tv Bloomberg Markets European Open Bloomberg July 20, 2017 2:30am-4:00am EDT
♪ guy: good morning, welcome, it is thursday morning, you're watching bloomberg markets, the european open. cash is about to open in europe, we'll see how the equity session develops. matt miller not here today. i am guy johnson. say nothing. mario draghi, candy and is to stay silent on the central bank stimulus exit plans? keeps itsntral bank exit plans unchanged. has backed down,
we are expecting him to speak imminently. six months of stalemate. president trump urges senate republicans to delay a recess to revive health care. the first year in office without a single major accomplishment. we are less than half an hour until the european open starts this thursday morning. there is a lot of central bank risk out there. the currency story will be interesting. pretty similar story to what it .2, .3 of 1% higher area we are not getting a lot of movement. there are individual stock stories that are worth focusing on. easyjet upgrading and we are watching what is happening with unilever. we will bring you an interview shortly. this is a great corporate story to dig into, it is a bottom-up rather than top-down kind of
day. at least the start of trading. when we get into the ecb later on we will see whether or not that is the case. let's walk you around the gmm to see what is happening around the world in terms of the action we are seeking -- seeing. that is africa and turkey trading up strongly yesterday, argentina in the mix. the emerging markets doing very well. are unbeaten this week, the aussie coming down from what was a stunning move in the aussie over the last couple --weeks, retreating from the retreating. let's show you what is happening around the world. paired tension, we will be debating this in the newsroom to what happened yesterday with this china-u.s. stalemate. a pressoss canceling conference. is that the green light to steel tariffs? it is a question will try to answer. we will see what happens. steel had a big run up this morning in asia. it is trading down by nearly 3%. it is one of those fascinating
stories, you think about what is happening in washington right now, what is going on with the president and than you think about the relationship with china which started ok and definitely fading fast right now. you wonder if the steel story is in the firing line. we watch that throughout the session as we work our way through the morning. let's get the bloomberg first word news update. here's juliette saly. juliette: thank you. the bank of japan has kept its monetary stimulus program unchanged even as it pushed back the projected timing for reaching the 2% inflation target for the sixth time. the central white lights to maintain its yield curve control program and asset purchases in line with economists' expectations. the boj x next to hit its target around the fiscal year starting april 29 versus a previous six foron of around 2018. donald trump has told senate republicans they should stay in washington and -- until they repeal obamacare.
the move sparked renewed negotiations two days after efforts to enact a new health-care law collapsed. a group of 20 per republicans -- 20 republican senators met to hash out possible steps forward including reviving a measure proposed by the majority leader mitch mcconnell. u.s. senator john mccain has been a guest with a type of brain cancer that was discovered when doctors removed a blood clot above his left eye. tissue tested revealed a glioblastoma and the 80-year-old arizona republican has been recuperating at home. president trump set his thoughts and prayers with mccain while president obama said he is an american hero. president trump has said he would not have appointed attorney general jeff sessions if he had known that sessions would recuse himself from overseeing the russian election meddling investigation. he called the decision "very unfair to the president." trump also excused robert
mueller of -- accused robert mueller of running an office rife with conflicts of interest. china has agreed with the u.s. constructive cooperation to narrow its trade deficit." the statement from the chinese form -- foreign minister came after negotiations broke up yesterday unable to reduce a joint statement. the talks got off to a tense start as wilbur ross scolded china over trade imbalance and both governments canceled their closing press conferences. france's finance minister has to thee u.k. must commit funds it owes the european union starting at the sum of 100 billion euros. speaking at an economic committee he said as thatcher famously said we want our money backs. talks on the refund must form the start of brexit negotiation.
theresa may will be urged to do more to reassure businesses about her brexit plans as she begins her first serious consultation with companies on the subject. senior figures have been invited to sit around the cabinet table and offer their views. having spent her first 12 months in office attacking industries for overcharging customers and not paying staff enough, may is trying a more conciliatory approach. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you very much indeed. if we had -- as we have indicated, we have seen the governor of the bank of japan speaking over the last few minutes per his press conference four minutes ago and we are getting commentary coming through. these are live pictures coming through from tokyo. the governor is talking about the rise of inflation expectations being delayed a little bit, the risk is skewed to the downside, the prices, and the economy. we are in a position where the
boj looks isolated. probably the wrong word to use but that captures it in terms of the situation we find ourselves in. other central banks are looking more at an exit rather than the continuation. of boj is in a continuation monetary policy. we will continue to make sure will tell you what do need to know. live blogging what is happening. the other is lythgoe -- live go. a couple of options to keep you up to speed. ave many panels available on your bloomberg screen. the ecb will signal its intent
to scale back monetary stimulus. is enjoyingurrency a 14 month high but what if draghi does not deliver? the ecb president released a policy update at 12:45 p.m. today. let's take a look with mark cranfield. are asymmetric. no one is expecting draghi to stay. it will be an exercise in saying as little as humanly possible about the subject of qe and electives from it. what constitutes a surprise today? mark: the euro exchange rate and withund yields will end up a closed yesterday. it will be a good result for mr. draghi. in reality, there will be quite a lot of positions going into the meeting and we would like to
see some volatility as he is speaking. he has a thin line to tread. already he has said something which suggests they are making a small move toward the exit. he has not backtracked on that so far, he has had plenty of time to do so and he has not backtracked so that probably means he wants the message to go ,cross to people in the market that the ecb is very slowly moving in that direction. amehow, he has got to prevent taper tantrum. he does not want a repeat to happen -- of what happened in the u.s. where the bond market got out of control. he will have to use his language carefully to let the message be clear that we are giving serious consideration to make an exit. we do not want you to get excited about it and cause a panic in the amount -- in the market. how he does that will be interesting. will continue to committee kate with you.
