Data check for you. Stoxx 600 pretty flat this hour. Fourth of july low volumes waiting for payroll data from tomorrow. Outperforming. Yields areyear certainly worth talking about. Yields have dropped below the 0. 4 level, below the ecbs deposit rate. Weve got gold still acting as a haven above 1400. The dollar index not moving all that much. President trump doesnt like the strength of the dollar. We will talk about that. Wti not reacting positively to the production cuts extended by opec. Lets take a big picture look at what is going on in these markets now. The u. S. Stock market closed for trading for the july 4 holiday. In europe, equities continue little changed while investors search for direction and await u. S. Jobs data. We are joined now by paul markham. Very good morning afternoon, in fact, here in london. Valentin, lets come to you first. It does feel like risk off is back on. Currencies are outperforming low yield ors. It remains to be seen whether that positive feeling will be sustained. The market is still pricing in almost three rate cuts by the fed this year, and if that is challenged by someone buy some more constructive data tomorrow, that feeling may not be sustained. Most Central Banks in dovish mode, it does feel like stock markets are outperforming, and on the ethics side, carry trades on the fx side, carry trades are back in vogue, so that may have staying power. Anna paul, how would you feel about the risk reward at the moment . I know your focus is equities. Bonds and equities are sort of missing each other at the moment. Give me a different picture of Global Growth and where we had from here. Paul it is a bit of a pavlovian response from markets initially, which was to sort of push some of the rate sensitive stocks a little higher. That came to a halt quite quickly after a couple of days. It is something now for the markets to figure out whether the Growth Numbers are good or not. I think data dependency will be very high. Whether we see a rotation from growth to value were not in the Fourth Quarter depends very much on data on a daytoday basis. That in theng with rotation between sectors, we have fresh eyes on the s p this week and other indices within the United States. Some people have point to do the comfort they take from the breadth of the rally we have seen in u. S. Stocks. It is not just one part of the index going higher, its all of them. Ive got this chart that shows two different measures of the s p, one that reflects that breadth and shows them both moving in tandem. Do you take comfort from that, or say this isnt very comforting . Paul there are different ways you can look at that. One is that there has been a leadership issue in the equity market for a while. At the end of 2017, i think a small number of stocks, 15 of the s p 500, were briefly worth more than 485. That meant indexes were being somewhat skewed by those mega cap stocks. So the breadth is pretty encouraging. On the other side, investors have maybe been piling into etfs and passive funds, and in some way that probably shows a change in sentiment which may not be justified. On the whole, i think for most technical perspectives you are encouraged by breadth, but there will be a caveat. Anna we heard a little bit earlier on from mark mobius, who was talking about his appetite for gold. Of course, hes a big name in emerging markets, but he said i love gold. Interest rates are going so low now, particularly in europe. I dont know if gold features in your currency universe. Many investors these days have. It is the case with the central. Anks put on the currency side, there is an amount of Currency Debasement. The weaker the currencies we have out there, all to make out there, ultimately that fuels demands for real assets. A real assetto be with real value. We are seeing accentuated moves to the top side, but targets are meant to move. We could see quite an aggressive extension here, especially if the fed cuts rates later this year. Overall, the flow of money really hitting the market from the Central Banks continues. This might continue to fuel demand for Currency Debasement hedges, hence higher gold. Anna lovely set up for our next conversation. Thank you both very much, inov of Credit Agricole and paul markham of newton. Both are staying with us. Reporter President Trump warned tehran not to increase uranium enrichment. Iran has said that is what it will do if europe fails to offer economic aid by sunday. Off gibraltar, British Forces have seen a supertanker suspected of carrying oil from iran to syria, in violation of u. S. Sanctions against the syrians. China and the u. K. Are escalating their war of words over protests in hong kong. Beijing accuses the u. K. Of meddling in its former colony after Prime Minister theresa may said she was shocked by violence after protesters stormed the legislative capital. Switzerland was judged the best place to live and work. Last years number one, singapore, was the runnerup. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Hows. Ivia this is bloomberg. Anna thank you for that. Coming up, europes japanification. We will discuss that next. This is bloomberg. Olivia welcome to Bloomberg Markets. Deutsche bank ceo christian sewing is putting the final touches on a turnaround plan. Among the moves being considered, another management shakeup and a new unit to house unwanted assets. Bloomberg has learned the u. S. Justice department is on the verge of approving tmobiles merger with sprint. The key, asset sales to dish network. The Justice Department once enough concessions so that issue can become a fourth competitor in the wireless market. William hill has been hurt by a law that limits bets on roulettes and poker machines aimed at cutting gambling addiction. That is your Bloomberg Business flash. Anna thank you. Over the past few days, countries from belgium to austria have seen their 10 year yields drop below zero for the first time. By one measure, japanification is defined by this measure. We had the german yields dropping below 0. 