Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20170717

And im watching copper acteding better than expected up 1 . Now for a quick look at the week ahead. It is quite a week. Tomorrow earnings from bank of america and Goldman Sachs. Then Morgan Stanley. Then the inaugural meeting of the u. S. China economic dialogue will take place in washington. At 8 30 on wednesday we get u. S. Housing starts data. Economists forecast a jump for the first time in four months. Then thursday, followed by the president 45 minutes later. And the bank of japan will release its Monetary Policy decisions. At 8 30 eastern its weekly jobless claims. Then friday well have earnings rom General Electric and honey well. And then shell watch her episode of game of thrones. Overnight we have important and encouraging Economic News from china. Joining us now from hong kong, it looks like a beat pretty much across the board. Take us through it. Good morning. A big set of numbers for china, shows that theyre on tract to contribute one third of Global Growth this year. Its not just an external story. Exports are doing well. But on the ground domestic spending is doing well. Retail rose 11 . So i think across the board not withstanding the risk on chinas economy, which well come to, the overall growth stories, in a sweet spot pfment what about personal consumption . Retail sales were encouraging. Very much so. Thats exactly what the government wants. They want to rebalance the economy away from the heavy industry, export, and the like. But now were seeing increasing consumption not just of cheap goods but up the value chain. White goods. As the base continues to grow. Were seeing disposable income rose 7 . Thats even as wages stay stagnant. It was interesting that you had shanghai ending lower. I can only think it has to do with the newspaper warning of rhinos walk us through what happened there with that headline. Not to be confused, the front page of the peoples daily today. Im told they need to get a grip of not just the stress you cant anticipate, but the ones in front of the. And that is debt. The president himself attended a meeting, which is unusual. He said it would be a dare licks of duty not to tackle that. He likened it to National Security. So theres a sense that with the good Growth Numbers now chinas authority will have the ability to reinin credit. So whats the trickle down effect . Less import growth . Less export . Whats the trickle down for the rest of the globe the sense is that for sure theres a series of risk in the system but they dont want to go too far ahead of the reshuffle of the Party Leadership this year. Economic stability is their key. So the feeling is that the steps initially might be baby steps but the a broader impact shouldnt be too negative. I think the biggest fear is the trade tensions which linger between the u. S. And china. Another story i imagine theyre laughing again looking at 6 president 9 . Have we got any update after the method, the model they have to gauge the performance and whats behind the the official data they put out . Thats right. Theres a healthy degree of skepticism and often quite rightly so. It doesnt have the transparency or High Frequency in terms of the data we get out. And indeed chinas government itself has acknowledged they have a problem with some of the data especially in the northeast and theyll try to factor in their own numbers Going Forward. Nevertheless, its the only Health Reading we have on economy. The trend remains at positive. I think that probably gels with what other orders of private sector tells us, which is that heavy government stimulus has slowed under the economy. 9 is up not its 9 for debate. What extent have officials there been bailed out or how by the Monetary Policy and the direction of the u. S. Dollar more broadly . Thank thats abuse of the power of authority and theyve gotten lucky to some extent. Pressure on the currency was heavy last year. The had to spend a lot of International Reserves to spend the currency but of course the swing into dollars taken, its taken a lot of downward pressure across the u. N. And it hasnt been at the pace some hawks would have anticipated so that has taken pressure off china. If it was to reverse and the dollar would sort of rally again that would put pressure chinas own nd reserves. You discussed the meetings going on this week. One chinas own is trade. Particularly steel. Because we may even this week get a decision on that proceeding in washington. So chinese trade is going gang busters right now. Weve seen exports increase around the world, including a widening of the trade deficit there although imports from the u. S. Are moving higher. I think that in and of itself be all and end all for chinas economy. The worried that it might damage more relations. Especially the tip of the iceberg and tariffs on steel today. That would really start to hurt the chinese economy and of course hurt the wider Global Growth story as well. Thats why it continues to be an ongoing and caution in china in terms of how they want to deal with President Trump. We heard the chinese president talk about the need to open the doors for more investment in china. Thank you so much for joining us. That was the headline out of china for the most steel produced ever in china. But exports are down. Theyre producing it because they need it. The ones who benefit are brazil and turkey and india. Not the u. S. And not europe. You know what they would, though is to trim back on production if they need it. Thats not going to happen any time soon. Definitely not. In the word of commodity. Coming up former white house and obamacare architect will be joining us from new york city. The main event this week is the ecb holding its meeting on thursday followed by a press conference. The question, when will they stop or slow the pace of Bond Buying Program . The latest news says they will slow the pace in september, rollback starts january and most economists see bond purchases ending in september of 2018. Oining us is andrew. Great to get your perspective here. The trade has seemed to be you want it except for today. You want to short those markets. You want to go into the euro and buy equities. Is that going to play out on thursday . Its hard to know if it exactly plays out on thursday afternoon. Im not going to forecast a couple of hours of trading a few days hence. But we are of the view that by the the end of the year could 1 . Ly be at and we have a 3,800 target on the euro stocks. And we are modest euro boom. So we think the theme in general will continue. But the question i have though is that was the theme here in the u. S. As well, when President Trump and the white house, you wind up having a fed thats going to the pair it back. But that trade didnt go out. You want long dollar, short treasuries. The only thing that worked is going long equities. I think its fair to say that there is some inconsistency in the consensus view. Because roughly speaking 70 of the time you have a strong euro. Europe historicically has underperformed because you get over half of european earnings from overseas. So our advice has been very much to buy europe unhedged and in addition to focus on those domestic plays which get the benefit of both relative euro strength and relative domestic demand growth. But when you ask the question will europe outperform in unhedged terms, i think the answer is clearly yes. Its 20 cheaper than the u. S. Relative last time European Economic growth and Earnings Growth was above the u. S. It was only on a 5 discount. So its something of a rebreaking story. Talk to me how you want to play that domestic story. Is that a stock specific thing . Its its fair to say it is quite difficult to play in any large size the domestic demand fee. Of course xy on it are the banks. Because they are abnormally domestic and historicically they do positively correlate with a stronger euro. So thats why we and indeed any others are of the way of banks. What we feel is even if yields did not rise then the potential rebound in asset quality because of the gap between the Mortgage Rate which is well below the rental yield would offset most of the disappointment if the bond yield didnt rise. In other words, the improvement in asset and loan growth. So in simple terms banks are a big way to play. There are other pieces we like that have high exposure to dormse stick euro. But yes that is prodly speaking right. Lets talk about european financials more specifically. Weve seen it come to play in italy, in spain. Is this a periphery tory for you or something in france, in germany . Can you be more specific on the banks . Well, its very simple. If you look at the banks they have the highest correlation almost with any sector with bond yields. Indeed, their correlation with bond yields is at an alltime high. Moreover when you look at that valuations relatively that broadly speaking neutral but the only momentum is that a tenyear high. And what i believe for certain types of banks, ie, retail banks, who have abnormal exposure to real estate as collateral and to household loan growth, that we are underestimating the improvement in real estate prices. Remember lending for retail bank is clat liesed by real estate. Were underestimating the improvement in real estate prices and the rebound in household loan growth. So you want to focus on a particular type of bank. Not so much in corporate banks in my mind but retail banks. And they tend to be found in spain and holland in particular, and there are one or two in france. Whats the biggest risk to your call on europe . We start off the year with a lot of risk. But it was the france or etherlandses or germany. Is it now or Something Else . We always thought the epicenter of risk in europe is italy. That could be broadly defined to have a joint list. And then they could potentially get more than 40 of the vote in the upcoming general election which would give them a 15 bonus. Then youve got to clearly enter your own parties in power. Now, what we hope is a five stars popularity is beginning to wane as in we saw in the general elections as indeed we have seen with their rather poor growth. And that they are also becoming less antieuropean. Theyre no longer antieu. Nd theyve ruled out a jointness. But italy is the center of a Political Risk also the economic risk. Its had worse growth in 2000 in depreast which is an achievement. It has one of the biggest fiscal problems and overvalued Exchange Rate. So yes italy is the risk. Global head of equity strategy will be staying with us. Coming up, blair efron. He will be here to talk about whether jamie diamonds frustration with washington echoes through other board rooms. Sigh M Fund Management is launching a fight against proctor and gamble. They say its stock has underperformed because of what it calls the companys slow moving. According to a filing they want to break up the company or replace its ceo. The hedge fund is trying to get Retail Investors on its side. Elliott management has a website and convincing investors that it can end underperformance by the largest mining company. They want it to end u. K. Ausestrailyam corporate structure. And the ceo is stepping down to take the same role as icb. She will leave the Discount Airline for seven years. Theyre dealing with slowdown in advertising and speculation that its a takeover candidate. Thank you very much. In the u. K. Here where brexit discussions are under way as the march 1e9 list edges closer. Theyve promised Real Progress in the negotiations over the future rights of european nationals in the u. K. While the chief spoke about the commission. The decision to leave the eu has consequences and we have to explain what these consequences mean for them. The pair saying a similar tune after completing negotiations after round one. Its incredibly important we now need new progress. And compare our risk positions in order to make good progress. Joining us now from the city of london, the collupnist and lets begin with you. What is concrete progress look like today over the preceding days as well . Well, i think the three main things, we have to understand that there are quite things of sort. I doubt theyll be able to get that much concrete progress through. But i think recognition that some bill will be paid i think will be taken very well in certain european capitals, not all. But i think the rerknigs that they will pay something towards the budget and means they will not have to redraw it up to 2020. The heat ake a lot of out of their discussions. I think the easiest thing to do is reveal the more foreign nationals from the European Union the heat out of their discussions. And t people overseas in europe that should