The question is where next. Janet faces her semi annual grilling by lawmakers. Ceo garyormer saks cohn is the top person to take her job. While it has risen sharply, hedgings have been their bets. What are we expecting . Look at european futures. We have gains across the board. Up 0. 4 . Far more interesting is looking at on yields, especially considering what we have ahead or bank of canada. Take a look at 83 j chart of the german bund. A threeday chart of the german bund. We have seen moves like this recently. Spike toe saw a bigger read right now, looking at the 10 gain. Investors feel comfortable selling off the perceived safety of German Government debt. In terms of the risk sentiment, that is interesting. Basis points, that does not sell like a big move, but in terms of real money, that is a significant move. In terms of the gmm, lets look at what is happening. The upside for the turkish market. The Australian Market down. The brazilian market, overnight, gaining as well. Toeer victory when it comes labor market reform. Elsewhere, the risk sentiment story, look at what is happening. The yen, that goes against the idea. The yen is rising. Lets a role that off to read sure you what is happening with oil. That has been you have to come to the bottom. Gaining. Eing crude data, aggregated factors coming together. On the crude story. We will run you through the details. Coming up. In the meantime, lets catch up on what you need to know. Heres the first word news. Juliette thank you. Gary cohn is set to be the leading candidate to replace janet yellen as fed chair. That is according to political. Senate Republican Leaders said cuts for high income earners. The measures would generate million billion in revenue which could extend desk cover extended coverage for the poor. The senate is delaney plan by two weeks. House republicans have included a funding bill that includes trumps border wall per review Appropriations Committee wants to add 1. 6 spending bill. Even as other domestic agencies face cuts. Five of the retail banks have banks withport for retail backing. The partnership will help quote Small Businesses sees the global demands. Alllays and others have been part of the initiative. Global news, powered by 2700 journalists and analysts. Matt thank you. Emails received by trumps oldest son show he was aware of potentially damaging material about Hillary Clinton before he met with a russian lawyer career that has intensified questions about whether his campaign colluded to read he said he never told his father about the meeting and spoke out on fox news. In retrospect, i would have done things differently. This was before the russian mania. This was Opposition Research. They had stories contrary to what i was hearing about. I want to hear it out to read it went nowhere. That is not with the meeting was actually about. Matt this comes as the uproar intensified in capitol hill. Mark warner, the highestranking democrat on the committee. I have never seen an example where the agent of a foreign toernment, massively trying interfere with our elections, that has been the consensus, reaching out in this way. A response. Have any Campaign Official would know you dont do this. Bloomberg editor joins us. Break down the significance. Mark warner is a democrat. Is going to ring this out as well as you can. What is the significance of , this trump junior saying was before we knew everyone would freak out about russia. Saying this is the first time. They dont necessarily do it with Foreign Governments. Now there is an email trail. This brings this closer to donald trump. Donald trump junior said his father did not know about the meeting, but the fact that a very Close Campaign advisor and a member of the family has now, has knowledge he was having these meetings, there is emails showing this, this brings it that much closer to the inner circle of president trump. In the middle of various it really raises the stakes. And intensifies everything. Theuts more pressure on white house at a time when they are trying to change the topic. Things forward in another direction. It is impossible to do so when there continues to be these kinds of revelations. That is probably the most important point. I wanted to follow up and say, we see the democrats take hold of this. The republicans, this is going to cause them a problem. The white house agenda is going to be difficult to move forward. Is the big thing we are hearing. The emotion we are hearing from isublicans on capitol hill frustration. They had such high hopes. They controlled both chambers of congress and the white house. Had hoped they would be doing things like tax reform. They wanted to pass a historic tax overhaul. Make changes to health care. They wanted to do infrastructure spending. Day after day, the discussion is about investigations into whether the russians colluded with the trump campaigned. And to try to get involved with the election. That is something conversation that want to have. There are only a few weeks left in two a monthlong recess. They are going to have a lot of trouble getting things done. Think they are very frustrated. The democrats will make as much as they can of this. You do. What at the same time, the republicans are frustrated. Thank you very much. Joining us on the latest on the email stories. Donald trump junior, also causing ripples through the financial markets. Market, starting to Pay Attention. Pimco down. That economicims outlook. Do you think he is right . Why are the markets now paying attention . Has a quarter been turned . Im not sure a significant quarter has been turned, but we are playing that narrative. The Trump Administration will fiscal stimulus because they are distracted by the distractions in russia. We are seeing a bit of a resurrection of that theme. Up. Ear treasury yields, spike, topping out in may. Is readyg, the market for yields to come lower. We are seeing the yields lower. It is not because the markets are committed. Couple of quick questions. Gary cohn as chair