4 . Lets get bloombergss dani burger, whos been pouring over the details. Relentlessve these dovish Central Banks and continued low efficient, and we get this world of eurofication. Japan has the highest absolute amount of debt, but on percentage terms, switzerland and germany are actually higher. Even 50 year yields are about at zero. , but if youre looking to buy any positive yield on the curve, youre out of luck. Italy 8 , but trending the way of the other markets. Weve also seen yesterday the btp rally caused 10year gilts to hit their lowest level. U. S. Only 1 , escaping this to a large part. The world at 24 . I want to show you the chart of what this looks like over time. That 24 is even more stark when you compare it to late last year , when it was just at 11 . It has really taken up, so it is the amount of negative yielding debt to the total Investment Grade market. Another measure of this is just how much investors are gorging on lung maturity bonds. This is duration. Basically a risk of your bonds moving a lot when there is any sort of change in Interest Rates. Us how manyly tells years it will take for an investors who see cash flow from a bond. This is the longest on record, and it also means one percentage point move would lose 2. 4 trillion in the bond market. Anna thank you very much. Dani burger with fascinating trends in the eurofication of the european bond market. And paulmarinov markham are both still with us. On german yielding debt below the ecb deposit rate, rhondas remind us rate, the significance of this. Valentin it is bad news for the ecb. They would love to have an upward sloping unit curve. Upward sloping yield curve. The euro zone, it also is an important signal for the governing council that the markets are now expecting them to cut rates, potentially september or later in the year, notwithstanding that draghis term is coming to an end. It is a case of the continuance of the ecb easing policy now being priced in. Yielding negative rates is quite scary because the ecb is no longer expanding its Balance Sheet. And stopped really growing reinvesting. The fed has been done for two years or so. Sick about what happens if the Global Economy now has to go into a slowdown and qe has to resume again. Where will all of these yields go . That is a scary question, especially in uncharted territory. That could get even less clear, how we will deal with that down the road. Anna and policy response to come. This is a bond market story. You are in the equity world, but clearly they linked to each other. Every time we see yield taking another leg down, we see people reassess the relative merits of holding stocks. What you see in the stock market as a result of this . Paul a couple of things. One, the banks have already been mentioned. The problem is that they have tended to be very Balance Sheet heavy, as opposed to the u. S. , where theres been lots of securitization of corporate debt. That allows banks to take corporate earnings and not have to hold them on the Balance Sheet. The spread becomes crucial for those banks, and that has continued to see the sector derate. On valuations in general, theres a piece of accepted wisdom which is that pe should expand as Interest Rates come down. What we saw in japan is sort of a bellshaped distribution of pes. You may get to the stage were continuing falling bond yields will tell you something about the economy, which would probably imply that pes should contract. I think that is something to watch because i think the idea that lower rates will continue to push equities higher cant carry on forever. Anna because it is telling you something could be bad about the Global Economy. Paul precisely. And someare nominal, sort of disinflation around the quarter is what bond markets are telling you. Anna if we are going to look at Central Banks to be ever more creative in their policy, when you talk about fiscal policy and what part that plays, but if we stick with the central bank, Christine Lagarde is going to the ecb. Are you somebody who takes comfort from her political expertise and experience in the troika and other bodies around european and global decisionmaking . Or are you someone who says she hasnt actually sat on a Monetary Policy committee, and that makes me nervous . To know it is early how creative shes going to be, but the fact that she is a relative novice to central banking also means she will stick very closely to the rulebook mario draghi has written. Already in september, mario draghi will lay the groundwork for what is to come. Clearly, i think lagarde may have no choice but to follow potential further expansion of qe and creating easier restrictions to 50 if you are potentially cutting rates. Im pretty sure draghi will prepare the ground for that. What comes next . For the Central Banks running out of options to do more and more, i think they will have to continue to create an environment which is stabilized enough for the government to step up to the plate and potentially consider fiscal stimulus and lower rates. Anna thats the other side of it. Thank you very much, valentin. And paulmarinov markham are both staying with us. Have more we will details on all of the developments in the energy