Not membership in the e. U. David a ceo with monte dei paschi with the latest plans to save his bank. There is clarity and transparency now. David and half of 2017 is in the books, what is the playbook for the second half . Liquidity continues to be the main driver of markets around the world. There is inherent momentum in the u. S. Economy. Lookst credit markets pretty expensive. I do not know how you are supposed to trade in nuclear war. I am not sure i would know how to do that. David it is all straight ahead. Bloomberg best, hello and welcome. I am david westin. This is bloomberg best, your weekly review of the most important Business News, analysis, and interviews from Bloomberg Television around the world. Geopolitical tensions set the dominant tone this week leading up to the g20 meeting on friday, but the week began on a hopeful note for investors with the opening of a new bond link to mainland china. The longawaited bond connect between china and hong kong has gone live, it is the third crossborder trading link, and gives offshore investors access to the mainlands 10 trillion debt market. At 9 20 a. M. Is when the gong was banged and the bond connect went live, at least in one direction, heading north in china. No timetable according to the dignitaries today for southbound, but it is inevitable that it will happen. Right now Market Conditions favor going northbound for Foreign Investors, only going into china. As you said, nearly 10 trillion bond market but less than 2 , about 1. 5 of that is in the hands of foreigners. There is a lot of potential. A lot of risk as well. A lot of questions about transparency and also of course the issuing of ratings, whether they are a true representation of the risk. The chinese bond market is a bit like the stock market, there are issues and of the government is known to have policies at the drop of a hat to completely change the market. We have seen a plunge in yields because of a crackdown that nobody saw coming. As a consequence, Foreign Investors are unsure whether to get in. North korea has fired another ballistic missile. It is the 11th test this year. The launch comes at a time of renewed tensions between the u. S. And china. How should we interpret this aggravation and this move again . The timing was very intriguing obviously, because it is on the eve of july 4, the Independence Day in the u. S. And also a few days away from the g20 conference. This comes right after chinas delegation in new york at the united nations, where they basically said things could get out of control and there were dangerous consequences as a result of this tension on the korean peninsula. There is speculation it could have been an icbm or intercontinental ballistic missile, which if they take it further could reach the continental u. S. , particularly the west coast. Francine the demand for the haven assets, despite political concerns, in the wake of north koreas missile test. The u. S. Confirms the rocket launch on july 4 was an intercontinental ballistic missile, with Rex Tillerson calling it a new escalation of a threat to the u. S. And allies. They are without question, going to try to continue to pressure china to put more economic pressure on north korea to deal with the growing threat of their nuclear program. Before the president took off, he tweeted trade between china and north korea grew almost 40 in the first quarter, so much for china working with us but we had to give it a try. In just a few moments, the Federal Reserve will release minutes from its june meeting, where officials forged ahead with a rate hike despite concerns over weaker inflation. Lets check in with chris condon. Three takeaways from the minutes, there was no agreement on when the fed will begin trimming the balance sheet. A very rigorous debate showing again, quite a divided committee over the question of where inflation is headed. And number three, no explicit mention of high equity valuations, underscoring the message that senior fed officials gave last week. Very little in terms of new information clarity that the market was clearly hoping for, on the timing of the beginning of tapering. Anything in this you think perhaps this gives a shift to that . I think the consensus is still for september tapering, however the more divided they appear to be the more dovish the minutes will be interpreted as. If they cannot build consensus internally, it will be harder to deliver the combination of taper and a rate hike by the end of the year. Pretty confident it will be one or the other. Jonathan the European CentralBank Publishing their account of the policy meeting, emphasis on account and not minutes. It is kind of like the fed minutes without the detail and he said, she said stuff. They have agreement that the current stance is appropriate and concern that small communication changes can be misperceived and urged not to overestimate the impact of electoral cycles. The governing council also considered whether to adjust the qe easing and said some changes of tightening are expected. The outlook is essentially unchanged, the ecb saying it can be reviewed if the outlook improves. What they are acknowledging is the economy is doing much better than what we first thought at the beginning of the year, and also in historical terms, and even with international comparison, they are doing quite well at the moment. They have withdrawn that bias towards even lower Interest Rates so they have taken that way. They see the risks of the economy are now a balance. The next thing they have to talk about is what to do about the Asset Purchase Program and it is one where the markets will be quite sensitive. Employment up 222,000 in june, that is the good news. Net revisions to april and may add another 47,000 jobs, so we over forecast. Unemployment rises a tic to 4. 4 , largely because more people were entering the labor force. The bad news, this does not do a lot for wages, taking the annual rate to 2. 5 , well under the 2. 