Shareholders, we will speak to longmans ceo later in the program. Than half an hour away from the European Equity market open, and let me slide across to give you an idea of where we think the day will start here in europe. This looks like it will be a fairly positive picture. Stoxx up 0. 7 . Well. N the front foot as everything opening up around 0. 5 . German market is looking strong this morning. Other assets, lets see what is happening around the world this morning. Higher,gher, 1. 25 48. 43. Goldman sachs sees changes in the gold market. Shanghai on the front foot. The resale name retail number was actually quite good. Ar, this is the one need to worry about, versus the chinese renminbi. A trading need to Pay Attention to. Pushing up north of january highs quickly. Are we going to see a significant outflow once again developing . We have a surprise for you this morning. Not only stephen major from hsbc, but my colleague from matt miller my colleague matt miller from the United States, in berlin. Matt im in berlin. Good morning. Pleasure to be joining you hear. I am more excited about stephen major. Looking forward to hear back hearing about his forecasts. Guy we will get those soon. Not a time to change some of the big views of the world. Matt, i have to say. U. S. Investors have been running away from europe as fast as they can since the start of the year. You just came from new york. What are they saying about us over there . What do they think about us europeans in new york . Matt i havent talked so much. I have been here for the weekend. I have not talked about what they think about us, but what they think about themselves. If you look at the german die welt, zeit, they are talking about the gdp number from last week. They are really impressed with themselves, managing to grow 0. 7 . I have a chart appear. It is the biggest growth we have seen since 2013. They are looking at this as proof, even the more rightwing papers, as proof that this immigration problem could be an immigration blessing. , a centerright paper, has been talking about the fact that the region reason for this growth has been the syrian refugees, helping to build up demand and byproducts buy products. Guy great stuff. The germans need to spend some money, everybody says. Maybe they finally are. Matt miller joining us from berlin. Looking forward to getting his take on the world. Lets get another take, with bloomberg first word news. Tom mackenzie, good morning. Tom morning, guy. There has been more disappointing data out of china. Bloombergs monthly gdp product tracker shows growth at 6. 88 in april, down from 7. 11 in march. Coal output dragged on industrial production. Retail and investment ratings also short of estimates. Dollars 850 billion wealth fund will join a classaction suit against volkswagen after the admission cheating scandal. The fund, which according to bloomberg data owns 1. 5 in vw, says it is acting to safeguard its holdings in the carmaker. The fed may delay Interest Rate increases until later in the year as they look at risks associated with the brexit vote and the u. S. President ial election, according to pimcos had a Portfolio Management for emerging head of Portfolio Management for emerging asia. Saying the Eu Referendum has put a dark cloud of uncertainty on the outlook. The pci sees cbi sees growth of 1. 8 this year. Mark carney has defended the bank of england against critics furious about his forecast. The boe governor spoke to the bbc. If we are taking a judgment as a committee, and changing policy because of it, we are putting billions of pounds into liquidity facilities and getting banks to raise capital against these types of risks, it will potentially alter the path of Interest Rates, or other instruments of Monetary Policy because of certain things. We have a duty to explain that to the british people, and parliament. Tom coburn global news 24 hours a day, powered by our 2400 journalists in 150 news bureaus around the world. More stories on the bloomberg. Guy thanks very much, tom. What happened on friday . What happened friday . Retail Sales Numbers were good. What happened in the bond market was slightly curious. We will spend a lot of time talking of that fixed income, because we are lucky to have with us hsbcs stephen major, the global head of fixed income over there. Good morning, stephen. Explain this to me. This is the u. S. Curve. Buy tens, and, it has been flattening. This has been the chart for the last five years. You can see we have been pushing down, down, down. Why after that good retail sales number did the market flatten out . Stephen the u. S. Curve is a signal things are not good, looking into the future, talking about recession risk. That data last friday on its own was strong. No doubt about it. It was way above the Consensus Forecast. But as was said on the earlier footage here, there is a gun great to growth forecasts in the u. K. China is slowing again, it seems. If you add together the whole global picture, it is not looking very good, and the fed has clearly pointed to the International Backdrop. So rates could still go up in the u. S. The fact the market is not pricing in for june is a red flag in itself. Guy is it a worry to you . Stephen no one will trust the Consensus Forecast, and no one will trust with the bookmakers say about various events coming up, either. Just look at the football. [laughter] leicester city, nobody thought it was possible. Skewed the risks are now against this trend, and people are looking to us to change our bond forecast because they think, look, we are getting towards the low numbers we forecast previously. But that is no reason to change the forecast. We could stay down here for a long time. Guy is that your expectation . Stephen its probably unlikely. Something will happen. If you look ahead to june, theres so much. All of these policy moves that may or may not happen in june. Japan, the