market. This is bloomberg. Anna welcome to this Bloomberg Markets special edition. Antish forces have seized oil tanker carrying iranian oil off the coast of syria for violating sanctions. The Foreign AffairsMinistry Says the seizure was done at u. S. Demand. Isning us with more bloombergs suis wallace. Reporter this is exceptionally unusual. As far as the oil market, it probably isnt a big deal because iran was already struggling to get its oil out there. It is probably more important for syria in that this is pretty much a lifeline, more or less the only oil moving in or out of syria coming from iran. The question now is what on earth do you do with it . Youve got 2 Million Barrels of oil you cant do much with. What do you do with the tanker . First they have to establish ownership. It must be worth tens of millions of dollars. What is the process by which all of that is sorted out . I think it is enormous lien interesting and incredibly unusual. For the oil price, it probably doesnt mean that much. Anna what about the other oil story, the saudis and the kuwaitis coming to some sort of agreement about the contentious Land Ownership issues, and who is going to get the oil out of the ground across their border . Stuart its been a spat for five years in the making. Long time an awfully to resolve. We hear that they are very close to a final agreement on this, so that is hugely significant in terms of capacity because it is about 500,000 barrels a day. Saudis andh the kuwaitis, as part of opec, have agreed to keep their production at a certain level, so we will not get a sudden rush of oil. But in terms of future production, it is enormously important. Anna thanks so much. Bloombergs Stuart Wallace with the latest on what is going on in the energy space. Still with us are valentin mari newton paul markham of investment management. The oil price is coming down again. Inflation expectations seem to plumb progressively downwards. How does oil play into that . If oil does recover, and we think it may hold its ground given that opec cuts have been extended to 2020, that may provide some support Inflation Expectations. There was actually quite a bit of decoupling between oil and Inflation Expectations that kept collapsing. Expectationsation just seem a bit more sensitive to that. I guess stronger or Higher Oil Prices may play out with higher Inflation Expectations in the u. S. Briefly, your hopes for oil stocks . We havent seen the oil price react positively to the opec meeting. Paul weve tended to take a fairly neutral stance on oil the price of crude is fairly hard to predict. We tried to go for stocks which ,re generally yielding preferably around some kind of capital discipline, which has been an increasing theme within that sector. Much. Paul, thank you very mobius sees ak shift into emerging market bonds in the face of a low global Interest Rates. We will talk about that search for yield and where it takes us. This is bloomberg. Anna welcome to Bloomberg Markets. Im anna edwards in london with this special edition for the fourth of july on Bloomberg Markets. Lets check in on the bloomberg first word news. Heres olivia hows. Olivia the Trump Administration is expending a crackdown on what it sees as unfair trade practices. It will impose additional duties on steel coming from asia, including china and vietnam. Bmw and qualcomm are among the winners in a fight over the cars of the future and how connected cars talk to each other. The Companies Argue that wifi offers poor performance compared to future 5g networks. The only House Republican open to impeaching President Trump is leaving the party. Michigan congressman justin amash says he is disenchanted with Party Politics and frightened by what he sees from it. He wrote that he is declaring his independence. He said the mullah report convinced him the president had engaged in impeachable contact the Mueller Report convinced him the president had engaged in impeachable conduct. Will speak from the steps of the lincoln memorial. Critics say he is turning the event into a campaign rally. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im olivia hows. This is bloomberg. Anna thank you. Latestnt Donald Trumps accusation of currency manipulation by europe and china has foreignexchange analysts game planning the administrations next move, but a weaker dollar on fed rate posedand a weaker economy risks. The currency weapon has been on the table for a long time. The chinese have used that weapon. It is interesting that may be in preparation for this recent meeting, the chinese allowed their currency to get stronger against the u. S. Dollar. That sort of eased tensions somewhat. But the u. S. Is in a very difficult position because the u. S. Dollar is a global currency. , given they little fact the foreign reserves of the u. S. Are not that great, it is very difficult for them to do anything about the currency. Other countries can control their currencies. China controls the currencies very closely. The europeans can do it. Other countries can do it. The only thing the u. S. Can do is get the other countries to ease up on the beginning of their currencies. If i look at the context of what is going on in markets, some people are saying we are hitting irrationally exuberant times, what would you say from the e. M. Perspective . Is it underpricing trade angst between china and the United States of america . Mark i dont think it is underpricing. I think the risk is out there. Everyone is aware of it. I just returned from a five city tour of the u. S. Everybody asked about the trade war, so they are very aware of it. The other