Welcome to bloomberg daybreak europe, our flagship morning show. Im anna edwards. We have great guests coming up, in particular from the frankfurt morning show. Bmw special representative joins us in about 15 minutes time for the first conversation of the day. That is followed by Stephen Armstrong at 6 30 u. K. Time. We will get into those conversations about electric cars, about diesel, about the future. Lets get to the markets, though. We need to tell you what has been happening over the last 24 hours. The United States picked up at risk on atmosphere we saw in the Asian Session and the european session yesterday. The snp, closing at another new record high. In fact, we have the snp here, charting its course through 2017, and pushing up against that green line, which marks where wall street strategists think the snp will get to. It was financials, technology stocks, insurers, all of those companies, quite a broadbased rally, bouncing after the receiving threat of Hurricane Irma. Investors have been favoring risk asset yields, well over 1. 2 . The dow, about 22,000. It was a very strong risk on picture for the United States, and that picked up in the Asian Session. We have the msci asia going higher, another one present gain for the nikkei. U. S. Futures, pretty steady as well perhaps we draw a line before the u. S. Session. The u. N. Security council an unanimously approved those sanctions. Unanimity was an important sign against pyongyang. One of the strategists from jeffries says there is a bit of a sweet spot. The inflation data is not Strong Enough to force a central bank hands. We put gold in there to echo this move back into the socalled riskier asset, and the dollar index, just pausing. We saw a bit of strength in this session yesterday, closing up for the first time in eight days. We should talk about comments coming through from christine lagarde, speaking over in asian, and comments on the strength of the global economy. Shes is incredible rebalancing in the chinese economy, making credible efforts to rein in risk. So says christine lagarde, speaking in china. Lets get a bloomberg first word news update. Reporter anna, the u. K. s government plans has cleared a major hurdle. Lawmakers agreed to allow the eu withdrawal bill to continue the progress through parliament by 326 votes to 290. That came after theresa may promised to discuss critics concerns before they have to vote again and to consider allowing more time for the next stage of debate. In the u. S. , the people of florida are assessing the damage of the countrys second major hurricane in 15 days. Eakened to a Tropical Storm and by one estimate, the total cost of the damage drops to 49 billion from 200 million. More than half of the population of the state was without Services Last night. Norways Prime Minister has become the countrys first conservative party leader in three decades to be reelected. Solbergs victory was narrow. The labour party had its worst Election Results since 2001, as joblessness boosted the prospects of the ruling coalition. Hong kongs financial secretary has warned potential buyers to be careful in purchasing property in the worlds most expensive property market. The comments come to unwind the u. S. Feds Balance Sheet. Our past experience indicates interesthe u. S. An impact ourll deftly Interest Rate. Reporter janet yellen met with Donald Trumps daughter and advisor ivanka in july. That is according to yellens public schedule. Eight days later, the president told the wall street journal, that yellen was absolutely in the running for a second term. Most economists expect the president to pick someone else. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. You can find more stories on the bloomberg at top. Still some very risk on sentiment across asia today. We are think japans nikkei index hold on to the solid gains they had yesterday, up another one point to present. A little flat in hong kong. And the asx 200 being boosted by generally firmer metal prices. Banks in australia also doing well. A bit more coming into the south korean market, holding about the kospi. The a lot of the apple supply is based in asia and tech stocks are rallying. Geely auto is doing very well at a 24 year high. This is on the back of what we heard from china over electric vehicles over the weekend. These lithium producers continue to rise on this move towards electric vehicles as well. Galaxy is a lithiumbased battery operator. As anna mentioned, we did have that passing of some of those sanctions from the u. N. Overnight. The won rising as some of these tensions ease, but these sanctions were deluded. The price of protecting against korean bonds has risen and is now actually outpacing those of protecting bonds in the philippines, which is the yellow line and china, which is the blue line. Still of course, very much at the forefront of investor minds, these geopolitical tensions. Anna thank you, juliette saly, with a nice round up. Tte was talking about the sanctions against north korea, so lets get more details. The u. N. Security council has in endlessly passed a fresh round of sanctions against north korea. The resolution will cut imports on Refined Petroleum products to 2 Million Barrels a year and ban textile exports. To win support from russia and china, the United States dropped a bit to ban all oil imports antifreeze kim jong uns s goods. Jong unsfreeze kimg jon goods. Demanding an end to the nuclear in the interest of a denuclearize i of the nuclear peninsula. The situation on the peninsula is deteriorating constantly as we speak, falling into a vicious circle. The peninsula issue must be resolved easily. China will never allow chaos and were on the peninsula. Anna scenes from the United Nations yesterday. We more on the sanctions, have our east asia Government Team for bloomberg news. A watering down of these sanctions, the end result in