be a solvable solution if they can agree this middle ground of having a court which or t subject to the ucj indeed u. K. Supreme court but is a middle way ground. Perhaps in the hague. That could take pressure off that as well. What does it say about the the level of progress . Consider the idea the concept the u. K. Just agreed that the very idea the bill needs to be paid. Then they need to work out how big that is. Thats going to take a long time. Isnt it . It is. The only car we have in this is some sum to to pay not be breaching International Law at soim point in the future. But i cant see why the current government wants to do anything without really a clear outline of what a trade deal might be. Eyve s the only card th got to play and theyll pay it as late as they can. There is something due without putting a firm number on that. But both sides there are other investments. The European Investment bank and other things which in theory pour back into the u. K. So if they are honest there are numbers there and they can frame it, perhaps some independent arbiter can rule what the correct thing is then maybe its a small step. Its easy to get boxed down and consumed. But you though looking at the world of expertise how much attention to you pay not negotiations . And give me an idea of what you consider noise and what you consider signal. Of course everyones got an opinion. My personal opinion for a long time has been there will have be a very long transitional period after mark howsman 19 partly for administrative reasons to get the customs declaration system up and running. Partly because the minimum rade negotiation has taken longer. Ponal because of the nightmare remembering it will almost be impossible until the parliament acts in 1e9. Just a practicality. I think the longer the transitional arrangement, it could easily be suggested two years. Then the greater probability. But nothing else has changed. So the key to me is the length of the transition or deal. So i assumed personally a twoyear transitional deal. In terms of march 1e9, in terms of the equity market. Just remember the golden rule. Nearly three quarters of u. K. Earnings come from outside of i think the longer the transitional arrangement, it c1 the u. K. The most important thing its sterling. Ironically the worse negotiations go the more sterling weakens and the better it does. Thats the bottom line,. From new york city coming up very soon well be speaking with donny, former bank of england policy maker as we counter down in a few weeks time. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Jonathan from new york city, you are watching bloomberg daybreak read im jonathan ferro. But you up to speed on the 500, second s p straight week of gains. Outperforming, we are up by zero points on the 100. On the other board, here is the situation in the fx market. Session. Pound on the a down by a third of 1 . The dollar showing strength. Yields lower down by two basis points. On the u. S. 10 year, following the soft data on friday on retail. In the markets, lets get you up to speed on what is making headlines outside the business world. Americans feel good about the economy but not so good about President Trump. 58 of the survey say they are moving closer to realizing their own career and financial aspirations. That is the highest level since the question was first asked in 2013. 55 of americans view President Trump unfavorably. Mcconnell hill, mitch has put the vote on the Controversial Health care bill on hold. John mccain is recovering from unexpected surgery. Comenell is struggling to up with the votes he needs to pass legislation. In venezuela opposition leaders say more than 7 Million People. Asted more symbolic votes the mock vote has no legal impact. Lobal news, 24 hours a day im emma chandra. This is bloomberg. Thank you so much, emma. We are the middle of earnings season. Will sentiment wind up evaluating valuations. Revision for the s p and we have seen the biggest jump in those earnings revisions since 2014. You can see that they jump you are so far. Despite the fact that we are record high on equities. Andrew garthwaite is with us and he has a target of 2600 and just raised his urine forecast his forecast. Do you see that backing up sentiment . Broadly speaking, yes. That is been close to a fiveyear high. Modestly rolling over, against the year on year change in the s p. That has had a good fit going back nearly 20 years. If the s p is flat from here it is implicitly assuming a large rollover in earnings. We dont see that degree of rollover. Nearly 9 ofsting Earnings Growth this year. Eight and a half next year. It is slightly below consensus for next year. 3. 5 percent for low consensus. The normal rate is 7. 5 over a calendar year. Geters can sometimes confused with the idea that the rate of earnings revisions deteriorates but markets go up. Which is what i think will happen. Alix what do you make of what happened with the banks on friday . The earnings were solid but the stocks rolled over. Are we going to be in a position where will not see outperformance in the equity market . I think what happened at the banks on friday is the u. S. Banks in the last five years have been the most correlated ,ector to the u. S. Corn yield that correlation is even higher than the beginning of the year. U. S. Bond yields fell because retail fell. I dont think it had a lot to do with earnings personally. To stress, if earnings revisions were to stay at this current level which is not what i would expect but if they did, that would be consistent with nearly a 20 rise in the markets over the next year. Assumingy markets are earnings revisions rollover. What are the risks . In china, we had good numbers. The government over the weekend saying we really want to clamp down on credit growth. How could that affect earnings . Andrew its all a question of degree. In passing, the government has since last december they wanted to clamp down on credit growth and house prices and especially credit growth in the shadow banking system. Then to come on to china, the the gaprofits growth is between nominal gdp a nominal wages. Is key to profits growth that labor hasnt not had pricing power. Is a slow recovery nominal gdp. I think that is the key. It is also worth pointing out that nearly 40 of a margin improvement in america has come from a lower Corporate Tax rate and that i can only see falling. Those are two elements which i think are important to understand. In terms of the question on is,a, the question really are we going to get a shock to chinese nominal as opposed to real gdp growth . This is in the context of chinese nominal, which is plus inflation, nominal gdp growth slows down between 2011 and 2016 from 23 to nearly 6 . It has slowed down by almost 16 percentage points. I dont see any meaningful slowdown to nominal gdp growth in china. 11 ,irst have a beer was that would be a small slowdown, but nothing comparable to the degree of slowdown between 2011 in the First Quarter of 2016. David on your first point, there is a limit to how good it is for a company if they can keep wages down while earnings go up. Andle have to buy things given how dependent the u. S. Stock market is on consumer purchases, is that not a problem in the mediumterm . Oddly enough, if you look at Earnings Growth, nearly 70 of it is coming from financial, technology, and energy. I wouldnt say the Earnings Growth is dependent on consumer cyclicals. Reposts been a constant to people. What counts as Income Growth and Economic Growth is employment growth and the amount to which people are paid real wage growth. And inflationth adjusted wage growth is disappointed but employment growth is still ok. Year on your employment growth has been remarkably stable. It is running at about 1. 6 year on year. Arebest indicators suggesting that if anything that will accelerate. Alix andrew, great to have you here. Andrew garthwaite of credit suisse. A management shakeup at bank of new york. There is the headline. Charles sharks is appointed the new ceo of the company, chairman on january 1 of next year. The former chairman will remain through this year but he will be retiring and he will become the bank of new ceo of york. He was previously at visa and he changed everything into a Technology Driven commerce company. An interesting change there. , talking about the new nationalism and what it means for business. Live from new york, this is bloomberg. This is bloomberg daybreak. Im emma chandra. Hour, up in the next former White House Health policy adviser. The saga of donald trump in washington may be taking a toll on the president s support. The latest poll shows that confidence in the administrations ability to get the job done is waning. There is kevin cirilli. Not much good news here . Not in terms of approval rating. The president has about 40 approval rating, 56 of americans disapproving of his numbers. If you look at where he stands on jobs and creating jobs, 47 of those polled in this new bloomberg poll say they do approve of that compared with 40 of those who disapprove and on Economic Issues 46 approving versus 44 so he he is weakest on health care. Over thehit a wrench weekend with the Senate Majority leader saying that the vote wont come until at least thursday. When senator senator mccains health is in question, it is anyones guess whether they will be about to bring it to a vote should they have the votes or if they wouldnt be able to have senator mccain in town to vote on it. David we showed a chart while you are talking but specifically in economics, that was better for the president. People seem to have more confidence about that . That is why you are seeing the president pivoting this week to what he is calling a made in america week. They feel they are strongest with their base on those issues. In terms of actually being able majorft some type of policy he needs to work with congress. Ishealth care, right now it unclear whether he will be able to get that done. To thisakest according new bloomberg poll on health care in particular. With only 28 of americans saying that he has done a good job. David thanks some much. We will check back in later. Some americans are becoming frustrated with washington. They found a voice with jamie dimon. We have become one of the most bureaucratic confusing litigious societys on the planet. An embarrassment being an american citizen traveling around the world and listening to the stupidity we have to deal with in this country. We have to get our act together. Joining me now for his take iswhat jamie dimon said blair. He is also vice chairman on the council. Talked to a lot of ceos and boardrooms, is that reflecting a broader sense in American Business . Unfortunately i think it is. There is an rising level of frustration. We are sitting here in july and there is a recognition that a lot of the promise of what we wanted to get done, tax reform infrastructure. Is not gathering momentum. You have the market at an alltime high. At 2 . E growth that optimism needs to be turned into Something Real that is sustained. Bailey the frustration that jamie dimon clearly the frustration that he expressed on friday is felt. So this is broader than jamie dimon. How is this affecting Investment Decisions . Is it having real effect in the real world . Absolutely. Withnt into the year certain projections saying it would be a record year over 4 trillion, it is not. Volumes behalf of what they were one year ago. On sergiohat is based decisionmaking and confidence of where we will go next year, three years. When you make investments you want to have a good tail end. Following that investment and i dont think there is enough confidence today that we have broken out of the 2 growth world. Therefore getting these reforms is important. I would say finally, there is also frustration that if we dont start getting the dialogue going by this fall, you start to run into the election calendar of 2018 and that would become more difficult. Said it is not clear that we would break out of 2 growth. How do you account for the two things you said . The markets are at an alltime high. Wheres the disconnect . We are trying to figure that out. It has been going on for a while. , low, alternatives for investments, low. The world is in a actually a stable place. Brazil and argentina attracting outside capital. Europe going 1 had again. You mentioned china earlier. There is a sense globally that we are in an ok place but not the kind of place we want to be in. We want to get not just employment growth but wage growth and general economic upticks. Other governments seem to get the practical progrowth strategy. Going to advise President Trump today on the one thing he should do to increase real growth what would it be . Focus on exports. Our you look at Manufacturing Base, 9 of our base is for exports. Go to germany. Of their almost 30 Manufacturing Base for export. It creates jobs, charges the economy. We are not doing that. Tradene is all for fair and everyone playing by the same rules. The fact is we do need trade and we need to be in the next. We dont want to be in a puttion where japan and eu together a trade agreement over hours. Be in a want to position where china has more investment in us than we do. Maintaining our position globally is essential. David talk about the practical pressures that this slow growth imposes on a company . Procter gamble for example. They were in the news today. Does thismpany slow growth put pressure on them for example, because it can grow faster because the overall gdp is not going faster. For a different reason. Generally, when youre not getting top line, youre getting more productivity below the top line which means cutting back on investments. You want to be able to have that margin to reinvest in the business to get growth. But if you dont believe you have the underpinnings of growth than it is hard to make that decision. Fundamentally i think it is quite difficult, the cycle we are in. Companies of been nimble and figuring out how they will go about creating growth. Some of the Biggest Companies are very local, where they are, they act locally. 