u. S. , the eurozone. Theres the vote in the u. K. There is one in spain. There is an election in japan. Theres a fair bit on the horizon, so something might come along to disrupt this trend. Ultimately, at yearend i doubt yields will be far from where they are now. Guy so volatility is in the middle. Buy volatility around fixed income . Stephen if you are worried about volatility, you look at the yield curve and think, do i really want to chase the flat trend here . Isnt it better to be sitting in the two to five year segment, where there is more value . I am worried about how far that curve has gone, because i am much more in this camp at the moment. This is probably too much, too soon. Iy walk me through how tactically want to put between now and june. Stephen you have to accept, theres a narrow range. I know that is quite a boring thing. But in reality, the 10year treasury has been in a range of 30 basis points the last few months. The 10year bund about 20 basis points. You dont chase it through the bottom. As you compare prepare for the unexpected. Im not forecasting any kind of increase in rates in the u. S. Or u. K. Anytime soon, and i doubt anybody watching this program believes rates will go up in the eurozone or japan. We know the next move is probably down. But its the unexpected, and whats going to happen around these votes, and what kind of data surprise we could have. Without knowing what it is, we just think we are getting a bit ahead of ourselves. Guy plenty more to discuss. We will berket, kicking that around in a few moments. Stephen major will stay with us. We will talk u. K. Later in the program. We have a raft of disappointing data, showing chinas debt will be hard to shake. We go to hong kong with the latest on that story next. Guy we are a few minutes away from the market open in europe, counting you down. Heres the Bloomberg Business flash with, and can see tom mackenzie. Ipo phillips has set the price of its lighting business, giving the unit a value of as much as 4. 9 2 billion euros. Trading is expected to go ahead light. Under the ticker the finlandbased company will pay 800 million in cash and 19 million in shares. Terex is in the parts business after they abandon a merger to pursue merger talks with a chinese company. Chinese car hailing company didi is targeting an ipo in new york next year, according to people familiar with the matter. They say the timing will depend on how the firms battle with uber plays out. Last year, apple put 1 billion in two into didi. Telecom italia has almost tripled its target for reducing expenses to 1. 6 billion euros by 2018. Cuts will include 800 Million Euros in operating cost, and 800 Million Euros in capital spending. That comes as the new ceo aims to improve profitability at the former stateowned carrier. That is your Bloomberg Business flash. Guy chinese stocks trading in hong kong rebounded from a twomonth low, despite a raft of negative Economic Data over the weekend. Retail sales and fixed Asset Investment it all missed estimates over the weekend. Malcom scott joins us from hong kong. The miss on retail sales and industrial output walk me through what the take away from this should be. I thought the retail sales number actually looked all right. Malcolm the retail number wasnt too bad, but it was the lowest. As with the credit numbers and industrial numbers. Throwing that altogether, there had been real optimism after the march numbers Beat Estimates across the board, that maybe the economy turned the corner, that maybe things have stabilized. Stabilization seems to be the word, but any hopes of a vshaped or ushaped recovery seem shot by the april numbers, which all undershot what economists were looking for. It highlights how dependent this economy still is on credit. On friday credit numbers disappointed. In fact, they were worse than all economists we surveyed looked for. Wesaturday, productively, saw all of those measures of Economic Activity dialback from march as well. Once the credit dries up in china, so too does the economy, it seems, and thats a big problem for the economy, because you cant just keep stimulating, you cant just keep throwing or asseto the economy, bubbles and all sorts of problems arise. Guy walk me through what this tells us. What is the real take away from this, in terms of what the data are telling us about where the chinese really are with this economy . It is so hard to get a real understanding, and you have to sort of pieces together, bit by bit peace it together piece it together bit by bit. Malcolm production rose 6 in april, from a year earlier. The big drag was heavy industries. Coal, steel, both are mired in overcapacity, causing a big drag. But some Newer Industries are looking ok, so good and bad on that front. On the retail front, the number is about 10 , so pretty strong retail growth, down from what economists had been looking for, down from march. That was a bit of a pullback, especially in automobiles. There has been a Government Measure to increase purchase of automobiles. They came back a little bit. Restaurant sales looked pretty strong. The Retail Consumer story still looks good in china. On the investment front, this is maybe where they are divided. Governmentled in construction programs are still going, but on the private investment side things are looking very weak. There has yet to be a real revival in the animal spirits business level, and that doesnt really spell good news if you are looking for any sort of pickup from todays levels. Overall growth is coming around 6. 