Welcome to bloomberg daybreak europe. Breaking news coming through on the bloomberg terminal. Toshiba is set to sue western billion. Or ¥120 this is lawsuits rising. Toshiba seeks a permanent injunction against Western Digital. Developed y has talking about memory they delivered earlier. This is email saying theyre 120 billion yen. We will get more on that story and bring it to you. When it comes to rockstar central bankers, there arent many that have the ability to move markets like mario draghi. Have a look at this. This is the euro, and hes pushing it higher. Is atoomberg euro index the highs level since 2015. Look at the bottom of your screen, you will see that. You also see the bund market move aggressively as well. Thats what rocks the market. , where on track quarterly gain in six years. He has shifted the dial in terms of what we can expect from the European Central bank. The barriers to the upside of the euro are potentially getting busted and Political Risks are fading. This is what jpmorgan and rbc are saying. There are few resistance levels left before it levels off in a sustained way. It broke through 1. 13. Lets talk about some of the other big markets. Lets check in on the u. S. Markets. Yesterday we saw this morning shot come across the markets. The dow jones, the s p and the nasdaq futures all continuing lower. Speakers, the nasdaq fell 1. 8 yesterday breaking that 50 day moving average. Health care got a setback in the u. S. , and that has caused the big question mark over the ability of the Trump Administration to deliver. Roughly in line with where weve seen it recently. This is the question, are these overvalued . Is it the new risk on the table for the Federal Reserve . Youve got the dollar dropping ever so slightly, the aussie dollar down by 0. 1 . The imf warning they are no longer assuming that the fiscal push will be delivered in the United States. Former member of the rba saying the potential for eight rate hikes to come. This is the 10 year Government Bond futures, to the downside in terms of price. The rise in terms of yields continues in terms of the fed agenda. To shery ahnoss with the first word news. Suggest het trump had another speed bump with sam republicans postponing a vote already Health Care Bill. At least five gop members said the bill was drafted in secret by majority member mitch mcconnell. Its been a sevenyear campaign to repeal and replace the Affordable Care act, or obamacare. Were going to talk and see what we can do. We are getting very close, but for the country, we have to have health care. It cannot be obamacare, which is melting down. The other side is saying all sorts of things before the even knew what the bill was. This will be great if we get it done, and if we dont get it done, its just going to be something we are not going to like, and thats ok. The president has blamed the former ally after Police Helicopters flew over a Government Institution in caracas and allegedly fired shots and dropped grenades. Begin on state television, Nicholas Maduro denounced the incident as an armed terrorist attack against the countrys institutions. Blamed an ally turned critic who previously served as interior minister. The u. K. Prime Ministers Office is tried to downplay a row between theresa mays most senior officials over whether britain should have a transition as it leaves the European Union in brexit. Secretary david davis accused Philip Hammond of taking inconsistent positions on whether the u. K. Should seek a bridging deal which could mean remaining in the union for years after britney is due to quit. Warren buffett said he would never take credit for anything the market does if he were president. Thats as the socalled sage obama hall was asked whether President Trump was right to pat himself on the back of her rising stock prices. Risingold cbss oxygen since the worst of the financial crisis. Its been going up basically since march of 2009. Thats when it hit the bottom, very early in march. Elected president , i dont want to be blamed when it goes the other way. 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. Not a lot to give us support in terms of the market here in asia. The regional benchmark losing ground for a second consecutive session. The taiex the biggest loser across asia. The nikkei is also being pressured right now and you see the japanese yen stronger against the dollar. Sincenow to lowest level october of last year. The hang seng index also losing. 4 . One of the few gainers is the asx 100 which is gaining. 7 . Orerials leading gains, iron pushing back about six dollars per metric time. Not surprising when you see some steel stocks across the market lines, you can see they are jumping as much as 4 . Ask a holdings is now gaining. 2 , were hearing their withoping shale gas continental resources, according to local media. Aska is moving 4 with operating profit gaining 270 on the year, but the stock has surged significantly in the past two sessions, so we are seeing that pullback. If you think there is not clear Movement Across stock markets in asia, you are seeing that the , the pboc strengthening by the most since four weeks. Insaw that after the gain the onshore and all sort yuan in the last session, the last fews last few minutes of the last session. A lot of people attributed that to intervention from the pboc. We thought close at a premium for the first time in 18 days. Where do they go from now, that is the big question. Great round up there from shery ahn in hong kong. Takeve our Bloomberg Asia editor, edwin chan joining us now. You. Morning to in terms of the ransom ware spread, what is the impact in your neck of the woods, in asia . Edwin so far, we havent seen much impact, or i should say not much reported impact. Maerskrd about the Container