Another financial crisis in our lifetime. We have the world covered on daybreak asia. We go to San Francisco and the followed from the cyber fallout from the cyber attack. We go to shanghai on the growth of the internet of things. Asia. S daybreak im in new york, where it is just after 7 00 p. M. We are in for some central bank speak. What an eventful tuesday, right . First it was mario draghi a bit more hawkish when it came to inflation. Then the selloff fueled by janet yellen talking about rich valuations in the market. Betty you used to not be able to get anything out of these central bank chiefs, but now they wont shut up. Particularly janet yellen and her talk about valuations getting more rich. That also sent some of these tech stocks tumbling, dragging down the nasdaq. We will talk about that in a few moments. Yvonne that is right. A lot of jitters when it came to tech. Alphabet slapped with a record fine from the eu. We will look at the cybersecurity attack we have seen that has embroiled in much of europe and the u. S. Lets check out the state of play in asia. Slow going in new zealand. Flat when it comes to the kiwi. Stocks heading lower. A fallout we saw on wall street, down one third of a percentage. Wti under 43. The market stunned by that report saying crude inventories rose. Oil given up the biggest gains in a month. Futures heading down by 12 points. Trade, another 1 lower for wti. Iser draghi and yellen, next corroded speaking today. We back above 112 territory. That should be good for stocks. We are seeing a bit of weakness when it comes to nikkei futures. We will see how things go. Looking pretty mixed so far. A lot of news flow coming out of headlines playing into the markets and wall street overnight. Betty stocks following the most in six weeks, following washington, and of course that cyber attack that seems to be more severe than wannacry from last month. More on how investors have digested this. In light attack of analysts say that cyber risk is already built into the market. There were a lot of crosscurrents, economic reports, the concern about janet yellen remarks. Lets get to some of the big movers. Hugebet, googles parent, 2 billion fine because of the way they have structured their Search Engine. Hightherapeutics raising against the tide. A lot of big funds have been adding it to their portfolios. A lot of green for the banks moving against the tight. Going into the bloomberg at bt streak since 5 drop on the record. This chart means there may be a drop coming soon. We also saw Health Care Performance pretty well. Even oil bouncing back. Su lets start with oil. It bounceback am a but is falling after hours it bounced back but is falling after hours. Lets go back into the bloomberg again. Looking at the technical indicators going into today, there is a view that on those indicators, oil was set to move higher. That will make the wednesday trade interesting. We have the api report, which is a front runner of the government report. It is not always necessarily the same. It indicates there will be a buildup. One investor saying they were blindsided. Lets go to the bloomberg one more time. When you Mention Health care, this shows there has been a rotation into health care out of energy, out of tech. That appears to be on pause right now. A lot of questions in the market. Yvonne talking about janet yellen, she did not give too many hints in her comments from london. She had views on stock prices. Su she was not there to sound alarm bells, but she kind of did. Was not there to talk about asset valuations, but she definitely did. Saying they were somewhat rich, but the markets took that as, uh oh. Chair yellen valuations are rich if you do traditional metrics like priceearnings ratios. I would not try to comment on appropriate valuations in those longtermending on Interest Rates. Of course there is uncertainty about that. Su what you saw was the fed chair wondering outside of the of what fed chairs normally talk about, and trying to wonder back in. Wander back in. There appears to be some concerns on wall street. Yvonne lets get to first word news with paul, allen, and cindy. Agenda hitt trumps another speed bump with Senate Republicans postponing the vote on a new health care bill. At least five gop members blocked votes on the bill, which was drafted in secret by mitch mcconnell. A setback on the republicans sevenyear campaign to replace the 2010 Affordable Care act, or obamacare. Pres. Trump we will see what we can do. We are very close. But for the country, we have to have health care. It cant be a obamacare, which is melting down. The other side is saying all sorts of things before they know what the bill was. This will be great if we get it done. If we dont get it done, it will be something we are not going to like, and that is ok. Googles record 2. 7 billion fine in the eu could be a fraction of the cost it may ultimately face for skewing search results in its favor. Googlesarely dampen 90 billion cash profile, but from is a talk of backlash restaurants and service reviews, and talk of further penalties. If we find noncompliance, we will have to prove it, even if you have to pay the penalty from day one. Lets see if we get there. I see no reason why google shouldnt comply. You have very strong incentives. You have a strong company. We need competition in the market for shopping comparison. Paul the imf outlook for the u. S. Economy, ending the assumption that President Trumps infrastructure plan would spur growth. A growth of 2. 1 , down from 2. 