Manus you are welcome to the pulse. Good morning, i am manus cranny could we have a lot to digest, not least a coup that went and came. It was quashed. It happened in turkey late on friday. We got the lira, stocks and the deal of the day which is arm on your board. Tocks in turkey, down 3. 5 you are seeing this index down the most in almost three weeks. You are seeing this real risk aversion. Recovered froma one of the most demolished emergingmarket currency trades. The dollar lira at 2. 94. What you are seeing is a shift. Where will we go next . It go tolmost see around 2. 90. Goldman sachs says they reckon it will weaken. You are seeing this big turnaround. The demolition that to go way thats effective place in the currency on friday dropped nearly 5 . We crawled back 50 of those moves. 43 rally, softbank buying arm holdings. Premium. E, a 43 we are bang on the money. The market seems to be pressing no other contender in the wings at the moment. Lets get their first word news with nejra cehic. Nejra, good morning. Nejra john kerry says the u. S. Is awaiting a formal extradition request. State calledetary for evidence that would stand up in court and dismiss any accusation of u. S. Involvement in the uprising as irresponsible. Shares in arm holdings have soared after softbank has agreed to buy the company for 42. 3 billion pounds. Just connected devices in the home. It would be the biggest takeover for softbank which has become one of japans most liquidity of companies. President obama has condemned the murder of three Police Officers and a shooting in baton rouge. A suspect has been killed but did not confirm the details. Two weeks ago, Baton Rouge Police killed and africanamerica man that set off africanamerica man that set off protests. Global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. Manus the turkish lira is rebounding. It has recovered 50 of its losses. That triggered the currencys steepest since 2008. Stocks have opened lower. Our middle east managing editor joins us. We to see a. Great to see you and we have the equity market reacting on the downside. The currency is recovering some of its initial losses. Just make some sense of it from a markets perspective. Look, i mean, this is the First Time Since the coup, the equity and bond markets are able to react to the news of the coup. The currency is rebounding from a very thick decline. Really, what they chose is there is a negative reaction in terms of turkey on the side of the banks and airlines. Recovering the most on the soft market. What it shows is maybe people do not think this is a complete meltdown or complete disaster. What it is really bad. Markets are down. Manus it is trying to gauge the scale of the reaction. The political backlash from anyone from erdogan. There areng to hear couple of comments coming across the bloomberg. Japanese cuts turkish stocks to bearish. Year,s what is at risk isnt it . It was crucial. Data recovery of money coming to turkey this year. The question really on peoples mind isnt so much is the day to day trading which is not sure there will be a reaction, but more so what does it mean for the longterm . Some people are saying it is stable. The government is back in charge. The coup has failed at others are concerned about the consolidation of power on a very hands of one the man and what that means for turkey Going Forward and the Political Risks. Much. Thank you very for the latest on the ground in turkey. For more lets turn to mike bell from j. P. Morgan Asset Management and global strategist. No matter who you are, youve got to look at these huge moments of idiosyncratic risks, brexit, turkish coup. What i find remarkable this morning is the resilience of equity markets from the global perspective. Mike with both of those risks, they are very local problems it not to say they are not big problems problems. Not to say they are not big problems. For turkey it is a very large issue, but for the Global Economy as a whole you look back, it is relatively small. What is far more important is what is going on in the u. S. And indeed in china. There, the data has been good. Manus we saw some very strong numbers from the u. S. On friday. Said, what weve got is a wirt. The probability of a hike goes to 44 . That is from 7 to 9 . That is a demonstrable change. What is your thinking in the ability of the fed to see the see through those small risks . Theyve got to look through those. Mike i think they can. Brexit is the bigger issue for them. That delays the rate hike until the end of the year. I think it is possible you get the red thats the fed to hike rates once the fed to hike rates once in december. Manus the other thing is we saw quite a rush of money in the emerging markets. This is where key this were turkey had been a key beneficiary. It a syncretic idiosyncratic, this coup of turkey. Mike little risks have always emerged in emerging markets. Lyrical risks have always emerged in emerging markets. The brexit boat caused some political concerns in the u. K. I think broadly across the world, we got the u. S. Election coming up, people will have politics high on the radar. Manus fascinating. We are going to get the cleveland later. Positioning initial for american Political Risk at the moment. How does that manifest in itself , through bonds . Equities . Areer of these protagonists some people would say protectionists in their nature. Michael if you look the polling, it suggests you are going to see you lookt mike if the polling, it suggests youre going to see a democrat when but it will be split government. Manus what about u. S. Equities. Valuations are stretched, 20 times pe. Mike because we are relatively cautious on the outlook at the moment, that favors definitive markets like the u. S. Ause us being cautious other parts of the world and within the u. S. , you want to favor the cheaper, value stocks. Manus this indoor rally that we are waiting for after 13 months continues in the United States. We have much more to get through. Mike, stay with me. Stay with the pulse. First up, postbrexit britain. Short, shallow recession. We bring you the headlines, then softbank is hard cash. The Japanese Company exit 24 billion pound did forearm. Good bid for our bid for arm. This is bloomberg. Manus 9 13 in london. It is 11 13 in turkey. Lets give you a snapshot of how markets are doing could equities under pressure. Japanese cutting turkey stocks from stocks to bearish. The cost of the cost of default insurance also rises on 10 year government bonds with the yield the biggest takeover for softbank. It is become one of japans most liquidity of companies. Exxon mobile has made a bid for into royal offering a fixed price of 45 a share. Large the companys reserve and pop under gini. For papua new guinea. 