Welcome. I am in and words. A new record. It took a long slog. The s p is what i am talking about, and not. Two major corrections. The longest stretch. The priceve got is earnings ratio. With trading up 20. Over the past 50 years, we are now above the average. The average over the past 50 and bp basis, around 16. 5. We are trading way above that. S p 500 has cited above its 2007 pecan the last rallies since this was 1946, 13 . That comes down to whether or not you believe the fed is going to hold back. Little like goldilocks. Absolutely. Anna the stimulus bets coming in from other parts of the world sounds a little bit goldilocks. The risk rate on overnight. The topics are in here and that is where the best games are coming from. A Strong Equity picture from japan. They have been saying about fiscal stimulus. 103 spot 06. Currency spending. Fiscal stimulus story crucial. What we have seen in some of the u. K. Political scene. 1. 3066. D, that is what closing the political vacuum tentatively looks like in the short term. Anna that is where it is at the moment. Who knows where it is at the end of the day. Nearly two months later, nickel leading. About 12,000 in six months. The first word. The International Money tree fund a urging china to deal with corporate debt. Isaging your says the issue manageable if the Government Works quickly. A former bank of Japan Executive director or says the boj needs to reduce its record debt purchases because it is approaching the limits of the bond market. They say the central bank is aware and should start reducing the price of bonded buying in the near future. Ubs Investment Bank workforce is the right size after thousands of job cuts in recent years. President. Vision he spoke exclusively to bloombergs erik schatzker. At this point in time, i think that to we are exactly where we should be to face the environment we have. ,o face the regulation we have to face the force we have. At this point in time, our challenge is to execute correctly what we have in front of us and i think the firm is very much focused on doing so. In Anna Christopher bailey is to end his role. He says despite the results not being what he had hoped for, the company will move on in the weaker pound might even be useful. It is certainly not a decision i wanted or believed in. Up it is what it is a end am always a Glass Half Full and we now need to move on. Done business globally. We trade all around the world. In, any trading agreement as something we will always work with no matter, you know, where, you know, what happens in the process. 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. david has the details for us. Once again, japan. David . David it is all about japan. That is where the market story is today. Were still talking about expectations. Maybe coming out with the next spending program. We do not know how large it will be. He does not know how big it will be but in any case i think the latest here is that a lot of these cabinet ministers have said they are there to start considering how to fund that when they get the details. Standing by for that one. Up one thousand points. In fact, north of that. That from friday, so talk about great expectations. The dollar yen continues to go up. Setting ourselves up for disappointment . That said, asia is looking solid. It is another good handover were giving you. Have a look at what is happening across asia. Emerging asia, another story. Money flowing into southeast asia, india entered able market yesterday. 13mud pies for the philippines and indonesia. Pressure from oil prices. The thank you. David is an hong kong. Davida may will succeed cameron as the uk Prime Minister tomorrow. The home secretarys only challenger for the top job dropped out of the contest yesterday. During this campaign, my case has been based on three things. The need for strong, proven leadership. To steer us through a uncertain political times. The need to negotiate the best deal for written in leaving the eu and forge a new role for ourselves. We aremeans brexit and going to make a success of it. It meanwhile, mark carney will appear before the u. S. Treasury tomorrow. Cut the first rate cut since 2009 is on the table. Minutes from the policy committee june to the eight. You can watch a mark carneys testimony live on bloomberg from 10 00 a. M. U. K. Time. Folio the head of asset solutions. Larry, thank you for joining us. It was your thoughts on the filling of the political vacuum n the u. K. Does this change everything more press pause . Is still pretty big figures below where it was on the eve of the boat. So it is higher than a few days ago and yes it is good to get the Political Uncertainty in one dimension over. The Prime Minister will be out of the way and there will be followthrough as she names the cabin and and proceeds. Brexit may mean brexit but that also means a great deal of challenge, uncertainty, and the pause on inward investment which is the fundamental source of pound weakness is unlikely to be reversed very soon. This point make about this. Up in certainty were about to go through and for you, politics will jump trump. Have a look at this. The market is already building up short positions again in sterling. What carneys trump potentially does . I think the large underway positions in sterling have to be to some extent scaled back. I can see a bit of a followthrough here but when we come to thursdays decision it is pretty clear right now from the anecdotal evidence and the first read that evidence does matter on the economy. It was slow going into the brexit vote. The probable thing is the bank will act. Whether it chooses to do so thursday or not is a closer call somebeen suggested by easing is required. Some point, some easing in the fiscal policy. Expecting action in august when they get the new inflation report. On the point about slowing inward investments, how convinced