22 of its sales in china, doubled over 10 years ago. General electric has 30,000 people in china. About wage difference, it is about manufacture and local markets. For a Midsize Company or Smaller Company doesnt have that resource, it is more difficult. David ok you will be staying with us. Check out tv. Watch us online and click on our charts and graphics. Interact with us directly. If you missed any of that great conversation, you can go back and watch on tv. This is bloomberg. This is bloomberg. Im david westin. One of the things President Trump is seeking to bring to washington is a new sense of nationalism the new administration is dubbing this week america week. President trump stormed into office promising he would put american interests first. The Commerce Department is weighing broader things on steel. Worries about a trade war. Boardrooms, ceos, are they feeling this new nationalism . Is it affecting their decisions . Affecting their decisions, absolutely not. Companies for the most part are as ambitious in bringing business globally as ever. Most companies in the s p 500 i would say, you talk to the person who works for them in europe and he thinks they are european domicile company. These companies have gotten very good at figuring out how to operate against a current headwind of trade issues. Fundamentally, what they are doing is instead of having exports from this country, they are manufacturing locally. Fundamentally, what the administration discusses and what anyone in congress discusses is a goal is absolutely right. We need fair trade and to protect our workers. That is something other countries are also trying to do. Tocan be in a position ever be out of the leadership in leading that discussion. You think the 20 tariff on chinese steel imports is fair trade . A race to the bottom. Do it with a scalpel and not with an ax. Importantly, making sure that we are not giving up our rightful position as leader. See is every country trying to take it vantage. Mexico is trying to figure out how to get a trade you with canada directly. Trying to figure out a deal of china directly. Change tradeng to agreements but it is another thing not to have them. Everyone will understand that in washington. We need to have better trade agreements that are more fair and balanced in our direction. Hammering down the steel imports and trying to revise that but that industry has been dying for a while and Global Exports are down anyway. Youre taking an industry that doesnt material make a difference and you said yourself it is also exports. Need to end demand. You raise a good question. You have to be sympathetic to anyone who works in an industry which is in duress. Whether it is steel or cold. Clearly technology is doing a lot to replace these jobs. We need policies that protect these workers. In difficult transitions. Education, jobs training, investments in communities where West Virginia pennsylvania, ohio clusters of new innovation. The goal of protecting these workers is spot on. It is not just the United States were trade relations have the potential to be disruptive look at brexit. The real possibility of being no arrangement. Wto rules. Is that affecting the way u. S. Business or Global Business regards the u. K. Right now . I think the u. K. With 45 Million People versus the cluster of europe with 600 Million People the u. K. Is on the losing end. People will always make investments. But the cost of doing business that retards growth for every company. Companyt that every will do things differently. It hurts global decisionmaking costs increase, timetomarket expanded. These are difficult. David thank you very much for joining us today. Jonathan we will continue the brexit conversation coming up on the program. England policy maker with the Inflation Report from newks away, york, you are watching bloomberg. Chinas economy grew faster than expected in the Second Quarter but officials continue to warn of impending debt risk. Brexit secretary david davis sees negotiations with michelle bonnier, hoping Citizens Rights will dominate negotiations. According to the latest Bloomberg National coal, americans feel good about the economy but not about the white house. Good morning, good morning. I am jonathan faro. Alongside david westin and alex steele. Lets get set up with the market dates. Futures are positive. The dollar showing some marginal strength against the euro at 1. 1464. Yields keep heading lower. 6 31 on the u. S. 10 year. Alix sterling weaker on the day, the dollar has a recovery. Gilt is one of the out performers in europe. The fix is steady despite s p around record highs and the copper getting a nice bit over china. David not to a click look a quick look at a big weekend. Tomorrow, earnings from bank of america and morgan saks. And Goldman Sachs. Morgan stanley coming up wednesday. The u. S. China copperheads of economic dialogue will be taking place. A 30 on wednesday we get u. S. Housing data. Economists look at a jump. The ecb Rate Decision is at 7 45 in the morning eastern time followed by mario draghi 45 minutes after that and the bank of japan will also release its Monetary Policy decision. At 8 30 a. M. Eastern time, wrapping up a big week on friday. Earnings from General Electric and from honeywell. Jonathan progress is the word of the day out of brussels as u. K. Brexit secretary david davis arrives for round two of the negotiations, putting out their view. It is incredibly important to make progress. We need to examine and prepare our positions in order to make good progress. Jonathan what might progress look like . Joining us from brussels is ian wishart. Tell me what you think that looks like over the last 12 months, 13 months, 14 months now. Over the last 14 months, there has been no progress whatsoever. It has gone the other way. That is why they are so adamant that time is running out and they need progress before october. What they are calling sufficient progress is when they will let the u. K. Start talking to the eu about their future trading. Until there is any kind of progress on the rights of european citizens in the u. K. After brexit and how much the u. K. Is willing to pay for its financial obligations to the eu, until then, they will not even talk about the future. Jonathan lets get to the bill, itself. I guess it is progress that the u. K. Has acknowledged it might have to pay but is that where it finished . Behind the scenes, are they theng to construct mechanism to actually discover how big this bill actually is . Is that what is happening behind the scenes . That is certainly what should be going on but we havent gotten to that stage yet. Frustrationsolute on the eu side last week where they said some people in the British Government dont even accept that they own a penny to the European Union before they leave. Concernsd to lay those on thursday, the British Government saying they do oh some money but they havent said how much and they havent said how they are going to work it out. There are big differences behind the scenes. Ian wishart joining us from behind the scenes. From hanover, new hampshire, is danny blanchard. England, itsof decision over two weeks ago, it is a good time to hike Interest Rates. Yes. I think not. We have seen a slowing economy. The labor market now looks to be a problem. Have fallen basically month by month since that decision last june. They are now negative. The economy is the slowest growing economy in the g7 and the eu 28 and we expect to see falling consumer demand and retail sales. And there is huge uncertainty over brexit. It is becoming more certain that the negotiations are complete. This doesnt look to do anything to raise rates. Expecting watching, the next move to be, once again, down. Jonathan jordan rochester, i said that just to wind up danny, not because i have a point on the debate. But jordan, you think they will hike Interest Rates . I do think they will in august. In the bank, risks are that way. Youve seen the communication but also those points on the slowdown. It is true construction has not stopped in q1 but if we have a right hike not now, then when . Economists are talking about no hike in england until brexit is riskand since we have that of a cliff edge, it seems a bit of an oxymoron to talk about the height now when brexit hasnt happened. We see this rising investment from business. If you look at the numbers from the wages, the last three months have spotty growth in the private sector, and unanalyzed basis, those three months have 4 annualized. It is not as bad as some people say. Alix denny, you say some of the data is bad but a lot of officials in the boe tend to feel the same way as jordan feels. Andhave mcafee, broadbent, pointing to needs of some kind of policy change. Well, i think the problem is the last commentator made it was untrue. Look at private sector wage growth. It went from 2. 4 month ago and 1. 9 . That is a rapid decline. There is no evidence to tell you to hike. We heard foolish comments from some of the members of the mpc who backtracked very rapidly. The chances of a rate rise would be nell because it would be an extremely foolish thing to do. The same thing is the uncertainty over breakfast has diminished. That is simply not true. About this talking investment. Maybe these people have got bets on and they are trying to encourage people to follow that that but if you are looking at the mpc, this will be a disastrous thing to do so i dont think they will do it. If they do, they will reverse it. Alix what is on the market, with sterling trading at 1. 