Government effort to help trumps candidacy. Will this hamper the ability to connect his agenda . Wci could drop below 40 blocks per barrel if efforts to rebalance the market do not therethrough what it takes to get direction from opec. A look at futures here, we are looking at possible games this morning gains this morning. Stocks continue to rise, i pause a minutes because i want to point out that we had muted trading. 20 below the month average yesterday. This morning trading as light as well. Green arrows nonetheless. You wonder what kind of convictions behind those purchases. Bunds here. At today we have seen a slight gain to 0. 554. Is point if you take a look at the threeday trade, we kind of crescendo there at 0. 58 yeilds continue to retire after going up. 5 . Guy you can see the Market Positioning. Market is generally wellbuilt come all south korea has also bit this morning. Thats what youre seeing bid this morning. That is what you are seeing. The real story is the affects market. Solid fiveyear auction earlier on to Pay Attention to. He aussie dollar is well bid. Look at what is happening with the ran, d relationship with the gcc, how is it being affected by the qatar story . Heres the first word news. Juliette President Donald Trump has rant nominated ready , thes randy qualls managing director at a private equity firm. Expected to play a pivotal role in carrying out the pledge to ease the dilatory restraints imposed on it ranks after the financial crisis. In tillerson is in the gulf a bid to resolve qatar. But something to bridge the gap between the two sides. It puts washington a difficult decision, while saudi arabia is the top buyer of american weapons. Ties withce severed qatar on june 5. Dalton juniors lawyer has of knowledge to his clients received any mel offering a meeting with someone who had damaging information on Hillary Clinton. Hours after the report the younger trump had been told it was part of an effort to help his fathers campaign. The treaty came by email from the former british tabloid marketing executor linked to trump through the Miss Universe pageant. The information it concerned clintons dealings with russia. The confederation of british industrys says u. K. Banks are less optimistic because of uncertainty of brexit. The sentiment fell in the three months to june for the fifth time in the last six quarters tudy ng to the s study. Races like good to describe the possibility of leaving the European Union without a trade deal. The suspension of amory morris reduce his mays numbers as she would struggles to enroll was to the house of commons where she lost her majority. Global news 24 hours a day powered by more than 2700 journalists and analysts in more , this iscountries bloomberg. Matt . Matt asian stocks are higher this morning, ahead of federal sserve chairman janet yellen report to congress tomorrow. Her testimony comes after a strongerthanexpected jobs report which keeps the central bank on track. Raising rates once more again this year. Francisco said John Williams spoke in sydney, australia about u. S. Inflation and interest rate. Atif inflation can get stuck 1. 5 , that would argue for going much more gradually in Interest Rates. We are holding off on doing that for a wow. Of inee a lot of signs the wages, but generally in the economy. ,mplement reports and numbers clearly the economy is strong and continuing to move ahead with momentum. Mark cudmore in singapore. Morning. Let me ask first, trading is going to be muted until this testimony comes out. What you think we are going to learn from janet yellen . Probably not as much as we are waiting for. The problem with this testimony is the question about Monetary Policy are never asked in eighth is a big way that traders or investors want. It is very much about governance, asking questions for selecting showboating. Is unlikely to give anymore since about exactly what the next steps are in the short term. More clarity about what the yet janet yellen is thinking. Minutes, the recent there is a bit of uncertainty about the inflation half. We dont expect that to be clarified today. You are saying the fed is pretty comfortable with the gap between Market Pricing and stocks. Is that fair to say at this point in time . Im not sure if they are exactly comfortable but i am much or if they exactly want to fight against its rights now. They are worried the markets may be right and they are not right. That has been the case for the last couple of years. It is not that they are happy with the fact that the market continues, it is just this is not the time to take up this battle. A nominationave from the president on financial relation and the fed. There has been talk over the last few weeks about Janet Yellens concerns. Financial stability is a big part of the mandate. How significant is it that we finally can somebody at this role may be more bank friendly in terms of future trajectory in the u. S. Economy . You can say the same positive thing for banks operate positive thing, but it is quite marginal. Assetsnot see price change, and you shouldnt. The current incumbent, the fact bank friendly, i dont think that will change much. Aboutwhat do you think the bond Market Reaction to this. Guy and i were commenting on the bund yields we have been seeing but it has really been global in a course of her nude hawkishness from Central Banks. There is not been a lot of conviction kind of the trade. There is not been a huge flow. Mostly algorithms reacting to the news. Shortterm consolidation size and where we go from here is important. We have seen the easy part of the game, what is much more interesting is the fact that european bund yields have made big technical tricks and they are the yields that look out of whack with the rest of the world. If you think we are postcrisis, look at the relative growth rates, and the u. S. And europe do not have a similar story. There yields are very different. The european yield structure has more to go. Perhaps the treasury yield has artie done most of the war move the move. Here,moves must hire from a real panic. I dont mean we will see all yields continue to much higher. 