Bloomberg daybreak europe. From hearing the city of london. Im anna edwards. Lets start by talking about oil. Its been very topical in the last 24 hours. Brent dropping below 45 of arrow, now in bear market territory. What does it do to all the Central Banks . Oilstocks are reliant on revenue. Lets talk about where we been on the inventory story. Too much oil seems to be the basic headline. We are stuck in his air market. Crude inventories slid last week , and thats what you see in the blue at the far side of this chart. But inventories remain above their fiveyear average. 100 Million Barrels above the fiveyear average and u. S. Production is at its highest level since 2015. Opec is aware of this, according to our grant. Consensus is difficult. Radar and at the risk you will see that it looks a little strange if youre expecting the oil story to be rid large across markets right now. Were expecting u. S. Markets to open pretty flat. If you look at the s p 500 energy index, the top performers , only two of them arent positive territory so it certainly taken its toll on some of the oil companies. Increasing. Still also gold increasing. You can see what this is doing to asian equities, we are seeing strengthen asian equities today. Partly because were quite stable on oil right now. Were actually quite stable. Heres where the msci asiapacific is, up by. 5 . A continuation of gains in china as well. This is the pound, it is that right now but with a lower handle them we have enough late. This is according to the chief economist at the bank of england , giving a boost to sterling yesterday in the session. Lets get the first word news with Juliette Saly. In the u. S. , donald trump has said he will propose legislation that would ban immigrants from receiving any Welfare Benefits for five years. Ae president was addressing rally in cedar rapids, iowa. He campaigned on promises the crackdown and documented immigrants and shortly after taking office, signed an executive order that led to increases in deportations across the country. Regulatorsnking discussing constraints on wall street. Plan tong comptroller tell lawmakers today they support revamping key structures. The trump issued a long list of proposals last week for rolling back post crisis financial rules. Leaders today will release a discussion draft of Health Care Legislation meant to repeal and replace obamacare. Republican tom tillis of North Carolina said the drop will would effectively delay the repeal of obamacare until 2020, allowing more generous tax credit for people buying individual insurance policies. The white house has created a website urging repeal and replace of obamacare ahead of a possible senate vote next week. The mexican finance minister says the central bank is probably near the end of its tightening cycle and may be able to cut rates before next year. Inflation isberg likely to fall below 4 by then. However, he sees more rate hikes before borrowing costs start to come down. Seeing the markets are is potentially another couple of increases this year but is starting to predict that interest will go down. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Much more of a relief session coming through across asian equity markets today. Australia had its biggest plunge since november yesterday but is up by almost 1 in late trading. Up, rallying on the back of the msci inclusion. Qatar coming back online for the first time amid reports it could file for bankruptcy protection as early as this week. Heard its expected toshiba still in the race for the chip business. And bonds falling by a record but weve heard from the group in the last hour saying its operations are sound. Lets look at this chart, we route hasthe tech been playing into u. S. Equities although there has been a significant rebound. This chart shows you the nasdaq index in light and it have the msci informationtechnology index overseeing giants like samsung rallying more than their u. S. Counterparts this year, very solid move coming back through in 10 sent shares. Shares. Nt anna Juliette Saly in hong kong. Theresa may will meet with eu leaders in brussels for her first summit since the disastrous general election. She is expected to outline how britain proposes to treat the black citizens after leaves, while diplomats worry her strategy could lay bare divisions over brexit. Joining us is matt miller. What does theresa may have to sell to the other 27 leaders at this summit . They will have dinner tonight. 4. 5 Million People from the countriesnion, the 27 these peoples rights, its important to theresa may as well as eu officials including germanys angela merkel. Its important that these peoples rights be extended past the march 2019. Theresa may has to come up with a plan to maintain the Free Movement of those people at the very least without impinging on the rights of her own citizens postbrexit, and the eu leaders that are coming to brussels are skeptical that she can do that. Anna the obstacles that are faced here and getting to the same page on this, there seems to be plenty of opportunity to follow about who is included fall out about whose rights are included. There are many differences of opinion here. Matt eu leaders want people who dont have the documented paperwork to prove that they lived in britain before the are before last year in unit to the other to stay. The cutoff date officials want to be march 2019. They may want to European Court of justice to have a say in the rights of those people post march 2019. Theresa may is made the European Court of justice impinging on her rights or britains rights is kind