What does it deliver for china . We are delving into all those stories. Notably today a little bit of risk assets. The ftse 100 managed to post gains. Up. 5 of 1 on the euro stoxx 50. Still of worth wealth of earnings. Also plenty of assets, oil driving the market today. Guy lets talk about what is happening in the other asset classes. A great place to start, your morning. You can see it right up here that new Zealand Dollar. A decision to cut from that reserves, not enough. You get a little bit of pushback from the bank saying the markets are misreading the story. It is more the pboc rather than the central bank that had control of this currency. We will discuss that during the show. And the japanese yen on the move. Lets get you caught up on all the news you need to know. David lets talk about brexit here. It is undermining the nearterm outlook for the housing market. Sales dropping in july according to the oil institution of chartered surveyors. When you look at new buyer inquiries they fell while the index of sales is pointing to the fastest decline in transaction since the Global Crisis in 2008. Deadly wildfires have hit hearts of Southern Europe and high winds are running the flames. For people have been killed. Forcing the evacuation of thousands of people including tourists. In france, multipliers residents forced to flee their homes. Private wanted an audience was donald trump. He climbed the tower using large suction cups. He climbed up to the toy first four before officers grabbed him and hauled him through an open window. Posted a video on message to mr. Ed trump, why i climbed your tower. He said he had something to discuss with the president ial nominee. I am david inglis, this is bloomberg. Caroline. Caroline thank you very much. Now when youre on, and this is the chinese currency. Value,c dropped its rocking markets with the unseen move. How has it worked out . Lets go to hong kong where our asia ethics editor is standing by. When youre on, what has changed . They have managed market expectations. The yuan declined 4. 5 last year. And we had predictions of them stay and the end of the world, etc. So far it is down 2. 2 and investors are hardly batting an eyelid. What is fascinating also is they have moved the currency from a oneway appreciation bet to a oneway depreciation bit. There is no panic. The pboc had succeeded in making itself more transparent even when it does not follow the market moves, investors do not pay because they know at some point the pboc will come back and stabilize areas it is pretty stable at the moment. About fixing and the level of government intervention. The pboc has control and the market since to be accepting. How transparent are we looking at here . Reporter what the pboc has done is sent out some veiled missives on how it is fixing and it is pretty clear to an extent. We can predict the direction of the fixing. Of the move in a certain range. As you saw last month, when they chose to strengthen the fixing come a when they should have gone the other way. They went opposite to what the market would have liked it to do. What they should have done. We had analysts and currency strategist saying they were not incredibly surprised by this. S barelyency market moved. Guy thank you, robin. ,oining us now in the studio youre just back from asia. What are they saying about the chinese currency . Guest they want to go back to the route of doing the internalization. We did mention the story. This has come at a large cost to the pboc in china. The intervention in the market, they have had to move the torency policy away from a basket of currency which is down 4 on the year. I think very much what is part of this is the strength of the dollar forces the sea and why, the Chinese Government to devalue currency. The market is looking at 6 to 10 evaluation over the coming 12 months and the game in China Remains the same, how do you get money out of the country . Caroline how much is china feeding into the oil style story we are saying and is that dictating when the overall mining spectrum goes as well . Natural resources. Guest it is pretty clear that therebound we have seen in aussie kiwi, all the resources clearly,rld, i think china is still the most play, much more important than the fed which we know is going to feed every single mood move they support. For me my china will surprise on the outside. One of the stories we have had is that china runs at 20 roductivity of the u. S. China has the ability to grow themselves out of the financial mess. That would entail that you have more free market opening, more internationalization of currency. And coming full circle, china needs to continue to [inaudible] happen in october. China will pursue that policy trying to balance out the cost of the currency not getting out of control. Guy the objective is still to get money out of china and then you talked about the commodity story. We see it moves and you wanted this before we came on air, it moves in gold, etc. During the asian session. You talk about the fact they are trying to get currency out to the country. What is the mechanics of how this is happening because this is quite instructive. Guest the game in china is you run a dual account set up where you have a domestic account were you deposit money and a mirror which theyh the oversee in hong kong. What you then do is you take the high in the marketplace, oil, gold, and silver and you take high bets. If you make money the money stays overseas. If you lose money you funded from the domestic account. You have the ability to take money out of the country. Guy the flow out of the country will carry on and we will continue to see volatility. There is all kinds of different, they are picking on where are the volumes. Guest if you take a look it is important because the oil game was the old exportimport trick. You got the money out that way. Ais is far less dominant and smaller force because you have to make the money in the account to get money out. It is a shy away. What we have seen is the impact of this is asia is not trading in any volumes even close to what it was in the past and i