On rising asset prices. Spurring a little of a stock selloff. Well this worry the fed . Share buybackhe days after dan lopes hedge fund bought a big stake in the business. Will this keep the activist investor at bay or spur him on . Hour less than half an away from the start of cash trading. Lets take a look at what the bloomberg is telling us about where we sit right now. At the moment and looks like we are starting off on a negative story. Feeding off what we saw yesterday. I will show you an interesting [inaudible] is outperforming. Uropean forces are down we will see a continuation of what we saw a little bit of yesterday. That was the equity market selloff. Lets move to the gmm. Heres what we can see happening around the world and dress in lines around some of these Asset Classes. The s p 500 down and the dax down. 8 of 1 . That is the bank drop to what we are seeing today. Interestingg some stories developing particularly in the commodities currencies, what is happening with china as well. Liquiditynue to drain out of the system. Lets show you what else is happening around the world. Allt yellen month draghi, being pulled together. We have seen some big moves and bond markets around the world. 10yearsee it in the and the japanese tenure. Big moves in the bond markets. It makes what happened to treasuries look fairly small. Most both of those moves i would Pay Attention to. We will get analysis as we work our way through the program. Lets get a first word news update. U. S. Stocks fell after fed chair janet yellen acknowledged valuations and equity and other asset markets have risen noticeably in recent weeks. The deal was that was a code by john lambs. Yellen was speaking during a visit to london. Asset valuations are somewhat rich if you use some traditional metrics like priceearnings ratios. I would not try to comment on and thosee valuations ratios, what to depend on in longterm Interest Rates and the sun there is uncertainty about that. By standard metrics, some asset valuations look high. There is no certainty about that. Shery president trumps agenda hit another speed bump with Senate Republicans postponing a vote on a new health care bill. Members block to the bill. It was drafted in secret. It delays another setback on the sevenyear campaign to repeal and replace the 2010 Affordable Care act or obamacare. Were going to talk and see what we can do, we are getting very close but for the country, we have to have health care. And it cannot be obamacare which is melting down. The other side is saying all search of things before they even know what the bill was. This will be great if we get it done and if we do not get it done, it is going to be something that we are not going to like and that is ok. Shery venezuelas president has waned a former ally after helicopter flew over and fired shots and dropped grenades. Financing the incident as an armed terrorist attack. He blamed the allied turned critic who served as his interior minister. The u. K. Prime Ministers Office has tried to downplay a row between theresa mays most senior officials over whether britain should have a transition as it leaves the european union. David davis accuse the chancellor of the exchequer Philip Hammond of taking inconsistent positions on aether the u. K. Should seek urging deal which could mean remaining in the union for years after britain is due to quit. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. You very much indeed. Lets get back to the markets and talk about what is happening. I want to show you what we are expecting the european stocks when they open and around twice five minutes time. What we have got is moves in the Foreign Exchange market and in the bond markets. Euro sterling hit a 2017 high. The euro is bid this morning, continuing to play the story we saw yesterday since the draghi comments. I want to mention as well, bringing this chart up as well which is what is happening with the bund trade. That is the bund as you can see, another yield higher in another move higher in yields. Story, seeing this yields rising and bonds selling off. Replicated in a number of different Asset Classes. Youre seeing it in the euro being bid and bunds are selling off and equities look like they are under pressure. Number of different angles as to what is happening. Also there is the cyber attack asia andeaching spreading across the globe. The virus advanced from russia and the ukraine and went through europe and ended up in the u. S. At it has moved on into india. It is moving on to china. The ransom ware is demanding a 300 bitcoin payment to unlock the system. Is it tech editor edwin chan is in hong kong. Talk to me about how long this is spread. It looks like this is a piece of software that is not specific in what or where it will go. Is that the sense you are seeing in asia as well as to mark edwin in asia as well . Thathen there has been widespread and impact. Impact thatnificant has been reported with was asia. Largest terminal operation. There is not a stringent disclosure requirement on Asian Companies is there is in other parts of the world. Be a significant story in asia. We simply do not know at this point. And when yes. Dwin a security form firm has said that there are infections in china but we do not know where or how significant. Another thing to remember is a lot of companies have hatched up they werenses and relatively better protected this time around. Guy i we hearing from the authorities about what is being done to slow it down, stop it, push it back . The Previous Software kill switch was discovered reasonably quickly. My sense is that is not the case this time. Edwin so far there have not been reports of a kill switch. It is conceivable we will see more and more affected companies, more infections, and the rent somewhere would spread ransomware would spread. We do not have enough information right now. Is affecting commuters around the world. You can watch the show using tv and the video stream