of a redline in her brexit negotiations, so that will be difficult to agree. Anna thank you very much, matt miller joining us there from brussels. With us to discuss exit and much monson. Guy give us your thoughts on the latest twists and turns in the u. K. Political story and how this impacts on the u. K. Economy and brexit. We will start with where the economy is at the moment. I had this chart, this is the of theent intentions manufacturing and services sector. Showing as if theyre resilience in the face of all the uncertainty around brexit and the most recent election results. It does is at the bottom of g7. Ive seen quite a few Industrial Companies and the message coming back flex your chart. In many cases they are saying the impact of the week pound still effectively swaps the uncertainty of brexit. Anna while they are entitled to export to the eu. Guy were hearing restoring, quite a lot of activity being brought back to the u. K. , partly because thats the general trend but also because the prospect of the u. K. Is cheap. And there seems to be a relatively resilient Capital Expenditure picture which is surprising. Interesting on the services sector. I was looking at comments coming through on the advertising side. Often we look to advertising to give us clues about confidence. The Adam Smith Group said we previously discounted brexit as a drag on the economy but the recent u. K. General election has magnified rather than reduced uncertainty. Its amazing that that could of been significantly enhanced the uncertainties around the election. Guy i think that comment is wrong. I dont think actually we will madeout the election has things more uncertain. Almost sort of drifting toward a government of International Unity in terms of how we face brexit. Anna we did talk about working with all the parties yesterday. So the tone has changed, but ,hat will that be reflected will it feature in britains approach . Could allow them to breathe him with all the confidential negotiations. That is a huge step forward from where we were the day before. I think were seen a slightly more stable backdrop after the election which is ironic and is probably too early to see it in the data, but i wouldnt be surprised if its not stronger than expected. And its given to look hammond more space. That would potentially allow him to negotiate and interim transition where for at least that time britain remains in the union. He wanted the transition floating on the cliff, we talked about that a number of times, and maybe over a substantial timeframe. Are we not talking about a difference in the end destination, were just talking about the time it takes to get there . Thats probably right, although you do here in brussels that some of these interims, semipermanent situations sometimes can become permanent. Open not be at all surprised if the length of that interim is longer than everybodys expecting. And if youre brexit watcher, that would be one of the indicators for how the deal is going, do you see a longer or shorter interim. Anna do you expect something off the shelf . Theresa may saying were going for something bespoke. Now her hand has been slightly reduced. Does that increase the likelihood that we go for something in the short term that is offtheshelf . Guy i think what youre seeing is a coalescing around a norway model both in the commons and in europe. At the moment, my thoughts would be on a long period that broadly resembles norway with perhaps special deals and services. Fascinating decision. Mark carney says we have to support the economy and others say there are risks to letting things key policy lose for too long. Where do you see that going . Guy it has rather surprised me. Every other inflation indicator in any other Global Economy showing an extraordinary effect where the phillips curve is broken down. Something we havent the bank of england where a few could describe a temporary factor, this is one, trying to hard code comeinto a rate increase at the moment i think it is just noise. I think carney does still rule the roost and i dont see any Interest Rate risk within the next 12 months. Anna saying the weakness in the pound can have a longer lasting of that. She will be at the bank of england much longer. Thank youch very much. Time, we getu. K. Of Monetary Policy decision from norway. After the close of u. S. Markets, there are regular results of the doddfrank bank stress test. How will those change over time . And how do you solve a problem like korea . Donald trumps top cabinet secretarys call for chinas help, despite the president suggesting those efforts have failed. This is bloomberg. Anna welcome back to bloomberg daybreak europe. The hang seng is up by. 5 percent this afternoon. 1 18 over in hong kong. 6 19 here in london. The equity markets over in asia are little bit risk on even if thats not what were seeing in the currency markets with the yen and with gold. Lets get Bloomberg Business flash with Juliette Saly. Juliette the foxconn chairman has bow to press on with the semiconductor business. It could cost 27 billion and usher them into the image of business. He will decide by next month which your estate will be the location for the display making plant. Kata has plummeted this week. Amid a glut of sale orders, planning to file for bankruptcy protection as soon as this week. It would take the way for the sale of the airbag maker. Takata said no decision has been made on the bankruptcy filing. Boeing has secured twice as much in order value at as rival airbus. Following expression of interest for about 420 planes. 