Have a stacked up show for you, were going to talk about the drug sector, i wonder what the ceo of nevadas is going to say about health care in the United States. In fact, it looks as though we are getting some numbers through right now. A fouryear numbers to be broadly in line and confirming the Group Outlook for 2017. They are a Second Quarter core eps, reading estimates, one of the biggest headlines. Broadly in line, that one seems to be. 1. 22, thenumber, estimate was 1. 18. Looks like the core number has beat the estimate. We will speak with the ceo later on during the program. This is the point from the analyst, this would be the trough in terms of some of the challenges they have from the generic competition, but they say year sales are broadly in line. They reconfirmed the core number, about. 2 on earningspershare, the estimate was about 1. 18. Lets talk about a we rating. The aussie dollar at a twoyear high. This is the blue line. The reserve bank of australia is the is using differently what. Is the finger on the trigger button, are we underestimating overestimating . This is a debate that will reach three europe. It is well above the market pricing, that is what commonwealth of commonwealth pick of australia says, but they are mildly hawkish. The aussie dollar at a twoyear high and the euro is also up. Conversation around wages has also gotten the market excited. There is strength in the jobs market and some of that has removed downsizing for wages, almost as if the phillips curve might still be lurking on the horizon. Lets bring up the wrist ratio risk ratio. Fascinating to watch the u. S. Health care bill, it seems to be dead in the current form, but a lot more to talk about where it goes next, and what does it mean for markets . There has been a bit of a resurgence he and the yen, a bit of selling in the dollar. We have the dollar index your across a broad range of currency, the dollar is is bit. D, down quite a lets look at the shanghai composite. There is a growth story to be had in china. It is about the risk aversion from the pboc. Extending the retreat. Down 1. 4 yesterday. The question for markets is this, is there a herd mentality . Yes, it continues to reverberate through the market, they want to lower the returns on Wealth Management products. This is the core of what theyre trying to do, reduce the risk in the market. S p futures down futures down, it looks like the Health Care Bill is dead and it will not go through congress in the current form. Two more republican senators are opposing the plan, and that takes the risk factor of what donald trump can deliver on tax and infrastructure out of the market. Some still believe, Morgan Stanley doubling down. That is a 10 upside from where we are right now, they believe the company should of trump delivering and profits could make a difference. Get the first word news. Chinas banking regulator has told some lenders to lower rates they offer Wealth Management products. According to people familiar with the matter, ranks including some big lenders received the order from the revelatory commission earlier this month. The move comes as officials try to reduce Financial Risks and stimulate the economy. Chinese home prices surged in june, even as property curbs drive down values in a larger market. Prices, excluding governmentsubsidized housing, rose month on month, up from 56 in may. Profits in fell in large cities that rose in smaller cities, highlighting the challenge. The u. S. Has said iran is complying with the deal to curb its Nuclear Program continues to be a malign influence the middle east. Irans foreign minister says its country remains committed to the commitment to not produce nuclear weapons. Iran is committed not to produce nuclear weapons. That never expires. The Australian Dollar jumped to a twoyear high after it was that the nations economy was improving. A neutral Interest Rate of about two Percentage Points higher from the Current Record low level of 1. 5 . Have been soaring in sydney and melbourne, and encouraging Residential Construction that soaked up many former miners. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Thecan find more stories on bloomberg. A very different day here in asia today compared to what we saw yesterday when the regional index hit its highest level since generate 2008. Today has selling across the board. The nikkei up one to the 1 after a long weekend of being sold out of the banks and carmakers. The hansen is also weaker. Extending their deepest retreat this year, a lot of concern about a dilatory woes regulatory woes. We saw a big spike coming through in the aussie dollar. Looking at stocks in detail, a lot of focus on these wonder wanda deals. Today, plunging on these fears, banks are worried about the risk. To fall. Tinues toshiba is having an ordinary day, its biggest jump since february. This after we heard the u. S. Hedge fund greenlight has picked up a stake in the company and also Western Digital to not gain an injunction to block the 18 billion sale of the chip unit. We were talking about china prices. This actually shows that even though the property curbs is not having property curbs is not having an effect in smaller cities, but it is in larger cities, they are all represented by different colors. 