are you were thing that already is that something still to come. I asked the question because yesterday someone said the investors have been putting money out of the real estate fund, one of which is managing the overall in charge of, that is not the International Investors brings bit and getting out of the u. K. Asked the, he says that is retail and they said National Investors are queuing up to buy property. Larry for sure. In some cases, the market might on thestorted and flat basis of price action when seen, but the reality is is the nword and investment story must be what is driving the pound lower and that is not so much about pulling money out. A deficit which requires financing and steady inflows. These slowing of those inflows, not reversals, not capital outflows or flight, but these slowing in my opinion counts for the 20 bigfigure drop in the pound against the dollar and a fairly large move against other currencies as well. Manus one argument would be the control under the property or the ftse 100. For thehe volatility midcaps. In the u. K. Midcap versus 5100 and we have this sort of exponential spike it is at an alltime high relative to the large cap. Does i continue . Do we find the base levels . Does the 130 band with these support level or under the midcaps to a certain extent or is it just a largecap story. It is mostly a large cap story. I would argue it will not make that much different for export. Currencies of depreciated and exports have remained lackluster. It does not build out additional capacity when firms gain that competitiveness so it is second round affects and the economy is right. The midcap spike in volatility had to do with tremendous selling and luke biddy pressure in the markets of the seven bated now but i think it will come back and it will take longer for the stocks to recover. At hathaway. Thank you. In leslie and one hours time, they eu Prime Minister will brussels. Governor mark carney is due to testify to the u. K. Parliament treasury committee. Just two days of course before his first postbrexit policy initiative. International court is due to rule on the challenge brought to the philippines on the claim to more than 80 of this side of the china sees. Can sheet negotiate a clean brexit . This is bloomberg. Manus welcome back. Business flash. At maine is, first career lands to release fanfares of models made by volkswagen and audi. That is due to an investigation widening. July 22. A banker has revealed it is in talks to buy almost 2 million in property from blackstone. The investor says it will put in around 582 million with other partners. Thenot identify them company will split into by the end of the year. That is bloombergs business flash. Anna . And eu finance ministers meeting for the First Time Since the brexit vote. Become the said to uks next Prime Minister said they now know who they will deal leaves they prepare to the European Union. Ryan is there. Good morning. What are we expecting today . Ryan look, i am sure we are going to get more discussion of brexit. It was interesting yesterday, they were supposed to talk about brexit into it was on the agenda. But they intended to talk about how is going to affect their in economies, the European Commission came out and said they thought it could cost as much as one half of 1 to the eurozone economies. It could cost the british economy as much as 2 in 2017, but nobody was anticipating they were actually going to know they were dealing with as they went into the future of the underscore Prime Minister when they went into yesterdays meeting. Yet, they all had the news and seemed to be briefed about it and when it to be talk about it. Sit andooner we can sort this out diplomatically, the better. The position of the commission is the same as the position of the council which remains unchanged. It is that we should open the negotiations as far in this quickly as possible because we need to have limits on the uncertainty which is not good for the economy. The first major step we are taking. Least now we know the very thats a very shortly there will be a government in the u. K. Hand we can talk to them about the u. K. Endncerning that northern ireland. Anchor just because a timeline has been moved up by two monster is not mean theresa may would be sitting down here anytime soon because she wants to have preliminary talks with the eu and they said she has to invoke article 50 and she said she may wait until next year to do that. It gives them something to talk to with large osborne today and i am sure they will want to ask him about that. Suppose we will find out more over the next 48 hours. Sanctions. About the potentially for spain in and portugal. Ryan, where are we in terms of i suppose levying punishment on those two countries . So, i think we can expect punishment. Maybe not today, what they are going to do is recommend that spain and portugal be punished. That goes back to the commission and then the commission has to decide what the punishment is. But the feeling seems to be, yes we have to punish some because we just came up with these deficit roles and if we do not punish them what was the point of coming up the rules . At the same time, they dont want to punish because they do not want to encourage the antiestablishment parties and they want the union itself to be popular. So, the formula seems to be, yes we will sanction but no, we will not find. In other words, a slap on the wrist. Anna metaphorically. Is the italian Banking System on the agenda . It is an area of concern for many investors. Ryan it no. In fact that was the first question i asked when i spoke with the Prime Minister and he was emphatic it was never on the agenda, it will not read, it wont be today. He was quite annoyed. He said every media outlet in the world seems were going to talk about italian banks and we are not. So, quite clearly all that movement was on