Back in new york. We are seeing bond year its near record lows. We have never seen this before in history. We will be talking about this through the whole program. Theme. Es, a key it is a testament that is splintering forces in the market. We have one of the most accurate henomists, joshua shapiro, will be here. You dont want to miss this. Once again, a historic move that we are seeing in the markets. Jonathan look at the futures markets ahead of the open and we are points away from an alltime high on the s p 500. And another big headline is on brexit. Sie up 20 post back into a bull market. The weaker pound stimulate some stocks with a big flow of foreign earnings. The s p 500 is going to be in , they madethe nikkei big lives overnight. The biggest drop since around march on the nikkei to 25. The market is doing its thing. The fx market response with a stronger japanese yen. Up 1. 84 . A weaker japanese yen off the back of a decisive election with the Prime Minister over the weekend. Does that mean for his stimulus package . We will discuss that to the program. A bond market on friday was fascinating. Even with the solid jobs report out of the u. S. That will be a topic of discussion. Yields on the session, the belly of the curve, up three basis points. To wrap things up, wti is a little bit softer on the session. We trade at 44. 92. Alix the risk on rally continues. We want to go around the world and check in for indepth coverage on our top stories. Enda curran is in hong kong. Andlet fu is in london Yelena Shulyatyeva, post jobs report. We have u. K. Politics developing fast and furious. Sterling moving higher on reports that Andrea Leadsom could be retiring . To get she was supposed ready to speak at 12 00, that hasnt pushed back to 12 15. That will mean that theresa may will win the leadership contest in the conservative party. It is not clear whether there will be a Party Membership vote to ratify this. Mark barton and i were talking about the ramifications and it would mean that theresa may was the only candidate to be the next Prime Minister in the conservative party. And it is not necessarily woulding she wants she want a proper race to make her case and be properly elected. In this instance, if she just becomes the next Prime Minister, she really doesnt get to make her case. She has less of a political mandate. Alix interesting, her viability in the market. U. K. Ll street meets politics, we have George Osborne making his way to businesses today. What can we expect . Scarlet it is a global roadshow. He will try to win over u. S. Investors. He has already met with investors from Goldman Sachs and jpmorgan to defend london status. Travel this month people to asia, singapore and china. His message is to woo investors and to tell them that london and britain is open to business. He reinforced that message with an oped in the wall street journal that discusses attracting private investment. For instance, infrastructure such as new roads, highspeed railways what we can expect to hear from George Osborne is an emphasis on spending cuts and tax reduction that have been part of his hallmark. He says he aims to cut the u. K. Tax rate to 15 or lower from the 17 that it is set to reach. I a point of contrast, six years. Go, the tax rate was 28 alix thank you. Scarlet fu joining us in london. Obviously the Market Action started in asia today. Jonathan it did. Interesting moves with the pound. Equities up 20 from a february low. The attention is very much on asia. Following a weekend election in japan and a decisive victory for the Prime Ministers party. And joins us now. Talk to me about the win and the consequences . Enda good morning. This is a clear win for Prime Minister abe. He is taking on the green light for fresh fiscal stimulus. We dont have the details of the measures yet but it will involve spending being rolled out over the coming months. Such a member why japan needs to do spending. We are talking about the. Hirdlargest economy this year alone, the yen has searched 20 and that is hurting exporters, the backbone of japans economy. It hurts their expansion plans and they dont want to increase wages. So when you take that altogether and you take his big win, it gives him a green light to push ahead in the fiscal spending side of things. We will see if he delivers on the structural reform side of things. Jonathan are was looking at stimulus in terms of holding a bridge . What about the reforms that go with it . Will they be delivered . Pace ofthink the Structural Reforms have left many disappointed so we will have to see if he steps up. Since see if he gets distracted into wanting to make changes to the constitution. That could become something of a diversion for him. Me say here guess who came to lunch today . Ben bernanke was in tokyo. Some people are reading this as a signal that perhaps they are for guidance on what to do in the future. Jonathan thank you very much. And occur in from hong kong. David you would like to hear about that conversation. Jonathan i would like to be a fly on the wall. David we will come back to the United States, we had surprising jobs numbers come out on friday. We are joined now by Yelena Shulyatyeva to talk about those numbers but the yield didnt come up at all . And looking this morning at w. A. R. P in the terminal, there ina 4 raise chance coming july. What would it take to move the numbers . Yelena the payroll report for june was clearly an encouraging development. But if by no means puts the july meeting back on the table. It comes back after significant deceleration in the previous few months in a payrolls. And it might not be sustained. I think that it still shows us that the pressures