briefly, what is his positioning looking like, how are the markets set up going into this? there are two big camps in terms of what could happen with the ecb. i wonder how they have set their chips out ahead of the press conference. a healthyave seen rise in the euro and a big jump in german bund yields when draghi's folks three weeks ago. that suggests the market has got something on board so the chances are that if there is disbarment in the sense he dovishback to his old self, one of the places you could see that is the euro could drop a big amount today. is: it seems that the bond pivoting around everything else, the center of gravity right now. thank you, mark cranfield joining us at mliv blog.
guy: 7:43 a.m. in london. here is juliette saly. juliette: thank you. of has raised its outlook revenue after reporting a quarterly sales jump. they project sales of 23 point 3 billion euros to 23 point 7 billion euros for the year based on constant currencies. it now -- it announced a share buyback. we will be speaking to bill mcdermott and his first interview of the day at 11:30 a.m. u.k. time. india has approved the sale of of $4.6 billion stake in state run refiner hindustan petroleum. according to a person with knowledge of the decision. the deal will make oil and natural gas corporation the number three refiner. the plan to create an india oil jet -- giant was outlined in
february. bank of america has told investment bankers to stop working on transactions with china's hna group amid growing concerns about its debt levels and ownership structure. according to people familiar, the u.s. bank joins other wall street firms including citigroup and morgan stanley that are steering clear of advising and financing hna on deals. representatives from bank of america, citigroup, and morgan stanley to climb to comment. that is your bloomberg is this flash. -- business flash. scenarios releasing -- a releasings guidance. rate doubling after a favorable first half. let's join the boss of this
business, joining us from helsinki. but get some thoughts on where this busy this business is going. neu are expecting the ebit li to double. we have done the math on that and that translates into around 110 million euros. the issue is the market is expecting somewhere around 140. do you think the market is over its teeth here in terms of what it is expecting? guidance that we expect our profits to grow in double, that means that it can than 110 or lower. we are focused on executing our goals strategy and our revenue growth was very robust in the second quarter. we continue to grow throughout
the year. guy: you putting a lot of capacity into the market and you talked about planning to grow faster than ever. you talked in the past about that being stuck at 15% in the second half. can you give us a sense, that is a very aggressive number if that is the case. can you give us a sense of what the capacity story will look like? pekka: we are the main growth europeor us are asia and and many of our passengers are transferring at helsinki. we see robust growth in passengers coming to finland or two europe and at the same time, europeans traveling toward finland and also to asia. that is the main growth line, we do not have some of capacity in the north atlantic where the situation is somewhat automatic.
at this -- problematic at this moment. something very few people have and that is russian overflight and this gives you the short route over the top in terms of being able to access asia. what kind of difference does that make and do you worry about the risks of that russian relationship going forward from here? thea: we have flown siberian direct route since 1987 and we are very confident that andan continue that model able to increase our flights not very dramatically but a steady increase over the years and be very confident on this model. this of course -- when you say over the top, we see this is the direct route, it is in fact the direct route if we can parrot this one to flying via the gulf offering -- we are
offering seven hours shorter flying time to get from central european destination -- from central europe to asia. 340 -- 350s, may airlines are canceling them. that: we do have a program we have -- we have nine more to come on our current order. we are looking into art european fleet in the next phase. guy: it has been a great pleasure speaking with you. thank you for joining us, pekka vauramo, the finnair ceo. 3%,underlying revenues rose this is a business clearly very much in the m&a crosshairs at
the moment, if ended off -- it fended off kraft. will the m&a story be back online? let's listen to the ceo. on --but we have focused what we have focused on is compounding with our continuous investment model and i think this again shows what interim us value can be created. [inaudible] a long-term compounded model like unilever is a good model for many of our shareholders. >> you are launching the strategic review when we last spoke and you said you were business that has been sold to mccormick. what you make of the multiples of that? >> it is a quality asset clearly
if you look at the price, we look at many of these things when they come on the market because you always learn something. disciplined m&a process and we are glad this first six months of the year to of hourglass to our stable brands. a partnership with a biggest company in myanmar. we continue to strengthen our portfolio and stay potent -- focused. >> what multiple do you think you could achieve with the business? process.a complex we are in the process right now, we're working with lots of interested parties to see what the possibilities are and we think we will complete that process probably by the end of this year, early next year. >> are we talking about a carveout or outright sale? >> we have options, we have
