Daybreak europe, our flagship morning show from london. Lets talk about what has been happening in the markets and what has not. Volatility has not been happening. Ive got this chart, volatility in fx markets. Swings, currencies remaining well below average. Of volatility is something we talked about with our guest on a number of occasions, and seems important to talk about, given we have seen from the g20, avoiding protectionism. Would there be a mention of trade . Will they produce the communique at all . Volatility still at fairly subdued levels, and this is out of the week where global stocks have had their best performance since january, and emerging markets have had their best performance since last summer. Lots to talk about. Lets put up the risk radar it show you where we are in the asian session. The bloomberg dollar index a little bit weaker. Some nervousness around that g20 story. Itsdollar heading for longest losing streak since the trump win, the yen hitting it strongest level since february 28, a bid into the yen. Closed away japan from that overall number. A mixed picture, retreating in australia, south korea, new zealand, led gaining in hong kong, malaysia, and thailand. A mixed picture. I put the south korean won to highlight some of the moves we are seeing. Last weekh continuing in some places. Indonesian malaysian, indonesian, taiwanese having a strong session. re expecting to be a little bit weaker as we head into the start of that trading day in the United States. Lets get the first word news with juliette saly. Juliette anna, thank you. In germany, Deutsche Bank says it will raise 8 billion euros in its new share sales. It will issue 687. 5 million new shares. Thats a 35 discount from last weeks closing price. John cryan reversed strategy after saying he didnt want to tax shareholders. The move comes as the Company Seeks to show off finances and growth. Chinese home prices rose last month despite increased restrictions on transactions by local authorities. New home prices, excluding subsidized housing, gained in 56 out of 70 cities, compared with 45 in january. Beijing raised down payment requirements by 10 percentage point in an attempt to cool prices. Angela merkellor and japanese Prime Minister shinzo abe have called for a concerted effort to defend free trade. Two days after merkel held what was called an inconclusive talk with donald trump in washington, she and abe said it markets can be both open and fair. They were speaking at the Cebit Technology show in hanover. Anothers set to meet deadline to unlock a bailout, inching the country closer to a repeat of the 2016 drama that pushed europes most indebted state to the edge of economic collapse. Economic ministers will reiterate that Alexis Tsiprass government has yet to comply with the emergency loans that has kept them afloat since 2010. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Japan was closed for a Public Holiday here in asia, and it seems that volatility and Risk Appetite also have the day off. Good gains coming through from hong kong, we saw material 200,rs hurt the asx jacquard also coming off that record high. Japan was up for a seventh session. If we have a look at stocks in particular, shed more energy is the standout after announcing a special dividend, rising by close to 16 in the late session. Company says it will have a longterm goal of retreating oil from palm fruit. Australiaerals in shows the impact of copper, retreating from six days of gains. We saw copper stocks across the asia pac come under pressure. Jakarta came of record highs today, but is Still Holding at that record high, and it is the only index to do so. Is starting to show that the jakarta index is near that overbought territory on the relative strength index. Quite interesting as we see a lot of movement, and focus on the emerging markets. Technical indicators are showing this e. M. Rally could have gone too far, too fast. Anna juliette, thank you. Juliette saly in hong kong. Breaking news this morning. We understand that m7 Real Estate Venture is kneeling a deal to acquire a u. K. London business, its continental hatopean Property Assets of t business because of the improving economy in europe, it seems, and the demand for logistic assets. This is according to two people familiar with the matter. Blackstone is nearing a 1. 4 billion deal for hansteen. He will follow that story with interest through the morning. Of june finance ministers wrapped up in germany over the weekend. In their statement, the finance chief dropped references to resist trade protectionism, renewing concerns about Donald Trumps desire to pursue new trading terms. For more on that and what came out of the g 20 meeting, lets head to brussels, where matt miller is. Good morning. What was the reaction to u. S. Treasury secretary Steve Mnuchin and the delegates trying to understand what the truth is about what America First means for global trade . Matt yeah. Although im not sure donald trump has ever beat around the bush when he is talking about his America First policy or when he talks about the protectionist policy he intends to enact. I think the trade ministers know what the white house wants to do. They were really trying to gauge what kind of power Steve Mnuchin is going to have us treasury secretary and forge a relationship with him. They were pleased with what they heard from the secretary, but concerned about what kind of power he actually had when it comes to policy. In any case, listen to what usin. Mnhucuch told Steve Mnuchin told us. We believe in free trade. Trade has been good for us and good for other people. Having said that, we want to reexamine certain agreements. Examination is the crux of the issue. The americans seem to think that fair trade, freetrade should be fair trade, and if they dont get fair trade, they may want to reserve the right to enact protectionist measures. That is what the other 19 members of the g20 wanted to avoid. 