You are welcome to bloomberg daybreak europe, our flagship morning show in london. If you are a business, have you been using Deutsche Post . The numbers are better. Net income 602 Million Euros a beat on estimates of 594 million. 4915, aboveshare, the estimate. They are confirming there for your guidance. Bloomberg intelligence ran the numbers, binder headwinds in this business, train waits might is essentiallyit looking at moving through from last year, a more normal year is what Deutsche Post promises, a tough day on its reporting schedule on the first quarter. Today it looks as if they are beating that momentum. They have a target operating profit of 8 and are sticking to fullyear guidance. We will have a conversation at 8 00 a. M. U. K. Time with the Deutsche Post ceo for our first interview of the day. Just exactly what lamented is there on the ecommerce side . Daye sent to you today is a of binary outcomes. Im talking about president zuma in south africa. It is the eighth time he has been challenged in the eighth year of his tenure on the eighth day of the eighth month. Eight, eight, eight. It has taken volatility bang up. Were rising, and hitting levels we havent seen since may. If this passes, the South African rand is off to the races. What does the market mean about being off to the races . Being off the races would be something sub 13 in terms of its overall trajectory. If it fails and zuma continues in power of course it is a secret ballot, so this is where it gets interesting. A considerable number of his own party would have to revolt and go against the sitting president. That is the risk to the market. If it passes, we are off to the races. If it fails, you could potentially break 13. 66, the other momentum. Volatility is rising. Out of all of this, the fed speak, china, the risks, the polling, it translates into risk radar. We skirmished with the 10 year highs, and we also have the china data this morning, the chinese trade data, july exports missing on estimates. We are still leaking out the smallest of gains. Korea backing the u. S. Proposition for u. N. Style sanctions, the u. S. Seizes hostile policy, that is the call from north korea. Aussie dollar at 79. 16. We are up for the first time in several days, because the dollar is a little bit weaker, really singing warning bells over inflation. Kashkari and bullard signed the warnings that the dollar is lower, and there is basis to support the aussie dollar. You have is this Confidence Index coming in at 12, previously it was eight. The risk is this, that the aussie dollar was indeed a little bent over sorry, the downside of the greenback is a little bit oversold. Thats the risk a lot of commentators are making. We dont often put aluminum in. You have an on track for the highest close in two years in london, and on track for the highest close in five years in shanghai. Cuts, andsupply copper is also romping at home. Well talk to our guest host over the next hour about commodities from j. P. Morgan asset management. Lets get to Sophie Kamaruddin, who has your first word news. Manus, speaking after the china story, the trade surplus expert growth remains solid while imports moderated. Experts rose seven point 2 in u. S. Dollar terms and imports increased 11 , falling short of economists projections in a survey. That means the trade surplus widened. Japan has reported a 36th consecutive current account surplus. June current account surplus was 8. 44 billion, beating estimates. That was reported by returns of overseas investments and trade balance that returned to positive territory. North korea has condemned the latest round of human sanctions and says it wont negotiate until america ceases hostile policies. The regime says the state would pay dearly for what it calls a heinous crime against north korea and its people. Also insisted that its Nuclear Program was necessary to avoid a u. S. Invasion, similar to those in afghanistan, iraq, and libya. Todayis a secret ballot on a motion of noconfidence for president jacob zuma. It increases the odds of him being ousted because members of the ruling party can vote him out without risking their jobs. Hes due to step down as leader in september, and as president has defeated previous attempts to oust him. In kenya, pulling is underway for the president ial election. It pits the current president against his challenger, more than 180,000 police have been deployed across the country amid concerns there could be a repeat of the 2007 vote which led to violence that killed more than 1000 people. In venezuela, all Foreign Workers had been pulled from the oil field amid a deepening political crisis, according to people with knowledge of the matter. Chevron and total have removed a small number of employees. At the same time, another company has withdrawn. Chevron says it doesnt comment on security or personnel issues. Total didnt immediately return comment. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Now lets check in on the markets in asia. Stocks mostly edging lower, just barely hanging on to the near decade highs. Data, chinese managingder pressure, to swing to gains up about a 10th of a percent, the yuan is the clear winner on the back of that data. Aheadere, little changed of inflation data do this afternoon and in tokyo the losses have used in the afternoon session and is set for a third day of losses. And i want to show you one of the reasons for the weakness we are seeing in tokyo softbank shares falling, but the biggest index despite firstquarter earnings beat. Vehicles fell when it comes to retail out of sales they are working for a Third Straight month five and a half months on year. A valley in base metals talking about the prices they are climbing to a sixyear high in hong kong at the strongest level in five years in shanghai. Chart, we want to show you that story, chinas total steel shipment changed by a third in july, falling to a 2013 low. The drop in exports comes as trump rolls tariffs to protect u. S. Steel producers and chinese exports to the United States have been easing as you can see from this chart this only makes up about 2. 