Once again . A corruption conviction for brazilian president lula sentenced to a decade in prison. He can appeal. What does it mean for the Economic Reform Program in brazil . Matt we are less than an hour away from the start of european equities trading. Very interesting to watch today because for you see the futures futuresuro stocks 50 unchanged. That was the biggest gain since april 24 and globally, stocks have risen once again to an alltime high. Bulls are faring well in this market. Take a look at the bunds. Yesterday we had a big jump in bund yields. Still finishing higher on the day. Now we are just about even right now. Trading at 0. 582. Trades not as exciting, a reversal we have seen in the last couple of days. Yesterday and germany, not causing the kind of tantrum we saw with the french issue a few days back. Ftsi and the dax, entry intoand the the u. S. Markets. The austrian dollar well bid this morning by. 41 . Question if it is a derivative of the australian [inaudible] 114. 54. Trading at continuing to grind higher. That is one of the more interesting trades. A number of houses withdrawing their proeuro call. Lets get an update. Thank you. It started with a White Knuckle handshake and the rejection of the paris climate accord. Macron and donald trump will get a chance to reset their awkward relationship with the twoday visits to france. They will hold press conference at 5 00 u. K. Time. President trump is standing by his eldest son despite a males revealing that trump, junior was willing and eager to campaign for help with russia. He distanced himself in an interview with the christian broadcasting network. Ourf hillary had won, military would be decimated. Our energy would be much more expensive. Does nothat putin like about me. I wanted a strong military, he doesnt want to see that and i want fracking at Everything Else to get Energy Prices low and to create tremendous energy. Willtte theresa may unveil the draft law that will take the u. K. Out of the euro. Government divisions could see brexit talks failing. Plausible scenario. The point of which they clubs i do not know. Maybe a year down the track before something catastrophic occurs. Unless the British Government gets its act together this show is going to be farcical. Juliette brazils former president Lula Da Silva has been convicted of corruption and sentenced to nearly 10 years in prison. He was found guilty of grafton Money Laundering and his part in the sweeping scandal known as carwash. To doring a strong blow returning to power. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am juliette saly. This is bloomberg. Guy and matt. Lets talk about will we got yesterday, Central Banks taking center stage. Around of hawkish Central Banks teaches speeches. Yellen emphasized ongoing uncertainty around inflation. A bit of a puzzle. We will hear from the fed chair today at 2 30 p. M. Its a time u. K. Time. Are the dots wrong, is the market right once again . Mark for now. It looks as though they know what they are doing. Markets are extremely happy with what yellen had to say. Modest path she is talking about and she is throwing the Balance Sheet into the equation. They want to get that started before the consider the next rate hike which suits the markets. At the july meeting, they meet again in a couple of weeks time, they will announce some kind of timetable for when they are going to start moving the Balance Sheet down. That will not start for a few months. Markets have a lead time and continue to enjoy this goldilocks situation which it has been having. We do not have to worry about a rate hike for some time. If the market does not throw a fit over changes to the Balance Sheet we may have a rate hike before the end of the year but that is some way off. We are going to be talking about janet yellen all day long forother data shows demand goods, china is resilient. What is the read across from this data for investors . Asian currencies are doing well, equity markets in asia are doing well. Investment into china is back up even though it is expected to decline. China is firing away the way it is and these are not big numbers but the expert it is huge. This is a good sign for everybody in asia. Economies are so intertwined you cannot help but phil feel good about it. When youre thinking about what happened in the last toy thehours, how important is bank of canada . It seems to be on a roll. We saw the appreciation of currency and it is per pointing to further rate hikes. Everybody elses raising rates. Is pricing into hikes for the ecb next year. You can always take these things indifferent ways but investors seem to be looking at the bank of canada as a positive thing. If they can afford to raise Interest Rates than things must be good, this is the way the investors are reading it. The Australian Dollar has had a good day as well. If the way the investors choose to read it that you will have gradual rate hikes because the economies are strong that is good news for everybody. At some point in the future, high Interest Rates could be a deterrent but we are a long way from that scenario. Guy always good to get your views. Positioning for volatility when it comes to the treasury market. Mark cranfield joining us here. Smart analysis throughout the day at mliv. Matt you can also on your bloomberg watch the show using tv and the video stream. To can get a video stream for tv , i am scrolling back so you do not see me talking to you and me talking to you. On the right side of the screen you can see the functions that highlighted, i am sure you are familiar with that but there is more to learn from tv. You can use the blue link at the bottom to ask the guess the question and ask guy and myself questions, a part of the conversation, make it interactive. Rendezvous in paris. President s trump and macron get set for talks in france. We will preview that next. This is bloomberg. Matt welcome back to Bloomberg Markets, the european open. Here alongside guy johnson in london. Thats go to juliette saly. Juliette thank you. The top role at the pharmaceutical firm. Shares suggests were higher in late u. S. Trade. Paying 5. 