8. 0earches it offered point shares. Rocket booster has landed back in Cape Canaveral lorna. The landing site desk Cape Canaveral, florida. Florida. Anaveral, it was carrying 5000 pounds of food, equipment for the International Space station. That is your Bloomberg Business flash manus. Manus nejra, thank you very much. Breaking News Headlines coming in across the bloomberg terminal speaking. Is he says that brexit is like is likely to reduce u. K. Income. He is talking about the variety of issues. The bank of england should wait for former evidence before policy change. A little bit of a surprise in the market last thursday. They did not go for a rate cut. The bank of england should word for evidence before policy change. Sterling decline is partly related to the current deficit. He talked about wages and productivity. This case it might be an argument against a rate cut. Lets have a look at some of the reactions. Dollar sterling could we got the bigger trade. Dollar sterling. We got the bigger trade. We are trading at 1. 3281 at the moment. Lets get reaction. Weve got mike bell in the studio with us. That is fascinating. Martin was saying actually the reconsidering more rate cuts. Mike i think the evidence is clear that the hit to the u. K. Economy is going to be significant. If you look at consumer confidence, and has fallen sharply. Confidence, it has fallen sharply. , the minuteslear from the mpc shows that they were considering a package and what they are doing is working out exactly what type of package is going to be best suited. Manus would be the best package from a j. P. Morgan Asset Management perspective . Pound. Ng lower on the everything i am reading suggests a moment of reprieve for sterling, i am looking at dollar sterling. Many of the analysts are calling for this is the opportunity to sell the currency. That has water ramifications in terms of assets that has broader ramifications in terms of assets for you. By the end of the year. Weve also got expectations for the rate cuts coming through in the u. K. We think they will do more qe and some form of credit easing. Perhaps,or lending or even some Corporate Bond purchases. Manus how possible is it that . Do you think that is in an extreme situation . 40 possibility at the moment. It is certainly not an impossibility. Gilts. Talk to me about in the treasury market and equity market both rallied about 19 . The worst week for bonds. What youve got is this real flattening in the yield curve. My question to you is how 1 . Thisan we see sub is at the very far end of the curve. Really i demolition in terms of what is going on. Thats really a demolition in terms of what is going on. Really, a demolition in terms of what is going on. Where are you in the great debate on bonds . Mike we think bond yields are going to be pretty well supported. The short end, you might see a move upwards. At the long end, the bank of england is going to ease more, probably with more qe. We think the bank of england we think the ecb is going to ease more. We think the bank of japan is going to ease more. That world, you got u. S. Treasuries which it sounds crazy, but they look like a highyield asset. They have a greater yield on the u. S. 10 year. We think the u. S. 10 year can go lower. We would not be sourcing duration and u. S. Tenure market unless you get to 1 . Market unlessr you get to 1 . Manus stay with me, mike. We got a little more to go. ,p next on the pulse, softbank hand over fist for britains arm. We break down the 24 billion pound deal. This is bloomberg. Manus it is our big corporate story, softbanks take over of arm holdings. For more on the big acquisition, lets get straight to the phones and speak to the director of technology research. Thank you for joining us. Stock is up. Bang on the money. The cap is quite low. There are a lot of people who would like to own arm. The ones who are most talked about his until about is intel. All of those have gotten quite significant revelatory issues. Significant regulatory issues. With owned by the chinese the single unit group. This is an all cash deal. It can close quite swiftly in september, october. The chance for scuffing it is quite low. Manus what i found interesting is softbank, they are committing they are seeking to double the employee headcount in the United Kingdom over the next five years it to me, this is just five years. Me, this is playing toward five years. It me, this is playing toward theresa may. Nick softbank does not have any semiconductors it would be odd from a business perspective to do this, increasing the headcount at that rate is the proper rate because it was a very fastgrowing company. It is good for the u. K. To have those commitments. I dont think those would be very difficult commitments to make. Those are the best things for the business and softbanks ownership. James, thank you for joining us. Lets bring mike bell back into the conversation. This is the very personification of a week sterling, a brilliant asset in the United Kingdom. Do you think this opens the door to more m a in the u. K. Postbrexit . Mike may is going to make that environment tricky, but some takeovers, given they dont want people coming in and taking out large it is champions, but this