and access the chart functionality which is there as well. Showingthe sidebar here the companies that are affected by the cyber attack, the functionality and we have who is on air and some of the chart functionality we are using. You can use this button down here, get in touch. Ask the guest a question. It opens of so you can axis the team at bloomberg. A fantastic function. You can access all of them. Macron government has taken a major step in labor reform. We will talk about that. Mr. Uestion for europe is, macron is saving europe from the populace. What does he want in return . I will leave you with that thought. This is bloomberg. Guy 42 minutes past the hour. Lets get the Bloomberg Business flash. Nestle has announced a 21 billion Share Buyback and says it is looking for acquisitions days after it called for a shakeup. They have not had a repurchase Program Since 2014 and the new ceo said a buyback was a lower priority than reinvesting and paying dividends. He called on nestle to sell its 23 stake in loreal and take more debt. Digital and western damages. Keeping them from interfering in the sale of its chip unit. Toshiba said it needs more time to reach final agreement on the sale of the business area but reassured it is on track to complete the deal by next march. It had wanted an agreement with bain capital and other investors by todays annual general meeting. Buy speeing to ctronetics. 38dutch company will offer and . 50 a share. That is twice 7 27 . They will buy back as much as 1. 7 billion of stock. Deutsche bank is said to make a u. S. Inflation bit that puts them on course to lose as much as 50 million. The german lender has been examining whether traders reached risk limits on the deal. Such a loss would he a setback for the ceo us efforts to overhaul the lenders risk and operational controls. An official for Deutsche Bank in new york declined to comment. That is your Bloomberg Business flash. Guy thank you very much indeed. U. S. Stocks fell after Federal Reserve chair janet yellen spoke. Valuations are somewhat rich if you use some traditional metrics like priceearnings ratios. Onould not try to comment valuations and those ratios, what to depend on longterm interestrate and there is uncertainty about that. Valuations and those metrics, somerd asset valuations look high. There is no certainty about that. That is a really big chair. Lets talk to mark cudmore. Was that something of a coordinated shift from Central Banks yesterday . Yellen, draghi, carney, etc. Ink we are considering that theory. That would be a scare for markets if there is this coordinated shift. Theare seeing r. B. I. , ecb, exception is yellen. She did make a warning about asset price valuations yesterday but she has not change the story. The fed has been more hawkish not the market that recently. I do not think you can get a coordinated pause unless the fed is involved. I do not the market is slightly scared about that today and that is affecting asset prices. Guy are we over reading what draghi said yesterday . Making the point that it was consistent with what the Central Banks message has been. Mark we are probably overreacting. Possibly because negative real yields in europe are large and there is an accelerated program in terms of tapering or even a rate hike. Negative real yields will stay large already. We might be slightly would overreacting but there was a shift yesterday by draghi. ,uy changing policy previously it has been the bumblebee speech, whatever it takes. And the narrative is different, it is looking the other way upside risks. That is a significant point in are to note. Mark we getting these tightening policies for good reasons because growth is taking off which means it will not derail the general global bullish equity story. It might be turmoil in the shortterm but it does not mean we will get a big change in trend. This is unlikely to be a big inflection point. Guy in the margin, if the fed sees massive prices being elevated, and irrational springs tois what mind, does the fed take action, does the fed take more action to do with that, or does it heightened the possibility of further hikes, does it list the terminal rate just a little bit more and that was not the evidence we see historically but it is it possible it could happen this time . Mark he has to focus on its primary mandate which is inflation. Done qe. As qe is a game changer. Is inflated asset prices, it has done many things but one of the main things is inflated asset rises. Mark we probably will see an asset price impact but it does not mean that we will get accelerated rate hikes. Not more than they are planning. I do not think that suddenly yellens comments applies they will hike even faster than we are thinking. Guy mark carney joining us from our mliv team. Individual specific events, tliv. Lets keep it on Central Banks. Corona rney, and a panel in portugal. You can watch that unlike go from 2 30 p. M. On your bloomberg as well. The policy decisions continue but lets talk about what is happening on the fiscal front and the french government presents a broad outline of labor lobby forms at a cabinet meeting. The highly anticipated reforms in the first test for macrons government since recent parliamentary elections. We have been hearing the labor saying theeaking focus is not the 35 hour week. What is the focus . Caroline the idea that the 35 hour week is a program, the 35 hour week has been loosened many times over the past 15 years. People, Companies Pay less taxes on the extra hours. This applies to factory workers. The idea this time is to lower the cost of hiring and firing. Contributions from the employer and the employee allow companies to negotiate wages at the Company Level rather than at the industry level. The idea is to decentralize collectivebargaining so the power of the unions and the collective level at the collective level and control the cost of firing someone by inping the litigation costs case of unfair