Right direction. Good Credit Control and good cost control. One, theck to Square Alliance states a list of demands on qatar just as new data shows a new economic pain. Manus you are very welcome to bloomberg daybreak europe, our flexion morning show in london. I am manus cannae manus cranny and anna edwards is out for the day. Haefele. Teful 54 euros sensitive you are in the first half, net income comes in at 440 million euros. They expect further organic revenue and profitability. Think tiger beer and vietnam. These markets are the driver. Mexico, vietnam, nigeria. Year of sees a full being unchanged, firsthalf 1. 8 oneomes in at 1. 18 billion. Those are the numbers for heineken. We will have a conversation with the ceo, he joins the Bloomberg Team at 7 30 a. M. U. K. Time. Revenue, 10. 37 billion. This is the market we are focusing on. Thenic Revenue Growth 5. 8 , market estimating four point 2 . Its the dollar. 50. 58 is your bt number on this. Says the dollar index is at the bottom of your screen. Up by an eight on the dollar index, up slightly on the bloomberg dollar index. It is a fading confidence in the Trump Administration on repeated political missteps. Even as Economic Activity data stabilizes. I have taken the move. Any dollar chart it says dying, dying, dying. We lost 2. 2 in july, the fifth six fifth consecutive loss. Are we all so oversold . 29. 32. You are technically reaching and oversold. D period in the market. The losses pile up as the Political Drama rises. Do you step in and look for tax as being the next driver that could take the drop the dollar higher . Politics of the world, Ballistic Missiles being fired by north korea. Equity searched, so what . You have these markets that are rising, china stabilizing. Purchasing managing index slips slightly, but billys, rio, all trading higher. This is dollar korean won. It has turned around. You have strength coming back into the korean won. Abe and trump has gotten together and said north korea poses a grave and direct threat to the United States. They are talking about doing more. What does more mean for markets . Right now they do not seem to care. In terms of nymex crude, we are up, but can we stay up . First time since may. To that extent, that his faith you will see a compliance. August 7 and eight, abu dhabi will be the place to be to comprehend compliance in the market. The first word news in hong kong with Juliette Saly. Juliette manus, thank you. Vladimir putin says he hopes there will be no need for further retaliation against washington. His comments came after its Diplomatic Mission left by two thirds of fresh sanctions approved by congress. The move marks a new stage in the kremlins deep disillusionment with donald trump on his campaign to improve ties but failed to deliver. Chinas factory gate tile back a notch. The manufacturing and purchasing managers slowed to 51. 4, short of forecasts. Officials educated the slowdown to high temperatures and floods. While some had regular equipment maintenance. Japans factory output rebounded as Global Demand supported economic recovery. Industrial recovery increase, beating forecasts. May reflected a golden week holiday when factories cut output. The saudi led alliance that severed ties with qatar restated a list of 13 demands that must be met before talks could start. The Foreign Ministers of saudi arabia and the uae said there will be no compromise. A charge that they have repeatedly denied. It fueled speculation the crisis could be resolved. Oil in new york reflate rose above 50 for the First Time Since may after said the partners will meet next week. Its set to take place after saudi arabia said it would step up pressure on countries that are not complying. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Bit of a shaky start to the trading session in asia, but we are seeing upside coming through in hong kong, up 1 . Their stocks are on track for another monthly gain, the best since then you are. Hsbc, it shows it popped up 5 in hong kong. Good. Rket is the deli and futures are limits up and we have seen upside in china even though the pmi number was a little bit of a mess. It shows we are seeing expansion in the secondbiggest economy. Having a look at some of the its going to be a competitor to charter. There is a question whether he wants to tie up its swift sprint business. Shen hello energy in hong kong is doing well. 443 , thecrease by back oncoal miner and coal prices. It shows you just how well hsbc cshares do on the back of these buybacks. They have announced a 2 billion by back. Last time they and asked a 2. 5 billion by back last year. We saw earlier in the year a 1 billion by back. We have seen hong kong shares rise 2. 5 after the lunch break. Cheers globally in london and hong kong up 50 in the last months. They are doing something right. Manus they are indeed. That was a conversation we had with mr. Mckay, the finance director. We will hear more from the finance director of hsbc shortly. Japanese Prime Minister shinzo abe has hit out at china over the lack of action in north korea. Following a phone call with donald trump, they reported the International Community needs to apply more pressure to the regime of kim jongun. Japan, as well as the International Community, having closely coordinating and build our efforts in order to resolve the north korea issue peacefully. They have been dismissing these efforts and unilaterally escalated the situation. The International Community, including china and russia, need to accept the facts we should apply more pressure. President trump and i agree we need to take further action. Strong words from shinzo abe. Lets get to hong kong. Daniel, good to see this market. The rhetoric is heating up. So far, china looks