Anna a very good morning, you are watching bloomberg daybreak europe, im anna edwards in westminster. Manus and i manus cranny, safe in the studio. You are in for a rough and tumble week in westminster. What can we expect . Theresa may has got to go to her party and explain herself. Anna yes, indeed. The first place, the Cabinet Meeting. We heard from the former counselor George Osborne, enjoying his new role at the newspaper, describing her as a dead woman walking. Within the cabinet she has been giving some support Boris Johnson denies he is planning a coup, liam fox speaking favorably, but she is sent to promote some political rivals so we will see how it turns out. The key question is how will the talks go . There was chaos over the weekend about whether there would be a deal. No deal has been done yet, so we will continue to talk about this into the rest of the week. From the moment, what else is happening . Manus the reality of what is this makes of this what do business makes of this, the potential Hung Parliament, thi s is how businesses are looking at the situation. They are more pessimistic now as a result of this coalition of chaos than they were at the moment of brexit. A Hung Parliament would be a disaster for u. K. Businesses. Thats the warning. Almost all businesses are now more worried about the makeup of the new government than they were at the time of brexit. 57 are pessimistic about the prospects for britain. T ithe time of breci was 43 . 92 are concerned about the makeup of the government in the u. K. Economy, but 59 dont want to see another election. That is what you see people like Boris Johnson saying im not necessarily going to run against her. Lets look at the wrist radar. More of the u. K. Feels today because this is all about the time we went banking on friday. 1. 2753 for reprieve, the pound, a slight studying of the nerves. Volatility is interesting, eurosterling. 8787. As theresa may goes to interest the committee, the rank and file, the volatility of the ftse is down and will continue because the pound dropped. That discount is very much implied. Lets look at it and have a look at the asian equity markets, because it is all about the technology stocks. That valuation is beginning to the question. Msci asia is off, tencent, samsung taking it lower, nasdaq down, apple down 4 on friday, microsoft, amazon, facebook losing more than 2 . Crude, if you cant keep the price up with action, you can always talk about. Talk it up. The rigors added in the United States for the 21st week in a row. Lets get out to Juliette Saly with your first word news. Juliette manus, thank you. In france, president Emmanuel Macron has expanded his control to put his party on track for a sweeping majority in the National Assembly in the first round of the legislative election. Vote,rty won 31. 5 of the almost 10 ahead of the republicans. According to projections, the result would give him between 415 to 450 seats out of 570 in the lower house of parliament. Has President Donald Trump renewed his attack on former fbi director james comey, tweeting that he is leaked comments about their white house talks were cowardly and suggested they could be illegal. Meanwhile, Jeff Sessions will testify on capitol hill tomorrow about alleged russian meddling in the president ial election. He says its important in light of the testimony last week. And President Trump is reportedly considering scrapping or postponing a planned visit to britain this year amid a growing backlash over comments he made after the recent terror attack in london. According to the new york expressedump has increasing skepticism about the trip after coming under intense criticism for a misleading charge that he leveled against the london mayor. North korea says it has moved closer to testfiring an Intercontinental Ballistic Missile with the potential of hitting the u. S. Mainland. N News Agencies say they are not far away from such a weapon, despite President Trumps pledged to prevent it. Last week the u. S. Said in a drill it had successfully intercepted and destroyed a mike icbm a mock icbm. Qatar is ready to understand the concerns of its neighbors. The kuwaiti Prime Minister said his country would not abandon mediation efforts. Its a sign that the spat between qatar and a group of middle eastern nations led by saudi arabia may be easing. Slash global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Is and find more stories on the bloomberg at top. A number of markets closed in asia today, including in malaysia and the philippines, but we have had weakness coming through from tech stocks on the back of the selloff in new york on friday. The nikkei is down by. 6 , hong kong and hang seng down. And you have seen some weakness in the korean tech stocks, particularly samsung. Having a look at some of those stocks in detail, theres a bit of Corporate News around toshiba, the battle for its memory chip unit heating up. Western digital is said to have planned to raise its bid. Grande down, selling a 14 stake to shenzhen metro. And samsung, have a look at this chart. Its quite interesting because we have these stocks in facebook, amazon, netflix, google, but you have these other tech stocks in japan, the socalled sunrise have been doing very well, up 65 compared to a 19 rise in the topix index, certainly outperforming those stocks that had the drop. Anna juliette, thank you. Lets get back to the u. K. Political story. Theresa may will face angry lawmakers today in a showdown that could signal the end of her premiership. How close to the end are we . It comes the day after she reshuffled her cabinet, which took place in an ongoing situation over the weekend. Er rival unsuccessfully stood against the Prime Minister in last years conservative leadership race. Another nemesis, George Osborne, told the