19 plusd to be the g one. Anna where does this go next . What is the focus now . Matt aside from the trade issue, there was a little talk about currencies, which i found fascinating. A lot of talk about regulation, and especially bank regulation. We know the Trump Administration wants to roll back regulations. The president has said that himself. That Steve Mnuchin said they do want to have one global platform. They want everyone on the same page. They want to get through this final dazzle free negotiation sticking point, with regards to global bank regulation, and figure out one set of rules that all banks can act according to. Many Staff Members are going to switzerland today and tomorrow as the finance ministers come to brussels for the Euro Group Meeting that will happen today and tomorrow. Anna ma matt, thank you so much. Matt miller. 6 09 in london. Joining us here in london on set, allen higgins. Morning to you. Good morning. Anna the week after g20, trying to put together the things we have heard about, or not heard about, things that were included or not included. The delegates kept everyone waiting a very long time for their communique, and they dropped this reference to ensuring that there arent barriers to protectionism that there arent protectionist barriers, sorry. Is that material to you, that they took so long . Presumably the u. S. Simply said no. For us, the markets have seen tariffs before, huge ones under reagan. Thats kind of where the markets leave you that is why we have calm markets. What the market is being complacent about is trade war. I think probably the market, on balance, is right anna i have this chart here, the u. S. Trade balance, the deficit with the european union. Do you think the market is right to be complacent, that trump isnt going to see this come after the eu . Well, i think half the u. S. Trade balance is in china. China is dominant there, and yields a small portion, a relatively small portion. A big part of that will be germany, and then germany quite cleverly said, it is nothing to do with us. Go and talk to those fellows down the road at the ecb about the euro. On thell be a focus, absence of any comment about free trade. But look, at the world can live with tariffs. Obama put tariffs on steel. Reagan put tariffs in place to protect one company, harley davidson. Japaneseriffs on motorcycles. You couldnt get much more protectionist than that. Its a big of a misconception. Anna how does this play of her markets . Markets are quite relaxed, and perhaps they are right to be. We saw dollar weakness, how does this play out in the trade conversation . In terms of currencies, certain participants have put too much emphasis on rates, rates going up, rates going up. If it was just about rates than the swiss franc would be the worlds weakest currency. The factt trade, and is that the euro has a trade surplus, and i can see good reasons why the euro is still out. It is fascinating to see vault no doubt it will break at some stage. Were lonely by the sterling with a break to the upside. Anna we have had other people suggesting sterling. I have this chart because you offer it. Sku index. Tell us a bit more about this. The risk of outlier returns to a more standard deviation below the mean. Were at 154. It means that the perceived distribution of these abnormal returns is becoming more likely. T two ways of looking at it. We know volatility is low. It is sucking people in to buy production, because when volatility is low, Everything Else being equal, buying protection is really cheap. However, what this shows is that people are really paying for options. How expensive is it to be cautious or bearish . The way we look at it, you wont be surprised, we are a little contrary and. People are scared. I need to buy those options, bid ding up the price. Its actually at record highs. Underneath the surface of the slow volatility, low vix, is a lot of scared people. With their are scared people, guess what . The market tends to go up against the scared people. The market doesnt reward the majority. Anna ok. A bit of a contrarian. Anna alan opinions stays with us. Alan higgins stays with us. Angela merkel and shinzo abe are holding a joint news conference. Later, the u. S. House Intelligence Committee holds its first public hearing on its investigation into russias interference with the election campaign. At the same time, euro area finance ministers gary in brussels. French president ial candidates hold their first televised debate at 8 00 p. M. U. K. Time. Coming up, as u. S. Secretary of state Rex Tillerson strikes a note of reassurance on his First Official trip to china, we will look at relations between the worlds two biggest economies. The favorite as the five leading candidates face each other in the first tv debate. We will focus on the fight for the french presidency. A and the new mobile company with millions of subscribers. The india telecoms market. This is bloomberg. Anna welcome back. 6 18. 6 ,ang seng is up by japanese equity market closed. Lets get the Bloomberg Business flash with juliette saly. Juliette anna, thank you. Ubers president jeff jones is quitting after less than a year amid multiple controversies. After bloomberg published video last month showing an uber driver, he said he would seek leadership help and was planning to hire a coo. The plan was viewed internally as an effective demotion. Vodafones indian unit has creating aerge, Wireless Company twice as big as at t by subscriber. Vodafone will own 45. 1 of the combined company, after selling a 4. 9 . The of the company will take a 26 holding, with the remainder held by the public. The new company is worth 23. 