30 and you see gilt outperforming . The market is not pricing at the levels that danny was alluding to. By november, it is a 40 probability across the market. The question i have for danny is why would 25 basis points now be a disaster . It seems like an exaggeration on the impact of 25 basis points. If you have an inflation overshoot possibly coming, 100 basis points does not knock off that much of cpi over a twoyear horizon in the realm of. 5 . If they are not hiking now and not hiking for the next two years, their credibility comes in some disrepute. Jonathan whats your comment on that . A little mistake is not as bad as a big mistake. It is like it is ok to punch myself in the face against the alternative of not doing it. My view would be you shouldnt do it, makes absolutely no sense. Every vote for a rate rise since 2008 obviously, a small rate rise would be better than a big one. But the data, i would say again, the data in the other direction, the economy is slow, and the only reason it is going is because the consumer, foolishly, has been spending and what they should have been doing is saving so we are going to see those declining real wages and the economy is going to slow further. Why would you raise rates when the negotiations are going on where the negotiators look completely foolish and there is no Fiscal Authority and the government cant get any fiscal measures through parliament at all . These are precisely the times were you shouldnt make a rate hike. It seems foolish to even consider it. Jonathan i think most people to believe that there was a window 14 when things were starting to boom in the economy and nobody anticipated what was going to happen with the politics. Maybe there was a window, but beyond that, talk to me about confirmation bias. This idea that you look at the data and it is either in spite of brexit or because of brexit. And how people are starting to view the u. K. Through the prism of brexit almost exclusively . I dont want to sound like a brexiteer, but it has been a year since the referendum vote and every single piece of economic commentaries and then has reminded you of the outcome. It might be true that we have a slowdown but it is not enough to offset these incoming inflationary pressures. I think centrally, it is reasonably said that 80 of the World Economy is expanding and it is hard for the u. K. To avoid those pressures and the mans by the equations that are going to happen. In terms of confirmation bias, it is true that every single forecast has had unemployment rising and i have been trying to be more balanced on this topic and give a healthy assessment. Alix getting a little bit restrained. , both of youlower are sticking with us. Coming up, former white house top policy advisor and obamacare architect zeke emanuel will be joining us. This is bloomberg. Alix see you in september. Bloomberg economics survey for the ecb meeting on thursday shows the most suspect the ecb will announce changes to qe at the purchases in january and the rate hike by the Fourth Quarter of next year and the eurodollar has seen a tremendous move after Mario Draghis infamous look at the chart. Really above all moving averages, still with us is denny blanchflower of dartmouth and jordan rochester of nomura. It seems like the euro is more sensitive to the upside on draghi and the dollar to the downside on yellen but they are talking about weak inflation. Why is that . In terms of the euros reaction to the ecb it is interesting. We had a strong euro since the first round of the election. We have taken profits. We are all higher in the risk reward is quite tricky. I think back to october 2015 where somebody said to me the ecb wont be announcing anything at the meeting in october before the december meeting. Actually, draghi did say that they may need to reassess the policy program in december. You could see a similar pattern happening this week. The ecb is working and we should expect some sort of easing package to come over the summer months but in that meeting, specifically, that any change to that q language will be highly watched upon. The ecb will be talking about whether or not to change the qe. Uage in the c that would be a hawkish step. Our Economic Team wouldnt expect that so i would advise that you shouldnt see that what the market is overpricing the ecb in the short term. Has 1 and euro inflation in the u. S. Is disappointing but the euro trade is not over yet. In the meantime, the flight euro, waiting for draghi. Alix so danny, should they fix the language . The european economy is actually starting to grow but i think people should understand that this whole process where you are dealing with qe, dealing with slowing the amounts that you are purchasing, this is entirely new territory. We didnt know what was going on on the way down. Economic policy to tell you what to do so this is a bunch of people trying to generate consensus on what they are going to do and waiting and watching while trying to work out the effects and what the effects of the language are. I suspect they are going to do this very slowly and they are going to experiment on what is happening but there is really no solid economic what to do and they will have to do it slowly and watch the data. David you always emphasized the data so lets talk about the data specifically in europe with respect to inflation. If you just look at that data, what will it tell you about what they should do . They have to have a plan for some point after december. The view i have expressed to you a lot of times Larry Summers expressed it this week in a new paper weve really got to think about perhaps moving focus away from this because if you cant create any, maybe we should be allowing these economies to get further employment and try to actually think about trying to create some inflation, look to see the whites of the eyes. But the story over the last 10 years has been we just dont know how to create any inflation. We know in the u. K. How to do it. You drop the Exchange Rate and that has a once off the fact but once off effect but we dont know how to generate wage inflation. It just means you run the economy tighter, you push the acceleration further and the reality has to be wait for the whites of the eyes. Have a higher inflation volume. Just keep going until you can get inflation up. Jonathan how do you balance that you with the subject that has dominated discussions over the last couple of months with Financial Stability . How do you balance the view where you should carry on to the floor when Financial Stability is starting to emerge in various important economies around the world . Obviously, you are right but i think the reality is that Interest Rates are probably not be fix to Financial Stability. What we have seen is a failure to separate out Interest Rates from financial setting. We have presumably, a central bank putting controls on unstable things so you cant really deal with issues in the Property Market or issues in some particular markets, through the tool of Interest Rates. You have separate sets of policies to deal with that financial instability and it looks like we havent really seen much of a move over the last, to deal with the things that got us into trouble. I take your point on financial instability but that doesnt mean you cant keep Interest Rates low and deal with it with another part of your weaponry. Jonathan danny, new zealand is pioneering that in the u. K. Picking up on that as well. But that is a difficult thing to do. What are you going to do . Regulate wall street . That is a tough thing to do. I agree and that is why we havent been able to do it at what are you going to do . Raise rates and peel the economy back . That is probably worse. It is difficult and the politicians probably dont want to do it which is why we havent done it but you asked me whether you should let inflation rise and i dont see that as the cause of the financial instability. Inis caused by other things the politicians have to go get their credential instruments in place and put controls. For example, you see the house price rising in london, there is things you could have done about it and the government decided it liked this and didnt want to control it and now you have Consumer Debt in the u. K. Explode and you should have done something about it. A raise in Interest Rates isnt a fixed. David lets go to thatdavid . One over simple find way to describe what has happened, not only in the fed, is we have shown that we can make financial instrument owners rich but we have not shown that we can make workers rich. And for fundamental growth you need workers to have money so what does that tell the ecb about what they should or should not do Going Forward . Today just get out of the game . I dont think it is a question of whether or not they need to equalize the wealth of the world but it is target inflation in they have a tricky question because it is different to end with tapering in 2013 but the World Outlook is a healthier place. The Global Economy has recovered. Growth rates are slower than usual in western economies but on a global basis we are much healthier. The external bankers of emerging markets are in stronger positions because when you have the taper tantrum in 2013 from the fed itched load basket slowed growth. It slowed growth. It was an unconventional policy. You wont see much of an impact compared to the 2013. So with the ecb we have currently got low inflation, but in the pipeline, there is more to come based on the fact that we are near the name route. As a policymaker, i should be looking more at the current data and it is risk reward that it is going to head higher eventually. David Danny Blanchflower of dartmouth and jordan rochester. A fair amount will happen this thursday. Bloomberg will have full coverage of the ecbs policy decision and News Conference at 7 45 a. M. Eastern time. Live from new york, this is bloomberg. This is bloomberg daybreak. Imm a chandler with your business . Business flash. A fight against proctor and ambled. They are seeking png stock has underperformed because of what it calls the companies slowmoving and insular culture. According to the filing, try and doesnt want to break up the company or replace its ceo. Headphone hedge fund is fighting it has a website convincing investors that it can end underperformance by the Worlds Largest mining companies. Bhp for thes corporate structure. China plans to punish a billionaire for breaching restrictions of overseas investments. According to people familiar with the matter, the Chinese Government will cut off funding to several of his companies and deny its necessary approval. That is your Bloomberg Business flash. You mentioned bhp and singer taking it to the Retail Investors. Bhp is one of the big performers in europe, up by 1 here in the core american as well all helped by the gdp data. They need iron ore and they are going to keep producing steel. You need iron ore, good for these big miners in europe. Anna was talking about Procter Gamble but lets see how the stock is performing. That is up by 4 10 of 1 . This is not the first time that accidents have gotten into the stock. Bill ackman in 2012 wanted a change in ceo that came within the next year but this has been really right for activists all across the board. You have the fight between dan loeb and nestle and you also had craft hynes. Up on thatming sector. A quick look at advanced micro devices, up 5 10, and an video up by 7 10 of 1 . It was falling earlier because it point bitcoin is down. Bitcoin encrypt currencies need these chips to make it work so it is an interesting correlation. Bitcoin has gotten really hammered. Jonathan coming up on this program, the former white house policy advisor and obamacare architect zeke emanuel will be joining us right here in new york city. From new york city, we will get you setup on the market open about one hour four minutes away. Desktop 1. 10 on the dow. You are watching bloomberg. Jonathan from new york city to our viewers worldwide, this is bloomberg daybreak. Lets whip through the market action. Here is global equities. Futures a little bit firmer in the United States. Up 1 10 on the dow and s p. Set potentially for more records in the United States. Weve got 25 of them throughout the year so far. In european and markets, alex, showed some of the movers. There are your performances in london. Helped by the situation in the fx market. A week pound story. We count by about 1 5 of 1 . The dollar is stronger and the treasury market, kind of the middle of the range for 2017 on the u. S. 10 year. The average for the year is 2. 34 or 2. 35. Potentially weak data on the United States on friday. Cross assets set up on monday, lets get you headlines from outside the business world. According to a poll, americans feel good about the economy but not about President Trump. Are closer to realizing their own career and financial aspirations while 55 of americans view President Trump unfavorably, that is up 12 points in december. 89 of those who voted for the president still say he is doing a good job. On capitol hill, Senate Majority leader Mitch Mcconnell has put a deskon the concert Controversial Healthcare reform bill on hold. That is as john mccain recovering from unaffected surgery. Mcconnell is struggling to come up with the votes he needs to pass legislation. In south korea, the president is following Campaign Promises to pursue dialogue with north korea. He has proposed talks on humanitarian issues in kim jonguns regime. That signals a willingness. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. David with health care apparently on hold for now, the administration is turning its attention back to trade. They areek dubbing this week by american week. What does it really mean, kevin . It is a bit of a mystery because no strong details, or a lot of details have been released about this. The president will be heading to virginia to open a new aircraft carrier. He will also, on wednesday, be announcing or could be announcing some type of policy that would encourage or a directive that would encourage business to stay in america but they are trying to get on message or develop a message in the midst of all of these stories coming out about russia. They are strongest on Economic Issues. If you look at the bloomberg told that just popped early, that would suggest that they are right on that front. The president facing low erproval ratings but strong numbers, at 47 for how americans think he handles the economy. Key Campaign Issue for him and who knows, we could even get some new intel on whether or not how he is going to be dealing with steel companies. David dealing with National Security, also the chinese are in town to meet with their american counterparts. There was a plan at maralago to have a various trade as we called it an wilbur ross said we are due for another round. Do we might do you think we might get an announcement there . They delayed the announcement about whether or not the trade relationships are harming National Security. In this case, the Steel Industry with regards to china and whether steel dumping is a National Security harm to the United States. I can tell you that President Trump, aboard air force one during that conversation, he had it with reporters just a few days ago, he suggested that something might be in the works by saying that this steel dumping is not something he supports, that it is hurting u. S. Workers. Commerce secretary wilbur ross has said that they are nearing completion of that section 232 ruling. A lot of folks thought we would get it at the end of last month but now there is, seemingly, some momentum to get it within the next week. David kevin cirelli, thanks so much. Alix still with us is Danny Blanchflower of Dartmouth University and jordan rochester. Would fixing the tariff on chinese imports save the Steel Industry . I dont think so. I think if we see some fixes and less language about putting protection on steel, but obviously, listening to the europeans, the europeans are extremely unhappy and the danger would be that you would see retaliation. This doesnt look to me like a big fix in town. Despite all of the things that are going on, much of what the president said he is going to do in economic terms looks like a big yawn. Alix fair enough, but this threat of potential trade wars and retaliation, we are talking about this a few months ago, jordan. Would you factor that into your view of the dollar . On this chinese steel story, look at the past and you have the George Bush Administration do a similar move. You have the steel tariff on chinese imports. You didnt really see much reaction in the steel prices, so that is a good example but that was antidumping. This would be an actual tariffs on steel imports and there is a distinction. But 20 import tax is different from the 200 antidumping tax. That is true, but in the Global Situation you need to have it ministration look more broadly in terms of the dollar impact as well. Steel is such a small part of trade that it wont be enough to move the needle on the dollar. Jonathan while we seemingly fight an economic war decades ago, and why have we got this view of global trade and supply of logistics of 100s of years ago . Why is that existing in such a big way around the world, not just in the states but elsewhere . I think it is a great question. In some sense, the reality is that trade has actually had positive benefits to economies. But there have been people who have lost and those who have benefited have not compensated the ones that have lost. Think about steel and coal. There have been communities that have really they were awful jobs but they were extremely wellpaid. What we have seen is the decline in those jobs, and around the world, millions have been left behind. You see the central places that voted for trunk and for brexit pen, they were steel towns and coal towns. Those places continue to hurt and the appeal of someone like trump saying jobs, jobs, jobs israel. Is real. We go about the trade for the people who have been hurt by it. Theink that the fix was benefits to trade did not help everybody but they helped the vast majority. But the losers were not compensated. So there was a fix. You could have done things to help those who were left behind and we didnt and we are paying the consequences of that, we are paying the consequences of deindustrialization. The American Dream for these people was under threat. It was a good point that you made but it goes back to our other question. Central banks cant deal with this inequality thing. Society has created too many left behind and that is why the debate is where we are and why it has moved to populism. Jonathan and some would say central bank have exacerbated the problem given what has happened with asset prices. Canan, given the situation, you talk about what the politicians financially accomplished . Anybody outside the United States looking into the Health Care Debate and seeing one senator having to go to the hospital so they cant even look at voting for the bill, that gives you a sense of how difficult it is going to be to a compass anything in d. C. Doesnt it . It is because they are so partisan as well. You have a mccain story where he is trying to be more centrist and then you have the ted cruz view where it is removing the preexisting conditions, so people will not be able to get health care if they have one. With those forces at play, it seems unlikely that anything can be done. For the market, a big surprise would be if we move on from health care, just what could happen. It has been a long time since anybody has asked me about the border adjustment tax. If that happens again, david Danny Blanchflower of dartmouth and jordan rochester of the nomura. Coming up, he helped design obamacare in his advising trump on it tends to appeal to repeal it. We are joined by dr. Zeke emanuel. Live from new york, this is bloomberg. This is bloomberg daybreak. I am emma chandra in the hewlettpackard enterprise greenroom. Tomorrow one daybreak, the former u. K. Ambassador to the u. S. David this is bloomberg. I am david westin. Most of the talk these days is about the politics of health care but we have not focused on the burden on iraq economy and on our businesses of the Current Health care system. Warren buffett addressed this at the recent Berkshire Hathaway meeting. Medical costs are the tapeworm competitors s competitiveness. Our health costs have gone up and will go up a lot more. That is going to have more trouble, regardless of which party is in power or anything of the sort. Dr. Zeke emanuel has spent much of his career addressing the cost and value of health care. He served as an advisor in the Obama Administration and is now medical ethics at the university of pennsylvania and he has written a powerful new book laying out what can be done to make sure we are Getting Better value for the money in the Health Care System. It is titled prescription for the future the 12 transformation of practices of highly effective medical organizations. He joins us from washington. Dr. Zeke emanuel great to be here. David how much are we spending and what are we getting for it . We are spending more than anybody else in the world. What do we have to show for our money . Dr. Zeke emanuel we are spending more than only three other economies in the world, china, japan, and germany. We are spending more than the entire gdp of france and britain and we are underperforming on every measure you look at. Whether it is infant mortality, longevity, treatment for Heart Disease and other things. We are not doing very well. We have a system that is rife with waste, inefficiently delivered services, Unnecessary Services, and high prices and it really needs to be reformed. I think the tragedy is there is bipartisan agreement that we need to Bring Health Care costs down and get the republican bill does nothing of the sort. What i have tried to do in the book is to go to places that are actually doing a great job and finding out what we can learn from those places that are not even out of the park. That are knocking it out of the park. David unfortunately, we dont have time to go through all 12 but give us a overview of the basic factors that could really be changed and give us better value for our money . Dr. Zeke emanuel let me highlight, the first one is it starts at scheduling. How do you schedule an appointment . Most doctors start monday morning and they have a full list of patients. Places that have transformed themselves, but doctors start the day and happened the patients appointment slots are empty. Therefore, people walk in and find the time that they need a Preventative Service like a pap smear, and that works much better because people who have a problem today are seen today and not seen three or four weeks or five weeks from now when the problems have gotten worse and other things could have been seen. The second thing, and this is important for people to understand, . 84 of every dollar in the Health Care System goes to people with chronic illness. Like my patients with cancer or Heart Disease or parkinsons or diabetes. If you want to reduce costs and get the focus on that . 84 and people with chronic illness. Places that have knocked it out of the park are places that have created a very good mechanism for dealing with patients with chronic disease. They get chronic care coordinators, working shoulder to shoulder with the doctors, they meet the patients face to face, they educate them about their disease and they dont wait for the patients to come into the office with the complaint. They actually do proactive outreach and monitoring. One place in california called care more, for its diabetic patients, actually runs a clinic clipping their toenails once a month so they dont nick their toes and get an infection and require and acquire gangrene. Those places reduce their hospitalization rates as much as 40 . That is huge savings. David so your book suggests there are ways to really address this. What does the federal government have to do with it . Are these organizations doing it because of the federal government or despite the federal government . Is it really a washington issue . Dr. Zeke emanuel washington is very important for this because key to getting all Health Care Organizations to adopt these transformational practices is how we pay them. . O we pay them for service just when they are sick or perform surgeries . Or do we pay them to keep people healthy through bundled payments that are putting all of the fees associated with some procedure like cancer chemotherapy together and let them figure it out . You have to pay them differently and since the federal government is paying a large portion of the bill through medicare and medicaid, having the federal government pay differently is critical. The informal care act did some things to catalyze this. Bundled payments and now a that was passed by overwhelming majorities that would actually pay doctors differently. These will have big effects and it will force doctors and hospitals to adopt the practices i have outlined. So does david david so can washington change that and repeal and replace . I understand you have met with President Trump and congress more than once to talk about what they are trying to do. As you look at the recent bill out of the senate, is it making progress in the right direction or what would it do . Dr. Zeke emanuel no. It is actually a very bad bill. Cruz amendment makes it worse because it will destroy the insurance market. If you really want to get these practices out there you have to give people continuous coverage because they have chronic illness and they need coverage from start to finish. Medicaid and have uncertainty about the insurance exchanges is not a good way to get doctors to change how they deliver care and to bring down the cost of care because they dont know if they will get paid to keep these patients healthy. In addition, nothing Mitch Mcconnell or paul ryan put in the republican reform bills addresses the cost control. Literally nothing addresses the cost control the way that is necessary to induce doctors and hospitals to change their practices. This bill does not advance and address the quote you had from Warren Buffett at the start that we need to get the costs under control. Alix this is going to be the rudimentary question in terms of timing but for investors here, what they care about his Health Care Getting through so they can get onto tax reform and that is making a difference to companies. Since you have been in the trenches, what is the timeframe we could start to consider Health Reform getting done or being scrapped . Dr. Zeke emanuel well, you just saw the irony of ironies that we delayed again, health care reform, because john mccain is in the hospital with a surgery that requires tens of thousands of dollars. If he had to pay out of pocket he could never afford it if he didnt have that nice insurance that the senate gives him. But it sounds like we are at least those till weeks before the bill is defeated and we are finally able to move on. Let me just say, even with the defeat of the bill we