Billionaire investor bill gross calls for two rate hikes from the fed as soon as march. Will september be worse than august . Good morning. Welcome. Where less than half an hour away from the market open. Let me take you to the bloomberg and show you where the open is going to be. We think it is going to be a positive one. A ftse that is up by. 5 . A cac that is up by. 3 . A similar number for the dax. Let me take you around the world with the gmm, show you what is happening. These are the markets that are opened. Hong kong is up by. 7 . Singapore, higher. A move in the austrian twoyear, keep an eye on that. The Australian Dollar is up by. 2 . Zinc is higher. Led are hot lead is higher. I am keeping my eye on what is happening in china. Copper, an interesting story. Lets get you caught up. Here is the Bloomberg Business flash. David we have to talk about donald trump. He has reiterated his plan to build a wall on the southern border of the United States and send mexico the bill. He will the port any illegal immigrants. He will the port any illegal immigrants. A range of topics, including a wall was discussed. The second brazilian president to be in peace and removed from office after three gauge three decades of democracy. Be promised more business from the policies to end the countrys worst recession in years. China is showing signs of stabilization with the factory gauge rising in august to its highest level since 2000 and 14. It came in at 50. 4 compared to the estimate of 59. 8. The improved reading showed temporary weakness from the flooding in the southeastern portion of the country. Spains caretaker Prime Minister has failed in his attempt to end a political gridlock. In aas succeeded parliamentary by 180 votes to 107. To block his candidacy. The chamber will look tomorrow evening when the simple majority this is bloomberg. Guy at first glance last month was one of anemic trading. We had a quiet august on the s p 500 index. It felt 1 in either direction for 38 straight days. There is a shift in sentiment where investors are bracing stocks with benefits from a stronger economy. As they prepare for Interest Rate increases as soon as next month. Lets not forget where we are within arms reach of yet another high on the s p 500. We are taking this one all the way back. It shows the picture. Where all the way appear. The question is we are all the way appear. The question is should we be . Bob is joining us on set this morning. Can bee central bankers your friend forever without any consequence, why not . If youre willing to believe that central bankers are not why not . Guy im sensing you dont . Bob i think any rational human being will understand the argument that the fundamentals could cally globally. World. Gative around the bob if you think why rates are negative, that looks like a problem. The markets are not willing to think. The markets are saying weve got a bit of a credit risk on the horizon. If anything, it is one and done. There are so scared to do anything, we get that. People are looking through and saying there is an election. It is in everyones interest to make sure bad things dont happen between now and november. Guy you would not be short at this stage . Bob the way i would express my view. Theres been some pain in a trade. The longduration trade is the right trade. In the world where everything is rally, bonds are doing ok. In a world where that comes under some microscope and people start to rethink where the risk valuations are. Guy we will talk about the duration story because bill gross is pointing us in the direction. Lets do that later. The market is preparing for growth. It is rotated in the last month that volatility has rotated out of telecom and the two banks. And into banks. It is pushing in the direction. Below the surface things are happening. The market is shifting. A lot of sectors have had big drops in big bounce backs. While the market has not within itself any sense of totality cant totality, have not had any retracement. Vote. E had the the world did not collapse. Not only that, central bankers it became a really important Pivotal Point for central bankers to commence that they are there to do more. What we are seeing is a postbrexit sunshine trade. The markets are saying central bankers got my back. We might get some fiscal policy as well. We are not going to get a lot of this good policy. Central bankers are desperate. You mentioned bill gross. He put out a piece recently where he talks about the kind of verbal con job. Con job that central bankers are putting on to us. Con job that central bankers are putting on to us. That is why i think being short risk asset today, as much as the core of me wants to be, doesnt feel like the right trade. If i want to keep a bearish pmi and my portfolio come i think the long situation. It has been a great trade for the last six or seven years. Guy we will talk about it in more detail in just a moment. Bob janjuah is going to stay with us. Jemez factory gauge hit its hits its chinas factory gauge hit hits its highest level. We are in china with a look at the numbers next. It is the market open. We are watching hays after earnings. Day two of a big basing thats a big banking profit call for consolidation. We are going to hear about the uterus chairman thinks what the solution is for european banking in 30 minutes time. This is bloomberg. That is new york. Uy it is 2 41 in hong kong i have a little bit of glee in my voice because when it rains elsewhere in the world and it is sunny in london, youve got to enjoy it and where 18 minutes away from the market open. Lets get out of this part of the world. Heres dating list with the Bloomberg Business flash. He is david ingles with the Bloomberg Business flash. David improvement in spain in the u. S. , the worlds second largest fillers says the Current Operations rose to just under 2. 3 billion euros. The company also forecast growth of 2 to 4 this year. Later on will be joined by the cfo. He will be live on bloomberg at 4 40 a. M. U. K. Time. Masonic raised panasonic raised it sold half in fiveyear notes in a yield of. 9 1. 