, it willut the outlook not be a quick fix for the spat with its neighbors. We will discuss what escalation could look like in this crisis. The seal of approval. Goaheadchi gets a from the eu to receive 5. 4 billion euros in aid from the italian government. The ceo giving details as we speak. Well have more on that in a moment. We are less than half an hour away until europe gets going for the cash trade. The u. S. Will return later after the fourth of july holiday. The indications is europe is not going anywhere in a hurry. That is largely due to the fact we do not have a significant steer out of the u. S. It does not look like europe will be anything in a hurry. Lets take a look around the look at the gmm, get a focus on what is happening. Saudi arabias market closing yesterday, the last price we have got, a big move to remember the runup, bear that in mind. Wellmarket will bid bid. In terms of the currency story the peso softened up, the aussie story. An interesting yesterday down on the back of the rba and coming back a little bit today,. 3 of 1 . That reps of the market news. We will provide analysis as we progressed toward the market open. Lets get a number first word news update with juliette saly. The Federal Reserve will give clues about when it is reducing its Balance Sheet before another rate hike. Lifted rates in june signaling one more hike this year and spelled out how they began gradually unwinding the bond portfolio. Janet yellen said the process could he come relatively soon. She left the precise timing and sequencing a mystery. Russia is said to be pushing and at any production cuts will oppose the idea at an opec meeting according to for russian government officials. Any further supply so soon after the agreement was extended would send the wrong message to the oil market. They are meeting in july 24 in st. Petersburg. Extended deadlines for qatar to respond to a saudi inspired list of demands runs out in the coming hours. There has been no indication of what it can contains. It includes cutting ties with iran and closing the al jazeera news channel. The German Foreign minister said he expects the response to be rejected that doha could not be expected to bank back down. Michael saunders said households should prepare for tighter policies. In an interview he said the british economy probably does not need as much stimulus as the boe is giving as the policy does not have [inaudible] austin pops fireworks spectacular has gone off in its customary extravagant style. The longrunning event honors Independence Day with the concert on the citys historic expert on esplanade. U. S. Bond and stock markets reopened after being closed yesterday for the july for holiday. 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. News, getting to the stepping down as the chairman of ericsson. Orould not expect a big move something to be to. The u. S. Has confirmed that the rocket launched by north korea was an icbm, intercontinental Ballistic Missile. It was called a new escalation of the threat and the Un Security Council plans a closed session today on the matter. Sining us now for more is our eoul bureau chief. Bring us the reaction that we are getting from america and south korea. Rishaad condemnation all around, the u. S. Obviously. Donald trump tweeted the other day as well as tillerson making remarks there needs to be a Global Action to stop a global threat. Dramaticlot more rhetoric. The question will be with they do about it, they are going to, all the leaders are meeting in germany at the g 20. President clinton left this morning, he will be convening are talking to trump and xi, and putin. Whether any will be of those countries agreed to imposing greater sanctions to keep north korea from continuing to develop a nuclear weapon. Guy in terms of the military situation, is it likely that we are going to see continued weapons testing, drills, etc. In the south involving the u. S. That is going to set a market the kind ofs extension of the diplomatic story that we are seeing and i was wondering how that is being viewed in south korea with the new leadership, etc. Peter the Financial Markets and the general public here is shrugging off the missile test. Initially there was a dip in the south korean stock market. The currency did depreciate a little bit. Today it is back to normal. The feeling is that this is again another provocation, there is not likely to be any resolution in this thing, and the escalation will continue. Basically the public here and the Financial Market seems to be desensitized to these events and the question is at what point will it rile the Financial Markets, that is not clear. On the othertest day that have a significant milestone, did reach a significant milestone. It is still to be seen whether nuclear miniaturize the warhead to fit on a Nuclear Missile and deliver that target. So a ways to go before something with that livability is available. Here, for most folks muddying along and it is business as usual. Guy thank you very much indeed. Let carry on the conversation surrounding this issue and talk about the market reaction. Mark cudmore joins us from our mliv team joining us out of singapore. Has used maybe what we are seeing a north korea as a little bit of a excuse, the yen getting bid despite the fact that it is in range of north korea and gold getting less than a bid. The yen certainly seems to be the target here. Mark theres a little bit of risk aversion but not too much so far. That can change this week. This missile test is slightly different. We did not see much reaction. One of the reasons is that confirmed the fact that there might be some military response. It is not an immediate threat, there is life still is normal today. It is not the threat of a war tomorrow. That is the reason this is more relevant is the immediate term effect. There are trade tensions between china and the u. S. And this will escalate the fact that they might cooperate. If they have a spat about north korea that