Manus and i am manus cranny at the bank of england. Anna, will the bank of england cut rates for the First Time Since 2009 . The governor had a message for the market, markets and economists are less assured. This is a governor who we know acts ahead of the knee. That is what were going to be focused on, 12 noon, the bank of england back to you. Anna let us but the risk radar, show our viewers what is happening overnight in various asset classes. The rally in equity markets losing steam just a little bit. We have u. S. Markets of course nearly alltime highs, waiting for the earnings season to kick off in earnest. The msci asianpacific treading water, the pound in there because of the focus on bank of england today, and in the wake of theresa may appointing some of her tea cabinets. As wasmany women suggested yesterday. There will be more names announced today. 132 on the pound against the u. S. Dollar, bouncing 4 10 of a Percentage Oil in there, rebounding as investors weigh u. S. Apply. Gasoline inventories rose over barrels. Having a good session, let us get the bloomberg first word news. There is rosalind chin. Newlind anna, britains Prime Minister theresa may has announced key members of her cabinet. Former mayor of London Boris Johnson become secretary, replacing George Osborne as chancellor, and the task of overseeing the negotiations. Earlier, may set out her plans as Prime Minister. Prime minister may the government will be not driven by the privileged few, but by yours. We will do everything we can to give you more control over your lives. London house prices have fallen to the lowest level since the height of the financial crisis. That is as brexit sent shockwaves across the u. K. The index compiled from a survey of real estates by the Royal Institution of surveyors dropped to 46 in june from 35 the previous month. That is the weakest reading since 2009. Responses were received after the european referendum on june 23. Merrill lynch cutting Private Banking industries, managing more than 3 trillion combined for the worlds wealthiest people. That is according to a study. Morgan stanley dropped one spot in the rankings to number three. As the management straight in all three private banks. And Credit Suisse has changes to compensation for some of its senior london bankers. According to people familiar with the plan, the company has increased pay while limiting the socalled allowances that have come under regulatory scrutiny. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more on the bloomberg top. Anna and manus . Anna rosalind chin, think you very much. Let us check the market section in asia. David ingles is standing by. It seems this theme is taken out of the equity rally. David yeah, first, i think i wore my red tide today. On thee started talking, way up. But not very exciting today. I mean, we are very close to monetizing the valuations, especially across emerging asia. Multiyear highs, and you do understand why we are seeing some Forward Momentum start to come off. But having said though, japan is still in focus as you can see of course, no meaningful moves. Obviously the market story is still waiting for details of the stimulus. Up for a fourth straight day. Asia overall still up for a fourth day overall, but volumes have come over a bit, at least compared to yesterdays level. As you think dimension. The Employment Data out of australia. The the expectation, but fine print when you look at fulltime employment, that was encouraging. You look at south korea dok, raising steady, but coming out, starting to cutting the Growth Outlook and inflation outlook as well for the rest of this year. And is very quickly before i go to singapore, eureka. Trading is still suspended. We will be reopening in about an hours time. They came out with a statement here, this temporary stop was caused by duplicate trade confirmation messages, so they will be reopening in about an hours time about to be in local time youre in asia. Anna thank you very much, david. We have that trading in singapore news, around 35 minutes ago, waiting with interest to see that restarted david amos in hong kong. Let us turn our attention to the bank of england in a. We wait to learn if the Monetary Policy committee is voting in favor of our rate covered manus cranny, a big difference between what economists think will happen and what the market is really pricing in run as to the details. Manus the market is much more aggressive in terms of its belief that there will be a 25 basis points cut from mark carney and his cohorts behind me in the bank of england. There is only one member of here that has only lived in a decision to cut rates, mark carney when he sat down at the bank of canada, he 50 basis points. This is the governor the want to send a message. How do you do that . Will 25 basis points really make a dramatic difference in the United Kingdom . Probably not. But reopening quantitative easing, it is critical. This is a government that dealt with a premium crisis. And he had a message for the markets, just the other day. Governor mark carney in the 2008 financial crisis, you have to come straight with people about where the risks are. And then have a clear plan to address them. You cant govern by assertion. You cannot wish things away. That way perpetuates a financial crisis. It reinforces it. Manus so, where is the new lower bound in the United Kingdom . The market is convinced near 25 basis points is priced in. My proposition is this, 25 basis points, with sprinkles on top. There has to be something more delivered today in terms of messaging and action. Anna we will keep an eye out for the sprinkles. Lets talk about the currency though. More rallies this week, in the pound, but that does not change the big size of the move we see since the 27th of june. Manus look, it doesnt change the bigger story. There is a long way to go. This protracted discussion in terms of activating