bbc that mays days are numbered. Theresa may is a dead woman walking. Its just how long she will remain on deaths right. I think we will know very shortly. In other words, we could get someone next week or next month. Anna lets talk about the u. K. Political story and how it rubs up against the economy, business, and investing. We are joined by allen higgins, the cio of. Your thoughts after the high Political Drama of thursday into friday . Has your view on u. K. Assets changed in result of what we have seen here . Good morning, anna. Well, on the one hand, if you look at sterling, it seems to be more difficult than a harder brexit. On the one hand, thats positive sterling. But we havent changed our view on sterling. The heavily shorted currency comes first. Ilt is overseas investment and you can understand why there is nervousness. That. Ore cautious on when it comes to u. K. Equities we saw clearly for the ftse 100 in terms of the weaker currencies, it immediately rebounds. That playbook continues. Equities. Aith on but at the end of the day, whoever is in charge, it is a conservative minority government, so no big changes to otheration, it seems, and levels in terms of business. It may not feel like it, but it is business as usual. Manus the next thing is what happens with the democratic unionist party. They will meet tomorrow. The debate is that they are in favor of brexit. We need to understand more on their position. But the ramifications in terms of hard, soft, or light brexit is a debate for markets. The cost of the brexit with access to the Single Market might be too high for the conservative party, which would be unlimited immigration, and paying money into your. You are right, it looks like there will be some kind of split, and you could get, will conservative, its a difficult situation. It looks like the economy is going to come first. A rather modest fall in slight recovery, focusing more on the economy. From our perspective, is a bit noculative, but the idea is deal walkaway seems to have dissipated. That so we are reporting many are talking about Philip Hammond being the soft brexiteer, perhaps the economy takes it will, but there are many other players. We were up after the week in the u. K. Political story, but this is just the u. K. Sorting out what it wants to ask for, what it wants to go to brussels having in mind. This is not what the u. K. Is going to end up with in the end, is it . That is worth reminding ourselves that this is only half the story. The eu will be the other half. Correct. And look at it for mr. Macrons perspective. He needs a strong economy. You look at it from a french perspective, we had the socialists, now the independent macron. French exports need to come to the u. K. He is probusiness, x rothschild, from his perspective, he will want to those export markets working, whether its champagne the u. K. Is still the biggest market aor champagne there is probusiness narrative behind it. Manus going back to the chart of theat the start, level of pessimism in the u. K. , ratcheting higher, they are more pessimistic than they were at the time of the brexit vote. We need some kind of shot, whether its from the bank of england. Where do you stand on the view that the next move from the bank of england could be a form of easing . I heard that on friday. Is that too far out there . Right now, it is too far out there, because the Global Economy is reasonably strong. Idea of a rate rise i think the rate rise will go completely, thats knows the price. But i think a rate cut into negative territory, i think they will say that for negative gdp. It is still a positive economy, and we saw the u. K. Economy very strong postbrexit. Lookingd that it ifward, i would be surprised the u. K. Economy entered recession. Anna if interesting, with the negotiations around brexit, that you see the french stance more influenced by the probusiness desire to keep exports going then perhaps the political ambitions that many have talked cannot not encourage other countries to go the same way as the u. K. Risky. I use bonds as an example, especially german Car Manufacturers and many others. A lot of my colleagues in france, if macron cant make it in gets the Unemployment Rate down in france, then surely it will be le pen next time. Businessis that doesnt come out and the politicians we are stuck with a bad deal. Its a risky situation. But in my experience, business tends to come through. Manus vive la champagne. Alec stays with us, our cio of the day. Here are the highlights for the week ahead. Its all about Central Banks. Tomorrow the Rate Decision from argentina. Wednesday is the main event with the fed. Thursday is the announcement from the boe. Weeke round off the with japan and the bank of russia. Coming up, kuwait mediates. We will have the latest efforts to resolve the dispute between qatar and its saudi opponents. This is bloomberg. Anna welcome back. You are watching bloomberg daybreak europe, im anna edwards in london. Manus cranny is in the studio. Lets get to hong kong where we find Juliette Saly with your business flash. Juliette Business Optimism u. K. Economy has plunged after Theresa Mays Conservative Party lost the majority in parliament two weeks before brexit start talks talks start. 