Terminal terminal in india and a cadbury plant in australia. Mechanismsreporting are not as efficient in asia for cyberattacks, and thats why we havent heard about anything, and on the other hand, also i think companies have stepped up their defenses. Thes in terms of proliferation of ransom ware, in terms of National Health service , there was a big headline just a couple of weeks ago. Why such proliferation in ransom where, is it because there is no oneoff button . Edwin i think there are several factors at play here. Branson wheres considered pretty lucrative, now that banks and Financial Institutions have shored up their defenses against credit card theft, information that. So rants and where is becoming the de facto go to for global cyber criminals. And also because, in the case of variant, it todays exploits an existing vulnerability in windows. So there is a hole for you to infiltrate. Manus thank you very much, edwin chan. The u. S. Stock markets fell the most in six weeks. Fed chair janet yellen acknowledgment equity valuations she spoke at an event on the same day as similar comments were made elsewhere by her. Olleagues in San Francisco are somewhatations rich, if you use traditional metrics like pricetoearnings ratios, but i wont try to comment on appropriate ,aluations and those ratios that depend on longterm Interest Rates and of course there is uncertainty about that, so by standard metrics, some asset valuations look high, but theres no certainty about that. Manus janet there, the head of the Federal Reserve. Take a grenade and check it out there. But you get the point, do you agree that what ive got for trailing pe in the group. Valuations are looking rich. Michael i think weve seen a bit of a goldilocks scenario where the fed has been delivering one thing, fixed income and equity market values have been going up. Theres always a question, can that continue . Markets have been incredibly on systemic. To the specific point, earnings actually have been quite good. There are definitely pockets of the market where violations do look stretched, but as a whole, the economic view has been ok. Certainly not as stretched as they have been in the past, i will put it that way. Manus technology took a bit of a battering for a variety of reasons. Call it the google effect. Talk about that. Ive put together S P Technology and the broader index, the , but the this article guys over Credit Suisse have done is to talk about an equally weighted version of the s p. The Broader Market still has a propensity to rise. Michael thats exactly the point. You can sort of see in the itmentary there, i said what wasnt is irrational exuberance, is just a response to a question that in her defense, she did ch, about the uncertainty obviously were tagging a market moved to it. The point is, valuations are stretched in some way. What impact fed policy more directly is a fixed income market. How do you justify the treasury strength, given the fed is tightening . Me if im wrong but i think theyre quite happy to see a moderately healthy adjustment in the longer end of the curve. Michael absolutely, youre not wrong at all. Given the fact that theyre about to begin begin Balance Sheet adjustments, the softer monetary positions had become, the more likely there need to bring that Balance Sheet adjustment forward. Manus janet yellen said it was much safer, much larger than before, following the fed focus on capital requirements. I think the public can see that the tactical positions of the major banks are very much stronger at this point, this year all of the firms past the stress test. Manus we will get a little more detail tonight, i have a lovely graphic for you. Dividend, have a look at the banks. Banks will return 121 billion inthe Dividend Payments dividends and buybacks over the next four quarters. 85 of profit, up to 75 of the profit. I would never have thought eight me,s ago if you said to weve come a long way in the banking story and this is the delivery, isnt it . Michael and of course she is right. The Financial System there is far safer than it was. Trading likere that, its not just in the u. S. About the story that began when we were talking about the italian banks. That,itial reaction to the Systemic Risk has been part because of the actions of the authorities about the stress test. And now potentially we will see the second wave that will potentially change going forward. The market is safer. The real stress test is that when youll start to rise, 3 10year gilts in the u. S. That is a proper stress test. When is 3 achievable in u. S. Rates . Michael 2018. Manus we will hold you to that. Thats get your highlights of the day ahead. U. K. Time, theresa may faces her parliament for prime ministers questions. Later mario draghi along with mark carney on the annual form in portugal. 9 30 p. M. U. K. Time we get the results of those stress tests. Dividends, thats what we want to know about. We check in on the health of chinas banks, thats next. This is bloomberg. 1 20 in the afternoon, a beautiful shot of hong kong. The hang seng down. 4 . The ransom where story, and the concern from fed governors and president s about valuations. Its a hangover on the markets. Shery ahn has your business flash this morning. Nestle has announced the 21 billion Share Buyback is is is looking for acquisitions just days after calling for a shakeup. The new ceo Mark Schneider said in february that of buyback was a low priority, that reinvesting in paying dividends. They were called to sell their stake in loreal and take a more debt. Damages anduing for seeking to stop the company from interfering in its business. It was reassured is on track to complete the deal by next march. Deutsche bank is said to have courseplan to put it on to lose as much a 60 me dollars. The german lender has been examining whether traders reached a promise on the deal. It would be a setback for the ceo. And officials for Deutsche Bank in new york declined to comment. Thats your Bloomberg Business flash. Manus shery ahn, thank you very much. We will get official data from china on friday. The bloomberg estimate indicates its slowest expansion in the sector since october of year, following the studying of the ship. Is with us. Alfe we can debate, hard landing,. Oft landing, growth trajectory theyre moving heck and high water to make sure we slug it out at 6. 