9 that we saw in december. I still think, despite the rather strong jobs report from the standpoint of jobs gained, not necessarily from wages, which is what yellen watches seriously as well, that the fed has maybe one hike left in the year and it will probably be december. Francine President Trump and president putin finishing their meeting in hamburg at the g20. Officials are saying that the u. S. And russia have reached an agreement for a ceasefire in southwest syria. Those pictures you see were from before they went into their facetoface meeting, friendly words exchanged. Matt the two leaders had real admiration for each other. They were not just pleasant words. President putin referred to donald trump as your excellency, mr. President , whereas President Trump said it was an honor to be speaking with president putin. Both said they expected a positive outcome to the meetings. They were only expected to meet for about 30 minutes, the meeting stretched far beyond the twohour length. Obviously a meeting with putin is eyecatching, sort of the melodramatic moment of the day. But it is important to remember that there are huge wide ranging conversations going on. Angela merkel spoke with the press about an hour ago and it is clear there are deep seated divisions emerging over trade. There is no agreement on the communique right now and in a lot of ways it is feeling like g7 in sicily, where the Climate Change issue hung like a shadow over that summit. And in the end, the u. S. Was extremely isolated. And now tariffs hanging over as well. The Putin Meeting extremely important, very interesting to see what can happen there, but trade could emerge outside of the u. S. Russia psychodrama. The rest of the world trade could be the big story this weekend. David still ahead, as we review the week on bloomberg best, the u. K. Labor Party Leader Jeremy Corbyn speaks his mind on brexit, italy throws monte dei paschi another lifeline, and a bank ceo tells us why it will work. We look ahead to what investors can expect for the second half of the year. Up next, more top business stories. Shinzo abes party takes a beating in the elections and affects will be felt across japan. I do not think it is about the economy at all in this case. David this is bloomberg. David this is bloomberg best. Im david westin. Lets continue our global tour of the weeks top business stories in italy, where the e. U. , the government, and monte dei paschi have agreed on a new rescue plan for the troubled lender. Banca monte dei paschi has laid out the fiveyear restructuring plan, including cutting jobs. The announcement came after the e. U. Said the lender could receive 5. 4 billion euros in state aid but only after shareholders and junior creditors have contributed to the rescue. Are we now at the end of the troubles . I think they will be clearly getting rid of a large pile of the bad loans that have weighed on the capital. They are addressing the inefficiencies that have burdened the bank as well, but Going Forward the key will be to maintain those efficiencies, particularly with lending. The theme that has weighed on them generally is lending practices that should not have been getting them into the situation in the first place. Prime minister shinzo abes ruling party was well beaten in a local election in tokyo. We just heard comments from the Prime Minister, saying he will try to move forward on this as ldp is projected to win the fewest seats in the capital. Tokyos economy is doing pretty well as we have seen recently. There are two jobs for every job applicant so i do not think really the economy was a factor. I think it is down to two factors, one is building the star power in the year that she has been governor. The other one is abe and his cabinet shooting themselves in the foot. They have had a number of scandals, a number of gaffes, and voters are expressing their anger. Shinzo abe may scrap some of his most divisive policies after his partys crushing defeat in the tokyo election. What is likely to be on the chopping block for shinzo abe . The most controversial policy he has in his plans is to change the pacifist constitution and that is something that really divides the electorate. The question is whether given the state of his public support, the question is, the lack of discipline in his party, whether he is prepared to push ahead with the idea that would take a lot of energy and might portray him as someone who is less interested now in the economy then perhaps he should be. The bank of australia has left benchmark Interest Rates unchanged at a record low. 1. 5 . The decision coming a week after the bank of england and the bank of canada among others, signal taking the time to move in a different direction, i. E. , hiking rates. The market was expecting a more hawkish tone, more in line with things we have heard from the likes of bank of canada. We did not get there. What we got was a neutral statement, very little change from the previous statement and that the dollar. The aussie dollar sold down accordingly about three quarters of a cent. More hawkish terms, it is usually overoptimistic, given the well documented concern that is around the australian dollar. They are anxious not to feel that strength in any way, and possibly stall a nascent economic recovery in australia. Vonnie automakers gaining today after auto sales mostly beat estimates. Gm missed, but ford, fiat chrysler, honda and nissan reporting better sales man m than estimated. It is a give back for last last months dismal figures . [laughter] certainly it still might be a down month overall. The declines we see our substantial from gm, ford and fiat chrysler. But not as bad as anticipated. As you see, the reaction on the markets mean that even gm, their shares are up as well. Because what investors are really liking is a little bit of discipline on the incentives, they are not eating into the margins, and especially the mixed shift, the mix of light trucks, pickups and suvs, that