the italian Banking Sector yesterday on the market, with the italian finance minister and other finance ministers for that minute wanted to say yesterday was dont expect any deliverables or results when it comes to the italian Banking Sector at this meeting. Dummy row road, perhaps, but not here. Manus thank you. Larry hathaway is still here. He is the head of multiasset portfolio solutions. Should we be more worried . We have a host of things to talk about but should they be more worried about a tyra banks . The imf this morning saying they are concerned about urgent action in terms of bailing. Not just a blind run 80 percent. Just stabilizing around 18 percent. There is a huge weight of bad debt. Larry if we think about brexit and sanctions against digital in spain and think about the italian banks, by the way not just a tyra banks, others as well, i far and away the biggest challenge is the Banking Sector. Indeed, if they do not fix the next six months that will be the biggest challenge thereafter. Thorny really a big issue in the sense it will not go away. Too many bad debts and too little capital to support the sector and yet the resolution mechanism, they Banking Union couldadopted by the eu, potentially be destabilizing for italy politically but potentially destabilizing for the Banking Sector in being economies and the rest of europe including france and germany and being able to resolve this banks without creating those sorts of destabilizing issues is, it seems to me, paramount for the eu to address and i am shocked they are not addressing it. Anna you were shaking your head and a number of things being discussed and brussels. Why would this be destabilizing to other countries because some of the countries we have had around the banking sect there in italy has been around the sort of selfcontained nature of italian finance and it doesnt necessarily spell out to the rest of the eurozone as other crises may have done. Larry look at Deutsche Bank on this as an example. Which is to say if you go through a resolution youll have to have some bailand from editors. In italy the problem is those creditors tend to be retail and and hence the political challenge. Europe is trying to engineer a Stable Recovery which requires credit formation. The last thing it needs is an adverse shock of uncertainty in particularly impairments to the credit story. It is round that they need to address this issue in a much more pragmatic way into the roles they have adopted it will be roles in this situation . Larry unfortunately not. The eu itself is a rolesbased institution and the lead voice on these issues, germany, is a very much rolesbased approach to things. This is where the rubber meets the road and it is grossly underestimated in many respects. Euphoric that brexit has been pushing the side, the japan will stimulate the World Economy and it is all rosy for major equities. If use of thist of the s p at a new record high. Story and bnp context, this is a bond issued in 2008. Trading at . 49. 10 billion euros worth of bonds to reach the mom and pop bond. 180 billion. A cannot they cannot. Cant. Larry that is the case that shows his party trailing the fivestar movement. Of course, given the importance of the referendum, because additional referendum for october, about a different issue but nevertheless could be portrayed within italy as a policy. Um on anna larry, thank you. Still to come on countdown, airbus plans multibillion orders. Will there be more ready for takeoff . Stay tuned. Were at the air show next. This is bloomberg. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. Manus it is 6 30 a. M. In london, 7 30 a. M. And paris. Main dig into some of the stories making todays edition. Who is this man . Anna carney. Do i get a prize . Manus i dont know if he is going to get a prize from the select committee. Anna in connection with the june 28 financial policy meeting where they announced the takeup of their liquidity or relations. This will be the first time he is said to come facetoface with law markers. Lawmakers. Runup to the referendum. It will be interesting to see the dynamics. As many people pointed out yesterday, a lot of the leaders have been quick to praise mark carney as being the Stable Institution at a time of crisis. Manus the other thing will be the focus on teresa may. 48 hours to go. You will be in the cabinet . George osborne setting out in a twoweek trip. Will he still be in the post . There was a great article talking about is theresa may challenging Margaret Thatcher . The odds are, probably not. She is talking about workers being on board. She is talking away from tax cuts being the only answer. 15 beingvocating what he might look for. Is that what theresa may will go for in terms of the vocabulary she used . To me it was a little bit more inclusive. A number of commentators pointing out a number of thing she talked about is quite similar to what ed miliband to the about in 2010 elections. Also the oil market. The first feature trading more than five dollars a barrel. Forw contracts for delivery the first time a year. The price gap has doubled in month, the recovery will be messy. Another of the stories that daybreak is picking up. Manus the price today is much less than in a years time and that says, look, it over saturated, overcapacity. Is 51 in top of this market benchmark their short daybreak. And the yen gains after aend weekend fresh round of stimulus. Good morning. Good morning, manus and anna. The s p closed at a record high for the first time in more than a year yesterday. The ftse 100 entering a will market. Asian shares of crime to levels last seen in april. Looking at the index, up 1. 2 at the moment. Japanese shares driving those gains in asia. Headed for their steep twoday climb since february. Announcing that fresh round of stimulus. Take a look at what is happening with the yen as well. One of th