remain limited and it should give the fed some comfort that they will proceed very cautiously. But at the same time, it also assures them that the domestic economy is doing ok. David so besides the wage pressures, the other one is the job anticipation rights. They remain somewhat depressed low what graphics would indicate. Is that an important factor in what the fed looks at . Absolutely. That is another factor that will give the fed some hope that there is slack remaining in the markets. Developmentsitive that the latest report showed us. Anticipation is increasing. And it comes on the back of some increase sentiment. Finances are looking better and better and that might encourage them to get get back into the labor market and try to look for a job. David thank you. That is bloombergs Yelena Shulyatyeva. Thats get an update on what is making headlines outside the business world. Outheresa may is laying what she calls a different kind of conservatism as she tries to become the Prime Minister. They outlined her vision for a fair economy. On workers her work on the board and pay finding. And she said Monetary Policy has helped homeowners at the expense of those who cannot afford to buy. Germany will take on greater military leadership in global conflict according to plans for the countrys first overhaul of the Security Policy in a decade. Angela merkels government has already taken a conservative stance. It has armed kurdish rebels in iraq and helped with airstrikes in syria. There was another protest in aden rouge against police killings. As many as 40 people were arrested for blocking a highway last week. Less week a black man was shot and killed by Police Officers in baton rouge. President obama heads to dallas tomorrow to meet with the families of five Police Officers who were killed. Global news, 24 hours a day. Powered by our more than 2600 journalists, in more than 120 countries. This is bloomberg. Jonathan thank you. Coming up, is the race for the next uk Prime Minister about to take a big turn . Andrea leadsom will make a statement in a few short moments. We will head there live when she begins speaking. This is bloomberg. Jonathan another twist and turn in the race to be the next uk Prime Minister. Simon kennedy joins us now from london. Andrea leadsom is making a statement right now in the United Kingdom. Talk me through what we can expect. The bbc sheding to will be pulling out of the race to be Prime Minister. She was down to the last two. It is not confirmed. Jonathan looking at the reports from this statement, they are saying the leadership race is undesirable. They need a new Prime Minister in place as soon as possible. Im sure everyone at bloomberg has got around a table to talk about this. If she drops out of the race, what does that mean to theresa may . Prime instantly become minister . Simon the word last week was they didnt want a coronation. They wanted to wait until the for the 150,000 members to have their say. Like ad now look coronation but whether there is a legal rule in the party, i dont know. This would suggest that theresa may if no one runs against her she is the next Prime Minister. The headline Andrea Leadsom withdraws from the leadership race. That is the headline right now. She assures mayo of full support and withdraws from the tory leadership contest. Walk me through something. This can be misguiding something but but what happened today on the sterling chart. Any dots between theresa may being the sole candidate for the tory leader uk Prime Minister and what happens in markets after that . Simon i think you can. And the timing of that leads to the reports. Two thoughts. This delivers greater certainty if theresa may is the next Prime Minister. We will now know that sooner rather than september 9. There are a lot of questions about who is in charge of britain at the moment and it would answer that. He second reason and a more cynical 1 theresa may was part of the remain campaign. Quite a quiet member of the theresa make repaying campaign. Willid promise she perceive the referendum decision and withdraw from the european , and she was against Andrea Leadsom who was a vocal member of the brexit campaign. So there may be price action there with the. That theresa may wont be as probe brexit as she has maintained she will be. Certainly not as much as Andrea Leadsom. Simon kennedy joining us from london. The headline now Andrea Leadsom withdrawing from the Prime Minister contest. Leaving theresa may to be be sole candidate. Another big twist in a big race. David quite a drama. I wonder what this might do about the timetable. And whether this offense is the entire timetable. To say there will be a Prime Minister sooner and we need to act . Jonathan theresa may herself said not until the end of the year. So if she is concerned as the Prime Minister and i stressed she is not that yet she is just the sole candidate you wonder but she said not until the back end of this year. That and you could argue the pound rallying is a reflection of that kind of movement in the markets. David we will bring in dan moss now. This is right in your area. It does this mean, globally for the market . Dan it is another example of a Global Economy that is expanding and taking some hits. Course. Not knock it off at the same time, there is not a lot of momentum there. It is really a question about who is in charge of the u. K. You could argue that mark carney is in charge. They were hers for this and they planned for this. They have been clear about the intentions of the bank. So what does that mean for thursday . Many economists predict a quarterpoint cut. Thisu go back to earlier year and last year, many people are talking about the