Confirm that. ,onne this is daybreak asia live from bloombergs asian headquarters in hong kong. Ramy betty is out today, i am david ingles. This is the first major market open here in the asian pacific. Lots on the play. Talk the ecb. E to it seemed like it was all about inflation the first time around. It is just not there. We look ahead to mario draghi and taper talk. There is talk about when auto maxx will stop start. Were expecting to go into this trading session with the stark contrast between the boj and ecb. The adjustment you mentioned we saw in the bond markets and currency markets. And the euro. S the dollar is stronger. The euro back to levels of what yvonne 23 month highs, remarkable. The whipsaw, we have a chart. I have to show it off. Twoentioned about those year highs for the euro. We saw whipsaw after the statement came out. It went lower and ran back up as soon as mario draghi started speaking. As much as he wanted to keep that the discussion vague on the timing of taper, the euro bulls latched on. You look at this chart and see the euro in the white. The blue line is the spread between the u. S. 10 year and german 10year bund spread. These two have moved in tandem most of the last year. The euro gains of late are out of sync from that rate differential. Dave, onyou wonder, whether the euro bulls are taking it too far . Now the euro 1. 16. The bigger eurodollar playing a big part in politics. David the dollar moves lower, that is a clearcut trend. You have an incremental strain in the euro overnight. Have a look at the close overnight. The s p 500 is closing off a few points from the top. The telcos are very much in focus. Microsoft earnings we will be fleshing out in a few moments. Have a look at the nasdaq. Last i checked that was the ninth straight day of gains. Yvonne a record. David longest streak, two and a half years. Yvonne that is the case, these tech earnings quite strong throughout the week. Take a look at equity futures in asia. Day aftering a red the remarkable nine day winning streak in the msci. We are down in the europol, down 0. 25 . Kiwi,. 7404. Rbas neutral, nominal Interest Rate. I am watching the bank and energy. Brent over 50, shying away from that level toward the close. The aussie dollar has been the clear mover, roughly at the same levels this time yesterday. Yvonne look at how things are looking throughout the week. It may take a while to hit that panel. Governors to speak later on today. We will see if he can continue this hawkish tilt. Japan, we are seeing dollaryen 111. 89. That is a fresh july low. Not doing enough to bring down the yen despite pushing back that deadline for 2 inflation yesterday for that boj and maintaining yield curve control. Equity futures heading lower today, as well. Here is first word news with courtney collins. Courtney the imf has agreed to a new conditional bailout for greece, bringing an end to two years of speculation whether it would participate in a rescue program. A new loanproved worth as much as 1. 8 billion. It grants a seal of approval demanded by many of greeces euroarea creditors. Res ends on counti countries providing debt relief. We are told the governing council may discuss tapering at its next meeting in september, but is unlikely to reach a conclusion than. Bloomberg predicted the bank would use its september gathering to signal a reduction in the case of qe. A very substantial degree of monetary accommodations are still needed for underlying inflation pressures to gradually build up in support headline inflation developments in the mediumterm. Courtney the second round of brexit talks wound up with the key divisions on display. Told the u. K. Er team to come back next month with more details. They shrugged off david davis suggestion that flex ability is needed on both sides. They talked about flexibility and clarification. The idea that by the back end of the next year, 2018, we would have signed off on the terms of brexit for the European Union and put into play alternative replacement trade arrangements that will govern goods and services for the future, is completely unrealistic. Find for exxon mobil what are called egregious sanctions when Rex Tillerson was ceo. They broke ukrainerelated sanctions by signing eight documents on oil and gas ofjects in russia in may 2016. They said it was known to be named in the sanctions. Exxon must pay 2 million. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Yvonne courtney, thank you. Washington news broke the market. U. S. Special Counsel Robert Mueller is said to be expanding his russian investigations to include businesses of donald trump and his associates. David the plot thickens. Lets get more on the story. We are joined from washington by joe. For viewers just waking up across the asiapacific, what are the two points they need to know about developments . special counsel are Council Mueller has a mandate. Any link between trump trade officials in russian officials. There are primarily three areas of inquiry that are known at this point. Those are some property sales involving condos, apartments, and things like that, to russians. The Miss Universe pageant in 2013 that was held in moscow, and a particular trump development in new york that company. A capital they are coming under scrutiny. In addition, the special counsels office has taken over the investigation into possible moneylaundering involving the former campaign manager, paul manafort. It is interesting because if you take a look at the transactions you mentioned, dating back close to 10 years ago, do we know exactly what special Counsel Robert Mueller is looking for in these transactions . Point, it is a collection of information. They are looking for possible moneylaundering. I would suspect. And whether there were any over payingsactions for properties or anything that would look suspicious. He is casting a fairly