unmoved. What is their calculus . Who is going to blink in this game . The view from beijing is that they want stability on the korean and its look. As awould view a war catastrophic event. On the other hand, they see the collapse of kim jonguns regime as a destabilizing factor. It could lead to a refugee crisis on their border and potentially put u. S. Troops on the border, which is a strategic threat from china. They do not see at the moment they need to impose crippling economic sanctions on kim jongun. They think that regime needs to remain and they do not see u. S. Allies will in a trigger on a work that could kill millions of people. Manus its amazing how this has escalated in terms of rhetoric, quite aggressively. What is the next step . How can the United States actually ratchet up the pressure . There is a few things they could do and that analysts are now expecting. That could be a dramatic move against china. , secondary sanctions really, to punish china for its dealings with north korea. That has all sorts of eventual ramifications which could escalate and lead to a fullblown trade war of sorts between the two biggest economies. That is the fear. Beyond that, there is not much to be done. Nikki haley said they cannot do much there because china and russia are blocking those resolutions. It has to be the u. S. Acting with its allies to put sanctions on china or of potential military strike, which would be a catastrophic event. Manus thank you very much, daniel. Daniel kincaid, our team leader. Lets welcome our guest host for the next hour. Welcome, good morning. I go away for three days, i come back, the world looks as if it is in a much more risky edition. Is that a fair take . Whole, if you read the markets, you would not have realized that. Volatility remains as much subdued. Risk does have a big tongue. You are going to have volatility and all that. It is a Fair Assessment from a geopolitical perspective that the risk has increased. Taken notehas so far notice of that. So we may be in some sort of an increase volatility environment. Having said that, we have said that many times and this thing has not really manifested. The market is taking a view that , i have i think right now what is trying to market is global these. Lets take a couple of big moves. I started the show with the dollar index. You look at the asian equity market, politics is about. The prism of fx is the prism of risk. Clients sayen, our they want to take a little bit more protection. If so, are they doing it . Road . We on an implosion is that really what is driving the dollar . Guest what is driving the dollar is accommodation of many things. Politics, right now the u. S. Is being seen as a major source of uncertainty, which is not been the case in the past. The repricing of the euphoria, which for me, was unjustified. Its sad to say it has been priced out to a large extent. We are coming out of a massive dollar malaysia. It has extended rate differentials for a wide margin. This has been correcting right now. Its accommodation of all these things. Its a combination of all these things. Still you say its overvalued. Its difficult to stop and reverse that trend. Guest thats right because you see, the issue the market typically goes through phases. Momentum takes over and that was especially the5, second half of 2016. By our estimates, the dollar rose 1518 overvalued. Now this has started to be reverting, being corrected. Is the gravitational pull of the fundamental evaluation, but at the same time, you have this political mess in the u. S. Administration stumbling on one mess after another. Thing you mentioned is growth. We at the gdp on friday and some emis from china this morning. Pmi from china this morning. Its hardly gone off a cliff. These are stable. I had a conversation with the hsbc finance director and that seems to be the tongue. Have we passed through the eye of the storm on china in terms of renminbi . Growth . Of guest what i can say is that the data so far in the first two quarters of 2017 have surprised on the upside. They have instilled caucus and in the market for both outlook alex in china. It is mounting problems with the credit bubble, but it seems the authority has been handling the situation, especially on the growth for quite smoothly. I do not know if we are past the eye of the storm because in a couple years, this double might burst and lead to something much more serious. For the next 69 months, i do not see china representing a. Eadwind for Global Economy on the contrary, i think it represents a tailwind. Manus the consequence of a weaker dollar is something which pboc is going to have to deal with. The capital flows are beginning to be pulled back. They are pulling back on the reins. Its always hard to benchmark the past and growth. This is what we are worried about. We talk every month when you came in. About capital flow. Guest that is definitely right. Least thetflows, at base of capital outflows have significantly slowed down, which is a welcome development. The other thing that has played into that, apart from the efforts of chinese authorities to put capital controls in place, is the fact the fate of the dollar has been fated. Faded. People did not want to pile into dollar assets and therefore it is working in favor of other currencies. This is something welcomed by the ecb for an entirely different reason because it holds the tradewinds euro from depreciating irrevocably. China has the biggest weight in the index, so to the extent that the dollar in for shades it is a bitciates, more restrained and that is why you have seen a big diversions. Eurodollar is up 11 . More. We will talk coming up on daybreak, the traits, theresa mays top brass clashes over there postbrexit plan. This is bloomberg. 