will not move on because we still need to fix the Health Care System and get these costs under control. Health care is going to be on the docket. It may not be issue number one for the senate and the house but i dont think we can move away from it given the current uncertainty, even if the bill is defeated. David finally, we had dr. David shukman who runs the veterans of ministers on our program, and he said he thought a combination of technology, digital, plus that are diagnoses, taking 30 of the cost out of health care. I know you have some skepticism about it but does that some plausible . Dr. Zeke emanuel taking 30 out almost all of the experts say we have about 30 of unnecessary care, inefficiently delivered care, high prices, and fraud and abuse. I dont think we will get all 30 out but if we could get 10 out that is 300 billion a year. That is real money. Getting 10 out will require a full assessment of how we pay doctors and get them to adopt the right practices. It is not going to happen if we just leave the system to itself. Weve seen what happens when you leave it to itself. Costs go up, Unnecessary Services go up. That is not the plays we need to be. We really need to focus on changing how we pay doctors and hospitals. That is going to be a really important. Ere, that in th would be my focus. David dr. Zeke emanuel, thank you for joining us. Bloombergou have a terminal, watch us online and click on our graphics and interact with us directly. If you missed that interview, go back and watch it. This is bloomberg. Jonathan procter and gamble faces a frosty fight with activists about its fund. They say p g has underperformed its peers because of its slowmoving and insular culture. It underlines a developing theme in Consumer Products companies, the struggle to find growth. Joining me with more is first, there was craft after you deliver and now weve got trian going after p g. What is the theme here with these Big Companies struggling to find some growth . Why . You really put your finger on the pulse. Largecompanies, these Consumer Products companies, regardless of some industries, are having difficult to growing. In the developed markets, population growth is slow and pricing is difficult. Their avenue of growth they saw a few years ago, the emerging markets, have slowed as well. It has really come down to a game of mergers and acquisitions, cutting costs, growing by cutting, and companies that are slow to do so are getting business by private equity and activists. Todays announcement at the ng is an extension of that. A 1. 2an if you have percent stake in maybe a 20 billion company, these are big. These are 200 billion companies, look at procter and gamble. Im wondering what they can do to make them happy. If you look at the response of was a buyback and nestle had the same thing, a buyback. Can they do anything else . These Big Companies have tremendous amounts of free cash flow. Share buybacks are always on the table. Certainly in the case of Procter Gamble. But for the longterm, i think companies in the packaged food undertaking all sweeping costcutting programs like zerobased budgeting and realignment. These are the kind of buzzwords and things you are seeing all across the packaged Food Industry to generate longterm margin growth. In terms of the small statement trian as on Procter Gamble, it was only go so years ago when they had another one with pepsico that it did help influence quite a bit. Behind their productivity programs, which are targeting about a billion dollars in costcutting annually. That has helped support pepsicos nice stock run over that time. Jonathan seemingly having success with ge as well. Great to have you with us on the program. Up next, chris harvey of wells fargo security. We will tell you down to the opening bell. Started this monday, this is the situation. Stocks go nowhere, futures on the dow and s p 500. As we come into the session at record highs, on the bond market, yields are lower by about a basis point at 6. 32 on the u. S. 10 year. You are watching bloomberg. Jonathan stocks setting records as a Bloomberg National poll reveals americans feel good about the economy, but not so good about progress in the white house. Netflix and focus with results after the close, and goldman, bank of america look to get financials back on track after earnings. The market wait for mario draghi to provide direction after weak inflation in the states. From new york city, good morning. This is bloomberg daybreak. We are counting you down to the opening bell, with stocks coming into the session at alltime highs. Futures going nowhere on the s p 500. The dollar showing a little bit of strength in the g10 space. The cross asset pitch, lets get some movement now ahead of the opening bell. Heres alix steel. Alix Procter Gamble is in focus with trian, peltz also getting their act together. Im not advocating they are not advocating any kind of wakeup. Ceo. Are looking for a new this is not the first time the company has to contend with activist investors. Same,ackman did the advocating for a ceo change. The question is while these companies in the states. Heinz was making the bid for unilever that fell through. We will be examining this through the next hour. Bank of america, melon, with its own ceo shakeup. Darrell, isceo, going to be replaced. Apron getting killed, down 8 free market. They opened three weeks ago at 10 per share and are trading below 7 . Amazon is being reported to file a trademark application for athome meals. That would be a knife in blue aprons heart. Now they are looking for things grainrotein, veggie, and packaging. Echo, i would like my did from amazon, please. I do not cook. I would do that. Jonathan lets get back to the markets, with futures may be a little bit higher, up to another record perhaps. Gains for the first time in two months. The rally has led the dow and the s p 500 to 25 record closures for 2017, while a new poll shows a lack of faith in President Trump. Less than half of americans approve of his performance on the economy. Investors might be high on the economy, but that has not been borne out in the data, with the most negative levels since may of 2016. Joining us now is chris harvey. And jay pulaski. Can you divorce a less optimistic view of the economy, at least in terms of the data, with a more optimistic view of the market . To a degree. Rates are low and equities are going higher. Eps is also increasing. The vix has dropped significantly. And whatever you want to say is bad,nald trump that he is more probusiness. Gdp has been 2 for a long time, so it is about the equity fundamentals, not gdp. Jonathan americans are optimistic about the u. S. Economy. You just do not see it in the data. Why is that . I think they are still hopeful that things may continue to improve, that the president may get some things done in terms of his apology in terms of his policy agenda. Potentially the big opportunity is higher wages. We have had the jobs, we have not had the wages. The trick is, if you have wage growth, then you have a pressure on corporate earnings and also pressure on bond markets, so you may be in a little bit of a perverse situation, where what is good for the consumer and the employee is not good for the Financial Markets. It would be a reversal of the last 10 years, when you have had policies that are good for Financial Markets but not so good for the employee and consumer. Alix when you look at the battle between value versus growth, what is the right call . It seems like it should be value, but it continues to be growth. Chris we think value is oversold. Obviously growth has done well and Interest Rates have come down and the Interest Rates have flattened and the curve has flattened somewhat. Gone to 25ears have basis points, to almost 50 in less than a month or u. S. 10year rates have also increased. Overall we think value will come back. Growth has done fairly well, and we think that is somewhat of a catalyst we think growth will slow down Going Forward. Is there a yield on the 10year . Will we see that trade play out . Jay i think we are well away from that . Alix less summer, we got there and nothing happened. Jay i look at things differently. Outlook. N the sectoral the challenge for the u. S. Equity market is, where is the leadership going to come from . Financials had tried to rally back to alltime highs. Technology has done very well, pretty well owned. To me the opportunity is in some things that have not worked out. On sector i am most keen right now is the industrial sector. Au are in the beginning of upgrade that we have not seen in 15 years. Upgrade that we have not seen in 15 years. We have just absorbed a downgrade. A new ceo, and by the way, 3. 5 dividend yield while you wait for things to play out. Interesting in a market where alltime highs i am interested in finding things that have not played yet, that i can make a case for like industrials, and of course i look outside the u. S. , which as you know from prior discussions, i am more keen on markets outside the u. S. David how much of a different is it where the growth is and where the markets are . In so far as that is what is going on because companies are getting money really cheap which helps their profitability which sectors benefit more or less from that as we talk about the real punch bowl . Peoplee perspective that are looking at our financials. Steeper yield curve, deregulation from the government, etc. They have not been able to get above their march level. As i look at things last week we had the president s son, in a ,eeting with the russians admitting a meeting with the russians before the election. We had that, yet stocks hit an alltime high because the yellen, said chair we are going to go very slow. I think in europe they are going to go slower still. The bank of japan will not move for a long time. The idea that we will have a taper like we did a couple of years ago i think is misplaced. Fore is more of a demand yielding securities with maturities than there is supply. The real challenge for the u. S. Market is earnings. Earnings have been good. That is underpinning not so much the Monetary Policy. We have had good Earnings Growth. As long as you have continued good Earnings Growth, you can sustain a slightly higher stock market. That is coming from better growth, synchronized mobile growth, and an opportunity to grow without having to pay additional wage. Jonathan we have had good eps growth. ,hat is a result of buybacks these guys going into the bond market and borrowing at very low rates because of central bank. The eps growth is stimulated by what Central Banks have been doing. The epsion isnt growth, it is when do we get topline growth . When is that going to come . Jay the reason for being optimistic about things is that for the first time in a decade we have a single nice, gentle upswing in the Global Economy. This is new for the last decade. It is likely to continue. Low volatility in the economy and in markets can sustain themselves until you get a regime change that breaks that volatility. To your point about i backs about buybacks, the key to me is at an, stock buybacks 11year low. They probably peaked in the u. S. , but you have pools of money, big pools that have not yet started to invest in europe. Buybacks are one, pension sovereign pension world funds are another. There is a lot of money left to go into europe. Jonathan lets open the noflations story in this as well. Where is it going to come from . Chris one of the things that has happened is that central markets flood the market with liquidity. Central banks flood the market with liquidity. Capacity, it is difficult to have pricing power. We are seeing that in certain parts of the market. We saw that in energy, we are starting to see it in retail. Until that goes further, we will have a difficult time with inflation. It is a fed that is enabling that to occur. They are fighting themselves to a degree. Hopefully this will work out, but it will take time. To your point about topline growth, that will take that will take time. Our guests will both be staying with us. Coming up tomorrow, a former u. K. Investor to the United States. Live from new york, this is bloomberg. Alix buying banks is the trend over in europe. The European Bank equities eps, that is the biggest weekly inflow in a year just last week. Bankshares are tracking the rising bond geared rising bond yields. Still with us is chris harvey and jay pelosky. You mentioned that you like European Banks, and you have for a while. Does this change anything for you . Absolutely not. The higher rates in germany reflects the fact that the economy is Getting Better. Finally they are able to start making some money. The europeans have fixed the problem with spanish banks. They have fixed the problem with the italian banks. This stuck this stuff has been bedeviling them for a decade. Jonathan, i know youre smiling. It is going to take a while. I liken this in the piece i wrote, this is european sausage making. You may not like to watch it, but it tastes pretty good here it but it tastes pretty good. Alix the question is, how much have we run up an expectation . I am not an ecb expert. One of the things that clients are telling me is that two favorite it is not crowded yet, people are still in early innings, valuation is still there. Sometimes the bad is the good. We have corrected a lot of the issues in the u. S. Europe is still getting there, albeit fully, but they are getting there. Growth is slowly improving. That is the situation you want to get involved in. Jay it is even more than slowly improving. Thanh in europe is better in the United States. Earnings growth in europe is way better than in the United States , particularly in terms of the banks. There is tremendous upside. I think europe is the place to be, not for this quarter or this month, but the next three to five years. Jonathan on u. S. Equities, is the buy europe story to the detriment of the buy u. S. Story, or can both perform . Both can perform and both are performing. We are not acting much more upside. Our price target is 24. 