Of failure. M it punches the most since november after the ceo quits. Anna welcome to bloomberg daybreak europe, our flagship morning show. I am anna edwards. Manus im manus cranny. The world deals with another terror attack in barcelona. That is the reality of the world we live in but also across the pond, the world deals with the reality of what is happening in the white house. It is a double punch for the market. The s p 500 is down 1. 5 , the second worst day this year. It has only swung 1 in three of the last six sessions. Are we dealing are we building up to more . Is what really unnerved the market yesterday. They report was set to go, denied by the white house. You have volatility rising. Rising but it is not doing what it has done historically which is drifting away after the events. Anna after terrorism in barcelona, not just in terms of white house agenda, but what does it do for the race to lead the fed as well . Lets get to the risk radar and show everyone where we are in the asian equity session as we go to the night. These insane concerns around terrorism and geopolitics and around dysfunction at the white house are influencing the white house. The flight to safety illustrated by the fx market, we have seen more appetite for the yen, up a little bit on the euro after flipping 0. 4 . Manus the question for market is, when does the dollar become the haven trade . We will have those conversations later. Ecb officials of voice their concern over european overshoot. They are turning back there positions on the euro market at the moment. Anna lets get to bloomberg first word news with juliette saly. Juliette thank you. U. S. President donald trump will not move forward with a Plan Advisory Council on infrastructure according to a person familiar with the matter. The Infrastructure Council would have advised trump to send a 1 trillion in up upgrading roads and it said trump was disbanding other advisory panels. A Senate Republican once considered joining Trumps Administration hosted radical changes. The senator told his reporters that the president has not illustrated that characteristics needed to serve at his job. Trump has come from ice to his moral authority with his response to last weekends violence in charlottesville virginia. A white house official has said top official terry cohen will cohn willhis gary remain in his position. The former executive has been leading the Trump Administration in overhauling tax code. In spain, five suspected terrorists have been killed after six civilians were injured. The incident came hours after 13 people died and 100 more were injured after a van drove down las rambles avenue. Two suspects were arrested but the driver was not among them. According to the intelligence group, Islamic State has claimed responsibly for the attack. Our neighbors in madrid, nice, brussels, berlin, have experienced the same horror that the people of barcelona have suffered and i want my first words to convey to them that solidarity and affinity of the whole of spain and the whole of the world. Chinese home prices rose in fewer cities in july adding designs the Property Market is calling. From thees gained previous months in 56 out of 70 cities. That is compared with 60 in june while rises fell in nine cities and were unchanged in five. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can of course find more stories on the bloomberg at top. Final day of the trading week in asia, it hasnt been a good one given wall street. Attack in terror europe is weighing into sentiment. Area thei is down 1. 3 topics on course for the worst weekly course since june. Also a bad week for singapore. You are seeing the other market 7 10 of 1 down. Its coming off profits. Looking at stocks, we are watching emphasis in india, a big one plunging about 7 as the ceo resigns. He will become the companies vicechairman. A 1. 7 after agreeing to billion deal to buy an asian unit from mutual life as part of jack marsgroup. The Development Zone has also been rallying. There have been developed its between beijing and have a province. We will not get to that but i will show you we are getting the property story, china home prices and Hong Kong Developers are performing in terms of price to value the valley. Manus juliette, thank you very much. Juliette saly with the latest from singapore. Our top story is barcelona. We will be joined with a Security Specialist at the front of daybreak. 13 people have died and the Regional Government says up to 100 people are injured. Anna we will get further analysis on the ground. Lets talk about that with our guest who joins us on set, bob parker from the investment committee. Good morning. Tragic events on the streets once again of europe. Geopolitics back to the fall back to the four. Now we have whats has been claimed by Islamic State, another attack on the streets of europe. It has become familiar in europe. Guest regrettably so. What is the impact on investment behavior . Inevitablyly the come it means they want to reduce risk levels. If you look at the impact of geopolitical risk on economies, the impact is fairly shortlived. 