2 billion. Chinas industrial sector reforms will bolster the iron ore export market as the shift support demands high quality Raw Materials,according to rio tintos ceo according to rio tintos ceo. As you have seen, last week, it is moving in the right direction. We we have plenty of are supplying both sides, supplying copper. Once again, i am not concerned. Juliette and that your Bloomberg Business flash, anna. Anna thank you. Lets talk china. Anquities expected meeting next month. Rex tillersons tone was more measured, with president s teachin xi jingping. In his first visit as secretary of state, tillerson emphasized areas where the u. S. And china could work together. Our china reporter joins us from beijing. Good to have you. To what extent do tensions over north korea dominate the agenda in beijing, even if the tone of what he had to say was more measured than earlier . Issuereally was the top for tillerson on his trip to china. He had in seoul talked about the imminent threat from north korea, saying that 20 years of diplomacy have failed and it did not rule out a preemptive strike. He said that the chinese would look again at trying to persuade the North Koreans to trying to move away from the nuclear program. Washington wants them to sit down and have talks. They say that will not happen until north korea steps away from the missile program. Saw another test of an engine from their Missile Systems over the weekend. It was a start. We had the conversation, but it was a long way to go, and the clock is ticking on this issue that is creating increasing tension in the korean peninsula. Anna tom, did tillerson managed to reassure his posts about u. S. China ties . I think he was echoing chinese phrasing directly, something seen as quite a positive. Yeah, that was interesting, wasnt it . He went out of his way to mollify his chinese host, using that language from the chinese government, emphasizing the need for mutual respect, which went down well with the chinese media. So definitely trying to reassure the chinese ahead of this president ial meeting between xi and trump, in april, likely in florida. Its the relationship that he says is at an inflection point, and it will help set the agenda for the next 50 years. That is something we will watch clearly coming up in april. Anna tom, thank you very much. Tom mackenzie in beijing. Chinese home prices rose last month in more cities, despite increased restrictions on property transactions by local authorities. New home prices, excluding subsidized prices, gained and 56 out of the 70 cities tracked by the government, compared to 45 in january. Beijing raised down payment requirements for second homes in an attempt to cool prices. Alan higgins is with us on set. I turned to my colleague, tom horlick, who said suddenly it is all going right with china. Aboutalking in particular this data around home prices moving higher in more cities than previous. I dont know if that is good , though. When you look at industrial output, factory prices, slower capital outflow, certain things do seem to be moving in the right direction for the chinese. They do. And it was interesting to hear about the down payment on the second home, but thats a characteristic of the chinese property market. Its not like here in the u k or even in the United States. You need very big deposits. Concernnot quite ther at least, we dont have the concern. Its remarkable how prices keep going up and that is why i think the pboc followed the fed. They tighten into a boom. Reflect on the fact that we have a global boom in developed markets. It is hard to find a country anna they said today they wont the offering the Interest Rate environment. This is the tool they are using. But they followed the fed is so hot on their heels, and they have done similar moves the month before. Do they need to do more . The economy is strong enough. They can do it, they want to do it, otherwise the market will continue to be strong. They want to stabilize the currency, and it is one of the favored hedge fund short stories and it has been remarkably stable. They want to stabilize the situation. Anna we saw a strong week last week for emerging markets, and emfx strong again. I pulled up this emerging market rally chart. Something of a surprise for some people, when you think about the Central Banks hiking policy next week. We do well on emerging market assets, and in face of the fears of what a Trump Presidency would mean. Partly i think it reflects huge flows out of e. M. A lot of the nervous owners of e. M. Are out. Two, it is measured tightening. So wellening flagged, so the markets can come to terms with that. Giving toward higher levels, that is much lower, especially compared to the u. S. Market and when you normalize. Anna all right. Alan higgins stays with us. Up next after the break, french fight for the president ial election. They will take to the tv stage today. This is bloomberg. We believe in free trade. We are one of the largest markets in the world, one of the largest trading partners in the world. Trade has been good for us and good for other people. Having said that, we want to reexamine certain agreements. And i dontd trade, think we have to worry that much. Regarding the discussions weve had over the past months, we still have some work ahead of us. The u. S. Administration recognizes the importance of an open economy. They may have some views about the risks of competitive evaluations that seem to be legitimate. At the same time, the idea of balance and a level playing field, i think, should be clearly addressed without limiting at all the ability of free trade to improve our productivity growth and ability to have a better life. Attitudeto me that the is still to be formed, and we have to understand how to learn. The position of france, i think, shared by all, is not just that we should distance ourselves because things are going well. It is because we are doing better that we need to continue working together in the most confident way possible and the most multilateral way possible. The openness to trade is key. There is no evidence that trade is destroying jobs. Theref