5 billion to resolve the second is the investigations. The deal is the second biggest the federal Housing Finance agency has struck an settles claims that rbs sold 14 march bounce bonds to fannie and freddie. The bank was must deal with the investigation before it can return to the private sector. And allegations it sold cars with illicit commissions control for a decade. According to a german newspaper or which suggests why than one million cars could be affected. The maker of mercedesbenz luxury vehicles had been searched by Police Officers and prosecutors as part of a probe. That is your Bloomberg Business flash. Guy thank you. The u. S. President donald trump begins his trip to europe today area here arrives in paris shortly well where he will meet with president macron and attend the annual bastille Day Celebrations. This is the first time he faced the press since his sons meeting with the russian lawyer was disclosed. How does this one go down, do you think that there will be fireworks and how do you think the story will play out from mr. Macrons point of view, what does he need out of this meeting . He has invited the u. S. President. What happens now . They will be fireworks but of the regular sort. I do not see much of a risk and if you are going to invite donald trump to paris there is no better day than bastille day and the 100th anniversary of the u. S. Entering the first world war. It has all the makings of pomp and ceremony, celebrating the worlds oldest alliance. Trumpism popular in france, no question, but macron has done a good job of addressing this that it is about the u. S. Entry to the first world war. He adjusts disagrees with the u. S. But they are our oldest partners. There is no real protest planned. There are a few minor protests on the outskirts of paris. A pretty good way for macron to show himself on the international stage. Matt not risk free for donald trump. The global media seizes on any gaps he makes and he responds on twitter and it all escalates into a real issue. Is there anyway this trip is the russian by email scandal . The big test will be at the press conference. The american journalists will ask a question and trump has the easiest way to bet it away, he can say he is there to celebrate bastille day and do not drag domestic politics this way. Whether he is able to keep his cool and do that calmly that is the question. Guy the french president wrote a piece in original newspaper talking about the fact that germany is getting a lot of benefits from the problems with the eurozone. How will that set up his meeting with Angela Merkel and the Cabinet Meeting . He and merkel meet all the time. His views on germany are nothing new. Thatn has always said germany is my model in terms of. He Economic Reforms the verbalizing labor market, reforming him climate unemployment insurance. The germans have tradesibilities that imbalances run both ways. This is part of a backandforth between france and germany. If you look at comments from merkel there has been listening on the german side. They want to see the reforms in france. Who is wanting reform. Someone who the germans have not trusted. If they see movement in those countries that is the bet that macron has been making. At liveare looking pictures of heirs air force one. Big day for brexit. The British Government is publishing its repeal bill. Good morning. How big a battle do you expect with this legislation . The labour party is putting you on notice that it intends to fight and make significant changes. How on skates will emerge . Guest it is important that we ensure stability in the process. What we are doing is to ensure that we are able to replicate the rules and laws we have emanating from the eu into u. K. Law and those who try to derail this bill are increasing the risk of what they would call hard brexit. Were going to leave the European Union. If we are unable to put the laws in place that provides at stability we will still leave. We will not have the Legal Framework we want. Bill beingepeal published to prepare for brexit one year on after theresa may and you came into your new positions. Guest for the department we have been in existence for a year today. We started a year ago with myself, three civil servants, and one special advisor. We are a Major Department staff based in eight countries. Where responsible for the exporting u. K. Goods and inward investment and preparing the trade policy for the u. K. As we leave the eu and are able to ship a trade policy of our own shape eight trade policy of our own. Guy do have time to make this work . Yesterday we had another warning , do you feel that time pressure . Under timerly we are pressure to get a negotiation done but if we have to have some kind of bridging mechanism that allows us greater time to get it right then we look at that. We are leaving the eu but we want to do so in a way that causes minimal instability, that allows market continuity, and were going to do what we need to do to ensure that. Those who think we are not going to leave are deluding themselves. What we need to do is to work in a way that ensures as we leave that is stable and mutually reinforcing. Matt how will you do that . You cannot get brexit negotiated at a trade deal in the remaining year and a half you have. The trade to will not be done. Do you have to fall back on wto rules, are you counting on the eu to give you a link the transition, what are you doing to hold off the blow . Easiestshould be the Free Trade Agreement in the history of mankind. We are beginning from a position where we have zero tariffs already and we have 100 regulatory and legal equivalents. The only reason we would not get a very liberal open agreement is because politics got in the way of economics and