75. That is the opportunity. David i dont get it there it normally traders are pretty quick on the switch. People have been talking for some time on buy europe. Why are people acting so quickly on the u. S. Equity markets but not the European Equity markets . Is not a secret. Jay it definitely is not. I started discussing this at a christmas party. It happened, and people kind of delayed. The interesting thing about europe is that the data flow in europe has really been robust and stocks have pulled back 3 or so. They have trailed the u. S. Over the last six weeks. That to me is a real opportunity. Everybody who went in did. As i said earlier, there are big pools of money that had not made their way into europe, and that will take us considerably higher. Maybe there is a reason for that. There is a reason why valuations have in depressed. In the United States. For a very long time, it has been because of europe. You can get optimistic about the banks, then you say they are being fixed, how many years since the financial crisis . It is a long, long process, and the reallocation is the reallocation of valuation in europe going to be a long process as well . Be episodic. If you miss the first byte of the european apple, you are getting another opportunity to take a bite now. The news flow has been go the europeow has been good, up 17 are you are up 17 , you are going to take some profits, pull back a little bit, and now you get a chance to reload. To me, you can play europe three ways. I like the region as a whole. I like spain in particular as a country. I like the sector, European Banks. European banks, i am happy to take the other side, jon, and say they are being fixed. They will continue to do better. They are cheap, and there is probably double the upside in European Banks in the next three years than there is in u. S. Banks. David you are both going to be staying with us. Coming up this thursday, we have full coverage of the ecb policy decision and News Conference. Now live from new york, this is bloomberg. Jonathan with 30 minutes dedicated to fixed income, this is bloomberg real yield. Leverage has been building up over the last year or so. Broadly, yields are at multiyear lows. Jonathan that is behind the curve to some extent already. Even the way the fed does finds it the fed the finds it, it is on a longer curve. We have breaking news that involves kkr. It is all about succession. The most important thing a company does, and also one of the most difficult. We have news about how that iconic private equity firm is making its plans with the announcement of a new copresident and new cochief of operations, to work under jason kelly joins us. Why is this so important . Really, as you mentioned, one of the bestknown and most successful private equity firms out there. It was founded by Henry Kravitz and his cousin back in the 1970s. They have run the firm for the past 40 years, so now they are naming these 240somethings as are likely these two newomethings as a likely ceos. This is a big moment for kkr. David this is clearly a new generation, 44 and 45 being the respective agents the respective ages of the two gentlemen. Do they know kkr . Jason they do. They are 20year veterans who joined in the mid90s, and notably, you had two guys who came up through different parts of the business. Scott is wellknown to the public investors. He has been known on the Conference Calls and helped take the Company Public years ago. Bae has worked for the company for years. Alix do you notice any kind of shifts on how their Mission Strategy might change . Jason i do not think there will be much of a change per se. It is notable that job a that asia. E was the head of it was interesting to see this play through with all of these firms. Carlyles ofnes and the world. As they think more about a global approach in their own succession plans. David whenever you have these succession plans in play, dont people get disappointed . And there are departures. Scott not all the firm also announced that and they said it was separate and unrelated that todd fisher, the chief administrative officer, will be leaving the firm at the end of the year. It is an interesting moment for a firm like this because it is sort of a sign of growing up. We have seen these sorts of things happen at the goldman of thend Morgan Stanleys world. This has become it is one they will be looking for for their competitors coming down the line. Alix this also reminds me of what larry fink said today, of black rock. There is still significant cash on the sidelines. I tend to think of private equity and that pattern. Asset prices can be higher because there is still money to back it. Energy prices are a case in point. There are lots of other pools of money. I think the pe space is interesting. Prefer blackstone to kkr you have a diversified, longterm stream of businesses. They are global, as you pointed out. In the case of blackstone, you have a 3. 5 to 4 dividend yield. All these groups are trying to think about the future. All of the people came up with the same time, are all approaching the same issue. One thing that has not worked is for shareholders in the publicly traded pe company. They have been very disappointed in the stock or it hopefully the new leadership will be able to make it more appealing for those who own them. See, it is interesting to from a shareholder perspective, this is some people have been looking for for a long time, a clear succession plan. When you are small partnership, you do not have to worry about that so much. But when you are a publicly traded company, this is disappointing stocks for people. Forkstone has been public 10 years now and has not moved much. Jay it is flat over 10 years with the margaret up with the market up. David y . Jay it is a tricky business to understand. There is talk of price pressure. Rules of capital that provide money to the pe firms are themselves under pressure. Why are they paying these fees . For the pe companies you need to have diversified, distressed credit, real estate, and you need to be global, and you need to make it work. Jonathan great to have you on the program. We will count you down to the opening bell, up next on bloomberg daybreak. Futures go nowhere. Highscoming into alltime on the s p 500 and the doubt. To get to the other screen, here is the information in the bond market. It continues off the back of some weak data in the United States, both in retail sales and inflation this appointing. The dollar showing a little bit of strength, particularly against the cable rate. From new york, this is bloomberg. Jonathan from new york, you are watching bloomberg daybreak, moments away from the opening bell. With 21 sextons to go with 21 seconds to go, futures down after a series of alltime highs on the s p. Quite a winning streak on the nasdaq. That is the situation, the u. S. Equities going into the cache open. To the other screen the bond market looks like this. Showing a index little bit of strength. Almost nothing. Up. 25 . , stocks that is how you are set up ahead of the open equities. Here is alix steel. Alix the last holdout. Here is the way we stack up. Pretty much flat on the day, the dow had three Straight Record closes, and the s p had 25. The nasdaq, 18 he bit of strength, up. 1 . Nine points away from its own record flows. Not a lot of movement. It feels like a summer friday, or a summer monday. Earnings will come out this week. That points the focus on to check. You look at apple, google, facebook, microsoft they are higher by quite a bit. Especially microsoft and performinghe best sector in the s p so far this year, up 21 . Health care is up next, up 16 . Financials up about 6 . Netflix and ibm and microsoft are up this week. Watch the stock throughout the reporting season. This is a great start that looks at earnings revision. The white line is tech, the blue line is financials, and the green lines health care. We see a lot of upward revisions for the tech sector and some downward revisions for the financials sector, where health care is relatively flat in terms of downward revision. When you have banks reporting relatively solid numbers friday but the stocks underperform, do you need a next her beat yeah cap do you need a next her beat . That is a question we will have to examine over the next few weeks. Jonathan who cares about bond trading on the back into a . Lets get to our guests. If you have if you have no idea what im talking about, jamie dimon on the earnings call, saying who cares about two weeks of montreal the back in tradingune of bond on the back end of june . David it is like the weather. Jonathan ultimately you are at the mercy of the weather sometimes it what is the story . We think the fundamentals for the banks are pretty good. You can have these lows from time to time. As we look forward, the environment is working better. Regulations will not be pullback, but they are starting to slow down. This is a much better situation for the Banking Sector than it was two and three years ago. Jonathan what kind of opportunities does this present, for the likes of jamie dimon . Chris there is a difference between the larger banks and the smaller banks. The larger banks still have a lot of regulation. The smaller banks, some of that regulation will come down and it will be easier for them to operate. Jay the big news for the banks is that they are going to be able to distribute a lot of capital. They have made it through the stress test area that have plenty of capital. They have leveraged they have lowered their leverage ratios, so now they will give money back to the shareholders. That is positive for the stock, but the concern is that financials have not been able to go above their march highs. To me, that is more of a sector that is rolling over than one that is going to be the stock market higher. For the u. S. , that is what i am looking for. Check has been a monster, but how many people are exposed to technology . Ishink one sector industrials. Another that is interesting, staples. We saw that with the png with the p g news. These investors have to do something to grow. That is what the opportunities lie. Consumer staples are sexy. Come on. Is an analyst joining us on the phone. What do you make of the action on the banks on friday when you had relatively solid numbers , and wellsan, citi fargo yack of what is the take away . The take away was that there were some unusual items that reporting for citigroup and j. P. Morgan and wells fargo lift above what was expected, mainly on gains and credit. Credit costs are still really low. We are still seeing a really stable economy, which is a big element when you look at these banks, being able to look at credit being something that will not come back and haunt you Going Forward. Alix what are we going to learn about Morgan Stanley, bank of america tomorrow . They when we look at earnings season, they had pressure from the activities being low at this point. They will not be up to bring through the second punch of what you just talked about, capital. The pivot point on regulation was capital, 26 increase in dividends, a 44 increase in Share Repurchases and strong numbers. The second followthrough is shortterm Interest Rates that are higher over the last three quarters. In the super regional banks, margins will expand. Margin wast interest 20 