Does this put tax reform even further away . Theuncertainty for abe, japanese Prime Minister pummeled in the election. Has this weekend his position ahead of next years vote . Or is this just a protest vote for what is happening in tokyo . We will try to get analysis on this throughout the show. We are less than a half hour away before the open. The start of q3 is the fair value on your bloomberg. London looks like it will underperform. Keep an eye on the commodity stocks today. Looks like it will be a positive start when cash gets going later on. Lets show you what is happening with jim and. This is the picture we had. Performance from the south american markets. Gst comes in fourth, thats a big story. This is one of the key policy agendas. The market is trading higher this might. Peso is it down. There are risks, inflation risks surrounding the gsp story. What about the rest of the policy agenda . We will talk about that in the back half of the show. Lets catch up with what we need to know. Here is juliette saly. Juliette in the middle east, a saudi led lock has agreed to a two date extension for qatar to meet its demands. The reported the decision was made as of the mayor of kuwait has been acting as a mediator after receiving a letter from qatars or minister. Coalition has blocked land of links with qatar, quoting it is supporting terrorism. Donald trump has ratcheted up his feud with the media by posting this video on twitter showing him body slamming a man whose face was digitally replaced the local of cnn. They say its a sad day when the president of the United States encourages violence against reporters. Democrats also condemned trumps message. Nuclear ambitions to dominate phone calls between donald trump and leaders of japan and china. It comes after they accused u. S. Of trespassing to save a guided missile destroyer. The move ahead of this weeks 20 meetings could signal the white house is displeased with chinas efforts to pressure north korea to curb it nuclear and missile programs. In china, the latest gauge of manufacturing has added the economy is maintaining momentum after a strong start to the year. The survey beat expectations, coming at 50 in june, up from 49. 6 in may. In the u k, theresa mays government has changed its tune on brexit, striking a more sober and realistic tom weeks after her disastrous election. Tone weeks after her disastrous election. Gesture toiliatory an audience that feels it has been overlooked. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy . Thank you very much indeed. Lets get back to the bond market is that is the big story of last week. The u. S. 10 year yield is just one percentage point above the record low. Even after we saw this big rises in june. The limited advanced can be treated to the slowdown inflation, lack of progress to increase government spending, thats what we are talking about what the latest trump video means. During us now is bloomberg reporter, mark cranfield. Think u. S. O you yields are going lower . Guest analysts are being confounded by the fact inflation has underperformed in the United States. It was expected to be higher by this time in the cycle. Longterm treasury yields have managed to stay low and the bond market has lasted longer than expected because real yields have been quite attractive for investors. Thats a conundrum that analysts are still grappling with. A lot of people have forecast higher yields are the end of this year and they happened to revise them slightly. In the shortterm, this move in bond yields may push u. S. Yields further for now. The bottom line is, inflation is way too low. Guy absolutely, but we need to think about the fiscal side of things. This is why i come back and referencing this trump video. Trump is fighting a war with the media, not delivering policy. That is what we need to get the markets moving in a way that may drive a yields higher. Is it down to the president now to push yields up . Story Monetary Policy doing what is doing, but to make a change here, policy has to change in the white house. Guest absolutely. The white house is a very big factor in this whole equation. If you remember november, the whole thing started with these trump reflation trades on the basis that his administration would be spending a lot of money to kick the economy into shape. There would be very big projects with infrastructure, tax reforms, all kinds of things that would generate gdp. So far, not much of that is coming through. If we continue to be disappointed with no new policy, then Bond Investors are saying, what is the point of me selling . I might as well keep my bonds. Guy absolutely. They give for joining us. If you want to follow us, loads of ways to do that. But one of the easiest is to go to the mliv blog. Perspectives, different ideas, different ways of looking at things, some smart ways of looking at things. Lets talk about whats been happening in japan. Test the times why ahead for Prime Minister shinzo abe. He lost to took his residence first party in the city assembly. Joining us now is asia government reporter isabel reynolds. Is this something we can extrapolate further forward and do what it means for the election, the general elections coming up next year . Was it really of a big disaster or is this kind of a midterm process or was the Something Else . Difficult to distinguish between the two at doesntnt because abe need to hold a general election until the end of next year. But this came as a surprise both whoim and the governor, said several times in an interview that this is beyond her expectations. I think it shows that there is an alternative and they are and hisangry with abe cabinet because of the scandals. Hey will punish them the question now is whether someone can offer the alternative in the general election sometime this year or next year. Well . S it down to her, as she is very charismatic. She carries something few politicians are able to carry in terms of their ability to reach out to very many different demographics and