think asia is becoming undervalued relative to if you want to look at the terms and metrics in terms of valuation on up. China is just across the border from hong kong this area is the Silicon Valley of asia. They have this productivity that they came close but it entails if you have stated a few times to me, it entails they pass reforms. Guy stay with us. Plenty to come from you. Pile intocontinue to low yielding bonds. We will show you one key corporate index. Bulls, weg with the discuss what is happening in germany. Ever. Pumps ever more than that story coming up. All of this. This is bloomberg. Caroline futures are up. 5 of 1 . Germanlethora of companies reporting. Lets get you up to date. David lets get started. Which until come has reportedly made Deutsche Telekom has made a profit but fell short of analyst estimates. Earnings climbed 253 5 billion euros if you strip out taxes and depreciation and other items. Offsetne unit helped revenue. Zurich insurance says secondquarter profit fell 12 on higher restructuring charges and claims from natural catastrophes. Net income declined to just under 740 million but still beating estimates. Toio the ceo is trying make the company more efficient. We are talking global life and general insurance. Third quarter profit falling 18 . Germanys largest steel maker they dropped. That still Beat Estimates and the company reiterating its fiscal year traffic forecast that exceeds that is a clear sign of a recovery. A couple claim they have been threatened by people who refuse to leave even when asked. Nintendo officials were not available. It is a holiday in japan. That is your Bloomberg Business flash. Yield glds on 10 year ilts at a record low. Bonds have plummeted. What happened with the bank of england is happening having a Ripple Effect around the world. Overweight pimco is overweight now. And you were pretty hawkish on the fed at the beginning of this year. How is it working out because the bond market seems to be going from strength to strength. You made 30 on the u. K. Have beenarly and we overweight fixed income and we moved to underweight for a number of reasons. It is a strain on the pension sector, the liability side goes to infinity. We have ago tory frameworks that can continue to make the banks have more fixed income on the book. We have the money market reforms coming online october 14. Everything indicates that people want to be defensive in terms of the money market and the cycle has turned in terms of the u. S. Interestrate and the global Interest Rate because inflation is coming back. Caroline give us a sense where this goes. You are seeing seeming a little more cautious. We saw a desire to get into u. S. Treasuries particularly coming from foreign buyers. We saw 72 of the billions that were issued in the u. S. 10 year were up by foreign Central Banks by foreign investors. There is a positive yield on u. S. Treasuries but actually the cost of hedging is rising higher. What do you say to this, where does this go . Asst we are seeing a change you are alluding to from japanese investors [indiscernible] into btbs. Needle inmoved the terms of that. I was overweight fixed income. Think if you look at the Senior Survey officers in the u. S. Which is leading the credit cycle, it has been tightening for the last three quarters. The regulatory capital is coming online. You have october 14 as the deadline for the changes to the money market funds which is a huge source of funding for nonu. S. Markets. The market right now is playing on momentum, on yield. The income and change the comes to the monetary side and what is interesting also, it is very unusual but the three months [indiscernible] is close to the five year. We have seen a huge amount of may be driven by microeconomics and changes to the regular side is massivelyrate rising relative to the long and. It is a game where you have and where the people who act from zero to two years is very scared about all the changes going on. I think the two years will win in terms of we have seen the low end of the cycle. , both the Central Banks are outspoken. Monetary policy is at an end, it cannot continue to support the economy, we need to see Something Else happening. Guy we are beginning to lose the effect of that. You talked about inflation going higher. This is china ppi versus the u. S. 10 year yield. We have this crossover here. Is fact that the chinese ppi climbing back a little bit. Inflation that could come out of china . China hasear is that been and massive inducer of inflation. Last time they were positive was in 2012 when inflation in the u. S. Was 3 to 4 . China has been basically exporting deflation to the rest of the world. China will go to positive pbi and become the next importer exporter in inflation. It is clear that it is not a perfect coalition. The Monetary Policy should leave the u. S. Monetary policy, china being the bigger macro player. Year. Blue line is the 10 this is parallel, we have not seen these kinds of crossovers many times. How does it actually work . Policy will look like coming off a . Look at whyave to ppi is coming back up and that is because the chinese authorities are allowing the x x capacity to be reined in, there are allowing you see state owned enterprises facing at a bare minimum no more support but also increased competition. China is improving at the margin. That is why we see the price going up. The rest of the world posterity will china will not be able to have lower prices. Thatans fx to valuation china has done through the ppi. Now you see a rise. Have all continue to weaker currency. Do not forget a lot of the ability of the consumer to consume is based on the fact a produce most of their goods in china. Falling prices have maintained the disposable income for the joe smith in the u. S. Inflation ind to the consumer sector. Guy thank you for joining us. Caroline we are minutes away from the open. Next we will look at the corporate mover in todays trading. Telekom and others for you. This is bloomberg. Caroline 854 here in berlin. The futures market up. 5 of 1 . Some of the big caps have been reporting. We could see