5 . Are you as optimistic on china as im putting the story forward . Michael i think there is an assumption that they can deliver. They said that all along, to be fair. How many times do we talk about the risk of china, and there are times when the market right now theres an assumption that we are steady as she goes, but this will deliver a very soft slowdown. Manus china may industrial profits rose by 16. 7 , compared to 14 . If you look at u. S. , europe, and china asset allocation, to what extent do you want to buy china . Michael the one lesson we , theres as year strong preference for both emerging markets in general of which china is a big part, but europe as well. The interesting thing about europe, expectations were just so low at the start of the year. Markets, theres more of the general longerterm allocation back to the yen. To you inhowed this the break, the yield curve in china. This is the yield curve in china. And this is the flow of money out of china. In classic economics, i can remember when i took the class in university, an inverted yield curve says recession is him. Thats what i mean heck and high water. What does the yield curve say to you, that flow of money out of china . They got it right, havent they . Concern about the slowdown is reflected in yields. Theres also an assumption that shortterm yields go up, we know that the longterm growth will not be as high as it currently is. The flat year was probably about right and you might begin to expect fears of the sharper slowdown on the outflows as well. Manus is that in sync with the fed . For every move by the fed, the pboc will match . Michael it will depend on how the markets react. Metcalfe speaks with us stays with us. Coming up on this show, could there be room for a pairing of stimulus . Unwinding of central bank pump priming. Much more to calm. To come. Thes its 2 30 in afternoon in tokyo. I would get your on brolin your umbrella. The dollaryen is a little softer this morning with light risk aversion in these markets. Theres a new edition of daybreak on your mobile if you know how to get it. This is the cover story, its about the ransom where that has taken down Computer Systems across the globe, striking multinationals. Its truly a global story, these ransom where stories are growing. Bothtars uses similar when windows. It has disrupted shipping in rotterdam in india. It causes crypto currencies to unlock the computer. Colleaguesn and talking about valuations, and stock markets up by the most in six weeks, and the dollar also weakened. Plans for the Balance Sheets well understood. Netflix, the 21 billion by that. This is days after the hedge sectors is looking into of where they want to make changes. Should it make a sizable takeover . It may modify the repurchase program. A little more news coming through on phillips, lets just bring that to you. Buy, doingginning to a purchase, i should say, of spectronetics, a move from fellow move from phillips, to buy it for 38. 50. M a and activism seemed to be the hallmarks of these markets along with the banking story. Tender offer at 38. 50. They expect to close the acquisition by the Third Quarter of 2017. The see the revenue adjusted ebitda as being accreted to the numbers by 2018. On there the big issues hardcopy. The government will present a broad outline of labor reforms during a Cabinet Meeting later this morning. Reformsly anticipated gave the party a comfortable majority. Great to see you this morning. Groundbreaking in terms of the project that will be put forward in front of parliament this morning. Is that how we should put the headline on this . Macron is what emmanuel is trying to do to go further in informing the labor market that anything that has been tried before. Its been called the mother of all reforms. The measures we expect this morning is that the government wants to lower social contributions from both the employer and the employee. He wants to allow companies to negotiate wages and labor rules at the Company Level rather than the industrial level. In some cases we can also see a referendum in case of these agreements at the Company Level. Also he wants to bring down the cost of firing someone by amounts in terms of dismissal. Many french president s have tried to reform the 3000 page labor code in france and many have failed. Many have faced street protests and demonstrations. Has beenur week proposed twice over the last 15 years. Macron also help draft labor reform and that actually had to be watered down later because of protests in the streets. Move just before we along, i just want to bring a little more breaking news, talking about phillips doing a cs. Chase of spectraneti shareps has announced the buyback of 1. 5 billion euros. Sonas sleep and phillips dont buy back, how to protect yourself in times of perhaps aggressive speculation about what happens next to your company. Buybacks will be a big thing of this half of the year. What i want to know is, the challenges are very grandiose. The ambition is huge in terms of what he wants to do. I know you read all the pages of that labor law page by page. What i want to know is, what is the biggest obstacle . I want to know how tough the union is going t