might spillover into the terms discussed by the trump administrations. The market at this stage are vulnerable to a little bit of correction if there is a fractious jude g20. Guy walk me through what that might look like. Mark Global Growth is good and there is an excessive liquidity. What we might talk in terms of correction, it is hard to give an exact premature. We could be talking about two or 3 or 10 . We will need to get a better does. Nd see what the g20 we might get to it ok but this is a possible catalyst for a bit of riskaverse scenario and we will get the classic havens do. Ell, as you mentioned, gold is the chinese Leadership Meeting with the german leadership, that might give us a few clues into the direction of the u. S. Story. Asnk you very much indeed, mark says it is an interesting week ahead. We need to think a little bit about what is happening in terms of the details surrounding the fed release, you can follow the insight on bloomberg at mliv. You can watch the show if you are a customer, i will roll up what you can do which is at tv , you click in on the interactive tv. This is the radio feed and you can look at the event coverage that is coming up. Lawmakers inq a Parliament Later on. You have this which is breaking news, all the things you need to do, all the charts were watching the functionality and ask the guest a question, you can get involved. We will carry on the conversation around china and sino relations. Two giant pandas arrived in berlin as a symbol between a friendship between china and germany. We have been discussing the markets. Should Pay Attention to this meeting because it may provide clues as to what is happening with sinou. S. Relations as we approach the g 20 on this week. That conversation coming up. Nice pictures. This is bloomberg. Guy welcome back. You are watching the open. It is 10 years to the day since the bank of england last raised Interest Rates. Something to think about as we contemplate such a move now. Here is juliette saly. Juliette thank you. Has a paschi has said it i head cut. Approval to receive aid from italys government. Marco marelli welcomed the decision. We did entertain talks with regulators for quite a long time, the outcome is what the bank needs to look forward. The u. S. Government is reportedly getting involved in apples tax rate dispute with the eu. Washington has filed an application with the Eu General Court over what it calls a Retroactive Application of state aid to apple. Recoup 30s order to billion euros in unpaid taxes from the company. Volkswagen plans to sell cars in rent for the first time in 17 years, taking advantage of easing sanctions as growth stalls in europe and asia. They signed a contract with the local importer to offer compact suvs and a sedan in the toronto area. Struggling to rebuild operations in the u. S. After the diesel cheating scandal. Fund [indiscernible] operates the and luxury apartment deponent in the u. S. Mainly in coastal regions. Stockholders will receive 12 per share in cash, a premium of 22 . That is your bloomberg is a . Guy thank you. World leaders are meeting on friday at the g 20 summit. It could be a market moving event. Ahead of the meeting, the chinese president is in berlin for talks with the chancellor of germany, Angela Merkel. Chinese media is reporting that the president said he supports a united europe and wants china and germany to promote economic globalization. And to make it more inclusive. Lets join our government east asia reporter david tweet joining us from hong kong and s euro government reporter. How is merkel likely to respond to the free trade message we have been hearing at davos, the chinese are keen to promote, how will it affect germantype china ties and what is the message that beijing is bringing to berlin . It is an interesting message of making overtures toward germany. There was an oped that was written in the german newspaper iust now where we saw x outlining germany and china has the opportunity to make closer ties, that germany and china also have the opportunity to take a leadership role when it comes to free trade and guarding institutions of post 1944 1945 postwar institutions of the world. More or less taking a place that has somewhat vacated by president donald trump. , tonyms to be pushing will be well placed for that for local reaction but i would guess that Angela Merkel seems to be germanyt for xi to peel away from the rest of the european union, this seems to be a strategy that the chinese are big on to divide multilateral groupings and use that to leverage and get its own way. It will be interesting to see what mrs. Merkel does have to say and how she reacts to his overtures. Guy he talked about a united europe. Lets bring you into this conversation. How will Angela Merkel position the u. S. Has led these sort of events and has donated the global stage. China and germany seem more aligned when it comes to the issue of globalization and issues such as the environment. Keep everybody happy or is that the objective here . Remember have got to that all these leaders are in germany, arriving in germany now, were also going to have the president of south korea in, they are all going to be arriving over the next 36 hours for the g20. Thisny is the hub of all diplomacy. What does merkel want . Andoon as trump was elected said he has been inaugurated, the germans and chinese have been meeting more often, there has been high level talks on the german side involving merkel. There has been this outreach. Germany, the chinese are a partner certainly on open trade, that makes sense if you look at the data. These are the worlds number one, that is china, and number three merchandise exporters and , a fairly, which was easy thing to agree on after donald trump pulled the u. S. Out of the paris climate accord. Significant are the patterns . Are the pandas . Significant gift. These two giant pandas are going to go down well when they arrive in the berlin zoo. There will be a Handover Ceremony