5 of chinas total expenditures so it likely wont have much impact. Indeed, great roundup. You say aluminum, i say aluminium. Andident james a learned Neel Kashkari say yes to inflation and the u. S. Is a problem. The two officials comments lineup with investors expectations that it will be kept on hold when officials meet in september. Here are his comments from yesterday. Inflation has been coming up short, a little low relative to our 2 target. That actually matters you think 1. 5 is not a big deal but it matters that investors believe the fed can achieve its goals. Despite this low inflation both fed president s are keen to shrink Balance Sheets, playing down the possibility of market disruption. I think we are able to get going on this process it will be very slow and i dont think we will have a lot of impact on markets but i think it is the right thing to do. Those are the voices. Lets bring in the Global Market strategist at j. P. Morgan. Good to see you. The soft peddling has really picked up in earnings. Balance sheet reduction will not have any material impact. But they are worried about rolling over in inflation. What you want is it necessarily what you get and they are not getting inflation. It is turning into a fundamental miss. I think it has two goals and thatby congress, is the big question if you want to have that fully ticked checklist before changing what has been the longest and lowest Interest Rate policy you want to be equipped to go forward. While it shouldnt cause drastic this is the markets, one of the largest demand for treasuries, reducing how much they are earning. It will not cause a massive structural change in the yield fluctuation but we have to be aware that longerterm treasuries are going to be back out in the market and that might cause impact. Tryt may make some moves to help me with putting a parameter. 10 year benchmark getting back toward 3 , in the process of round down. Does that sound fair . It does. Getting to 3 might be a higher point for the yields that in the next few quarters we could see and we doyou mind expect them to continue hiking a couple times next year. That is definitely in our projection for the next couple quarters. At one juncture does a lower dollar im trying to extrapolate. At what juncture does a lower dollar added to the bottom line is inflation in United States of shift onnd therefore the break even . Should i be even thinking about that . It wouldnt be the top metric for us to gauge inflation. It depends which currency the dollar is weakening, because that trade when the sterling rate weekend after the referendum results we saw inflation spike up because much of the imports were against a much higher currency. In the u. S. They are giving less of their goods in from other places and it is more of an insular economy and it depends on which currencies the dollar is itkening against the euro or is it the yen in which those more important merchandises come in . It really depends on that, not a top factor from inflation. It is more wage growth we are monitoring. Concentration, risk are many of the phrases that have been used in the market. What i have done is pulled together a couple things, the top line is s p, and then the equal weighted s p this is where apple matters just as much so the equal weighted has posted its biggest weekly drop since may. I suppose my question we are up 8. 4 in 2017 on the equal weighted but it is trading the big, broad index. Does that raise the concern about the breath of this rally and the veracity of it . That is one of the biggest conversations we are having. And you have a valuation the stocks that are increasing are giving you those rallies year to date, you can count them on your hand, these large, specific names that have done well wednesday do you think about the downside and what else is in the index that could either rally or not do as well, relying on these sectors. We would say yes, that concern is very much playing forward. We dont like those highly valued sectors at this point. We are looking more at value what theyd showing have to say for us. The rally on the good fundamentals and financials rising where do we see them benefiting from that. Can we chug along at 2 growth, or cannot materially change . It can materially change in the next few years. Is when we start to get concerned about what is naturally supposed to happen there is going to be a slow down at some point. The recession risks are low for this year, manageable for next year, but we would expect a slowdown in u. S. Growth will it be the dramatic contraction of 2008 . No, there will be a softer slow down but that is certainly something to watch for when the s p 500 starts to weaken. Thank you very much. She stays with us. Lets give you a quick line we understand the great, big piece of utilities this is the personification. At willar adjusted bid . 2 billion. Dividends, around a quarter. 2017 dividendros, growth at 25 . That was originally the whole growth for 2016. A nice set of numbers. We have the conversation with the ceo of uniper. His first interview of the day. Coming up on daybreak, chinas trade surplus widens. This is bloomberg. Welcome back to daybreak. Just gone 1 20 in the afternoon in hong kong. You are looking at the hang seng, up a quarter of 1 . Imports rose, but again, that is down from 23. 1 . Global stocks are still ekeing out gains. Lets get to Tom Mackenzie in beijing to break down the china data. Given the block numbers in yuan terms, you have had time to digest these numbers. What does this tell us about chinas Growth Outlook going into the back end of the year . Well, its not good, but equally, these are volatile numbers, and this is of course only one month. To get a read on august and september before we can reassess. The general consensus view is that the second half of the year, chinas growth will be relatively robust, slowing moderately. I will give you the dollar numbers for the exports, 7. 