50 years and you look at the geopolitical negative impacts on markets, it typically only lasts for a month or two. This is yet another example of and it will event result in investors wanting to shortterm,in the but if one looks at the history and the data and the impact on markets, the impact will probably only last a month or so. The market is booked to clinical and terror, but there is also a discussion of gary cohn and the state. Marketrved a seat of the pretty much as i have not seen for quite a while. The s p 500 and a vix ball. The whole point is that gary cohn is the trade. It is not trump. Cohen is the tax, cohen is the intellectual board behind the Trump Administration. Would you agree that is our risk . Guest i would totally agree. Last november, december, markets assumptionve on the on fiscal measures to reboot the u. S. Economy. That is obviously now history and the most fundamental point is that the more turmoil you have in the Trump Administration, the more risk you have on very serious people like eric cohen possibly desk cohncohn possibly gary possibly leading. Matter, you have stress in the Trump Administration. It needs the probability of important policy measures are significantly reduced and that is negative for markets and you see that in the downturn in the s p and more importantly, you see it in the increase in the vix. Anna if he is less in favor as he was as a result of this week in relationships and the white house, who leads the fed . Guest i think that will be a focus on the markets later in the year. Janet yellen might be replaced in early 2018. There is uncertainty about if she is replaced or if she is replaced, who would be the replacement and it would that be somebody sympathetic with the Trump Administration or not . Lets not forget the Federal Reserve is one of an independent central bank. There is a signs of that independence being eroded, the markets would take that negatively. Manus we have had a number of councils to spend it. Or was in if a structured News Conference and trump has abandoned his Advisory Group on infrastructure. Where are the bridges that need mending in the United States and how much would it cost . The darker purple, the lighter purple is where you need to spend the most money. Upper right, new york, into the middle of the United States of america. If you are going to fix the bridges. This is a staggering anna not just bridges. Guest very good point. Infrastructure covers bridges, roads, other transport systems like ports and railroad systems, like airports. A lot ofpotentially necessary money to be invested in every structure. In infrastructure. If this is not going to happen, vestors would take that quite negatively. It does not send a positive signal to investors in the s p. Anna bob parker stays with us on the program. Lets return to our top story in spain. Five suspected terrorists have been killed by police and six civilians injured south of barcelona. Manus the incident came just hours after 13 people died and 100 more were injured after a van drove down las rambles avenue in barcelona. Officials said the driver wasnt not amongst them. Islamic state has claimed responsibility for the attack. Anna lets bring in will gettys, the security expert from barcelona. On the streets of barcelona, are you seeing action by the authorities to try and protect public spaces to put an infrastructure, to protect people in public spaces as we have seen in other parts of europe . Certainly in terms of the standard profile of barcelona, i have been here in the last few days on business. Like many relaxed, mediterranean cities. There has been visibility of local guard and police around some of the main tourist hotspots, but i was in las rambles a couple hours preceding afternoon yesterday and it is a difficult environment to attack. It is a small boulevard. References andng it is much smaller than that. It is highly concentrated and its a big hub for foreign travelers and tourists to congregate which would have made it an ideal prospect for terrorists. Manus very good morning to you, well. We now have the government that five suspects were killed and six civilians were injured and that is connected to the attack on barcelona. Given your experience of how these issues are handled, this is now about reassuring travelers and indeed, the residents, that Security Services has gotten a grip on the situation and there are no further potential risks. It is really important for them right now to reinforce the fact they have control of this and authorities have responded very appropriately. We are seeing a lot of uniforms across barcelona, many of the hotels have taken robust procedures, walking off the vehicle Access Points and inevitably, there is going to be an air of concern and anxiety amongst not only those people that are visiting the city, but some of the residents. People are anxious right now so it is important for the authorities to communicate clear messages they are on top of this. By the being illustrated very Quick Release of information and confirmation of information in the wake of the incident. Anna the spanish authorities islamic confirming terrorist attack and separatist activity. We know who has claimed responsibility for this and i wonder if this opens up further conversations about encryption and messaging. We dont know how this was planned or who was involved in planning it, but this is these are the conversations that followed after the london attack, the nice attack, and others. It helps them listen in on conversations happening behind the scenes. Indeed that it is about collaboration and trying to defeat a common enemy. I have contacts within some of the Big Technology companies. I have had candid conversations with them about dealing with authorities and it will be a continual balancing act before findingcing act for information from intelligence agencies that is grounded and suitably providence for them to justify the release of data on private individuals. This will be an ongoing discussion for some time. There is no easy quick fix on it but something we do all have to us, if is that all of you are like in a collaborative sense, we need to realize we need to remove some of those veils of secrecy afforded to us to enable a universal security and safety to a certain degree. Manus they give very much for being with us. The ceo of icg group joining us from barcelona. Quarterhose measures to off areas from the hotels. The city is reeling from the very latest terror attack. The lets get an update on Bloomberg Business flash