5, 10 basis points before there is any worry. Ise you get 2. 5 , the market going to start worrying whether this is the really big move. Guy this is all fantastic and to be honest it is really important what happens on deck capitol hill. More 30t expect any with class janet yellen. Iet summer markets. Whenever roger has won wimbledon, good years. Investors should be focused on how wimbledon and not what is happening on capitol hill. I have heard of these super bowl indicator but it is even better. We can follow his live insights and those on the team on the bloomberg terminal at mliv. Rex tillerson is getting his first taste of shuttle this policy shuttle diplomacy to end the standoff between qatar and the other u. S. Allies in the region. Qatar has turned to turkey for help in dealing with the Economic Impact of isolation. In an interview, turkeys Prime Minister says his country supports qatar and highlighted the performance importance of trade and prosperity in the entire region. Why we believe that the treaty of qatar has been unfair, we advocate dialogue and we continue to call on all of our to peaceful, constructive dialogue. We hope this will work out sooner than later. We also, of course, tried to prevent such political differences from having big impacts on economic relations on investments and trade. I think we have been successful in that sense. We have had a big spat with russia, a big glass from russian side. Turkey has been cool and avoided a big fallout. Finally we are back on track. Ecrisis level. There was a big crisis with israel. Avoidedpened is that we same applies even more. Omfortably if we have strong ties with all of these countries, we think qatar should be treated in a more fair fashion but we dont want any fallout when it comes to trade investments. Im sure we can manage that. Are you concerned that your relationship will qatar with qatar will one day have implications on you and sanctions on turkey . I doubt it because first of all turkey is not alone in thinking that qatar should be treated more fairly. There is absolutely no ground why turkey should be treated any i think turkey is responsible. We want peace, stability, and prosperity in our region. Far, doing the biggest combat against isis. In fact, turkey, if you put aside proxy wars, turkey is the on a with boots on the ground only country with boots on the ground. Way, liberated 2000 daesh. Kilometers of we work with our coalition partners, all the major players, and containing daesh. Speaking to bloomberg, the rolet turkey is playing, absolutely fascinating at the moment. Is going to be interesting to see exactly how Rex Tillersons diplomacy goes and if it delivers the results. A fantastic function, you end up feed which is great but you also get the sidebar which allows you all the functionality, the charts we are losing using on bloomberg. Give you all other kinds of aspects we are doing here as bloomberg interactive television. Up next, how low can oil go . Below 40 box per barrel. What is going on next. This is bloomberg. Matt welcome back to the european open. I am alongside guy johnson in london. A look at oil prices. Could below could fall below 40 per barrel if efforts to rebalance the market do not bear through. Theres a view of a report by analysts at Goldman Sachs. If evidence of further opec actions are needed to bolster prices, but go to abu dhabi. Tracy, what are the likelihood of declines or a drawdown in u. S. Crude stockpiles . The reason this report from ,he very the goldman analyst one of the more bullish guys when it comes to oil prices. The reason it is interesting is because he points to two factors. Opectiveness of ok policies, but whether or not they will extend those themselves. When it comes to the effectiveness, this is what he is talking about the need for sustained inventory draws and cap reclines. The declines. Last week it was already back up. When comes to further action from opec, it starts to get dangerous for the group here. We had the Saudi Energy Minister saying that opec was prepared to do whatever it takes when it comes to rebalancing the market. They delivered, they said they were going to extend the agreement by my nine months instead of six months. It has not proven to be enough. The danger here is that the market really starts testing the bill for further action. Opec finds itself in a downward spiral when it helps to has to keep ramping up its efforts in the market area guy how far away his Goldman Sachs from the consensus from its view of where oil rose . Goes . Im curious if it is middle of the pack or on the fringes of and. Distribution. Dear sticking to their threemonth forecast which is 47 per barrel. They are cautioning that if the risk is there we could see oil dip below 40 per barrel. Moving parts to that forecast. We saw the kuwait Energy Minister yesterday saying they might include those countries that have been exempt from some sort of good agreement. The fact that those countries had ramped up Oil Production basically means that hospital for is currently on par with what it averaged in 2016. You can see moving variables. Analysts pointing out that even if you didnt include nigeria and libya, you would still have to have their increaseoutput offset by tweaks to saudi arabia and russia. That is when you really open up this issue of who bears the brunt of these production cuts. Im not sure opec is in the position or has the political will to dive back into that discussion. These are the questions the oil market is asking right now. You can see how difficult they are to actually answer. Thank you you matt so much for your time. We are minutes away from the open of the equity markets. Up next,here. Sales down in a both food and clothing. What is up with u. K. Retail . This is bloomberg. Leverage has been building up over the last year or so. We are seeing the bond level because yields are at lows. Even with the fed describes it their behind the curve. Five minutes until the market opens. Overnight we had better use for the u. K. Retail sector. The number definitely takes up. Not only is it not delivering inclusion, but also the food side of the business as well. The anr is on my screen right now, showing where we stand. You can see the story there. The price target, 3. 