bring them together. She is very different in terms of the political narrative. Absolutely. Despite the fact she has come party, hes own wouldnt give her a job in the government, so she dropped out and went for this job in tokyo in a landslide a year ago and she is very good at campaigning shes good at creating an image. Shes talked about open government, cutting wasteful spending by harboring her own salary, which is a convincing way to show people she is a serious about what she is doing. Luckily, she will be in the job until 2020 at least, so does not present an Immediate National politics threat to him. Guy thank you very much indeed. Isabel reynolds joining us out of asia on the latest stories writing japanese baltics. If you are a bloomberg customer, you can watch this show using tv. But when you use tv , you have all the added bells and whistles we have added. What a gives you is this sidebar, which provides breaking news, writes what is happening in terms of functionality and the charts we are using, many smart charts produced here at bloomberg and you can pop them out, press them, and pop them into a separate screen. You have so much to use. You also have this function down here, where you can ask a guest a question. If you want to send us cool things that are happening, we would be delighted to hear from you. Also send us your thoughts on what we are doing here, some of the questions we need to be asking. Its a great function. What the bloomberg tv screen many different ways, but this i would argue is one of the better ones. Coming up, what are we going to talk about yet . Iran is signing of contract with total, making an investment into iran. We are going to talk about that next. This is bloomberg. Guy you are looking at live shots of london, the market open is 60 minutes away. We are expecting a positive start but for the ftse to underperform. Lets go to Bloomberg Business flash with juliette saly. Juliette the list department of Homeland Security has lifted it ban on electronics on airliners flying to abu dhabi. The move comes after the u. S. Pelleted security measures at a facility outside i would be national airport. U. S. Officials are pushing other airports to boost security on laptops and similar items after intelligence warns terrorist groups are capable of hiding bombs in it. Former berkeley ceo john vallee will be a month for x bankers that will appear at court today. With scheduled to appear Roger Jenkins and richard bove following the announcement of being prosecuted about how barclays raise billions of pounds in 2008. They said they would contents contest the charges. Google parent alphabet says the eu antitrust fund will profit in the Second Quarter by two and three quarters billions dollars. Two with seven 5 billion. Google was penalized for pushing its own Shopping Services ahead of those on rabble. Toshiba is considering an initial Public Offering in vigilant. The Company Might do it by the end of september. Its one of several assets toshiba has put up for sale after making up for multibilliondollar losses at an energy unit. The ipo is one of several options on the table and the sale of the business remains an alternative. That is your Bloomberg Business flash. Guy . Iran is set to sign a contract with total for a share of the World Biggest natural gas sales, the First Investment in the country since sanctions work these last year. Lets go to the middle east and join tracy alloway, who joins us from avid daddy. How significant is this and what are the risks associated with it . Have been waiting for this wave of deals to come off the back of tensions being used in iran last year. This looks like the first of what could be many. Iran is in talks with other. Uropean majors but iran was to accomplish is get an influx of Foreign Investment into the country, Health Reform some of its antiquated Energy Infrastructure and what oil majors want is access to new energy assets, china in particular has been stepping up assets all over the world now. What is interesting about todays news has to be the timing. Expected toement is come on the date that was going to be the deadline for qatar to respond to the list of 13 demands from the Saudi Arabian gcc alliance. Frankly, the gas field has been at the center of some speculation about the reasons behind that qatar gcc dispute. I spoke to one source and i would dobby and he set the approximate cost for that dispute was not terrorism or trumps recent visit to the region, but qatars decision to end a self imposed much for him on moment or you and that would put pressure on other opec produces. Interesting geopolitical stuff on the red. Not one of the story, so how does that fit into the qatari story about the other four nations . We had a deadline extension, but where does that leave us . Tracy thats right. The deadline was supposed to be today, but we have news from saudi arabia, that they have agreed to an extension to a deadline at the request of kuwait, who is acting as a mediator in this dispute. We have not heard from the tar yet and do not know if they have agreed to the extension. Its unclear what the additional two days will do here given some of the rhetoric coming out of both sites. The Qatari Foreign minister was saying there was no possibility that they will concede to demands that effectively chip away at their national sovereignty. Meanwhile, saudi arabia said there is no room for negotiation on this list of 13 demands. Of ahe list is kind laundry list of various things that include the closure of al jazeera, Rex Tillerson has called all of these things tough asks for qatar. Come two days from now, its entirely unclear at this moment in time whether we will get a resolution even though we have had an additional 48 hours to discuss it. Guy one quick question, how significant is it that if i get a plane to have a dobby, that i can take my laptop, but i cant if i go to dubai . Tracy well someone like me that goes to the u. S. Regularly, its good news. Preclearance u. S. Facilities, which