article 50, what is brexit and what will it look like . The volatility, have a look at the volatility and, something we looked at quite often. Ratcheting up, coming back from those busy peaks, but i think really what you saw yesterday was policy trumping politics. And in the market was taking opportunity on the relief rally committee get some short positions in. George osborne is gone. Those charters he said are gone. Hammond is in the driving seat. What does policy made for the pound . What does policy mean for the gilt market . What does it mean for the system applications on the pound, and nna . . Anna good wanted easing be the sprinkles . Manus with cherry on the top, this is about a governor we know is for the market by the scruff of the neck, saying i am in charge here. We have a politics writing itself. Look, not much difference between now and 0 rates. That is a given. We know he is a proponent necessarily of negative rates, and indeed there is that backlash against the negative rates syndrome. In the absence of that, we saw the Capital Buffers from the banks. But for me it is about qe, and that is good to be the most fascinating debate over the next six months, whether he does it today or not, and have to be on the agenda. Anna well, let us turn for insight to someone i know we value on this program. Greatvestment bank, paul, to have you on the program is sponsored what manus was talking about what do you expect to see from the bay coming wednesday . Paul i think the chance of a rate cut, but it doesnt matter if they do it today or not. They will signal a rate cut, because we do the minutes simultaneously. And a minutes i think will signal a rate cut if we dont get it today. Why do a rate cut . It is not going to stimulate credit. The banks, we know that cutting rates is a way of taking income away from savers, and giving it to borrowers. Anna why do you say the banks will not lend to businesses, having this cyclical buffer which is supposed to enable . Paul on the other hand, you just had one of the biggest shocks to the u. K. Economy, since the first opec oil shock in 1973. But that were probably way more than ok, tweaking the revelation, im not against it. The bank of england has eased by changing revelation. That is an enormous shock in terms of uncertainty. The advantage of doing at Interest Rate cut and taking away from the savers to give it to the borrowers, the effect is a generational transfer. My father is the one with the savings. I am the one with the mortgage. This is a way of me getting my hands on my fathers money. That is great. I am in favor of it. The negative Interest Rate as it transpires, more likely to follow the younger generation. This is a good mitigating factor. Ul, Consumer Sentiment plunged the most in 21 years. I am looking at business the lowest in 4. 5 years. This ast ubs see transitory dips . Is this a negative feedback loop in terms of sentiment, because that what drives the economy. Opaul absolutely. On the sentiment side for the consumer, we probably have more bad news to come. When we look at the consumer, the increase in food and fuel prices have come down as result of sterling, but it has not really started to hit yet. We see the price of coffee going up, which matters a great deal to me personally. We see the price of oil going up but we aretations, not seeing the full force of that. Consumers tend to overreact to food and fuel, very sensitive to pricing. And i think the full force of that is not going to come through until september or october. So i think on the consumer side there is more risk around those. Anna lets talk more about that. We learned about your passion for coffee. Paul,. About what is happening with the pound. This is pound volatility chart, showing brexit near the lowest since march. Sterling swings stabilizing, as minister may major cabinet figured what you expect from the cabinet . Is that something that will the bank of england, watching carefully, the reaction to any slowdown in the u. K. . Paul i think the pound is something we have to watch. Because the drop in the pound is not necessarily positive for the u. K. Volume, the amount of stuff we sell overseas, does not really react to sterling anymore. This is very common now. Companies see Profit Margins fluctuate, not the volume of sales. Now what that means is that the weakness of sterling is mainly felt Commodity Prices on the impulse side, which is the damage we have just been talking about. So i think the bank does have to take that into account. Of course the issue is sterling is that you have this very, very large current account deficit, how do we fund it . Are Companies Overseas going to want to invest in the way they have done in the past . There is one quirk with this, which is worth bearing in mind. A lot of the time, the media tends to focus on is there a new car plant going up in sunderland . Because that is dramatic. It makes for good television. But a lot of Foreign Investment is rather tall, things like retained earnings, and that side maybe a little bit more supported by sterling at this level. Do not get me wrong. Foreign direct investment is going to be lower into the u. K. No new car plants in sunderland. But you have earnings continuing, it may not be quite as bad as has been suggested initially. Paul, we have a new chancellor, mr. Hammond. What do you expect to hear from him in terms of fiscal stimulus . Do you expect a big Infrastructure Spending to counteract the recession . Are you calling the recession . What can we expect from hammond on the fiscal positions . Paul recession is one of these made up media words that you journalists love. There is no formal definition of what a recession is in the world of economics. If we are saying are we going to get consecutive quarters of negative growth, i think we probably avoid that. Whilstd that because i think employment is going to rise, we are not going to seek a pretty