3 , and cut next years figure as well. The imf says the u. S. Will struggle to hit the president s target in the face of almost full employment but low productivity. Hong kong clearing cannot explain the sudden plunge of many smallcap shares. Toldormer hk exit director bloomberg it points to ongoing problems with directive systems. He issued a report called the Enigma Network are going to the companies were part of a complex web of shareholdings. Global news 24 hours a day powered by more than 3700 journalists and analysts in 2700 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne a new cyber attack affecting institutions from russia to the u. S. East coast. It appears to be similar to the Wannacry Ransomware also last month assault last month. Lets get to our global tech editor. How bad is this attack . We have heard similarities to wannacry, but we are hearing it could be worse than last month. We are still hearing from different parts of the world that are just waking up. We just found out about some grain ports in latin america that were also affected. You have seen this spread from ukraine, russia, across europe and into the United States and latin america. We will certainly be on the lookout for any evidence of the impact in your region. In terms of numbers, not quite thatg as wanna cry reached hundreds of thousands. 2000 is the estimate we have heard so far. In some ways this is more sophisticated. It does spread like wannacry. It attacks vulnerabilities in the Microsoft Windows operating system. We have not found what is called a kill switch. Lingos the tool in cyber that would allow you to easily shut this down. Again, your best defense in a case like this is to make sure you are upgrading to the latest version of windows software. Wannacry should have been a wakeup call for anybody out there. That is still your best defense. Betty i know it is still too early to hone down on who is behind this, but how difficult will it be to trace these attackers . Tom cyber researchers, they look at what this looks like and disliket is like or attacks we have seen in the past. Acry, we wereh wann hearing rumblings of russia. Later we saw the emphasis switch to north korea. Always hard to know who is behind these attacks in such a shadowy world. Its difficult to know how big of an impact they actually have, how much money do they collect . This is all happening through crypto currencies like bitcoin, where you are not exactly able to trace each transaction. Yvonne what about the victims so far . Who has paid, who has responded . Tom dollar figures, not hearing a lot of money so far. Ransom,f you are paying you will not want to put out a press release about that. You dont want to broadcast that you got hooked this time. [laughter] in terms of victims, we are seeing ports, infrastructure, wpp, the Advertising Company in europe, a food company in the United States. A pretty broad range. Betty you dont want people to know that you are a victim by any means. Our executive editor for Global Technology in San Francisco. Looking ahead, it is about making connections. Looking ahead, it is about making connections. Our daily devices we are addicted to. We will discuss the internet of things with at t later. Yvonne the bank of england governor warns about forgetting lessons of the past. This is bloomberg. Yvonne this is daybreak asia. Betty if you love Central Banks, then today was your day. Mario draghi and janet yellen all spoke. Speaking to the british economy in london, yellen spoke no change. Our Global Central Bank watchers today. Who doesnt love Central Banks . What are you talking about . [laughter] lets go to the boe. We are talking about some concrete action. That is in terms of raising capital requirements. Clearly governor mark carney saying there is a need for a diet in terms of the u. K. Financial system because of a credit binge we have seen from brexit accommodation. Pop into the bloomberg terminal. I want to show you the borrowing boom the u. K. Has been seeing. 10. 3 the annual gain. It has hit its fastest peak since september. They are going to take out about 11. 4 billion pounds from the system. They will increase the capital requirement. They will raise the capital buffer to 0. 5 from 0 . If all goes expected, they will raise that to 1 in november. Carney is keeping an eye on brexit talks. President mario draghi of the ecb is stressing persistence as well as prudence. Take a listen. Ghi we can be confident that our policy is working and its full effects on inflation will materialize. But for that, our policy needs to be persistent, and we need to be prudent in how we adjust its parameters to improve economic conditions. So prudence in the ability to change. This is btv 8489. Line, adding 2. 3 trillion euros since 2009. Credit analysts are saying that draghi has made his attempts to less accommodation. We look ahead to september 2. We will have more on this in the next half hour. Yvonne a huge move in the euro overnight. We did see the strongest gains for the euro cents august. Euro since august. Treasuries have also declined as janet yellen signaled the u. S. Economy can withstand higher rates. Raymond joining us live from sydney. Great to see you. A a few weeks ago we were talking about how the fed would be going rogue. But now the ecb talking more on a hawkish tone. Where are we on the convergence of Central Banks . Hi yvonne, thanks for having me on the show. Stanley was surprised by the comments from draghi yesterday. One view to take is they wanted to be a bit more hawkish. Over the last couple months draghi has been dovish when it comes to accommodation numbers. Looking in the eurozone, particularly gdp growth, and the low Political Risk in the eurozone, it could be in draghi providing wiggle room for the ecb. It allows them to be more hawkish should they need it later on in the year. You continue to hear the debate about inflation. Mario draghi also chimed in on this, saying the downside of pressure we see is temporary. First and Second Quarter have been quite noisy. With that tightening labor market, are we expected to hit more wage pressures . Do we assume inflation will start picking up . U. S. Nd i would say in the you are more likely to get Wage Inflation compared to the eurozone. The u. S. Has traded 60 million jobs created 16 million jobs in the last four years. You have seen Wage Inflation twos overthe mid the past couple months. The u. S. Has a stronger story. In terms of europe, my guess is that Wage Inflation remains low. We have had Commodity Prices selloffs as well. In europe, what they need is a lot of structural fiscal reform. If they get a bit of that coming, inflation could take up in the right direction. That would be a more mediumterm event. Betty you were surprised by the overnight moves. Did the markets get ahead of themselves . 