41 ll home prices fall by in beijing in june, the biggest decline in some time. 60 out of 70 cities reporting price growth. Thank you. Back to the top story, the u. S. Mitch mcconnell has abandoned efforts to pass his Health Care Bill. He will inevitably try to repeal obamacare, but without a replacement, it is almost certain to fail. If the gop is unable to deliver on its promise over the Affordable Care act, it would be the biggest failure for President Trump and the republicans the election. Treasury yields fell. Lets get to Jackie Edwards, who covers is for us in sydney. Tomakers have responded Mitch Mcconnells new strategy of a straight repeal of obamacare. I think the work we were talking about earlier is, is it the Nuclear Option in terms of what the gop can do . So far, democrats have criticized Mitch Mcconnells plan to have a simple repeal of obamacare. A plan chris murphy said to repeal obamacare without a replacement would kill insurance markets. Mcconnells announcement, and it is important to note, mcconnells announcement comes as some republican senators are calling for a new strategy on health care debate. Senator john mccain, who is in arizona recovering from an operation, called on republicans to work with democrats and with governors to have open hearings and a more bipartisan debate on health care policy. More will see if something Bipartisan Committee achieved because donald trump has found it difficult to appeal to both wings of the party. Is a possible for this to be successful in any way . What is the chance of success for repeal now and replace later . Jackie it has not garnered a lot of support in the senate among republicans except for the most conservative members. In 2015, the senate was successful in passing such a plan, at this was under president obama and under the expectation that obama would veto such a bill, and he did. This scenario is different, ause there is a president a republican president in the white house and he is called for a straight repeal, as well. Toh a plan, it is uncertain see where this would go because republicans have such a narrow majority in the senate and they can only lose a few votes for the bill to pass. Thank you very much, Jackie Edwards reporting from sydney. Joining us for the next hour, lawrence. Welcome to the show, great to see you. There was a line that, year, mccain calls for bipartisan. Inis a less like deja vu terms of u. K. , everyone link farms across the oil. Thisross the aisle youd is a failure of the gop, and this has ramifications for the fed. Absolutely. What we have is a key piece of evidence that the fiscal stimulus that was part of the trump election victory is going to find it hard to pass through the legislative process come up which means the extra stimulus that would be provided on the physical side is not going to happen, which means the fed has more time to move more slowly, and it ought to move more slowly. Will he be a big effect on markets . Arguably not that big, because this though. Com give this not come from nowhere. I think it is all been about the markets looking at the fiscal outlook and realizing it will be quite hard to get things done. This has significance for the fed and also Asset Classes. I was interested in Morgan Stanley doubling down on the s p by the end of this year. They still believe that donald trump can deliver enough to achieve that and earnings can achieve enough to deliver that. The Asset Classes your following, how much donald trump belief is based in baked in . Laurence i think less and less. We are not only thinking about fiscal stimulus, but we have the debt ceiling issue looming for autimn. For autumn. Uncertaintynormous and interactions in the market. I think from where we are, theres not much which the gop is expected to achieve, and therefore if they do start making things work again i know yesterday anna decided to talk about goldilocks, but have to give credit to the macro. An column what theyre talking about is the citigroup economic surprises. The white line is global, you have the United States and united kingdom. Were back to where we were a year ago. The point is, goldilocks has gone awol. , the data is disappointing, that helps the fed story. Have the bears really gone from the on market . She has left the building, she is fleet of foot, goalie looks. We got that growth number out of china. Laurence shes gone to europe, that is where she is gone. The worlds most popular tourist destination. , it isis doing very well true the u. S. Is disappointing in the Second Quarter, the u. K. Obviously for internal reasons has been undershooting expectations as well. But again, is this really a process . This is against an expectation of quite strong economic numbers. Some have done quite well relative to the expectation. That is the reason why we deliver that doubledigit earnings on the s p. Laurence we were very optimistic. If you look at the u. S. Line, that is what the dollar looks like. The dollar has become weaker and weaker as surprises have come out on the downside again and again. As we were saying, from an expectation there would be good fiscal stimulus, the republican majorities would be able to deliver some a genuine Economic Growth. We are retreating from that optimism. The bond market overdone in your view. How range bound are 10 year yields in the u. S. . Laurence weve been bearish, it has not been very fun the first part of this year. But we had a decent sized selloff in the last six weeks really driven by central bankers, by a slight change in central bank talk, which is that a massive change from what the market has been looking for. Weve had the selloff. It is typical of bond markets bearheir markets and market, the moves up our slowly move slowly. There are reasons why markets tend to drop quickly and rice slowly. It is much easier to be long than short on bonds. Shorts get punished every day. Weve done analysis on how bond market work, and even in the bear markets, basically have to date the market goes up and not dow come and not down, but everyone still you go down. So it has been quite nice. Stay with us. Coming up after the break, chinas stocks fall. Their biggest oneday retreat in seven months. It is after a regulatory crackdown. This is bloomberg. It is 1 20 the afternoon in hong kong. Hang seng is down. A little bit of shakiness in some of the equity markets. Lets get to your business headlines. Recordlix scored a Second Quarter, surpassing subscriber growth and growing its international audience. The provider side of 5. 