the travel operator rise. Doing better than expected. Despite the tragic events we have seen unfolding in egypt and turkey and tunisia, they are managing to send their customers to the western a trainee in instead, mediterranean instead. Spain stands by their forecast for operating Profit Growth of 10 . That stock will rise. And rising 2 . Revenue growth up 5 for this tech company which is a deliverer of your clothing in germany. On the downside, keep an eye on some of the utilities. Down 2 missing on its earnings. Profit up 10 . It was worse than expected create i leave you with one big laggard, kaylas. Kls. Guy the market open is four minutes away. Ftsi is called lower them a continental markets higher. This is bloomberg. Guy welcome. Im guy johnson in bloombergs european headquarters, alongside Caroline Hyde in berlin. We are moments away from the start of european trading. Caroline has the morning brief. Caroline yes, guy. Brexit hits housing. Figures show sales dropping the most since the financial crisis. We speak to the london times. Is that all you got . The kiwi surges to a oneyear high after a quarter percent rate hike is in position. And happy yuaniversary. What does china deliver . Guy markets are just about to open. As a quick note, a lot of stocks are on the london market today, which is where you may see what looks like ahead scratcher. Lets show you whats happening with the market in europe. Lets see where all the markets are trading. Well see how the Market Makers are putting the story. Huge moves in the bond market. The london market softening up as a result of whats happening from where we were yesterday, slightly negative. You can see the continental markets trading differently. I want to check my mrrc, hsbc at shell, all sorts of big star on the move. Be aware of that. Lets get the details, ftse and cac in different directions. Elliott docket has only need to know. Stocks areheck myelliott euron slightly higher at the open. We can see that energy is one of the only laggards, still a nice shade of green. We can go inside and see a little bit more detail of whats going on, the likes of shell and total and bp showing the drags on the market. If we look at the bond market, u. K. Bond starting trading today. We cant see over the last few days we are down to record low borrowing costs. The u. K. Bond says the bank of england is expanding its quantitive easing program. Areers and investors falling over themselves to sell the bonds. Its just about off those record lows. We are looking at a few specific stocks, and we will start with william hill. This is the betting by a group together togetting try and buy this company, as it stands at about 3. 2 billion pounds. William hill has dismissed the beta so far the bid so far. We are getting details that talk about 100 Million Pounds of synergy, cost savings, and other abilities. Looking to germany, where we have a big day of german earnings coming out today. We had earnings from the Tour Operator, reiterating its at forecast, which is reassurance for a investors. Sales were down, but they seem to be weathering the storms of terrorism money and the plunge in the pound better than some of its rivals. Thats whats going on in the stocks we are looking at today. For now, caroline, over to you. Caroline elliott, thank you. We were looking at Deutsche Telekom as it falls today. Rwe is also lower, down by some 5 . Lets dig into the key movers on the dax. We are pretty much through earnings season now. Sinkingplayers rwe as numbers in this, germanys largest power producer saw profits rise, although that was a significant miss. We also see steelmaker profits down 18 , sales down 11 . Henkel is rising 3 on the back of its numbers, that have a look at my bloomberg. I want to show you what has happened in terms of earnings season. This is the earnings analysis function. 26 out of 30 are currently reporting. Not looking very pretty on the sales front. Out of 24 that have reported, only six have beaten. Most have messed to the tune of 8 10 of 1 . Some are seeing 71 of the companies that are so far reported beaching in terms of earnings. I want to show you one interesting fact. Maybe it is time to sell dax. We are potentially going to show daxthat the rfi oversold, picking 70 on the relative strength index, a technical indicator to say get out. Our guest is still with us, the cio at sex a bank. Sack sxobank. I agree with your valuation metric. Most european trading markets are trading close and i dont think growth will accelerate. Get support will very loosely, but in a place like to germany, china is the biggest m a player in the world right now, and they continue to buy both private and Public Companies in germany to get that hand on technologies they need back home. I think m a will still go to with china and the other people. I think it is overvalued and i wanted to belong. Guy i know on bloomberg was concerned about this, one of the Big Technology messes when she was confronted with these Amazing Technology companies that were later being taken over. If you think about what a country has, its ability to differentiate itself, germany is engineering. After to protect that . First, it needs to protect its job integrity, its intellectual property. Sharing after private production, transferring that to china, they can only be winwin. Its a trade argument all over again. History, whenr in you try to micromanage an industry, you end up in a bad place, and that is only have seen a number of countries; turkey, russia, other places. I dont think germany wants to go that way. Are they concerned . Absolutely, anyone would be. But the corporation discussion is lost. Think of bp, chevron guy there are plenty thef things surrounding but i think intellectual property sharing is in any way going to be negative. I dont see germany climbing down. I think they will keep an eye on eroding strategic resources. But Technologies Technology and china needs it. They will continue to do so. I dont think anything can stop the industrialist in germany. Caroline steen, you have just been on a trip around asia. What do they think about the po