72. Price, not a great deal mass. Matt pearson came out with some music confirming it will sell 22 of it thing when random house to a german company. It has been expected to upload. The question is how much, it billion dollars. The turn of 300 Million Pounds to investors through a share buyback. 25 of this publishing unit which publishers books by george r martin. Writer of game of thrones. The open is four minutes away. This is bloomberg. Guy cash is about to open. Where bloomberg it is telling us it will go this morning. The yen has gone off this morning, partly to do with what is with the yield curves in europe and japan. Not amazing but we will take what we get at this point in time. European equities of by two points. 2 . We are not going down. In terms of some of the stocks, msci this morning. Matt, what have you got . Keep the bondo market at the forefront of everyones mind area 1766 on the bloomberg. A twoyear short position and twoyear treasury. You can see here at a decade of low. The white line is the absolute level. It has not been this low since 2008 and people get bearish. Not exactly the whirlwind to her of the financial markets. Slow and steady, dipping into negative territory. We are expecting a flat start around europe. How mark and see spencer works. Walk us through what we are seeing there. Matt im looking at the headlines here. 275ts rose to a record versus as of march 242,000,000,001 year ago. Record,ising to a reducing its pace of investments on valuation and competition. One year total return, 13 . Not bad. 16 billion divesting. 18 billion and the year ended march 31. Getting a number of Balance Sheet figures here as well as the shareholder return. Interesting thing is the return. One year, 13 . Annual return, 15 . This is not doing badly at all. Lets talk about what we are seeing on the screen. 2. 24 . Selling a chunk of random house. Downside, lets turn our attention to what is happening or moving down this morning. Those are the losers we are seeing. Stillmetro, etc. Its trading. A mild risk on sentiment. Lets turn our attention to the story dominating the headlines. It will be interesting to see if the market has a pop in sterling. Become before the storm could provide opportunity for that spread the british Prime Minister theresa may expects to call on her for opponents to save the we will ask other parties to present their own ideas. To the by the reactions house yesterday, i am not exactly sure where heading for a right now. Good morning. Of course it is important. It is absolutely important. I just dont know what to make of it is. It is confusing at the moment. We got ourselves into quite a pickle because there are several themes running through the political situation at the moment. Were not really getting a clear message in terms of following party politics. Im sure there are number of people who voted for the labour party who do not think brexit is a good idea or like a soft brexit. The position was exiting the Single Market, which means 80 want to leave the Single Market. Message goingbe a back to the speech that they were so liked to retain membership of the Single Market. It does seem that a of Labour Party Voters in the last election, a similar message but they are tired of austerity. 10 , to eightr me two in a half today. There is plenty of scope in virtue in letting the Purse Strings go a little bit. Is there is line more uncertainty now than there was before theresa may held the election. Is that hitting is this investment . We have seen Consumer Spending numbers soft and. Are those going to continue to fall and hurt Economic Growth question mark Economic Growth . Some of the data is suggesting a reasonably meaningful softening in the data. Personally, im less concerned about that because we have been heavily reliant on consumption in the past. Things is those helpful in the long term. That is something that needed to change anyway. I get your point. As the economy is to reliant on Consumer Spending, all it means is more consumers need to the navarro and spend more continually. It is a bad cycle. What replaces that if you reduce the consumer consumption part of it . It would be beautiful if we could have a rise in business exporting countries and to gdp. Lovely if the consumption softened among other things. Unrealistics very for that to happen in a smooth fashion. I do think that is something i would expect to occur. Moment,eeing at the remember a function of consumption. Reasonable to expect imports Going Forward. That will have a positive impact on gdp. The Political Uncertainty here, i can understand why businesses might say we really dont know what is going on here that maybe we need to show an investment plan. It is kind of middle of the range. That is selling you that arenesses somewhere relatively positive. See, but iy that we dont see any reason to be particularly panicky. Im surprised you care about the politics as much as you do. I timidly and. Wement it looks as if dont really understand where the parties stand on the wage debate. We saw the pay cap stories surrounding that. What we do know is that Central Banks around the world are sounding more hawkish. Pricing in theo possibility of a rate hike for the bank of england. We had a guest on talking about august being the most likely date that we now have for the bank of england to pull the trigger and take away some of that accomm