Is all about the data. China outperforming, that has helped the bid. Italy and france coming in light, a mixed field across the globe. Onhas a significant move Asset Classes. Coming up, we will delve into all of that. Take of Americamerrill Lynch head of economics joins us ahead of the jobs report. Plus, why he says the fed should overshoot its 2 inflation target. 25 hours until the important jobs numbers, markets wait and see but we got global pmis and a little bit of risk taken on. In the equity market, the dax off the high for the session but pmi cominga german in line with estimates and European Banks seeing a huge rally, the biggest threeday jump since july. A little risk, especially across europe. The fx market, the stronger the u. K. Pmi coming entity 10 month high, the other story is still going to be the relatively stronger dollar, the dollaryen 10369, now at a onemonth high, the dollar grinding slightly higher. , the china pmi coming in almost at a twoyear zinc,leading copper, tin, nickel, the base Industrial Metals moving higher but oil not participating as much, around a threeweek low. Sovereign market, yields backing up, u. S. 30 year yield coming up to basis points, a lot of issuance coming on over the next 24 hours from the u. K. , spain, france, poland, that weighing on prices on sovereign yields. U. S. Equity futures points to a slightly higher open a you cannot imagine traders will take on big positions headed into the 8 30 print on friday. Cautious trading, keeping track of the volume but we go around the world for Bloomberg Team coverage. From berlin to mexico. In london looking at some of the stronger than expected u. K. Economic data. He is here digging into the report that Deutsche Bank said to be weighing strategic options. In hong kong, the latest on the improving factory data out of china. Lets start in london with mark barton. Strong pmi data, the pound is surging. Sometime the chart is better than my golf or 1000 words from mark barton, u. K. Pmi manufacturing, 2014 to 2016, look at this rise, from 48. 3 253. 3, a record rise for manufacturing in the u. K. To 49 fromn increase 48. 2, revised up to 48. 3, what a turnaround in the u. K. Manufacturing sector from those lows in july. Now at the highest level since december. All of the gains in the last month have completely out shot the movements we have seen in the last nine months, 10 months, the big reason, you know, the decline in sterling, new orders arising and rising that sterling has dropped what we saw after the brexit referendum was a plunge in activity, a plunge in confidence, look at recently, a rebound in manufacturing in the u. K. , the big one is Bloomberg Intelligence, says monday, manufacturing is important but a big part of the economy is services, two thirds of the tonomy, in july we plunged 47. 4, if we get a rebound in services on monday, he talked that the brexit was not as bad as initially thought really starts to gain traction. , all majorllying currencies falling against the town today. We want the town to state lower if you want to see exports continuing. Lower European Banks seeing a huge rally, the biggest one in three weeks, Deutsche Bank leading the charge. Thatis due to reports perhaps Deutsche Bank would sell its Asset Management union, the details . A lot of chatter, as of yesterday, a talk of a merger about aet bank, today potential sale of some or all of the Asset Management units, a unit that is small but very profitable and is growing in terms of revenue unlike the rest of the bank. You have to see sentiment around Deutsche Bank and big European Banks, they are depressed and have been for much of the year, clearly a lot of pressure on ceos to come up with new ideas and offer more to investors to come back on these supercheap but super risky stocks. It is that idea that has led European Bank so high, the biggest threeday jump since july, or is this a value trade, they are so beaten up, we are seeing a reversal . More of the later, banks have been seen as value trap because there is no good news to cling to, especially in terms of growth, pressure on the ceos with other banks such as credit squeeze, more radical revamps and overhauls, if the talk turns to this direction to Deutsche Bank then it could spread to other banks. Deutsche bank up 4 in the market today, thank you. Checking in on the china data that was moving markets. Lets discuss china pmi, i have a chart that confuses me quite a bit, this chart is of the official data china pmi over 50, that increased, the blue line the unofficial data, that decreased, which one is right . We are having difficulty can you hear me . Having some technical difficulties. We will jump over to carolina checking on stock movers. Into some bigs moves we have been seeing in the Banking Sector, youre outperform are on the stoxx 600, closing 2 , outperforming the banks, across every single country, the spanish moves, german moves, french, italian, comment bank up 6 on a tear over the last few days, so much talk over german consolidation, german report, we said big moves to the stoxx 600 in banks, now to the levels of prebrexit. I want to get into at one particular spanish company, gas natural coming down to a 4 surge, higher than a few hours ago, all about private equity with a stake in the company to a tune of 20 , this would be getting a company that has its revenues in spain and latin america. A private Equity Company said to be looking to buy a stake of rexall. Europe,this plays into some of the big players in terms of Business Software are moving on what has been happening to salesforce. Com, yesterday for the first time in three years we saw this company miss its estimates, down 7 in early trading and yesterday latenight trading, two cents better for the Second Quarter is the outlook, Third Quarter disappointing, the consensus was . 