prosperity. That would be a great pity and that would not the matt if politics got in the way that would be how things go in the real world. Can you expect politics to get in the way . We can expect politics but if it gets in the way of prosperity that would be a pity. An introduction of impediments that do not exist today would make europe less competitive area it will have some impact on the wider global economy. Continue weotiation have to understand we are not carrying these negotiations out in a political or economic vacuum and what we do will have implications beyond europe area if we have in mind the wellbeing and prosperity of our people and the economic wellbeing of the confident that would put us on the right track if we sought to look at this as a family squabble, we would be on the wrong track. There is talk of the need for an accelerated process to make sure we have the process is in place. Would you be accepting of the idea that maybe we need some sort of an extension when it comes to the customs side of the story, would you be prepared to accept extended membership of the Customs Union if we did not have the processes in place . Take theot going to negotiation on the airwaves but what we do need to ensure is we get stability and we are not introducing impediments to our own trading system that we do not need to. We want to see what we can do in reality with the systems we have as to ensure that we have much continuity and as little instability as possible. To wait aif we have few months to get full implementation, as the price for keeping stability i would be happy to do that. Guy thank you for your time. Liam fox. We are minutes away from the open. Six to be exact area do want to get some stocks to watch. Daimler ag is one of them in germany. After the paper came out with a report saying there was a warrant issued for the to search the car makers facilities because of allegedly using some cheap devices on one million Diesel Engines, two different engine very big deal for diesel today. Guy we will move from diesel to jet fuel. The president of the u. S. And the first lady departing air force one in paris. This the start of a twoday trip. We have meetings this afternoon between the two president s. We will have a press conference later on today. In advance of the fireworks and pageantry of the bastille a celebrations. And the chancellor of germany will be in paris later on today as well. Ongoing negotiations for the future of the European Union create fascinating what they have to say. What is in the baggage hold . Does the russia story remain with the president as he travels . The i thought you meant baggage hold of the beast. What you are looking at is the president s limousine made to look like a cadillac limousine. It is modeled on a g. M. Suburban , a chevy suburban. It is it has one big Diesel Engine under the hood. That is massive. Every to my look at it it is distracting. Is that offtopic . Guy we are looking at it right now and it is interesting to get back stories on the cubic capacity of the various president ial vehicles. Lets talk about where the markets are going as the president of the u. S. Touches down in europe. We have a European Equity story that is likely to show a little bit of promise. Europe traded strongly yesterday. This is bloomberg. Guy lets take a look at where we stand, what we are expecting in terms of futures. The story with futures is really what is happening with individual names. Jamie dimon is one of those you want to be watching out for. The bond market story remains fascinating, but at the moment, according to the fair value calculations, european equities are going to go sideways, very sideways. Absolutely dax, unchanged, in terms of where we are expecting the market ago. Im wondering if the jamie dimon story can change the mix a little bit. Matt im definitely focused on the downward story. Also the global picture for equities. Long equities have done quite well. I have a chart here of the msci all world index, including developed and emerging markets. Ocked globallys st and once again we hit a record high. Equities continue to touch new highs as ever the last few weeks bonds sell off. It is a very bullish picture of global markets, i should say. Guy absolutely. This morning though, not exactly an upward trajectory. The ftse 100, barely budging and the stoxx 600, up less than. 1 . No clear sense of direction being generated by european equities, but a solid day yesterday up nearly 2 , in certain cases. I think it can be excused for a flattish open. It seems the driving force has been what is coming out of the states. Here is manus cranny. Manus matt, the Global Equity market was put into context yesterday. July saw a 3 rally. The longest winning streak globally since may 25 on the stock markets. That phrase from janet yellen in terms of airing the possibility of a slightly more majestic process. This quest and inflation story. Financials are up 1 3 of 1 . Energies are flat at the moment. Rex tillerson, doing the groundwork down in the middle east. Our guest during daybreak, you areok, were unde underestimating an underpricing the risks to the oil markets in a region. There is and i start there is a nice chart on the bloomberg this morning. From dogs to darlings, talking about the miners. 100 is the 50 and the day moving averages in the mining stocks. We drew back a little bit on iron ore, but we are breaking out here and we need to close above 405 to take the market h igher. Gilts are just opening now at the bottom of your screen. A slightly better open in u. S. Treasuries. 127 is your yield on the u. K. Gilts. A 10 million trade. They need a virulent move by july 21 in u. S. Treasuries. That potential on the gilt market. Diamondll no price on at the moment. You have to bear that in mind in terms of the movement you see. The diamond is reasonably well bid. Just in terms of putting todays move in context. There is the move over the last