is where automakers make their money. That is especially where u. S. Automakers make their money and it is the overriding theme of the sales and that is why investors are bullish today. Mark a former executive appeared at Westminster Magistrate Court in london, facing allegations dating back to the 2008 financial crisis. So what happened in court today . This was a routine hearing to have the charges read out to the defendant and decide on bail. The judge decided that they must pay 500,000 pounds Financial Security because Roger Jenkins is obviously a high flight risk, so they wanted that to be paid. The other ceos were allowed to go with unconditional bail. They were also asked if they wanted to indicate a plea at this stage, not a formal arrangement, but they can give an indication and they did indicate they would plead not guilty for the charges. Mark hsbc said to be approaching peter hancock, the former boss of iag, and mark tucker considers internal an d external candidates to lead the largest bank in europe. He is an outsider but has come from the hsbc club. He was a banker at jpmorgan. And cfo of the bank before emerged with chase. He is a banker, most recently running an insurance company. It did not and in the best way for him. His reputation is somewhat intact still. Hsbc is 152 years old. They have 21 former leaders. All of them come from inside the bank until tucker. The fact they are looking at external candidates is not surprising in itself, but if they pick a second one for chairman it will be a big departure for the bank. Global banks preparing to move londonbased operations as Great Britain prepares to leave the e. U. We got details of Deutsche Banks plans for a postbrexit financial landscape. Another win for frankfurt. What are we talking about, front office or backoffice or a mix . They have said previously that it could be a mix of the two. You could get 2000 in the front office and 2000 in the back office. That is at the high end. Some of it will certainly depend on how negotiations unfold and how hard the brexit appears to be. But we have heard Deutsche Bank not only looking at the people side but looking on the asset side as well, and making plans to set up a booking center in their Frankfurt Office to really route a lot of the trading through there. That potentially is a way to address the passporting issue. The saudi led bloc which has cut ties with qatar, has accused the country of failing to recognize the situation, describing the response to demand as negative. They say the group shows complacency and lack of seriousness to do with the problem, but stopped short of imposing the sections. The sanctions. What is happening in terms of the timeline . What we know is that the saudi led alliance has said they will meet again in bahrain to discuss qatars response to their list of demands. They have not said when exactly they will do this. In terms of what happens next, we have to watch for the impact on qatar. That could come about through Something Like inflation or higher food import prices, it could come through pressure on the real or through higher financing costs. We already saw at downgrade by moodys of qatars credit rating. Qatar is one of the wealthiest countries in the world, but the question remains how long it can withstand, how long it will feel comfortable with withstanding this economic and political pressure through some of its ostensibly once closest allies in the region. The bank of japan has asserted control over the nations bond yields, sending borrowing costs lower with their fixedrate. This is after a global debt selloff. The central bank offered to buy benchmark 10 year notes at. 11 . Yields dropped to 0. 085 after having more than doubled in the past week while the yen severs lost. What happened last year, the boj has come out and they have said this is what we want the price to be, the yields to be and they are basically threatening the market. And they are putting pressure on japanese yields to also rise and the boj has made it clear they do not think that global bond yields rising should put pressure on japanese policy for japanese bond yields to rise, and they will act to make sure that the 10 year yield stays at the level they have set, 0. 1 . David you are watching bloomberg best. Im david westin. Next week, Jeremy Corbyn meeting with eu negotiator Michel Barnier to outline his vision for brexit. After a strong showing in the snap election, corbyn is aware that he could be the next Prime Minister as talks continue. He sat down with guy johnson to discuss the political possibilities. We did very well in the election. We did not win the majority, but we put out a large number of votes and a credible, economic alternative to this government. The government does not have a majority and it has done a very strange deal with the democratic unionist party, and it does not look to me to be very stable. Guy do think things could change quickly . We could. We could have another election, i do not know when, but we are ready for it. I am very ready for it. Guy there are many unknowns in british politics at the moment. You are going to tell me about it . [laughter] guy no. But one of the great unknowns is where Jeremy Corbyn stands on the details of brexit. We hear this all the time. I am curious as to why you are being so vague on the subject, and when you will provide more transparency on your thinking. Fundamentally, we want to make sure there is access to the european market. That is crucial. Half of our trade is with europe. And secondly that we do not become an offshore tax haven. Hens the response i gave to the chamber of commerce, i just gave questions now about levels of taxation. Thirdly, that european nationals are guaranteed unilaterally rights to remain in britain with full citizenship and rights to family reunion. I think it is crucial. And that we maintain the University Connections across europe and that we maintain a broadly similar level of regulation of cons