of the fed. How will the market react . X i dont know they will price too much into it. They have too many other things to worry about. There is no point trying to do the marginal pricing if the and on sheet is uncertain. Guy can i ask you about another central bank, canada. Loony has gone up quite a bit. An interesting chart you can see on your bloomberg. The risk reversals, the fact reversals areeek above the onemonth reversals, indicating the the market is buying calls. Is there a chance for central bank will not deliver . I think the central bank will deliver. I think this is positioned the wrong way for the meeting. It is very much of you, you should be fighting this rally. Commodities have been falling. The Housing Market has been having problems. We have seen the loony rally. We are seeing this market gets squeezed. On a record short position. I am too worried i have seen too many analysts and traders expressed that view. Do, even ahat they mini correction, the market will continue to rally. Guy thank you very much. Joining us of of or you can pick up plenty of great charts on your bloomberg. I want to just remind viewers they can also use tv to see the charts we are seeing. You get the video stream. Use,an see the charts we those we intended to use. Maybe a better chart here. You decide. Check out what guy used. You can also message of us directly. Come, we will speak financeely to cypruss minister. An interview you do not want to miss. Matt welcome back, the european open. Lets get the business flash. Juliette Fidelity Investments is said to have cut hundreds of staff on tuesday. Last month, 1500 workers had opted to except a buyout offer. The company, which has made its reputation by picking stocks, has adjusted to the wave of investors. Of heas filled one is currently a Vice President of finance and will replace the chief operating officer. Biggest bankpruss says the country has done everything the country has promised it would do. Speaking exclusively to bloomberg, he says the country is a case study of how a smaller country can do well in europe. Cyprus has been doing everything it said it would do. Maybe it should have done more reform, but in general, this country has behaved impeccably giving confidence to investors. Juliette that is your Bloomberg Business flash. Hsbc is hong kongs new stock market darling. Joining us to discuss this, the Bloomberg Markets reporter. What is driving it . Why is it Hong Kong Related . It is part of the story financial shares should rise rate the high interest environment. Also, what is interesting, the busiest day for trading in hong ofg, almost 5 billion worth shares have been traded. It is highly unusual the stock is traded more than in london. After the fed stress test where all of these banks were given basically the green light to return a lot of capital. That day, Morgan Stanley upgraded and really raised the target price, saying the stock has a huge potential. Saying thewe had same thing. It is all about come a how can this give more money to shareholders . Can i ask how much is about higher rates leading to more profitable lending . That is a good question. Both theuld expect stock in london and the stock in hong kong to react the same way. Why hsbc . The Capital Position is really strong. We also have new management ight changehich m the strategy, may get more aggressive. We do have earnings coming in at the end of the month. We know the ceo once to step down in the next few years. It is all about this new regime for hsbc. A strong pick up in volume. Lets come back to the issue of why hong kong. You tend to get these kind of fads emerging in china. They have played all kinds of different options and aspects. It kind of a fad . It doesnt seem like a fad per se. There are fundamentals behind this. Hong kong is the market where derivatives traded more. It is not a mature market. To play thist game, it seems like a better place to play in. Options traders are jumping on this. Contractsof bullish is more than bare ones. Might be about these liquidity. Also, some play on the hong kong dollar. The trading volume, the highest since exit. Guy thank you very much. On the hsbc story. Minutes away from the market open. Checking and. Excuse the pun. The stock is higher, we think. That story next, plus market moves. The open is eight minutes away. Cash opens in five minutes. Lets talk about some of these stocks on the radar. Grossing to hit the margin target, 20 . Interesting to see if a can achieve that. Some concerns around the Housing Markets in london. Proceeding pretty well. The gross margin, people will probably focus on. Matt one retailer doing well. They had better than expected sales. Probably become sales number that really impressed. 2. 5 growth. There was a big rebound in china. The new ceo is overhauling the u. S. Business. Not necessarily the lads in london. Markets about to open. We will be back, we will talk about that. We think the market is going to be open three, 4 10 of 1 . The market going up. Later today. This is bloomberg. A guy four minutes until cash opens. Were expecting a positive start to european equities. But if stocks to watch. We are not called that much higher but it feels a little risk on which is interesting given the bond market this morning. Something to Pay Attention to as you work your way into the guilt open. We get wage data today. That is going to be important. Absolutely. Wage data importing for central bankers around the world. I wanted to point out something. As we go towards the open, the currency story has a lot to do with weighted equities. This is a look at the euro in white, the aussie in blue and the bloomberg dollar index in yellow. It has normalized over the last year and the euro has really taken off. There is a number of ways to look at this differential. For example, the curve is a lot steeper than you see on the u. S. Treasury curve. Marketts see with the open looks like. This is how we are opening. London positive. Not by much, but a little. We expect that up about. 