points higher in the Second Quarter of 2017 than the Second Quarter of 2016. That will produce doubledigit earnings per share growth for the Central Banks and an improvement in profitability. With what is going to leave the market, super Central Banks are a small piece of the puzzle. Months the banks when you look at the banks, they are not at the mercy of the weather, they are at the mercy of the bond market, arent they . Marty that is one of the urban legends i am ready to take down. When you look at the treasury, banks have traded coincidentally in strong correlation with the treasury of the last four years. As the yield curve steepens, the perception that rates are going to go higher is increased, so that helps the banks stocks because they need higher Interest Rates. Now what we have is a shortterm Interest Rates connect. With the super regional banks, we will see this quarter, it is not the 10year treasury that has that causal effect on earnings. It is the shortterm interest whichich you sought highlight strongly. That will help eventually to disprove that the 10year treasury should be the tail wagging the dog. Alix you looked at the blue the white versus line, which is a financial. David marty, i want to go back to what you were talking about, what they were talking about in their earnings calls. I did not hear much talk about regulation. You are right, the reserve issue that really jamie dimon emphasizes two or three years back, quarter after quarter, the thing that kept us from making so much money is financial regulation. Now i do not hear looking forward that it will have much earnings. Why is that asymmetric . Marty look at expenses. When they heightened and increase the regulatory burden, you had to invest and bring on new people, and you had to create these systems and alledures to be able to do the things required. We have thousands of pages that have been created, so that was an investment in compliance, in Risk Management, that took place over the last five years. Pretty much driven by what was going on the regulatory side. David if we have what the administration has promised come which is a mission a diminishment of that regulatory behavior would that affect the Earnings Statement . Arey management teams looking at once you get that Risk Management embedded, they can look back at it and they will be not just pressure to do more, more. That will go away. They will invest another things that start to create more revenue growth. They do not expect to see expense levels dropping because regulation gets better. The key part of what you need to make sure the industry can work is on the capital side. We saw the first stage of that a month ago. We will see another 20 growth again in capital deployment next year, the second stage of that capital side. That is the most important piece of what we needed in deregulation. We are seeing that happening. Alix marty mosby, thank you very much. Chris, when you look at the broader earnings season, what sector will have the potential to match up with sentiment . Chris they will all perform fairly well. One of the things we learned about is that everyone knows that earnings season is going to be very good. It will be very hard to beat that and continue to move things higher. We have been talking about rotation and leadership. It is more about rotation and holding the game. One of the things we have been talking to our clients about is higher quality. We want people to be positioned in higher quality. To really protect on the downside. That is the most important thing. Alix what about guidance . Chris guidance is going to be difficult because we do not have clarity on health care, on taxes, and it will be difficult to go out on a limb and say here is what we think Going Forward. Consequently, unless a company has a great particular story, guidance will be jonathan great to have you with us. We will be lets get to the markets. In terms of tech stocks, out performing again on the nasdaq, the second straight winning streak. On a daily basis, on the nasdaq, up. 9 . We go nowhere on the dow. On the s p 500, we look for another alltime high potentially. You are watching bloomberg. Emma i am emma chandra here, and coming up tomorrow on daybreak, peter westmacott. David what looks to be the nelson peltz, the board of Procter Gamble. Procter gamble has a market cap of over 200 billion. P g has underperformed its peers because of its slowmoving and insular culture. The latest move underlined, a developing theme for Product Companies and that is a struggle to find growth. Joining us now is scott. They have been talking with Procter Gamble for some time. Why did they decide to move . What happened was in july they came into a meeting and presented their ideas for how this company can turn around and tofaster and more responsive market changes, and they suggested that nelson peltz get a seat at the board, and the Company Directors decided that was not the avenue they wanted to go because they already have a plan in place for writing the ship. David how different is nelson peltzs plan from Procter Gamble . It is not a breakup and it is not a ceo change. It is very much acceleration of the plan. You will remember in 2012, Procter Gamble embarked on a 10 billion strategy. Peltz says that had no effect. The board has identified another 13 billion in savings, and peltz does not believe that is going to have any impact whatsoever unless somebody is guiding it and pushing it through. David what has the stock price . One under the new ceo if you look at the last 10 years, try ands argument is that it is not what its peers are. David if 13 billion is not it is an chance of seller a accelerating change. What about cutting costs . Cutting costs is honestly part of it. Implementation less the acceleration. Alix and p g is no stranger to changes. What is the tractor the track record for activism when you have a huge company like png and you are such a small shareholder. It is such a huge ship of all these different components. We are starting to see this now. Se toptier activists because these companies are so big, they come in with ideas that are so constructive, and david what ist the Balance Sheet look like . Procter gamble is one of these conglomerates. It has lots of money, lots of things going for it, but the problem is, those ships tend to move slowly. Jonathan great to have you with us. I want to bring in jay. Can you change this overnight . How long does it take to change . Is that cultural . Jay a great job coming out of college was to go work for p g. Times change. These countries are also big players in the emerging markets. Emerging markets are doing well, these companies are not. They are also at risk for the amazonification of everything. As movement in this space, and there is a different way of doing his us than the traditional way. Even with food and detergents, etc. Tok the opportunity bring in these activists and investors, stables up 5 year to date, pretty defensive, low risk. In an environment where stocks are alltime highs, it is not bad to have in the portfolio some things that are that have room to go up with limited downside. Jonathan they probably have that pressure with the buyback. Do more than just the stock buyback . They have these big Balance Sheets third what can they actually do . Animalhave a big angry at my door, i have to feed it, let me give a big stock buyback in and youre done. Then how do you deploy that cash . You develop a much more aggressive Market Strategy yourself. What is interesting to me there you have in china and the United States Real Technology companies that are moving into more and more facets of the business, and you have to be able to understand that. That is where the culture may be a problem. To your point about bureaucracy, they are not used to thinking in terms of swap buybacks. Changes, and that is the cultural challenge i see, the ability to move more quickly and to recognize that your competitors are not the same people that you competed with for the last 30 years. There are new competitors who will be taking away pieces of your business. Does Consumer Staples change . Under pressure to use the levere sheet, potentially up, take more debt, does the proposition change . It changes at the margin, but if you as an investor see upside that does not exist in other parts of the market, you can go along for parts of that, knowing you have the dividend support underneath and knowing there is cash for people to do things, and the market is saying you need to do something. We will give you a little this concession, try some stuff, and in the interim you pay us off with higher dividends and stock buybacks. Alix good stuff. Jay pelosky, always good to have you with us. Watch us online and interact with us directly. Any kinds of those questions you may have missed on p g. This is bloomberg. Alix it is a busy week. Big banks are closing up and earnings. Goldman sachs, tomorrow, Goldman Sachs Morgan Stanley on wednesday. And economic dialogue that will take place in washington, attended by senior u. S. And chinese officials. 8 30 a. M. Wednesday, we will get you housing starts. Decisions, any city presser by mario and ecb presser by mario draghi. Any, 30 eastern, initial jobless claims. It is a big weight. Joining us, michael mckee, our International Policy correspondent you will be in d. C. For the china and u. S. Conversation. What do you expect to hear . Michael probably that the two sides are working hard to get along. Theuld be surprised to see steel and aluminum tariffs this week or at least before the meeting. It would be a slap in the face and a difficult meeting to have if you have done that. We could see those postponed a little bit longer, although the president promised some announcements on trade. This has been an ongoing dialogue for years. They tried to wrap it up of bit, given the president s concerns about china. We will see what kind of announcements they get. David what about the ecb decision . What do you expect from that in the News Conference afterwards . Michael a couple of weeks ago mario draghi gave a speech that change the bond market. The question is when the ecb starts tapering. There is a feeling that draghi will not come out and say the date this time, but he may say there is announcement there is an announcement of september. They are trying to avoid a taper tantrum like the fed got when it announced it would start thinking about tapering. They will give us a more hands on that in the markets will be on. Jonathan i want to roa phrase from a colleague. I want to talk but something that is not happening this week. There will be no fed speak. For is usually a good thing a lot of people, but given the data recently, what kind of void does that open up . Michael in this case, probably not a whole lot. In this case they extended the blackout period. This is a nonpress conference meeting. Nobody expected them to do anything anyway. There may be a feeling they might announce when they will start to taper on the Balance Sheet, but nobody is guaranteeing that. There is the feeling there would not be a whole lot of news out of this, so if we do not hear from them, not a big deal. As far as the market is concerned, you can probably take off to jackson hole when you might think that when you might hear something from janet yellen when you might hear something from janet yellen. Alix we are done until jackson hole. We will see you there bank. Anything in the next two weeks that we have to . Michael nothing major. Joblessy watches claims, but it will be a relatively slow period for market changing data. Jonathan thursday, president draghi delivers a News Conference, which we will cover here on bloomberg tv. 500 on the dow, after two weeks of gains, we kicked things off with little price action in the s p markets. The situation on the bond markets as follows. Yields are lower by two basis points. The dollar showing a little bit of strength. This is bloomberg. It is 10 00 a. M. In new york, 3 00 p. M. In london. Live from london, i am nejra cehic are looking to bloomberg markets. Vonnie here are the top stories we are covering at bloomberg and around the world. U. S. Stocks hovering around records. Does the rally still have legs . Are theyn tech poised for further gains . In politics, President Donald Trump is mulling a shakeup at the white house as the senate Health Care Bill remains delayed here and we will tell you what changes may be coming. In corporate news, Procter Gamble becomes the latest corporate giant. Nelson peltz is angling for a seat in the busy jumpstart. All of that is coming in the next two hours. We are 30 minutes into the trading day of the u. S. , and we are not moving very far. The nasdaq