unanimity. Reporter exactly. China could veto anything they want. For the u. S. , it was a matter of, do we stick with the stop proposal they wont go with, or do we try to get a unanimous decision . In the end, they went for a unanimous decision. They are hoping to resolve this problem together. They are helping these sanctions will get north korea to the negotiating table. Anna it might do that. It certainly brought them out in a rhetorical sense. How might north korea responded next . We have heard some very strong words. Reporter we are still waiting for the official response. They have already there was and is a vision last weekend that they would fire new Intercontinental Ballistic Missiles that could hit the u. S. So, you know, a test fire run of those. Theres always that possibility. They have that ready to go. That could come as early as tomorrow morning. They are not going to like it. They have threatened retaliation ahead of this and they will have a harsh response for sure. Anna meanwhile, north korea appears to be stepping up efforts to extend bitcoin and other currencies and this could be leading to the sanctions. Reporter that is right. The more they are cut off from the rest of the world through trade, through formal banking, the financial system, they are looking for other ways to do that. Aboutng un has an army of 6000 people, just dedicated to hacking and cyberwar affair. Part of this is going around the world and trying to steal money from Bank Accounts and other ways online. Theftsthe biggest reported lester was they had 15 million in oen ago. As they get cut off through these new sanctions, they are looking for alternative ways to raise money for the regime. Anna daniel ten kate reporting for us from hong kong, thank you very much. Joining us here in london, alan higgins. It is great to see you this morning. United nations, going for unity, figuring that matters, sending a strong sig nal to pyongyang. The response see from the north koreans, at least the rhetoric ratchets higher. How do you navigate this as an investor . That is a tricky one. We have a look at geopolitical risks, generally. You are right to be concerned because we have seen 28 examples from the cuban war missile crisis on earth. Crisis onwards. You should be concerned about a market fall. But generally, it is too late. You need to buy into it because one year later, the average return is about 13 . So, it is quite difficult to navigate and as you have got perfect political insight, do nothing. Dont try to be clever about that downside. Rather, tried to be stoical and buy into it. Atiously, we have risk relatively medium levels before you go in and not be caught in one of these geopolitical issues. Anna i got an email yesterday, joel a lot. Billy he talks about how outside events come and go, but patience matters, which is important to bear in mind. It is. This is exactly the point. All my career i have seen concerns about korea. Low,tly, it is really compared to previous situations i have seen in korea. All my career i have seen concerns about korea, south korea north korea and we tend to get through. As the north Korean People theirue to work on get smartphones and find out about the world, just like we have seen in other places, going from russia to years back to cuba, capitalism tends to take over. Anna if you take the long view here, i have heard investors talk about whether this is similar to tensions in the cable missile crisis. When you talk about the markets, traders are the most bearish on korean won since 2013. This is the korean won, but if you look on the s p 500, you see this generally. People are paying up for options. It is clear that markets are extended, that evaluations unchallenging, and there are things to be concerned about in the world. I know you dont see that in the vix in terms of volatility, but you do see this in the risk reversal. For us, that is a positive signal. When investors are very worried, it is not when you need to be concerned. It is what investors are not worried that you need to be concerned. Anna well bring you an exclusive interview with mexicos finance minister at 8 00 p. M. U. K. Time. This is what you should be watching out for alongside that interview today. s union leads against president macrons labor reforms. How he stands up to that union test. Philip hammond faces challenges from the law, the Economic Affairs committee. We also get u. K. Inflation data. And apple hosts their Product Launch event with the latest iphone and watch models expected to be unveiled. It could be the toalk of the day. We go live to frankfurt to speak to bmws representative. This is bloomberg. Anna welcome back, everybody. 6 18 in london. This is singapore. The asian trading day come up by 0. 4 . Risk on momentum from the United States. The s p closing at a record high. Lets get the Bloomberg Business flash juliette saly. Reporter volkswagen has announced sweeping plans to build electric versions of all 300 models. The comments from the ceo come as they accelerate the shift away from Combustion Engine and tries to draw a line under the emissions cheating scandal. Fromlkswagen has learned the past and over the last two years, we have understood what people understand by sustainable mobility. Have announced and what we have alluded to is a self commitment. Reporter an agreement to sell the paradigm contraceptive business for 1. 