2 million subscribers in the Second Quarter, 2 million more than analysts forecast. 4 million of those came from outside the u. S. Shares surged in late trading. Citigroup has settled on frankfurt as its newest trading hub in the european union. According to someone with knowledge of the situation, they are looking for approval this week. They look to expand in germany, 200250 neweate role there. Thank you. Has toldanking regular brokers to lower after themes presidency has told the central bank to defend against risk. Droppedghai, is it after its biggest oneday drop yesterday. Lets big two hour economic correspondent. So is china getting serious about curbing a financial rift . If they are, we could see what yesterday,the china chinext yesterday, or maybe that is a story for another day. The language for the meeting is quite striking. It was said it would be a dereliction of duty if they were not to tackle this. They are likening it to national security. Just say we had the front page. F peoples daily warning us i think the language is being ramped up and were seeing steps being taken. We are seeing a move on parts of , companieserates buying assets around the world last year on a record shopping spree here that is being reined in now. Wealththe move today on management products, trying to get yields under control. We are seeing definite steps, although overall tentative baby steps. They dont want to ultimately choke the economy. The president sibley does not want huge risk in terms of the president simply does not want risk in terms of growth. You have shares in Real Estate Company what was the backdrop to the move . They areckdrop is that involved in buying some of the weeks of wanda that last put a chunk of assets on the block to be bought i sooner bought by someone else. That was in response to a government investigation, the conglomerate had come under focus. Bought fromy have da, they are also in his under scrutiny. I think the end result is essentially greater scrutiny on big conglomerates in china, they can no longer go by assets whenever they want. The funding even from state banks will not necessarily be there. I think the message from the regulators is it is a level playing field, no more special treatment. I think that is why conglomerates are getting cut open. What does that mean for Chinese Companies buying Assets Overseas . Thanks very much, our chief agent economic correspondent. Lawrence as to what is. Chinasation story and contribution to the commodity market . Data in termsaw of the commodity market and gdp makes, it makes our us very confident. We could see a slowdown because of a tightening. It seems more and more likely it is the target the Chinese Government has for growth this year will be hit or slightly exceeded. What does that mean for us . I guess that means the potential disinflation or deflationary dangerous just arent there deflationary dangers just arent there. If we look at the bond market, the fx market, the dollar is weak. But this position you have in regards to be fed, it also gives the pboc a window to navigate, as well. It takes pressure off them, because the fat in your view, is a little bit slower to hike. Laurence i think that is true. I think where they have gotten to him according gotten to according to our economist, it needs slowing and tightening not just in terms of rates but regulatory tightening, is one of the ways they are good at finetuning their economy. Thank you very much. Stay with us here on daybreak europe. Next, brexit begins to bite house prices. White house price rises are expected to cool. We look at the data. Breaking news coming from erickson. Secondquarter adjusted growth margin a touch above estimates. Billion against an estimate of 56 point 67. Adjusted operating profit, 300 million. Accelerating their actions to reduce costs. Ericksons management would provide an update on the cost cutting times and asset disposal. Looking for any comment they have about selling assets. The company navigating a period of declining Network Equipment sales. That is something that has played the market. Ceo of the company accelerating plans to reduce cost and increasing reese see an risk of further project adjustments. Risks in the Quarterly Earnings this year with Market Expansion too optimistic, perhaps on the money with this great margin estimate. Yous analysts think that have seven buys, 17 amas holds, five cells and an edge lower as the days and months go on for 2017. Anna also, the adjustments would hit the results by three billion billion to 5 krone. Manus there is a new edition of daybreak here. It is on your mobile and your machine. This is what is making the cover story today. President trump health care, a break reports that the Republican Health bill is dead. Two more senators announced optimism opposition to the measures. Mitch mcconnell to begin a debate. Treasuries fell, mcconnell said the vote to repeal the bill instead and delay two years given that giving lawmakers that time to seek a replacement. That is the worstcase scenario. Anna the next stories european data, which breaks today. Daybreak says the data may underscore divergence in areas. British Consumer Prices helped cash held steady at 2. 9 in june. That is still too far ahead of wage growth to provide comfort to the bank of england. On the other hand, germanys survey is unlikely to offer a picture of solid growth. There is divergent data out of europe, something daybreak draws our attention to. Business hotspot. Final story as daybreak focuses on brexit and the bank citigroup. Frankford is its newest eu trading hub. U. S. Lender will add up to