this afternoon in berlin and and it is going to be carried live on some television. I think it is pretty significant because it is a big gesture of goodwill and something that xi therying to remote between german and chinese people. It is part of his Overall Campaign to position himself as well as a Global Leader which is part of Angela Merkels agenda. Not quite so important her as it given he is facing the 19th Party Congress in beijing later this year where he is positioning to be given another five years in charge of china. I want to how you respond, someone gives you a panda, what do you give back . Something to ponder. Just getting some breaking news relating to the monte paschi story that we have been talking about. Says it sees the completion of its burden sharing and to recap taking place by july. We are getting the presentations being unveiled. It will happen reasonably quickly, the billing and of some of the creditors. Thexpect to keep ahead of Online Grocery rivals. Well have the stocks to watch next this ahead of the open which is seven minutes away. This is bloomberg. Guy welcome back. We have five minutes to go into the European Market open. Without a strong sense of direction emanating from the states which was closed yesterday, remember, we are now looking at a market that does not have anywhere to go this morning either. Here you go, ftse 100 cooled off by less than. 1 of 1 , and the dax is flat. No sense of direction. Keep an eye on this grocery company, is looking to sell its technology in the u. S. And picking up on that. Depends on where you pick your points in terms of the report that is coming out to decide whether or not you want to go up or down. The stock is having a fairly decent run with trading now. Lets see how we go with the open. Thelear sense of direction, market set to open in four minutes time. Guy welcome back. One minute to go until markets open. The are some stocks we wish to focus on. Watch for the license deals over in the u. S. The are some stocks we wish to focus on. Increasing level from u. S. Retailers. Space that amazon outplays in. Paschi will not trade today but it is a story. Reiterating sharing trading on the stock exchange. Details of that, he is saying that will happen by yearend. That is something to Pay Attention to. The fair evaluation on the bloomberg with a really insipid open. The market less than 1 10 of 1 . In some cases, down 1 10 of 1 in certain cases. The market is now open. Trading at 73. 57. It is going nowhere to be honest. A similar story expected for the other markets as well. Lets see what the drivers are when we get through into u. S. Trading later on. There is the aex opening up, up just hire. Gher. What else is going on . Lets find out with manus cranny. Manus one interesting fact i spends that europe will euros. Llion big machines, the drivers, the bull of industries. We have not seen that since the beginning of the financial crisis. And theand the paschi this year, many people are saying this is the beginning of the end of the nightmare. It will be the biggest nonperforming nonmarket in the world. Nearly 80 billion will be in private hand by the end of this year. That was the conversation i was having with investors last year. Banks are slightly better this year. Theia saying we dont have palace at the moment to consider any further cost. When it comes to corporate earnings, this is the citigroup earnings revision. Look at this, returning negative. We have citigroup returning index going negative and this is the precursor to the global earnings season we are about to enter. Quite shocking giving everything that has been said. The idiosyncrasies are important in terms of europe and u. K. And the united states. This is a cop as it of cop as mposite of excluding the u. K. It is the white and the global one is the one in the blue. In the u. K. Is interesting. We talk about gilt markets. Cgi, domestically generated inflation. Out all the noise. It is domestically out all the. It is domestically generated inflation. At the bottom of your screen, 1. This is where Bloomberg Intelligence off the bank of england model. This is where you need to get to before cci hitting 2 . We are still weigh on the way for thatwe are still weigh on ty for that target. You can see there is so much more to be done for domestic inflation before the bank of england considers a move. One of the gentlemen voting for a height putting for the idea that we could receive higher rates in the u. K. Before the end, or during the brexit negotiations. Guy thank you very much indeed. Lets talk about what is happening on the main screen to focus on. Financials recently, the sector was off this morning. Tsk, all trading lower this motor morning. That is the takeaway in terms of index057. Points. Presented losers. The three main losers. It is well bid this morning. You want to see where you want to go. The market is definitely with the good news of this morning. It is up 1. 63. Ocado one of the lead stories. Getting a bit of a better bid. All tradingzley higher this morning. No clear sense of direction out of the united states. America gets back to work today after the fourth of july holiday. It is whether it will begin its 4. 5 trillion for another rate hike. The last meeting will take place at 7 p. M. U. K. Its 4. 5 trillior another rate tonight. Joining us is the chief investment officer. What do you think the fed will tell us later this day . Mohammed i think the clue in the last meeting was fed policy will be like watching paint dry. It is an element of a very gradual normalization, whether sheets or interest rate. On growth and employment, they are largely on track. On inflation, not as high as they would like to be. They are around 1. 5. Think financials stability is becoming a concern . Janet yellen, and other Central Banks, but yellen started talking about asset prices. That is for a later market economist. It is beginning to become part of the narrative. Mouhammad janet yellen has led from other