wide net. I do not know that he has it narrowed down to any specific events, but those are the things they are collecting now. Yvonne thank you so much, live it with of the latest bloomberg skill. The s p 500 climbed to a second successive record. Here for look at the key movers is su keenan, joining us from new york. , the trump story was effect. If you look at the details joe gave us it hit the market hard at the start. Look at the close, hard to tell there were major gyrations in the market. Lets go into the bloomberg, take a look at the graph intraday chart and see if you can tell where news of a broadening investigation into President Trump and his cohorts if you have a, take a look. It was 10 00 when the news broke and you saw a sharp drop. I take it we do not have the chart, so i will move on. Wait for it, as we say here. We have a qualcomm down 5 . The earnings disappointments are hitting tech companies. Home depot down in a big way. An amazon scare, amazon teaming up with sears to sell can more kenmore appliances. Companies down, wall street thought it was overdone. A strong earnings report. We have that intraday chart, i will take a peek. Because it was a big drop off the top of the market. What were looking at here is, what overvaluation . They look relatively cheap compared to u. S. Treasuries. David su, another stock in focus, microsoft had numbers. The stock moving higher last night in late trade. Give us more details on these numbers. Su it was a really Strong Performance and will set up a nice for friday trading for tech, for microsoft. They really blew it out. Cloud sales almost doubled. Rises 43 . In terms of the turnaround for the company, if we have video some of the big headlines, the Company Really performing well. That is what many of the investors want to know, how successful is he at the turnaround, the underlying trends, the shift the clouds, and what it means on the legacy . They are likely to be in motion for a long period of time. That is the take away. We have a fiveyear price chart up 19 this year, but up dramatically over the past couple years. We were at an alltime high almost every day this week. That stock is up and away the undercurrent. This is a dark spot for microsoft. But one of the bright spots, but 23 cent per share bump from a tax writeoff related to the business. Artphone they also got a significant tax rate benefit that boosted profitability by 23 cents a share. A good shot in the arm for the stock and a positive outlook for the company. David fingers crossed, hopefully these numbers do justify these valuations. Plenty more on daybreak asia. We will look at the fx markets. And the latest Central Bank Announcements with the head of currencies and rate at barclays. Yvonne later on on Bloomberg Markets, our chat with the at 11 40 hongrman kong time. David before that conversation, we will look at the bond markets here, implications of what we have from Central Banks overnight with wells fargo. This is bloomberg. David we are counting down to the open of asias first major market. Japan futures not looking good. 29 degrees in tokyo. The markets have been on the hotter side. Very good this week, looking at an open above 20,000. This is daybreak asia, i am david in glass ingles. Yvonne and i am yvonne man. Bonds rallied at as the ecb subduedt focused on inflation pressures in the euro zone and the need for ongoing policy support. Lets dig deeper with a brian of strategy ind st. Louis. Great to have you. Interesting to see this divergence of where the euro went, and bonds. What stuck out to you the most about the ecb statement and the press conference that followed . Brian when you look at all the Central Banks, the common theme even though they are at different points here, they are all delaying or pushing out, or slow talking their next move. Whether it is the boj, ecb or the messages here across the globe, message is across the globe, stop and wait before taking the next step. Overnight, we had that horrible, horrible option of 10 year tips. Is there more to inflation not being there, than what the results adjusted . At two. Ay below two or the last time we saw that level was at the height of the Global Financial crisis. Brian the bond market is telling us the bond market is concerned about inflation. , but believeing it it is transitory. They are right to be a little more concerned. Whenever you look at the longerterm indications with the Market Pricing inflation, expectations are just not there. More often than not, the bond market tends to get things right. Yvonne is that story going to change . Mario draghi is talking about autumn. When you have core inflation at one point at 3 , how much will that change by the time we get to september or october . Brian i think it will be difficult. I do not see the inflation pressures anywhere across the globe. I wonder if some of these thoughts ares perhaps more hope than reality. You should be seeing just look at the u. S. , where the economy is a bit in front of what you see in the ecb. Here in the u. S. , where is the inflation . Unemployment is low, the growth is better. Not great, but better than you see in the eurozone. There is still a lack of inflation. I do not know where it is coming from. But it will be more of a problem, more difficult to find then the central than the Central Banks wish. David how long should i build my portfolio . Brian i have no problem adding duration to portfolios. I see no scenario where we worry about longterm rates moving materially higher. They are not cheap, by any stretch. It would not be a call that it is cheap. I do not see where the pressures are coming from. Not only in the near term, but systemically, over the longterm, there are factors at play with demographics and debt and other factors that should limit Interest Rate concerns on the long end. I can see the Central Banks getting ahead of