21 to . 24 per share. Cloud computing supposed to be the hot sector, something to watch for. Lets break down the china pmi data. I pulled up a church chart highlighted a disconnection between the manufacturing data, the white line is the official site of pmi which moved higher in august and the blue line is the unofficial data which moved below 50, which data point is right . Predicting chinese Economic Data is not exactly an exact science, a bit of a Global Economy, highly controlled, the important thing to note in this is that it is staying around the 50 mark which divides contraction and expansion. We hade of weeks ago, retail sales, Industrial Production, all missing estimate and the u. S. Economy is in the doldrums and now pmi has increased more than expected, so a bit of upbeat about it, at the end of the day, the economy is stable, we have to remember that is highly controlled and things are not going bad, that is the important thing, especially for commodities. Why are not things going bad, that leads us back to stimulus, production up, new orders up, domestic demand higher from the stimulus but the question is will we get more . We probably will because the manufacturing cycle kind of starts in august, especially for some commodities. Get into theould sdr, china will probably want to keep the Economic Data going pretty strong, at least until the end of the year, they do not want pressures on the you want, do not one volatility in the stock markets. Everything seems to be going according to plan, a few pangs of birthing pangs as the economy moves from one model to the other. Overall, things looking pretty stable if not positive. Thank you. Lets get an update on what is making headlines outside the business world. The first word news. Donald trump has returned to form on his signature issue, immigration, in a fiery speech in phoenix the republican president ial candidate made it clear he wants to build a wall on the southern border of the u. S. And have mexico pay for it. He ruled out legal status for undocumented immigrants. Donald trump there will be no amnesty. Statusnot obtain legal or become a citizen of the United States. Byyou legally entering not legally entering our country. Earlier he flew to mexico city to meet with the mexican president , he says they did not discuss a border wall at the mexican president data said mexico would not pay for it. The british Prime Minister has set up the first ever redline for brexit negotiations, she wants to end the free moving to people coming to the u. K. From the European Union and suggest she is willing to meet the eu Single Market is to accomplish that. The new brazilian president said the work is over, she was sworn in after the senate in pete the suspended president , her first job is to put brazils economy back on track, telling the cabinet they will be spending cuts spending caps and pension cuts. This is bloomberg. Caroline . Coming up, Strong Manufacturing numbers out of china and the u. K. , are investors buying into the stronger data. Ethan harris, bank of Americamerrill Lynch head of Global Economics on next. Tom alix this is bloomberg. You are looking at relative risk on, futures pointing to a slightly higher open, you do have a relatively flat 6100 but the dax moving higher, was higher earlier, off the highest of the other session but the better pmi out of the u. K. And china helping firm eight tiny bit of Risk Appetite heading into jobs friday. The fx market, two stories, sterling surging higher, 132 against the dollar, you continue to have a stronger dollar against the yen, dollaryen at a backupth high, a slight in yields by one basis point, you are seeing that across the board as investors rotate a bit into risk and oil flat at a threeweek low. Day, ae happy pmi strong pmi day. Strong manufacturing data out of china, the u. K. , the eurozone, india, all above 50, getting a rebound in factory activity and with us is deep in harris the bank of america and religion head of Global Economics, do you diet by it . Better datang at for a while, started off year with people worried about Global Growth, the brexit was a bit of a shock, generally speaking the data has been a slight on a slight upward trend globally, we have an indicator called the global cycle which looks at trends in Global Growth and it has been improving for recent months and is above trend growth globally. The Global Economy is doing fine. The reason is because sterling fell, and china, in europe, a mixed picture, italy, france, horrible, are the tea leaves, if you dig deeper showing a slower Global Demand picture . Ethan i do not think so, the Global Economy is growing slightly above trend appeared in the u. K. , you are right, what does this brexit even do, its somewhat has helped manufacturing because of the cheap currency, where you worry about the u. K. Is about durable spending, all of the stuff affected by confidence, Consumer Spending on automobiles, housing, business investment, thanks affected by the company in the future, that is where we should look for the brexit shot, not in the pmi. Alix manufacturing 10 of the u. K. Economy, really about services, similar in the u. S. Caroline look at that number on monday, give us a sense of the pound rallying today, will that debt the future performance of the u. K. . Still a little bit, you have a weak currency, a cushioning effect, the currency cushionings job of the blow of what will be a tough environment for the u. K. , the