9 . Twoubishi are the only issuers to sell more than 4 billion worth of bonds in a single deal so far this year in japan. Shares of twitter jumped after the cofounder said the company has to wait has to weigh all options. His comets come amid speculation that twitter is a target for neck position could revenue has been growing slowly and the stock is down more than 17 this year. That is your Bloomberg Business flash. Guy . Guy 16 minutes until the market open here in europe. Lets turn our attention to what has been happening in china. The official reading for factory activity at the highest level since 2015 dividing unexpected momentum. The index rose to 50. 4. Suggestions are that as a result pboc will not cut Interest Rates or the reserve requirements anytime soon. I think people are trying to decide whether this is a blip. Lets find out. Lets join tom orlik. Tom is this a blip or something or can we take a trend on this . Tom i think you are right to question it. People tend to over interpret very small movements in the emi surveys. In this case, there are a couple of reasons we can be a little bit reassured. Firstly, this is a slightly longer term trend if you look at chinas main this is surveys. They are on a very moderate improving trend. Econdly, it is broadbased we havent just seen an improvement in the official pmi, we have seen a range of different measures from an index based on satellite images of chinas industrial zones, to the flash reading on koreas exports which tend to move closely in line with chinas exports, all improving slightly in august. Guy we are going to discuss this further with our guests. How much of a lead indicator is the maccallum number . It has been crashing for a long time. I wonder if this is a indicator of confidence. Macau, people spend money. Is this after an incredibly that run . Always starting to see some better luck or are we starting to see some better luck . Tom i think you are right. In a sense, it went down so far there wasnt anywhere else to go but stabilization. There is also some behindthescenes stories about corporate actions, new casinos opening. That is affecting the number. At the same time, the macau gambling numbers are seen as a canary in the coal mine for chinas economy. That slump seem to register for chinas consumers, as well as the impact of that crackdown on corruption which made it harder for chinas elite to go overseas and spend their money. The rebound now could be taken as a broader sign of return of confidence. Tom orlik, chief asia economist at bloomberg intelligence. You can see what has been going on with that maccallum number. It has been gradually recovering. The loss has been getting less bad but we finally crossed the line. If you go back to late 2014 and see what happened. It was that point that we start to get into this draft and this push that really affected Luxury Companies around the world. Lets get back to bob janjuah. His china stabilizing . Bob is china stabilizing . Bob we expect more rate cuts. The korean data is a bit of a head plate because the keck relations very different year on year. The house relations are different because the calculations are different year on year. Guy i noticed copper has been battered. That is been seen as one of the useful indicators in terms of how much their building, what construction looks like, what is actually happening. I think you have to use as many resources you can. I speak to people in china. I speak to hopefully the right kind of people both in terms of market, in terms of regulators and some of the corporate sectors. I tend to get my feedback from them. Ryan and they are saying . Bob things are ok. There is expectation around the property market. Wrapped around for the devaluation. What is key now for the currency is what the fed does. If the fed does deliver what below once, a couple of hikes, that should imply a lot of Dollar Strength which is probably not what china wants. I would also highlight that weve got a g20 happening in china, so i think they want to be seen as a stable going into that as stable going into that. We may get a repricing of that. Guy people get really hung up on the dollar raise with china. The basket are much more the baskets are much more useful indicator. Are we looking at the wrong number . Bob i think if we go back to ,arch where the u. S. Expected talked up a soft dollar policy, according before the shanghai accord. The idea was china need to devalue weight against the basket. It,e were two ways to do either china goes out and do what it did last august, or china keeps in pegged with the u. S. Which is the most visible sign of u. S. And allows the u. S. To evaluate the devaluation. The fed may do something that raises the dollar. I think that will put pressure back on china. Guy what is the Investment Case . Bob china echo i think it is a longterm Investment Case. China . I think it is a longterm Investment Case. The opening up of the Security Market longterm. It is a medium to longterm story with china. Within that, you have to accept that the demographics are not in your favor. That should push you into certain sectors more than others. Within that, you should accept that china is not going to go at 6 or 7 or 8 . Down to 3 or 4 growth rate if were lucky good within that, there is a lot of debt lucky. Within that, there is a lot of debt. Guy is there a better buying opportunity coming up . Bob i think there is. There is a this is a broader global story. There are very few people who are willing to pile into risk. There may be some portfolio stuff going on. Around half the world that we talked to is petrified. Worries that everything is completely wrong to together half is waiting for the list of nominal growth and inflation. The fed is kind of surfing that little ways. Bob guy bob, stays with us. We get bobs take on what is happening and we are minutes away from the European Equity market open. A weaker u. S. Market as forecast Earnings Growth ahead. Apple. Ceo, europes we will talk about those stories next. This is bloomberg. The market open, nine minutes away. Guy 7 53 in london and we are minutes away from the market open. The first one is noble nordic has a new cdo a new ceo. Has delivered some stunning performances. This is the chart i have compared it with an unlikely candidate. This is apple in the blue line and this is no more nordisk in the white line. Look at the match you see, the parallel performance you see coming in from these two stocks, absolutely amazing. In some places unrecognized and apple has really delivered, but no vote nordisk really putting up as well. In an area that is done well. This is the performance under the outgoing ceo, 817. 