tiring. I think companies are not going to be firing in this situation. I think we basically sort of get a frozen labor market. Again, bad news if youre a School Teacher or University Graduate trying to find a job, but in a big Macro Economic sense, it is not so bad. Does that mean we need fiscal stimulus . I think you have artie seen an indication that we are not going to get fiscal tightening at quite the same pace. But part of the problem that we have got is that there is less to maneuver fiscally. The economy slows down, tax revenues are dropping, you can do that to stabilize, but additional fiscal stability becomes a problem. Immigration into the u. K. Has tended to be a net positive for the fiscal position. In other words, migrants bring more may take out. If we see the slowdown that is quite widely expected again, it does damage to the fiscal civility of the government in the mediumterm. I think they have less room to maneuver. I dont think we will see grandiose Infrastructure Projects this time around. Anna thank you very much. Paul donovan stays with us. Interesting what you said about the job market. We will talk more about the job market in the next hour. Here are some other highlights of your day ahead. Jpmorgan will post secondquarter earnings. And as we were just discussing, a few minutes later the bank of england is due to deliver the first posteu referendum policy decision baird that 7 00 p. M. U. K. Time, president hollande gives a televised interview on subjects from brexit and whether he will run for office again. That should be interesting. Up next on the program though, why the Philadelphia Fed president harker sees more than one rate hike this year, as the u. S. Is the brexit fallout. This is countdown. Anna welcome back. Time in london is 6 20. Equity markets pretty flat over in the asian session. Let us get the Bloomberg Business flash. Here is rosalind chin. Volkswagen plans to recall cars in the wake of the emissions scandal, a potentially costly speedbump. California regulators have rejected the proposal to fix the engines, as quote incomplete and substantially deficient. A substantial solution will be found. The company has reached a 603 million settlement in 44 u. S. States. Monsanto is looking for alternatives after rejecting a takeover offer from a buyer. People familiar with the matter said the company has survived talks with a German Company about a possible accommodation of the agro business. No final decisions have been made. Talks to buybe in as much as 49 of paramount pictures. The wall street journal says viacom is seeking a deal that would value paramount at up to 10 billion. Estimatescondquarter and raising forecasts, that is after they performed better than expected in china. And isso own pizza hut, spinning off operations this year. Shares rose in extended trading and nintendos recordbreaking rally continues today, was shares rising as much as 18 . The companys value search around 75 since the launch of the pokemon go app, the biggest gaming since they started shares in 1983. And that is your Bloomberg Business flash. Anna . Anna roslyn, figuring that. Philadelphia fed president Patrick Harker says they should not sustain much damage from record they will not vote until 2017, and more than one rate hike may be warranted before the end of this year. Patrick inflation return to target sometime next year. Now considering the anticipation that it may be appropriate for up to two additional rate hike this year, approaching 3 by the end of 2018. Anna paul donovan, global economist at ubs, still with us. Chart of gdp, perhaps a little gdp stuckbut u. S. In a rut of 2 . Possibly, as much as paul i dont think there would put rates up two times this year. If i were sitting on the fmoc, which i cant because i have the wrong accent. It will work this way, but not the other way. I would be raising rates. Because we have a growing inflation problem in the state. S. Most indicators are at or about the 20 year average. Interest rates are nowhere near their 20 year average. But we look at core Service Sector inflation, no matter what you look at, except for the headline which is all about oil, we have a tight labor market for skilled labor. We have an increasingly tight labor market for semiskilled labor. Wage pressure is building. Look at the survey, the index of wages, wage pressure is building. And you say we are stuck rut in it is ais not a rot, trend. That is not an economy that needs emergency accommodation anymore. Anna a very trendy rut. Manus . Paul, the fed says employment in the u. S. Continues to grow modestly. Wages are modest to moderate. With that in mind, we have heard from harker, im seeing the fed decisively split. Paul i agree. This is one of the challenges. Of course you cannot divide the fed into hawks and doves and more. That does not work. It is a multifaceted institution. You have someone saying actually we can look at tightening costs, or change regulation or Interest Rates, you have three different policy leaders now. So which one do you pull . You could be pulling and pushing at the same time. This does give a very confused picture. And you are quite right. There are people saying we should actually continue the accommodation for longer, other saying we should not. But i come back to my original point. We are saying ok, the economy is saying moderate tightening of labor market, well, that is fine. Policy today is not modest, it is very immodest and in moderate in terms of policy today. And that is were the challenge comes in. Anna you mention we talk about the bank of england that the media perhaps unfairly on the conversation focuses on things that look pretty, like new car parts in sunderland. Perhaps the media reporting on inflation focuses on the oil price, the price of filling up your car. Is that a reason you mention that oil is one of the things that doesnt make inflation look quite as scary as it