6 22 in london, 1 22 in hong kong. It is daybreak europe, lets go to the splash with Juliette Saly. Juliette Mitsubishi Financial Group is considering answer them and paris for its basis of Security Operations after brexit japans biggest said it has never done candidates for the two cities, but a final decision has not been reached. Global banks are expanding offices in the eu to maintain thes for the market before u. K. Formally leaves the block in 2019. Softbank is planning to make a direct office of Charter Communications after the company rebuffed its proposal with sprint. Plans toese company make the offer this week although the plan is not complete and could change. Sprint is scheduled to report Quarterly Results tomorrow. Hong kong billionaire has agreed assets for six like 1. 9 billion u. S. Dollars. It serves corporate customers and residents. Hutchison telecom indication Hong Kong Holding shares surge the most in six years. That is your Bloomberg Business flash. Manus. Manus a split has emerged within theresa mays cabinet over the governments postbrexit plans. Philip hammond claims a consensus was formed around a threeyear transition phase and that has been criticized by the trade secretary, liam fox. Economic optimism among u. K. Companies has fallen 70 in july, the lowest level in six months according to the barometer. Our guest. G in slightly,ing ever so but it is this gordons of politics that since into fx. Thatscordance of all text slips into fx. Politics is a difficult thing to trade. David bloom last week said i am not trading politics. You trade politics . Guest no, you do not trade politics and that is why it is difficult to trade sterling on a shortterm basis. It will depend on whether you will take a mediumterm the. Concerned, brexit has been a negative. We have a lot of uncertainty, what is important to me is happening at the time when politics and economics in the eurozone are moving in the right direction. That is why i think, and we will discuss earlier, cable is the wrong currency to look at. Factor,he week dollar the euro sterling you want to be looking at. Direct we31, 128, a can dollar story. Weak, 1. 28, a direct dollar story. Dont know the extent of the damage that has been inflicted on the u. K. Economy because of the brexit referendum. It will take us time to assess the structural damage. It will really depend to a large extent on momentum and it will depend on flows. Claritycast do not see and that is largely because it eurodollar may start getting uncomfortably high in the next six to nine months for the ecb. 9095 is entirely feasible. Portfolio flows have started reversing away from the u. K. Eurozone. Manus we will carry those thoughts through very shortly. Breaking news coming from the Swiss National bank. A profit of 1. 2 billion swiss francs. Francs, firsts half Exchange Rate profit of 1 10 of one billion swiss francs. First half that results of. 9 billion swiss francs. You are seeing a weakening in the swiss francs against the euro. There has been a chip in the movement. It is a profit for the smb in the first half. This is bloomberg. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing xfinity mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Just 2 30 in the afternoon, breaking news on the bloomberg terminal. This is the global drug company raising their outlook. They see business earnings, broadly stable in 2017. The Second Quarter net income for some of the came at 7 sanofi came at 7 billion. The picture there remains in the diabetic world. They had a new drug which is getting good feedback. 1. 7 billion. They raised the outlook, they see the business earnings being broadly stable in 2017. That is a nice bit of guidance from the sanofi ceo. We continue the conversation with the cfo at 7 30 a. M. U. K. Time. Markets, if you look at markets, you would say to yourself, politics occurs. Thats where risk seems to be playing out in todays session. 4 10 headingee or for its seven monthly gain. The Industry Groups and how it is playing outcome of material stocks, commodity producers very much out on the front foot outperforming at 1. 2 . As sox also outperforming energy stocks. We are seeing in the commodities space, copper heading for its best month since anyway. Iron ore is surging and oil. We saw it go above 50 a barrel. This is opec and its allies meeting next week for production cuts. Oil moving higher, the link on last weeks gains, moving about the 200 Day Moving Average the First Time Since may. I am looking at the dollar. We talk about equity and commodities. We are seeing yen strength, the 10 year treasury yield edged slightly lower. When we look at the dollar, there is a great story on the bloomberg talking about the dollar a proxy for politics. I know you showed this early. You look at the 14 date rsi, most sold it ive years. If this goes about 30, thats where it could be a buy signal for the dollar. It looks as if being bearish on the dollar is becoming a consensus trade. Manus the very latest on the dollar there, one more line coming from the ceo. He is not the ceo in a hurry. That is the line coming from the sanofi ceo. Therefore it the Second Quarter profit ahead of analyst estimates. The chief executives trimmed costs. They will spend 2 billion buying back stock. I caught up with the finance director and he gave me the first interview of the day, happy with the banks capital position. Guest we are happy with the first half of 2017s performance. We have revenues heading in the right direction across major businesses and regions. Good Credit Control and good cost control. In a Strong Capital position as you mentioned, another 2 billion for us to buy back. We are honest and today, over the last 1215 months, will make a 5