229us posted tally of airliners valued at about 25 billion. It marks the first victory in at the aviation industrys annual showcase. Nomura has picked frankfurt is the headquarters for its operation after the u. K. Leaves the block. Japans biggest brokerage will start preparations this month to form a base in the german financial center. They will seek Regulatory Approval and find office space before transferring fewer than 100 employees from london. 1. 9 billion raised in this second biggest u. S. Public offering of the year. Shares for 30d each, near the top edge of the market price range. He comes one year after it was formed when its Parent Company closed the acquisition of cablevision systems. Thats your Bloomberg Business flash. Trumps todent a President Trumps top cabinet secretaries said china still has in north role to play korea. Secretary of state Rex Tillerson appears to have disregarded and earlier tweet from President Trump saying that chinese efforts have a. Failed. We reiterated to china that they have a diplomatic responsibility to exert much greater economic and diplomatic pressure on the regime if they want to prevent further escalation in the region. Guy monson is still here with us. It seems the americans are trying to pressure china in various ways. President trump taking to twitter, as he does. Geopolitics in this region, is this something that worries you in itself for stability in the region or is it simply a distraction from what you would rather washington were getting on with . Guy i think its the secondary effects that worry us. Was a possible buildup is what stands behind the trump tweet is a possible move toward sector secondary sanctions that hit Chinese Financial Services firms and companies that trade directly with the north korean regime. That will be messy but its clearly one of the few available screws the americans have to tighten pressure on north korea. So were not building in north korea event risk yet but possible damage to some u. S. Relations. Anna those have already been damaged by all the conversations during the Election Campaign around trade but that hasnt yet manifested itself on a largescale cents President Trump has been elected. The chemistry seems rather good between the two leaders. I think there is an element of mutually assured destruction as. Hey embark on trade debate relativelye been successful. I dont think either side would want to escalate but the problem hisore president kim jabs thing are at the United States was greater pressure. Interesting,art is is is the easy financial conditions we see in the United States. The easiest financial conditions in three years over here, despite the fact that were seeing a tightening cycle. So tightening is not really tightening. Guy thats exactly the sort of chart that gives janet yellen nightmares. , were not seeing the core inflation rate go up, in fact its going down. Its ending up in conventional moves by the Federal Reserve being interpreted as further easing. What we saw the wobble and low grade bond spreads, i would entirely echo that chart. Thats why despite the inflation mrs. Yellen was so keen to say that she was on the same track and one more rate increase for this year and three for next. This is absolute issue of the day. Are we miss measuring, its beginning to sound like greenspan when he set of not moving rates because of technology or something and the measurement of the statistics is wrong. I think the yellen agenda will stick for some time. Will she stick, given that the position is up for reelection in 2018. Looking back at what other president s did with the incumbent when they arrive. Guy there is a lot of president for a president of one party accepting the previous nominee from another party. Reagan appointed volcker who was originally appointed by jimmy carter. Greenspan was originally appointed by reagan. Theres a lot of pingpong before the election. Now the white house seems to be quite close to yellen. Donald trump need two things. He will need a Federal Reserve chairman who keeps interest want tow and he will keep pumping out these 50 year so the scene is ultimately a friend of the bond market. Do you like u. S. Banks on less regulation for the Banking Sector . Guy i love them. They are an amazing parting investment toolkit. Are a wonderful Interest Rate hedge. If we are wrong, higher Interest Rates being higher mean higher bank rates. Anna x 26 here in london. Green light to chinese stocks but will in spurts investments country is hoping for . How will it turn that into the stock market . This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. 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. , this iscome back tokyo at 2 30 in the afternoon over in tokyo. 6 30 here in london. The marketscheck on with guy johnson. Fair value, take a look at the gmm. Saudi arabia yesterday, very Strong Performance coming through as result of what we saw with msci. What was interesting, and well talk about this enough yesterday , we mentioned it but didnt talk about it enough. The argentinian market getting crushed, down by 4. 82 . This heaven at the front end of the u. K. Curve, having quite effect in terms of positioning there. Still not a big enough move to justify a change in the narrative. Back to argentina, the msci story yesterday, the argentinian peso falling to its weakest level ever. You can see the move that we saw. What were not getting his confirmation that this is an economic slowdown from the oil price. Take a look at what is happening with the metals index. Its not rolling over in anything like the same way oil is. It looks like its just an oil related