means there are u. S. Customs officials on the ground in Abu Dhabi Airport and they supposedly implement security measures similar to what you would find in the u. S. Abu dhabi is the only place in the middle east that has that facility, one of six countries around the world. What is interesting is that if you think abu dhabi and its own carrier gets an advantage from having clearance, allowing there passengers to carry on laptops, you start to ask whether or not you will see other middle eastern hubs such as dubai may be asked for a similar clearance from the u. S. Guy something to watch out for. Dizzy morning. Tracy alloway joining us from abu dhabi, thank you. We will carry on the conversation, what the total detail deal is going to me. Plenty of other things to think about. Guilt will be opening shortly. Well talk about guilt trade. Short day in the state today because of the holiday. Lovely day in berlin, matt miller not there, though. The open is next. This is bloomberg. The natural and for legislation is in february, 2010. Therefore the foreseeable date would be between the month of february and early spring. Democracy, there may be conditions for early elections, but for the time being, we do not have such isgle and therefore it likely for legislation to expire naturally. Guy that was the italian resident talking dates for an election in italy. More from that interview later on in the program. Important stuff, the market paying attention to italy. Lets take a look at what we are watching in the stocks. As we mentioned, total expected to sign its deal with iran on Gas Production area keep an eye on that stock. Could be one to watch out for. Not without risk what they are doing in iran. The other one to mention is, the disposing ofis assets to make another asset with the u. S. Authorities work. Million selling for 875 dollars, considered to be a natural interest. Thats danone stock. Getting just a little bit, up 2. 94 , but the year not looking great. This date looking better. Just a quick idea of where everything markets will be going. Remember, it is a shortened day in the United States, so bear in mind in terms of liquidities working its way through the system. London is going to underperform 2 10 of 1 , the cac and the dax up by 56 of one 10th of a percent. The big story last week was not equity, but the bond market. The gilt market is about to open as we see the push for a soft brexit being given home later by mr. Hammond, chancellor. The open is four minutes away. This is bloomberg. Go, somethinge to to be aware of. The new their project in the billion, a cost increase of 1. 5 billion, which raises the rates of return a book by percent. Thats one of the things people are paying attention to in terms of Infrastructure Spending and whether its worth it. Wind because more viable, questions are raised about cost benefits of investing in hinckley points. In terms of the financing and toshiba etc. Lets talk about where cash is going to open. I think it will be a positive open. Up a bike around of a half of 1 , london looks like it will underperform. Looks like you can see london not trading quite strongly. As the market opens, this is the picture. We can see london flatlining right now, 7313 is what they are as not quite as strong markets are expected to be. Lets see how the aex is going 1 , we are 4 10 of waiting for the cac index to open, expecting to open a little more firmly. Ftsesre opening, already open, lets find out what is going on the internals on the markets. Manus the data has been supportive from asia. The china manufacturing data has been nice and robust. Abe is politically soft, but the data supporting the momentum in markets. We are going to get u. K. Manufacturing and u. S. Manufacturing data are in the week. That is going to drive. But financials are strong in europe, up over one half of 1 . Money flowing in, up until the 20th of june last week, another 2. 4 billion came into european equities, the 14th week in a row you some money come in. Have a look at this. Have european equities rescue, are they kidding and oversold division . Thats the question this chart goes up. Someone would say that is the star, but there is a lot to debate. Debate, growth and stimulus debate, all collectively around a little bit of a drawdown in european equities. That is coming through that. Fund managers, they are the longest on the euro a have ever been. The net longs are at a record high. The shorts are reduced by 700 contracts last week. One market that is seeing something, if you look at june in its totality, it was quite literally torturous. We have seen a reprieve in the oil market, the oil rallied for eight sessions in a row and wife . Why . What happened . Thought insitive for terms of the was crackers and their production. At the same time, the shorts position, they are increasing, rose by 8 , but the momentum is what seems to have stymied a little bit. We see every from tuition fees in the u. K. , pay caps in the ,. K. , under reconsideration what is it that happens next to the british gilt market . What happens to the Global Markets in terms of the next move for the eu . We are releasing some moves in the bund. Is tradingrket higher. Let me break it down for you by the mov screen. They are considering a strong run post the u. S. Stress test. We think as a result of which, total is trading strongly on the back of the iran deal, but the banks are up. Etc. , axa financials, all trading higher this morning. Its really hsbc that is lifting things higher. Legal inwnside, general where the weight of the money is coming out. , oil and gas banks and basic resources are the three areas we are seeing the most strength coming through. Lets talk about Something Else we need to focus on and that is whats next in the bond market. Q2 wrapping up the week. Its interesting for a change. Lets throw you a chart and talk about some ranges. Joining us now, the global head of research at bank of america and merrill lynch. Yields, its been a tight range. On a nu