4 in gains. Dax up. 3 . Similar story coming through and we have car data coming through. Bmw lets go back to mac. You are allowed to do car stories. I am not hogging all of the car stories, although i suppose it is a german brand so ill take it. To car sales up 2. 1 in june 232,000620 vehicles 620 vehicles. Many rose to 39,443 cars. Important to look at mini and rollsroyce. Could be inbs that danger postbrexit and we are talking about not an insignificant amount. They have 18,000 or use in the and unitedes kingdom. Bmw really chipping into the game. European markets are opening up so lets cross to manus cranny and see how they are doing. Manus a nice strong opening in European Equity markets. Burberry leads the luxury goods. 4 , way ahead of what market expected. Financials up. 26 . A big day today in the bloomberg building. A conference in terms of what happens with cyprus. After what you saw in spain and in italy, the next logical step is to go from domestic saviors. O crossborder m a that is the next facet of the banking spectrum. That is your stoxx 600 opening. What do you do in july apart from book a holiday or party a little bit . You want to be long equities because in the past number of years, the best month is typically july seeing a nice rally. The average return in your average july over the past five years. Beach, go long equities. Dropping a are little this morning. 26 some long that a supply coming to markets, 2. 5 billion pounds worth of fixed maturities. What you have in yield is potentially going to be Deputy Governor saying he is not ready to raise rates or jump on the bandwagon yet. There are reasons to see why the committee might move in that direction, but these are gilt yields at the bottom of your screen. Im off to digital radio. Guy . Guy lets look at what is moving around europe. Oil stocks seem to be on the forefront. Gaining a little traction again. Bp trading higher. This is an index point. Total is rising. Lvmh is getting a pickup off the burberry numbers. Hsbc, talking about that earlier on, continuing to move higher. On the downside, pearson off the good news of yesterday on the downside this morning. Pearson down by 3. 05. The fed is something to Pay Attention to. I want to point out, the fact we are getting a decent move in the german bund this morning and you are getting a significant steepening of the german curve, which is something with paying attention to, particularly when you think about how to german banks perform going from here and that story in relation to what is happening in the United States with the federal reserve. Investors watching for guidance on when the fed will start reducing its Balance Sheet. Testimony being delivered later on. Janet yellen will be speaking to Congress Today and tomorrow. Meanwhile, and this is kind the twist, we cant figure out where the market will stay start pricing in yet. Cohn, thechs gary leading candidate to replace janet yellen this could come next year. What are you expecting from the fed later on, because reynard was pointing out that it was either or. Either we run off the Balance Sheets will be raise Interest Rates. What it is unlikely to be both. Is that what we get from chair yellen . We will probably get more clarity on one or the other. There is a bit more consensus on the Balance Sheet runoff. There is a bit more wide acceptance that has happened and will happen at a pace that is almost imperceptible. The rates are something that is more of a debate and a good reason why. If you look at unemployment, it is a big check. They should be raising rates and aggressively. Look at the unemployment rate. Big problem. A it has been falling for a long time. Core inflation is far from where it should be, as well as the chief measure with the ecp is about 1. 4. There is a big x there. What does the fed do in such situations . That is why there is such a huge debate. Mandate isnt to keep inflation up, right . Is to keepdate inflation in check and we are pretty far from deflation so as long as they have runaway employment and prices are not falling, what is the problem . They still have hike, right . Didntwell the fed mandate specifically to keep unemployment low and keep inflation at 2 . There is an actual target there. In that sense, we are close but not there. Another part of their that it is not just the 2 target, it is keeping it sustainable. There is reason to be the inflation rate is not sustainable and while unemployment is very low, it is certainly not generating the sort of wage pressure that the fed would like to see and what inflation is sustainable and the good time. The inflation you are seeing in markets and this is across the globe the not so nice cost push kind. It is the inflation the fed would like to see come through that is not there yet. That is why the mandate is largely unmet and why rates remain in a murky future pathway. I will point out that many of us often get lost in the minutia of when will the next rate hike come . Will it be december, one month before, one month prior . I would really say it doesnt really matter. More importantly is where is the eventual path going . Where are we going . Undoubtedly, there is going to be another rate hike this year and three in the next two years or so the fed would have you believe. That means rates are going up in the long run. See what the fed beliefs, why doesnt the market believe . The market has half the number of freight rates priced in. By the skepticism in the markets . Fahad the market does believe rates will go up eventually. The difference between the markets view and the feds view is a matter of timing. Part of that is what we discussed regarding timing is important because this incredibly long cycle will run out of steam and the longer you leave it, the less hide the terminal rate will be. Or do you believe the later you leave it, the steeper the rate path will be . It those things matter is a matter of perspective. 10 years from now, whether they raised rates three months before or after