5 billion. The move comes as the largest maker of generic drugs works to turn the company around and reduce bids. Shares soared as it ended a sevenmonth search for a new leader as it named kare schuult. Apple holds the new Product Launch later today. The Company Marks the 10th anniversary of the iconic iphone and bloomberg will bring you special coverage of that announcement at supply p. M. U. K. At 6 00 p. M. U. K. Time. Anna thank you, juliette saly. Lets get from singapore over to frankfurt, where matt miller has driven in to bring us some coverage of the frankfurt motor show. He is joined by a guest there. Thanks very much. I am joined by the board member of marketing sales, ian robertson. Let me first ask about the electric cars we have here. You have three models behind you, whether concept or ready for the road. How much bigger did this push towards electrification get to the german diesel crisis. We have been growing it over the last few years. It is four i years on to the day when we unveiled the i3. We will bring 100,000 vehicles this year. The mini, of course, will hit the streets in the not too distant future and we have plug which tells you this is a longterm trend, something we see will be a move that is going to get st ronger. Matt well you be able to ramp up sales quickly enough to meet your emissions target in 2021. It is already ramping up. The momentum is already there. Of course, as we continue the r d investment, Commission Sales are coming. Matt bmw margins are, right now, the dream of the industry. Will you be able to keep it that high with electric cars coming into the mix . We renewed our guidance. We think that is possible. Of course, we will bring more models to the market. Leave a big push into what we call the larger cars. You will see an eight series as well. The mix of products will shift. In the mix there, 8 to 10 , is the clear guidance. Matt if i were to purchase an x7 i would want a big diesel engine. In my the last of am i the last of a breed . We still see very Strong Demand for diesel. You will see diesel still in come,x in the years to and i believe we will pass the situation right now. People are beginning to understand there are older diesels and there are new, very clean diesels. Matt the reason the new diesels are so clean is because you have such sophisticated exhaust systems that you are able to put in a vehicle like an x7 or x5. Can you keep diesels in the smaller, lower margin cars . I think what we have seen in recent years is in the smaller cars, of course the turbopetrol engines, they have become more popular. In the they are cars, the diesels are still very popular. You have got technology, you have got particulate filters. All of those things combining to give you a great, very flexible field. Smallerright, maybe the cars will move more to the gasoline engines. Matt what about the investment cost to switch over powertrains, the focus from diesel to electric . How much will that cost you and we are you going to find those cost savings . We have a flexible approach. Whatever is diesel or gasoline, we are balancing this done similar production lines. In the same way we have installed our own electric manufacturing. This was an important strategic decision. We want to build our own engine technology. As such, that forms part of our overall strategy and gives us more flexibility. Same you havent had the and problemsals the other german carmakers have had. Could it be part of your strategy to separate yourself from the pack, to stand along e among the other german automakers . I cannot comment on what the others have been doing, but clearly, the culture of this business is a very robust one. We are very challenging to one another, but at the same time, we are very clear in our objectives and how we deliver those objectives. From the perspective of are we different, i would say we are and we will continue to drive our strategy within this company the same way we have done in the past. Matt thank you for your time, miller, talking to the bmw special representative there at different for auto show. Plenty more to come from the auto show. Next up, Steven Armstrong will be speaking to Bloomberg Television, coming up at 6 30. Up next on the program, we will also talk about norway. The country has reelected a conservative led coalition. What does this mean for Norwegian Oil and sovereign wealth funds . This is the reelection of Prime Minister solberg. Investors embracing her promise of tax cuts after a first term records shaken up by spending, dipping into that sovereign wealth fund. The green party were expected to do better than they did. What does this mean for the oil industry . Is the industry breathing a sigh of relief because the greens have been calling for an end to Norwegian Oil exploration. This is bloomberg. Anna welcome back, everybody. 6 30 in london. The dollar against the yen, pretty flat. Making the change from yesterdays session and fridays session. Getting out ofs the dollar and yesterday we saw them piling back in. Lets get an update on the broader session. Guy lets carry on talking about these equities at the moment. The ftse 100, trading in futures. The fair value pointing to a rise of 0. 2 , not as strong as what we saw yesterday, but you have to appreciate the risk rally rolling on. It looks like we will see a solid session. Pay attention to the gmm. The japanese nikkei, trading stronger this morning. The yen, under a little bit of pressure as this risk rally continues. Thats what we are seeing at the moment. The big story at of japan is what is happening with the japanese jgb 10 year, training one much as we have d earlier we were trading up as m uch as we have this year. So, thats what you can see there, the gmm highlighting that. Earlier on we were up four faces finesbasis points. You can see yields coming down over the last month. And then this bounce back up again over the last 24 hours. The yields popping back up again. It will be interesting to see how the boj will react. Curb control, something we will be talking about for a long time. Heres a chart i want to highlight for you. Chinese ppi has not always been the best predictor, in terms of the Global Inflationary story, but it is a predictor and worth paying attention to. You have seen the data this morning beginning to edge up. The yellow line here is u. S. Import prices and the two are reasonably correlated and