dismissals. Allmeasures that these measures that macron is trying to do go further than what has been tried before. You have the unions in france and were going to face political protests and demonstrations over the next few weeks. Guy normally this kind of thing would not be done over the summer but it looks like it will be this time. How does that change the kind of story around this . Caroline it is a question of timing. Macron wants to go fast, he wants to avoid the extensive debates in element for hours and weeks. He wants to use executive decrees. He has the majority and bypass the debate and use executive decrees to do this fast and have the first laws in place by the end of the summer in september. As you were mentioning, because it is summer, many people will be on vacation which limits the risk of strikes. It will be anlike interesting day there. Thank you very much indeed. We are minutes away from the market open. We will look at the movers. Nestle making its first concession to activist investor. An low dan loeb we will see what reaction we get in the stock. The market open is seven minutes away. This is bloomberg. Guy welcome back. Nestle is doing a buy back. It kind of feels like it is a first reaction by dan loeb to take up stake in the business. He has a laundry list of things he wants to change. On this. Keep an eye watch some of the stocks that ransomn hit iceland the hit by some of the ransomware. Shareholders Pay Attention to this . There is the wider story of what is happening in the text race tech space more broadly. The nasdaq broke its trendline, it is an upward trend line, something to Pay Attention to. We will talk about that with our next guest. Keep an eye on european tech. The ftse 100 cool down and the rest of europe cool down around white five of 1 . The market open is next. This is bloomberg. Guy minutes to go until cash opens. Futures pointing to a negative start, which is something you are seeing in other Asset Classes as well. The euro is trading higher. Yields have opened higher. Else opening shortly. Openingaround gilts shortly. Upon his weaker, which is why you are seeing an outperformance relative to its peers. Down. 2 . We will want trade carefully to see how the pound trade through the rest of the session. We are expecting may be some movement of individual names. Keep an eye on what is happening with nestle, and some of these tech stocks as well. Beeneuropean stocks have affected by the latest ransomware as well. Let us talk about what is happening. The markets will be opening in a couple of seconds time. Coal down this morning. Let us talk about whether janet yellen is right or not. Are we overvalued in our Asset Classes . Ftse 100 opening reasonably flat. We will see what the stoxx 600 does. They will be down a little bit more than that. The ftse, down. 1 . The stoxx 600 down. 2 . I expect the cac to be opening down. Half a percent. There is the cac 40. Here is manus cranny. Manus the question you have got to ask yourselves is was janet itlens comment about . Exuberant she said it was not. About exuberant . She said it was not. It was not an irrational exuberance moment. If you want to understand the real propensity to shift the dynamic of markets, it came from mario draghi. That trumps kuroda, and yellen. Ability to be accommodative, but hinting stance, toifferent adjust quantitative easing earlier than anticipated, or isbe in line with what anticipated. Financials should reset the tenor on financials. Industrials down. 4 . . How should you look at a june move . We have put it together for you. G btv 521. We will break our winning streak. We are going to come in on the downside. That breaks the longest winning streak on the stoxx 600 since 2013. Is the political victory of macron priced in . Our people as concerned about italy as they were at the start of the year . Maybe not. Stocks are getting a little bit of rally here. We had a rally in may. This is something we have seen time and time again going back to 2013. The gilt market, we will get to that. Have a look at the sterling market. Thisis euro and the on is btvhashtag on this 520. You have a few more comments coming through from the bank of england, the Deputy Governor saying we have to take our time, more time to assess things in terms of the inflation pressures. When do you hit parity . When and if do you hit parity . This is the strongest ever for euro sterling in 2017. I think it is the strongest level since the latter part of november. You can see the momentum. These are the gilt market, and the gilt yield. Downside in terms of price. This is the gilt market. Staten see metcalf from street. Your brexit risk is better played probably where they have been underweight. Guy. Guy thank you very much indeed. Let us talk about what is happening here. A few upgrades yesterday. 2. 58. I need to track whether it is exdividend. Let us go back today. The 18th was the number in front of me. Galapagos, abm, amadeus is exdividend this morning. It looks like it is a Software Company that is trading or the Tech CompaniesTrading Software. Chipmaker, is Trading Software this morning. So you are seeing some of the tech stocks coming off. Hill, risingiam this morning. That is what you are seeing on the upside. We are seeing feedthrough from the tech story which started stateside, rippling through into the european session this morning. Nestles one company we need to be paying attention to as well. For a announced plans Share Buyback and it is on the hunt for acquisitions. They will funnel investment into coffee. Baby food and bottled water. The company said it will pursue opportunities in Consumer Health care. This comes after the investor disclosed there are 3. 5 billion stake in the company. Let us go to eric fowler. Is nestle buying time . Is this nestle pursuing a planet already had in place . Dramatic onquite the shores of lake geneva, two after they bought in. It looks like they are moving aggressively to respond. How longhis was