2 up for july, misting estimates of 11 . Wellts came in up 11 , below the estimate of 18 . The trade surplus around 27 billion usd, which has narrowed somewhat we know that the Global Demand picture is going to be strong, whether thats from european households or u. S. Households, so that should shore up exports in the months ahead. Bloomberg intelligence was saying the scope for chinas exports are shrinking, numerous saying there could be currency effects, because the yuan has strengthened a little more than 3 year to date. Indeed. Risk, that thee surplus has narrowed. Trade tensions between the u. S. And china, it seems they are going the geopolitics route in regards to trade. It seems they have taken a moderate backseat for now. It seems to ebb and flow. And post u. N. Sanctions on north korea, it seems like china is whatin u. S. s good books, we know they are considering washington launching an investigation into intellectual property violations, the commerce secretary is investigating steel, although it should be said that chinas steel exports to the u. S. Have fallen quite considerably. Bloomberg intelligence saying it is unlikely to have any material effect if there are targeted sanctions on exports likes deal and aluminum. The other risk factor for the chinese going ahead is the property sector. Economists expect further pressure on the real estate sector. We have seen that play out just in the last few days, share price is coming off. And trade tensions remain, of course, in the background. Going ahead, we have the party congress. A busy man over the next couple months. Tom mackenzie, thank you for breaking the numbers down. Our guest is still with us, j. P. Morgan asset management. Listening to tom, when you look at the import and export data, to what extent do you get irked . Onemonth does not constitute a trend. I not too worried about the individual numbers, you can see how jagged the numbers are. I think the general trend, import growth is growing faster than export growth. It is concerning that rebalancing story that china is starting to consume things, and also just general global trade being on the up and up. Global export growth is higher than it has been and that is something to be positive for, not just focusing on the china shift or slight weakness. And to that extent, you and i were talking about japan. They have seen their sixth consecutive current account surplus. Global trade seems to have funds at a floor, but to grab a cliche, is it at escape velocity . The floor is very low. In terms ofh trend trade was nowhere near what it was pre2008. The volume of imports and exports around the world was nowhere near what it was. Now seeing a bit of growth picking up from low levels, it is positive for various elements, very highly leveraged, height beat on Global Markets, benefiting from high export growth. You are seeing pmis, pushing indices and exports, services in manufacturing. The echoing of the trend of synchronized Global Recovery, based on the survey data and hard data of trade increasing, people buying and selling things. Given what you have just said, there should in theory be a skew in terms of what japan, that, hang seng, whatever, i pick up relative to my european exposure. Its interesting, because there are pockets of asia connected more to each other in terms of exports. Exactly. So when you see the momentum going on, it does look enticing. Valuations are always our first point of interest, and when you think about the u. S. , it doesnt look as attractive or cheap as asia, which is highly leveraged. Hold that thought. We have more to get through. Nandini stays with the daybreak team. Up next, we have a conversation with the australian trade minister, who says the strengthening of the aussie dollar is a concern. We will bring you our interview a just in the next couple minutes. This is bloomberg. Just cant 2 30 in the afternoon, dollaryen, moving 1 . Y by 1 8 of one to we have had great numbers from japan, 36 months in a row. An additional couple lines. Producer, 37. 3 billion euros first half usted, 930 Million Euros those are the numbers coming uniper. Ver guy johnson and matt miller will be introducing the ceo. Lets bring you another story on our Bloomberg Business twitter account. Who is the worlds most feared investor . It is this man. The evolution of who he has taken on board or if he has challenged. He has challenged the Biggest Mining Companies in the world, warren buffett, a whole host of issues. Aen some would say, he had hand in the impeachment of south koreas president. In our guest. The title of this story is the most feared investor. It says he is scorned for employing bullying tactics at times, singer doesnt worry about the tough reputation. He sees it as a selling point for investors act as them. If there was ever a definition of 2017, it is paul singer and act as him. Nandini it equates to a larger theme in investment about investors having a more potent stake in the companies they invest in. Weernments have been a theme are talking about with clients. If you see something wrong, the board is doing something wrong. You have ownership of equity or assets of that company, it is your responsibility to look at what is going on in terms of profitability. Fors an interesting Concept Investors to look into, being more act is in the process. Manus defining line, it doesnt bother me anymore in regards to his reputation. Guy johnson comes will dig into this and have more interviews later. But take it away. In advance ofve the secret vote later. Function, iron ore also a big move down that we have seen. 2 , this has been elevated of like. Late. Barclays says it will come down 50. Decent move on the front end of the u. K. Curve, Pay Attention to that. We will see what the data says later run this week. Yesterday, we did see a decent move there. The dollar is weaker today. The indian market is softer. That is a standout as well. From the european open, the fair value on the bloomberg for the ftse 100 pointing to a change of around. 1 . We will see what happens as iron ore comes off and that affects the miners, they traded stronger yesterday at the get go of trade but the china data is one of the things you