57 are pessimistic about the prospects of the economy over the next year. The institute of directors says it was higher than when they voted to leave the eu. Uber has said its board has approved several changes to the company, that provided no clarity. The announcement that the board had approved all recommendations from an investigation came after a meeting yesterday that lasted more than six hours. The company declined to comment further. Tencent has led declines by Technology Shares in hong kong after fridays tumble by excessive gains. The hong kong stock market has become increasingly reliant on 10, which on tencent, which added billions in value to its share. It accounted for a quarter of the hang sengs gains in 2017. And that your Bloomberg Business flash. Manus thank you very much. Lets focus in on the middle east. The gulf crisis mediator kuwait has said qatar is ready to understand the concerns of their neighbors, but the comments come from the Kuwaiti Foreign a disputesigns of that may be easing. Qatars the main benchmark plunge last week, the worst since december, 2014. The index is now one of the worst performing this year. Our middle east anchor yousef gamal eldin is on the road in qatar. Great to see you. Lets talk about this is there any the latest in terms of the great political maneuvers, kuwait is the mediator. What is the latest . Point, a lot of smiles and promises, and kuwait is saying that qatar understands there are concerns from their neighbors and is willing to listen. They are also happy to hear them out and have additional talks, but nothing beyond that as it stands. If anything, we have seen qatar reach out to its allies and peers around the world, trying to make it a set of allegations that are false, that it is being caught on the wrong side of the bigger conflict. There in mind that Rex Tillerson has been on the phone with the deputy crown prince, who has been trying to mediate this ongoing conflict. Generally have a meeting between the russian and Qatari Foreign minister is, a lot of words, but nothing tangible. I want to quickly quote the eurasia group, who make the point that qatar has two two choices one is to say ive got bullies in my neighborhood, i need to reach out to allies and go with this direction, or abandon foreignpolicy objectives that they have worked so hard to build and submit to the saudiled demands. The politics is behind the scenes, meanwhile markets have been reacting and qatar looks weakened. Escaped the notice of lng customers. Yousef on the one front, we are seeing enormous pressure on the qatari stocks. I have spoken to some of the key investors, and they said the biggest concern is that this is not an isolated story. There is a contagion risk that has spilled over into why the risks have some of the ambitious plans of the kingdom of saudi arabia. Think along the lines of iran, the appetite for investors to put money to work. Its one of the biggest exporters of lng around the world, and now some of its now tryingtomers are to seize the opportunity, trying to push qatar in terms of better pricing. Maybe you can get better deals out of it. Always anna thank you very much. Yousef gamal eldin, joining us in doha. Allen higgins is with us in london. Allen, really fascinating story. When you look at the unprecedented pressure we are seeing on the qatari currency, the interbank rates in qatar going higher, default is higher, yields go higher. These are all pressures around an emergingmarket debt perhaps dont lead you to believe that ends well. What are your expectations . You are quite right, and you have this strange situation that such a wealthy country that all of a sudden has solvency in question. It issued a lot of bonds in dollars. Im looking at the chart that manus has pulled up, which shows we are not quite at february when oil and gas prices were much weaker, and to many the perception was the chinese economy was about to implode. That was quite a dramatic situation. But this is a big move, and should this continue, there would be a real concern. Yousef made a good point about contagion. Saudis will want to contain that, its important strategically for them to get aramco away, to start investing in private equities, and turn themselves into a mini norway if they can. I would expect them to try and calm the waters, to say enough is enough. Manus the qatari banks are out there. No sign of a run on the banks in any way thus far. No, and i wouldnt be surprised if it really got difficult in terms of raising dollars. You can imagine Central Banks trying to revive dollars. And the other interesting thing, qatar individuals and institutions are huge investors in the u. K. They are essentially getting income screens, and some of the individual stocks i think you will see more money coming into the u. K. From individuals. Manus ok. An interesting thought. Allen higgins, he stays with us. We will talk fed. Thats next bloomberthis is bloomberg. It too 30 in the afternoon. A Beautiful Day in tokyo. These markets are fairly sanguine at the moment in terms of race. Risk. 110. 27, dollaryen. Cover. The front you know how to get it on your terminal. Story, continuing to come with the u. K. Election. The fallout theresa may set faces. Serious conservative lawmakers, which could be the end of her career. George osborne saying shes a dead woman walking. Cabinet, butak a he could struggle to push through a hard brexit. Thats the key issue for markets. Theesa may will meet with Northern Ireland cu p tomorrow after failing to finalize a coalition deal. Confusion over the weekend in terms of what has been agreed and what hasnt been agreed. Manus anna is a lot of backtracking. There was a deal, then there wasnt a deal. Lets stop top of that another story breaking this morning. This concerns coal. Glencore offered 2. 55 billion u. S. For coal and allies, higher n the Chinese Companies company plus bid. They would also by mitsubishis stakes in the ventures. They should clear the proposal by the end of june. Manus finally, lease focus on the central bank. On Federal Reserve focused the central bank this week. The bank of england follows through with plans for the u. K. G, muddied by elections. The bank of japan is forecast to stand, and governor kuroda is how heressure to reveal will exit from negative rates. Lets talk about one of the big items on the agenda this week.