59 . Many ceos would be happy to leave on that note. What else is happening, at the banking conference. John cryan talking about talking about consolidation is the way to revive profit ability. Seems hard to get rid of this story. There could be merges in the banking segment. A positive story. Haze a positive story. Both stocks, it is going to be interesting to watch those two businesses when we get into the open. A bit of a dream for has delivered. Something quite sensational. Continue to watch what is happening with the postbrexit fallout. Watching that quite carefully. Bob janjuah is still with us. Still with it. That is questionable. Companies are beginning to want to the idea that we are going to see brexit affect. Too early . Bob i think it is too early. I think we wont accept that the heart stores that we were expecting, were told to expect, or perhaps hyperbole were perhaps hyperbole. My view is theres a lot of pragmatism on both sides alternately will come through. I think there will be an adjustment period. Right. Five minutes we will look at the open. That is next. Guy good morning. You are watching on the move. Here is your morning brief, folks. Chinas factory gauge hits its highest levels since 2014. We look give you the numbers from europe, including postbrexit u. K. Numbers at 9 30. John cryan calls for consolidation. Chairman takes to the stage in frankfurt. What would his solution before the european Banking Sector struggling to find stability . Bill gross calls for two hikes from the fed. Will september the even worse than august . So, we are moments away from the start of european trading. My wei is telling me that the stock 50 is called higher by. 2 . We will talk about that in a moment. But let me take you to the bloomberg and show you what is happening. We saw a selloff into the european close yesterday. We are now starting to open up. There goes london, a little bit more positive at the start. We are expecting the continental markets to follow suit. We are only up by. 2 , rising now. 4 . The European Equity markets get going on the front foot today. This is september 1, the beginning of a new month. Let me take you around europe and show you what is happening in terms of the performances of the sectors and stories around europe. This is the breakdown, as you can see, a sea of green out there. The stoxx 600 is broken down into its national constituents. Spain, not far behind. 600,rn europe on the stoxx up. 3 . Lets go to Caroline Hyde with the details. Caroline good morning, guys. We are getting a little bit higher in terms of yields in the u. K. Treasury. The 10 year yields are up about two basis points. So, may be coming out of a haven that has been u. K. Gilts. Prices for yields are rising, all of that ahead of the u. K. Pmi data. We are seeing the best we have seen in two years, 50. 4 is the number for chinese manufacturing. So, we are bracing ourselves for europe. What are the headwinds there . And the United States around 4 00 p. M. U. K. Time. Lets look at how were opening on the stocks. A bit more Risk Appetite after we lost at the end of trade yesterday. Oil prices are sinking lower, and that dragged energy off. Everything will Industry Group is trading higher. Who is winning . The bank are outperforming the financials up. 7 . Materials are also up. 5 , and where is energy . We are up about. 1 . Atp your eyes on all prices the moment. Lets look at the individual movers. A bit of a bellwether for the United Kingdom and europe, and australia, for the hiring sector. We are down 1. 5 . It looks relatively good with our pretax profit in line. Hays are saying the increased uncertainty in the u. K. Market and the big disappointment, guy, was the dividend, coming in slightly lighter than what we had hoped. Lets move on to the next set of numbers for you because he want to keep a keen eye on that. The biggest insulin maker in the world. The ceo will retire at the end of this year. 16 years at the helm. He hands the reigns over to an insider, the executive Vice President at the head of development. He will take the helm january 17. Next, i want to bring you the german juggernaut that is sap. Flat, but we have seen calls for it to follow her as sales were missed for the first time in three years. We saw it fall some 7 after hours. Keep an eye on the competition that is rife within the Cloud Computing software business. Guy thank you, caroline. One stock that is worth mentioning, and caroline was highlighting what is happening with commerzbank again today. This time yesterday, we were talking about deutsche considering looking at commerzbank. Remember, the markets were short on this stock. This positioning story is in here as well, not just an mma story. Commerzbank on a three day basis, up nearly 9 . So, not a bad start for the returns for the desk really, for the commerzbank ceo. He spoke yesterday at this conference. We will see what he has to say ultimate later on. Lets turn back to the bull market and its relationship to the equity market. Bond sales this year for the bluetooth companies in the u. S. Are about to exceed 1 trillion as investors seek refuge from negative Interest Rates. Investors are embracing investmentgrade debt, which gave almost 10 this year, according to the Bloomberg Barclays bond index. This makes it the busiest august in at least 12 years, m