a legacy for him . In terms of the markets, we have seen in recent weeks, as this idea was floated, shares of printing houses were rising. That is because this would be the end of an era, literally. Means eternalra peace. Japan arecuments in going to have to be reprinted with the new era as soon as it is decided. In terms of his legacy, i think he will be known for having a conflict progress towards peace, both in his overseas visits, where he apologized for japans colonization of korea. And at home, where he has pushed social welfare issues, and was an early backer of the paralympics in the 1960s before that idea caught on in japan. I think that is his legacy. Francine thank you so much. Bloombergs brian fowler in tokyo with the latest on the japanese emperor. We have some breaking news. This comes in the form of delta. You understand that all delta flights have been grounded. This is because of systems being down everywhere. We dont know much more than that. If you are due to fly or pick up somebody from the airport from a delta flight, check on the website for the very latest. This comes from delta commenting on their official twitter account, replying to some complaints from passengers. So, this is what we know so far. Delta, saying their Computer Systems are down everywhere. It does seem to be a worldwide problem. Therefore, flights are currently grounded due to this system outage nation might. Up next, we wrap up the markets. And we will also look at currencies. This is bloomberg. Francine lets get to the bloomberg resinous flash. U. K. airbus says the fraud office has opened a criminal investigation into allegations of fraud, bribery. The plane maker is cooperating with the pros. Airbus shares are trading lower this morning. Steinhoff international has agreed to purchase mattress holdings. The retailer offered 64 a share in cash, more than double fridays closing price. This has traded the Worlds Largest bedding company. Profit at singapores biggest bank fell 6 in the Second Quarter and missed estimates. Net income dropped to 178 million u. S. Dollars. The week, moodys warned amount of money banks have ss et aside to expose Energy Companies is not enough. People have told bloomberg that walmart wants the jet founder to heat the division. This would help walmart challenge amazon by tapping into jets technology and customer data. Francine thank you so much, nejra. This is the picture of Global Markets around the world. We can see a little pressure on bonds. A lot of these stocks are gaining on the back of the u. S. Jobs data from friday. We also have a little bit of news on thailand. Thais currency is up. So, this is a picture overall for the markets. I would also point out to some of the treasuries and the u. S. Yields raising 28 fouto a four month high. Surveillance is up next. We kick off the conversation with james foley. We will be looking at a lot of the currency swings and the dollar. We will also be looking at some of the breaking news we had in the last hour. Systems are down everywhere for delta. Flights areing grounded because of a outage nationwide. Surveillance is up next. Live pictures from new york. This is bloomberg. Global rally after the u. S. Jobs data. As fed hike optimism grows. Chinas overseas shipments stall, signaling tepid global demand. And trump tries to rebuild the campaign. Repealingals include the estate tax. This is