with juliette saly. Juliette and a, thank you. Indias secondlargest Software Services company has slumped after the ceo resigns. Amid heightened acrimony between the board and its founders. Operatingt chief officer will become interim ceo. Until a permanent replacement is hired. He will focus on strategic matters and receive an annual salary of one dollar. Double like capital is engaged in an Unusual Campaign against the wall street journal. Their rival news organizations for a story yet to be published. The walllock said street journal is desperate to populate anonymous source is. According sources. To him, they have been looking into it. Element management has signaled its willingness for the private equity duo starter in the middle of it according to people familiar with it, the investor engaged with bain capital before a deadline on wednesday. Spokesman for elliott and the private Equity Company declined to comment. That is your Bloomberg Business flash. Juliet, thank you very much for that. Home prices in china rose. Adding signs that the country could be cooling. Rose 56w home prices out of 77 prices. That was down from 60 in the previous month. Nine cities saw proceeds drop. Lets bring in Stephen Engle and hong kong. What are the Key Takeaways for you from this set of housing data . Stephen the key takeaway is that authorities want to cool the bolt before it comes a bubble. Tier one seen the cities, beijing and shanghai, impose strict borrowing curves and other proper he related curves and we have seen those of white. Month over month gains turned into declines for prices in shanghai and beijing. Months, butple of what has been underpinning the Property Markets of late has. Een the third tier cities the data suggest 56 out of the 77 cities have seen home prices range, 60 the previous months. A lot of those reversals are coming from the third tier cities which are starting to impose the property curves of their own. Terms of the impact on development, this is about rebalancing china and not allowing an entire implosion in some of these countries. What about these developers . What are we seeing . Ephen that is the dilemma of any regulator in any industry. Ofy want to keep the support elements in the Property Market going without causing undue stress to these companies. There has been a number of different defaults in the chinese economy. Merrily in the property sector. They are quite vulnerable. That do inverseas the middle of next overseas debt that are due in the middle of next year. They will be running into cash flow problems because they have been paying record prices in land in china and they are running into cash problems and they will have to start flashing prices to get more sales. Much,thank you very Stephen Engle from hong kong. Bob parker still with us here in the studio. In terms of the chinese conversation, do you look at this and say, the market coolities are trying to restrictions on the sector . It seems to be working. A calmness flat to negative. This is by design, isnt it . Guest absolutely. The whole focus has been on derisking the areas of overleveraged in the economy. I thought that was consistent with the statement we had from the International Monetary fund this week, who basically gave a warning shot that there are areas of excessive debt still in the chinese economy. The action taken, whether by the peoples bank of china with a regulatory authorities, first of all, as we discussed, they are trying to diffuse future risk of a bubble, again in the real estate market. They are attacking the shadow banking market and reducing the activities of shadow banking and bring it on to bank balance sheets. They are concerned about nonperforming loans in the Banking System and about the levels of debt in Stateowned Enterprises and local authorities. Just one area, it is a raft of different sectors where they are trying to slowly diffuse and d risk areas of overleveraged. Manus certainly this is something xi jinping wants to manage carefully. But this is particularly important politically for him to it toure according make sure it goes according to plan. We are talking about debt. Area isou say this important and yes we have the National Congress in november and clearly they want to minimize the risk of any economic accident before we have this important meeting later in the year. The other factor is, they are concerned to try and slow down the economy after a very good secondquarter results when the economy accelerated. On the basis of that strong economy, economically, this is a very good time to take a late liquidity and reduce the leverage in the economy. To avoid a hard landing and we have been talking about the risks of hard landing in china for the last four or five years. I stick to my view that we get this longterm price down and gold growth slowing. Another discussion was outflows in china. To some extent, the chinese have been helped by turmoil in the white house. A weak means the focus has been taken off the yuan. Christopher paulding was on the terminal talking about how some of those things that led to you on weaknesses is still there. You want weaknesses is still there. The reserves have stabilized around 3 trillion. To quantify that come at the peak in the reserves was 4 trillion. Over the past two or three years, we have seen when julie dollars decline in the reserves at a time when china is running a significant current account surplus. The decline in the surplus is down to capital outflows. Pressure byure the looking at the spread between offshore trading and onshore. That spread at the moment is very tight. As of today, there is no pressure on the capital account. If you go back to january 2016, the spread was wide and we saw significant pressure on the capital account, money moving out. They have a very good control over the capital acco