4896, we have seen this yield gap between 10 year treasury reels and bund has narrowed a bit. Around Holding Strong 183 and 185. Do you see that as a game changer compared to where bunds go from here . Raymond sure. If you look at bunds overnight, they spread in about 10 basis points, and u. S. At about 5. Basic differential is narrowing. I would expect that to happen. Tenurelook at bunds over the last six month range, it has come from a very low base. Bang for really good your buck. If they get better Economic Data you will see bund yields increase. Increase. We have seen those other countries as well. That is a trend that has been handling globally. Happening globally. Yvonne i am curious what you are seeing. I want to move over to china and ask you about the flows in anticipation. We had big news about china shares being put into the msd i emergingmarket index. We know it will be happening until next year. Is that having any impact on interest, on flows . Any of that sort in china right now . Raymond over the medium to longterm, it will. It will happen in the bond market where both countries can buy the mutual debt of their counterparts. That is good for china. It is a step towards opening up their borders. We have seen some of money flowing out of china so they can encourage investments to come in, whether it is stocks or bonds. That will be good for their economy and currency as well. Yvonne thank you so much raymond lee, the head of credit at kapstream capital. Bloomberg subscribers, go to dayb on their terminals and mobile on the bloomberg anywhere app. You can customize your settings so you only get the news on the industries that you care about. This is bloomberg. Betty this is daybreak asia. Yvonne a quick check of the latest business flash headlines. China Telecom Giant bt has emerged from scrutiny as a stronger company. Pay 1. 2 billion to resolve allegations it restricted the sales of American Technology to iran. We are told bte wants to improve its position in the u. S. Smartphone market. A strong market is america, china, europe, and asia. North america, particularly in the u. S. , so the numbers in terms of market share. We now have 10 market share over there. We will continue to grow the business over there. Delay to capture device is aimed at younger people t he lightcatcher is aimed at younger people, allowing better quality photography in dark places. 500. Ope at about prices for north america have yet to be set. Yvonne Facebook Says its top 2 billion regular monthly users a quarter of the worlds population. The site reached one billion in october 2012. It is up almost 600,000 new users each day since then. Facebook says its concentrating on building virtual communities and is working harder to reduce violent, hateful, and misleading content. Betty of the next, a record antitrust fine for google. What will betty a beautiful morning out of hong kong, 30 minutes away from asias major market open. Looks like no rain for now. Yvonne incredible. I should have just come one week later. York,. M. Tuesday in new where markets closed decidedly lower. A pretty grim day if you are a u. S. Bowl. But u. S. Bull. A beautiful summer evening in new york. Betty you are watching daybreak asia. Lets get to first word news with paul allen in sydney. New cyber attack is hitting institutions from europe to the u. S. , similar to the demands from wannacry. More than 2000 entities have been hit so far, from governor sneft, and ukraine, ro utilities along the east coast presenting problems. Chair janet yellen gave no indication her plans for tightening have changed, while some assets have become rich. While speaking in london she says it is appropriate to raise fed conflicting production remaining sluggish. Mario draghi repeated his mantra in the pursuit of inflation and that he will be drawing support. Ecb becoming less accommodative in 2018. A considerable degree of accommodation is needed for dynamics to become selfsustaining. For us to be assured of the internal inflation to our objective, we need persistence in our military policy. Monetary policy. Paul just days after calls for a shakeup. The company last completed a repurchase in 2015. The new ceo says a buyback was a lower priority than reinvesting and paying dividends. Struggling commodity Trader Noble Group slumped again after indications that a default was possible. The stock finished 5 down. Nobles rating to ccc, the first downgrade since the middle of may. Noble agreed to a credit extension and was talking to potential investors. Global news 24 hours a day powered by more than 2700 journalists in more than 120 countries, this is bloomberg. Yvonne trading gets underway with asia. Adam, we have been talking all yellen all the time so far. She said asset prices have become somewhat rich. She should be careful saying things like that, right . Test immediately sent shares down quite a bit. Are investors really concerned by this . Of course it wasnt just yellen on the main comments on valuations, although as fed chair she is an important voice. Lets look at valuation. Bring up the bloomberg chart here, 491. This shows the earnings ratio on the s p 500. There are plenty in the market that will put an average line nothingt chart and see that particularly worries them. The latest bank of America Survey shows people are over u. S. Stocks on a Global Portfolio basis. I think more interesting is the comment we have heard from importantanother big policy maker in the u. S. He says the u. S. Stock market is runnin