5 , 7 . Most economists say that is not too bad, especially by european standards. Guy everybody seems to say that this morning. Ird had matt miller talk about what decent growth looks like around the world, and what we experience in europe. Malcom scott, joining us out of hong kong. Lets bring back steven major, global head of fixed income at hsbc. The chinese are still enjoying decent growth. You watch whats happening globally at the moment. How worried is the fed going to really be about what is happening with the chinese economy right now . Steven the point that was just made was about credit, and we know are that ends. If the growth is being purchased with extra borrowing, it is not good for the longerterm. That, i think, is one of the current focuses people have had. In the past, there was it was about the currency. It seems we had that scare last august and january. Guy you bring that up. Are we getting back to that . The dollar started to strengthen again. This is the u. S. Dollar versus the chinese currency, in january when the market got really freaked out and we saw the effect of that quite clearly. We are ever so slowly starting to push up to that level. 6. 52. We are climbing back towards that. The Dollar Strengthens. Is the fed worried about the effects of a stronger dollar after a rate hike, and what it will do to the rest of the world . Steven they are. That chart belies whats really the yen andcause the euro have been running a fair bit. They had achieved some of that evaluation. Guy if you look at the basket, it is a different story. Steven , all of the talk in august and january some of that has played out. The market focuses on this. People like to talk about conspiracies. I dont think there is one, but the reality is everyone who is quite well served by the u. S. Keeping rates low and china expanding credit, and china can only expand credit if rates are low. So eventually it comes together quite nicely. People know in the background that the debt is building up, and it is a question for the future, not right now. Guy we will talk about how far in the future, maybe a little later. We are minutes away from the open. Up next, a look at corporate movers around europe. Telecom italia has tripled its targets for reducing expenses. The market will open in nine minutes. A lot of stocks to talk about. Guy 7 53 in london, counting you down to the market open, moments away now. Lets find out stocks you need to Pay Attention to. Caroline Telecom Italia is the first stock to keep an eye on this morning, because it could jump 5 to 10 . A volatile ride if you have had Telecom Italia over the last 12 months, on a downward trajectory. But we could see a spike today. Why . They are phenomenally increasing the amount of money they are going to be cutting overall. They will be costcutting to the tune of 1. 6 billion euros by 2018. Compare that to the 600 million previously. They are upping it by one billion euros. A new chief executive is taking the bull by the horns, really wanting to improve profitability for Telecom Italia, so watch the stock rise on the open. Meanwhile, watch the stock fall. Not by much, but 2 . I want to focus on this, because you know they are seeing concerns about trading. We are seeing a likelihood of 1 to 2 lower on the stock price. Remember, they are going through m a at the moment, but fascinating for icap, for your revenue down 6 . A Challenging Market environment. The challenges will stay. They will be fact renaming themselves nex group. Nex. Will be changing to guy welcome very much, indeed. We have the market open coming up very shortly. Looks like we will see a negative start in europe. Euro stocks down 0. 7 . Ftse down 0. 5 . Dax a little better, opening absolutely flat. Looks like we see a negative start here in europe. Keep an eye on the stocks. Telecom italia could be one to watch out for. Icap another one. We will talk about the bond market. Chinese data, interesting over the weekend. We are four minutes away from the open here in europe on this lovely day in london. Show me top new artist. Ah, ha ha. Show me top male artist. My whole belieber fan group. Its not a competition, but if it was i won. Xfinity x1 lets you access the greatest library of Billboard Music awards moments, simply by using your voice. The Billboard Music awards, live sunday may 22nd, 8 5 pacific, only on abc. Guy welcome back, good morning. You are watching were moments away from the start of european trading. Heres your morning brief. The treasury trade. What is going on in the bond market . Joined by one of the biggest names in the bond market, hsbcs stephen major. This weekend, weak chinese data is a worry. And has lonmin finally got a grip on its conquest . We will speak to the ceo. Meantime, let me tell you how we think the executive markets are going to be opening. Looks like the fair value calculation will see a negative start to the day, euro stocks down by around 8 10 of 1 . That looks like a trade we will see at the getgo. Heres the market open. Were getting the negative view, cac already trading down well wait for the dax to open for the closing price, and the euro stocks looking for that negative turn, down by 2 10 of 1 . Market flat to negative this monday morning. Lets get some details with caroline hyde. Caroline i want to dig straight into your imap function. This is where you get to see the sector breakdown. The stoxx 600, red across the board. Down 3 10 of a percent, the worst performance of the i. T. Sector. Some downward trajectory for the Consumer Staples as well. We saw a bit of a growth spurt on friday. We ended in the green for the digestion ofn that woeful chinese data, missing estimates not only in retail but weo investment and, indeed, are seeing concerns about fixed Asset Investment and industrial production. Good news bad news for the United States we saw a selloff in the equity market on friday because the retail Sales Numbers were just too good. Does that mean a federal hike sooner than anticipated . We see money going into the dollar, and it could fall down a little bit. Overall we are seeing Dollar Strength continue over the last three days. The bloomberg dollar index function, and it does show the path of strength we have seen as we start to anticipate