where they should be in terms of, at least in the u. S. , continuing to very slowly raise the short end. Movingt see the long end much, i see the curve flattening in the year ahead. Yvonne we saw in terms of peripherals and bunds, tightening overnight. I have a chart to show our viewers. It shows the net change when it comes to basis points in those bunds. Italy remains behind in all this. You mention this before when spreads of not narrowed as much. Uncertainty when it comes to its own elections this year. Do you see this as an opportunity to buy . Brian no. I see those spreads is relatively tight. Thissaid, were kind of in place where if the Central Banks keep policies in place, rates state extremely low. Investors are going to continue to be incentivized and take risk. As long as Everything Else remains calm and we grow, and there are no major hiccups in the growth picture. I do think growth prices can stay relatively expensive. I do not think you are getting a good riskreward tradeoff for those. If you go into those types of positions for the yield, relative yield, i think it is a play where you might have to be number nimble. You could get whipsawed if Something Different happens. David the dollar is super weak. Monetary conditions are becoming too loose. Brian i do not think so, not at this point. I think it is going to take time for that to filter through the u. S. Economy. I do not think the fed is overly concerned about this at this point. I would say a pass for now. If the dollar continues to itken, we get above 1. 20, may be more of a concern. I do not think the fed should be in a hurry, in any case. Rehling, wells fargo fixed income strategy. Yvonne building an Internet Services powerhouse. This is bloomberg. David you are watching bloomberg, daybreak asia, i am david ingles. Yvonne i am yvonne man. I just rose 9 , a big push into the cloud really beginning to pay off. David lets get details on this. Cory johnson, nice to see you. What did we learn from this set of numbers . Cory microsoft is really managing this transition from a ship it in a box Software Company reliance upon updates of windows and office, to a Cloud ComputingSoftware Company. Still focusing on same kind of customers. Some of them are billed very difference different and offered in a different fashion, and they are managing it quite well. Three months ago, the biggest blemish on microsofts how is it this time around . A product that tries to show off what it software can do, more than being a really important business and profit them. For this is fundamentally a Software Company, still. The surface is cool and doing alright given what it is and the focus of the company. Them. This is fundamentallythe real tm these results is that the Cloud Business is growing. Amazing numbers. They are growing at 96 in constant currency. That is stunning from this company. It shows you a real acceleration of what is already a giant business for them. David cory, nice to see you. Cory johnson, our editor at large, breaking down the earnings of microsoft. They are trading at 28 times earnings, very good numbers. Transitionant quite to the surface, i do not know what it is. I was tempted to get one. Lots more coming up in the program. ,he inflation dream of the boj is it slipping further and further and fur yvonne it is friday, looking to be a great way to start the weekend. 7 30 a. M. Friday in hong kong. Half an hour away from asias first major market open. David bright skies, which means it will start raining in a few minutes. Yvonne do not jinx it. David still happy hour some places. A very good thursday evening and good morning. I am david ingles. Yvonne i am yvonne man, you are watching daybreak asia. Courtney special counsel investigating alleged ties between the Trump Campaign and russia is said to be widening to include business transactions. Fbi teams are looking at russian purchases of apartments and trump buildings and the president s involvement in a Controversial Development in new york with russian associates, as well as the 2013 Miss Universe pageant in moscow. President trump can claim a win to redraw the trade map. The u. S. Now can ship rice to china for the first time after the two sides finalize trade protocol. This comes after weeks when china opened for the first time in more than a decade. They are increasing imports of american natural gas. Chinas Deleveraging Campaign is taking on its biggest target yet, the Public Sector itself. Policymakers have focused on my ability of banks and private sector companies. Thatdent xi made it clear loaded, stateowned Companies Must stop borrowing. He said china should hold officials accountable for debt. Interest rate its unchanged again as predicted by all economists we surveyed. On benchmark rate has been hold at 7. 4 since october. Inflation has picked up in southeast asias biggest economy, but remains within their 3 to 5 target. It is keeping a lid on price pressure. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Yvonne we are counting down to some of the major market opened in the asiapacific. Lets get the latest from adam haigh. He joins us live it from sydney. Good morning to you. With the markets trading at near west third records, fears for fund managers. But you are seeing some Silver Linings when it comes to small caps . Yeah. One of the things when we hit record highs day after day for u. S. Equities, you have to do more work. Fund managers have to scrutinize more to find pockets of value. One area there may be space for gains is u. S. Small caps. Dive into the bloomberg terminal, this chart. It shows you how small caps have struggled over the last year. The fact that the gaps between the bestperforming and worstperforming in u. S. Small caps is really opening up. The gap between the best and worst is almost 13 percentage points, which is way higher than the average over the last