deal may be an exception. I think more broadly, there is push and pull on the m a factors it the uncertainty is clearly factors. Clearly ony is the other hand, week sterling makes the companys cheaper in yen terms where the Foreign Companies are looking at the u. K. Market. It is hard to call the outlook. The uncertainty from the brexit outlook is probably likely to win out. Manus mike, thank you very much. Joining us this first half of the show. No doubt about it, the one trait that is going through on the marketplace is turkish lira. It is regaining some of the grounded lost. And toainst the dollar, 95, 56 up next, where life to brussels. His is bloomberg we are live to brussels. This is bloomberg. Of turkey from fridays military coup. U. S. Secretary of state for evidence that would stand up in court and dismissed any accusation of u. S. Involvement in the uprising is irresponsible. Shares have soared this morning of something is agreed to by the u. K. Chip company. And connected devices in the home. It will be the biggest ever take over for softbank which under the chairman has become one of japans most inquisitive companies. Louisiana police say a suspect has been killed but didnt give further details. wo weeks ago, police africanamerican man setting of protest that was followed by the killing of another black man by Minneapolis Police in the murders of five dallas officers by a gunman. Countries,00 and 20 i am nejra, this is bloomberg. Manus thank you very much, lets give your snapshot again some the biggest movers in the turkish market. 100 is down at the 3902, it is a fairly fast market. Expect a risk premium on turkish assets to increase they just released an email statement. Youre beginning to see the markets begin to interpret exactly what has happened. Into turkey the first seven months of this. Taking back last year, of course it was near 5 billion or 6 billion. Lets go back to nejra, who is trying to put some perspective on this. Europe is already up pretty well in a relative sense to this cascade. Nejra you have covered turkey comprehensively this hour. But we have seen globally is really equity market showing some resilience. We saw it in asia and in europe as well. If we look at the stoxx 600 it is up 3 10 of 1 . Not Massive Gains but we are seeing risk. If i look at the stoxx 600 and Industry Groups performing the best on the bloomberg it is Technology Stocks leading those gains up 3. 6 . Guess what . The biggest gainer among them is arm, this has jumped the most ever and hit its highest point ever today since 1998. A really big surge in the stock after the news that softbank has agreed to acquire it for 32 billion and a 43 premium to fridays close. Interview isa tv all happened very quickly. We have seen the reaction happened very quickly. One thing i want to note that is quite interesting is that Short Interest in arm holdings is close to a six year high. Whether these gains will last is another question. We are seeing a big move higher on the stock today. I wanted to look at sterling, we have had some comments of the bank of england saying that the weakness may not be as severe as previous recessions in the u. K. He also said that to the bank of england should wait for further evidence before a policy change. We are seeing sterling extend its gains. As further evidence of general Risk Appetite we are seeing gold declining today. A lot of this has to do with the data on friday that we got out of the u. S. , really meeting with the markets have changed their probability for a fed rate increase by the end of this year. Last time will and 44 probability of a fed rate hike. That prospect of higher rates is bad for gold. And may surged more than 5,900 an ounce. There are 1328 spot 79 an ounce on gold. Manus u. S. Secretary of state john kerry is due to give a joint News Conference with the european foreignpolicy chief. Shortly, their gathering for the eu for ministers meeting. How much will the events in the with the eu foreign ministers, their meeting today. Ryan chilcote on the ground for us. Ryan it is critical. If heard some tough talk from the eu over the last couple of days, a real shift in their position from one of support to one that say we support you but lets make sure you dont over do it in terms of going after the political opposition. That rhetoric is at this point only rhetoric. It dependent because of the migration. We have seen them come through turkey to greece followed by 10 fold over the spring compared to the time. The year before. The eu really needs to keep turkey on its side to stem the flow. Do and eu needs to membership talks with that if you were to see the eu suggest that either of those arent going to happen that is when the rhetoric would turn into policy and that would really show some teeth. We havent seen that yet from the eu. Manus unusually, we have john kerry there as well. Politicshere global comes in. Turkey has accused the u. S. Of to find that for me but some parameters around it. Clericso goes back to a in the United States of america. Ryan thats right. John kerry over the weekend and luxembourg just before he came and said that if turkey was to provide evidence that could stand up in the court of law that the individual you are talking about who lives in pennsylvania should be extradited and was somehow involved in the talks, then the entertain move and the idea of some kind of extradition to allow them to leave the United States. Dont forget, if it is migration for the europeans it is security for the United States. Turkey is a hugely important member of nato for the United States. Worlds one of the Worlds Largest countries with a muslim majority with a democratically elected government. I think if we have seen the european so far respond to their concerns about the crackdown going to far in turkey, if we have seen them be somewhat circumspect and just keep it rhetorical, who will probably get the same from kerry when he sits down for that conference. Manus thank you for a much on