u. K. Getting to the point of increasing. Alix right, we were debating whether the fed or the year we were the strongest data point. Dan right and that hasnt played out. David expand this out a little bit. There is a Bloomberg News piece out today on the drift economy. Dan this tells us it is a Global Economy which, overall, has defied the naysayers. It took some hits. We have guests on the show and some beds. Into seven years now and it is true of the major components of the economy. Andu. S. Hasnt gone back china hasnt imploded but there is not a lot of momentum there. Point, josht shapiro is joining us. You could make the same case but you are much more negative when it comes to the u. S. . Joshua moore in 2017 then this year. We see things unraveling in 2017. And that is on the back of declining Profit Margins. Pressure on the corporate sector that we think will result in aggressive costcutting that will weigh on the labor market. Of recessionnd does this wind up looking like . Joshua it is hard to say. Alix is it steep . Joshua i would think in the beginning it is not steep because we are not coming off of a boom. It is a withering on the vine kind of thing. The fed has a very small window if they are going to move. Just about to begin earning season. A number of economists to come in here say that they think they are looking towards good earnings because energy, year over year will be better. And the dollar was too strong. What do you find wrong about that analysis . Joshua i dont see anything wrong with it in the second quarter. Jobs data isverall better in q2. I think what you want to look at is the overall trend. If you bounce off that, the trend is still downward interns of corporate Profit Margins and we would expect that to continue overtime. Alix this brings us to a little bit of the u. K. And the u. S. Which leads us to japan. A vote of confidence for abenomics. Does this actually wind up moving the needle . It was a big vote of confidence for a human. In japan, the opposition parties are desolate. We talk about the u. K. Labour party being in a bad place but in japan, much more dire straits. Yes, another japanese fiscal stimulus package. Widespread expectations that the boe is going to ease. We have heard it before. And it keeps hanging in there. The japanese downturns tend to not be sharp. Deep. Ds to not be they tend to be shallow but they are not getting much traction either. In a population where the demographics are working against them, it is awfully tough to get to lift off without massive support. David so why havent the attempts in the past worked . Does it tell us anything about this one . Joshua in japan, it is demographics. Do something that changes the demographics in that country which means immigration there is nothing they can really do. Alix this ties together with what we started with with u. K. Politics. There is a huge inability and Central Banks to actually get any kind of momentum within their respective economies. You wind up having political opposition which promises Something Different but it doesnt wind up moving the needle. What is the end result of this . Is it all breaks it . Is that the outcome . If we go back through the postwar decades, we are used to seeing a singular growth driver. Whether it is japan in the 90th 70s, the u. S. In the 1980s19 90s. China in the early part of this century. There is no theme. We are just drifting along. One more thing that you add to the mix, on friday we will be talking about china gdp figures which will be out. Again, go back to the start of the year. People were talking about a recession in china and an implosion but that hasnt happened. It is not powering ahead either. David what could be the next main driver . Lets go back to japan. The about women in workforce . That was a main driver to increase productivity in the United States. Other other drivers that could get the economy going again . Joshua it is hard to see that in japan. They need more young people. Their demographic profile. The only way to do that is to start having babies and it starts to take a while it while before you have an effect. Are you allow young people into the country which they dont have any intention of doing that. David the u. S. Is a large driver of global economies. Are there potential drivers . We did have the driver of women in the workforce. Either other things waiting in the wings that could trigger increases in the economy . Joshua we need a lot of structural reform which requires Political Leadership and people working together. And that is hard to see in the near term. I think in the United States we will see more pain before we get to the other side and get politicians who do what they need to do. Monetary policy is over. The fed and every other central bank in the world has done what they can do. Alix that is a great tie into what we talking about in the u. K. Future probabilities. This isate hike for the u. K. Were looking at a 70 chance of a cut in july. It keeps growing. A 90 chance of a cut in a year. This Means Nothing then to the growth of the economy . Joshua i dont see where does a lot with growth. Interest rates are not the problem here, except that they are too low. Alix wow. Ok, a great wrap up. A lot to talk about in the u. K. , the u. S. And japan. His piece on the bloomberg, dont miss that. Leadsom, one of the leading candidates to be the next Prime Minister in the u. K. Has pulled out of the race. Paving the way for theresa may to become britains next Prime Minister. That has not been confirmed. We will discuss that throughout the program here on bloomberg. This is how it is playing out in the market. Stronger pound story bouncing off session lows a