small rebound in the pound is a small impact, still a story of manufacturing as well relative to the rest of the economy. Digging in much more with the data out of the u. S. Later. Again,ounding the alarm bill gross saying negative Interest Rates turning assets into liabilities, pounding this m, why , 25s is bloomberg hours away from the allimportant jobs report we get tomorrow, another read on the u. S. Economy, will it be Strong Enough for the fed to raise rates in september. With us is ethan harris. The magic number that the fed says we have to pull the trigger in september or december . Ahan september, you need strong report, well above 200,000, the consensus in our forecast is 180000 and the fed probably watches, a december rate hike is very likely, the stars are aligned, something has to go wrong at this point to stop the fed from hiking this year. Caroline what happens to the dot plot, generally . Ethan the fed will go extremely slowly. There is no rush here they should be hiking very slowly. The fed should not be worried about a small pickup in inflation, not a big concern in this world where we have had low inflation for years. The hole exit path of the fed will be slow. I do not see any time of toughness. Alix at the heart is the inflation debate, this is my favorite chart, from a report you wrote, the cpi that blue light and the white year the fiveyear form break even, it says as we see the cpi cried higher, the expectations are continued and lower, how does the fed bridge that gap . Ethan after years of fighting to hold down inflation, the problem the people do not leave the fret fed can rise inflation. Can convince the markets and the average person they can create their target of 2 inflation is to get inflation up, they have to prove they can do it and they should not try to resist the rise in inflation. Of 4 , 6 , what is your overshoot target and what does it do for inflation . Ethan i do not think the fed should be going back to 1970s, we do not want to go down that path but a modest modest overshooting where inflation in that 2. 5 which makes up for the fact we have been down at 1. 5 for years and by going to 2. 5 the fed gets ready for the next downturn, we will have a recession in the next three years to five years, they do not want to be at 2 in inflation when the recession hits because they will tumble down to the low inflation environment we have seen for years appeared if they want to plan for the future, they should be thinking about a modest overshoot. And this debate is front center at the fed, Charlie Evans leading the way, wanting to wait until inflation hits that 2 while other fed members are more skeptical, yellen herself. Fedline where are the leaning, tort evans or a more hawkish view . Ethan they are stuck, a lot of people saying the fed should raise their target but raising the target is a painful thing that requires a big internal debate, it could bring politicians into the picture complaining about what the fed is doing so they are reluctant to start down that path and they do not have to go down that path yet, inflation is still below target. Over time, in the views of evans and williams and the others on the committee who are the more dovish people, they say oh overshooting the target some way makes sense but i do not see anything happening soon, the fed has plenty of time to wait and figure things out. Alix if they risk raise the risk premiums in Financial Markets . Ethan yes, higher inflation creates a little bit more riskiness but we are not talking about real inflation, we are talking about modest over to consisting with the normal ups and downs, the fed can still stick in the long run that we want to average 2 and if we do that we have to be above 2 some of the time, presumably when the economy is hot and the load to present when the recession hits. Below 2 when the recession hits. This is centering inflation around the 2 target. Alix great to see you. Thank you. As reported, the inflation measures in the United States, fiscal stimulus was the wildcard, especially in the u. S. Caroline in europe as well, coming up, more about the u. S. , donald trump declaring no amnesty for Illegal Immigrants in a fiery speech, we debate that next. This is bloomberg go and i am emma chandra. Heres what you need to know this hour. A surprise from chinas Manufacturing Sector. It unexpectedly rose to the highest level in almost two suggestingecting the slowdown in because by flooding. The pound is giving a boost to manufacturing. A reached a 10 month high in august after work postponed in july was restarted last month. Apple ceo is confident of winning the battle over taxes with the European Union. The decision that ireland must billion dollars and taxes is maddening and disappointing, he has faith the right outcome will occur. That is what you need to know this hour. Caroline we will dig into the apple story more. We are in the green, Risk Appetite of bound after betterthanexpected china manufacturing, u. K. Manufacturing. We are up. 8 and the banks lead the charge. We are currently up 2. 8 in the Banking Industry and every single bank is climbing. We are having the best day since july 12. Nasdaq and ftse 100 held back because of Pound Strength. It is great today and your key best performer, up. 8 . Best day in a month for the british pound. U. K. Pmi surged after the brexit caution. The official data from the government of china showing expansion more than expected. Zinc is up. 7 and the metals are on the up because of china on the down, wally continues to be brett brent. Alix today we turn to the morning must read and it is a morning must watch. According to bill