different options to see how we could maximize its value but also guarantee the success of the business. it is a big and successful business. >> any idea at all on the enterprise value? >> we do not go into that now. probably by the time we come to the conclusions of what to do. >> the last time we spoke as well during the strategic review, we talked about m&a and you talked about continuous m&a. as you go forward, are you thinking of making any big purchases or just more hans nichols oceans? t-rex we have had a good strategy over the last seven or eight years where we made steady and consistent acquisitions. has done extremely well. we are extending these businesses in different
countries, seventh generation into the u.k. as we talk. tresseme into china. we are making these strategic on acquisitions and put global scale and reach behind that and create shareholder value as a result. we happen able to grow at about twice the rate as the market. overallg spreads, 3.4%, gross 5.5% in a market that is flat, these are good results. and driving the financial [inaudible] operating margin of improvement. guarantees as we stay in the top percentile. the great majority of acquisitions have been in home and personal care. are you going to make more acquisitions in that area or in food or both? >> we continue to look at value enhancing acquisitions and all
of our categories are going, you talk about food and refreshment, the last six months we grew 4.2% and we have made acquisitions like -- that we are expanding in retail. and premium ice cream is doing well. a combination of organic growth and programs and strategic growth. we always look at them in every that is value enhancing. it has to be done with enormous discipline so that we pay prices that are reasonable for us and for our shareholders. >> shareholders should not expect a big acquisition in the future? >> we look at the options that might be available to us. it would be stupid not to but our strategy now is working for us. >> whatsit of options question mark colegate, palmolive? >> we do not comment. we are pretty happy with the
strategy we are doing right now. of m&a in that sector, we saw that the mistreated very clearly yesterday. there is continuing to do more. tightlipped, figuring out what the m&a story and how you both that into the operating environment is going to look like. plenty of thought is being put into that process over at unilever. let's talk about the other stocks focusing on as we run you up to the market open. easyjet, a company on the move it seems this morning. lifting its forecast, is bracing for life without caroline mccall's. itv,ill be heading for returning to the fold, you could argue. at a time when the pricing story looks interesting or tough, a
♪ guy: stocks to the attention to as the market opens. even i on what is happening with unilever this morning. -- keep an eye on what is happening with unilever this morning. he got its is flexible. nevertheless could be a little south of where the market is expecting. keep an eye on easyjet. looking for a new ceo. the sense of direction seems fairly positive. there's going to be continuing pressure on heels as we work our way toward the business. going to be setting up a new airline. in austria, they will be generating an operating license and certificate in austria.
wei scream tell you on your fear by your company relations -- fair value calculations, trading up around 4/10 of 1% in europe e. let's talk about where we are expecting the markets ago. there is the for the opening up. not by much. not much movement there. we are expecting a better performance elsewhere. we shall see how the aex opens up. stoxx 600 down. i sit down, it is flat. we have been treading around the 74 level. manus, what have you got? mario radio draghi -- draghi is one of our guests in a pin in how he presents it.
he does not have a shakedown white he had. mario draghi is looking for goldilocks. in terms of the equity, 2.5% is what we are looking for. the bank of japan of course taking that higher road, more divergent root continued with persistent in the markets. this could be the last momentum moment before the summer holidays kick in. one of the last big pieces that moves european markets. what mario draghi was not want to do is have a rerun where he spikes the yield higher and perpetuates what is already a very sick of it and move. the euro is back to 2015 levels. this is where we are in terms of the bloomberg bureau index -- euro index.
the market for the first time in three years. this is where the risk of a stampede comes. if he is not hawkish enough, get ready for an absolute stampede for the door. speculators are the most bullish since 2011. he needs to keep the balance correct. to 117.erride up s.a.p. gets 55% of their revenue from beyond the european shores. that is a snake and the -- significant number. we had michael sullivan from credit suisse. the cio. there is in his view more of a likelihood. let's just get a price on that. let's return. it has not come up. what you're seeing there is michael's view. that you probably will see --
you have a higher probability of a hike coming from the u.k. versus everybody else. that is before the end of the year. stocks are better bid, waiting for mario draghi. mario draghi. we will be adjusted in what he has to say. where we standt in terms of the market this morning. let's start on the left-hand side. dropped by .4%. all trading higher this morning. the downside is quite interesting. this is the technology company. they make submarines, etc.. trading down by 5.3%. outlook of the fighters
looks pretty good. i'm wondering why it is down as much as it is. missing across the board this morning. that bank is suffering this morning. down by 3.65. a little scandinavian theme this morning. business down by 2.47 as well. anyway, that is the top story. i would argue in terms of the financial sector, certainly weakening. something of a positive story of late. let's talk about central banks. the ecb not expected to announce the policy change. mario draghi will prep on whether september will see news of tapering. views are split on whether the president will if needed. carefully, strength
would come locate the inflation talk at best target. kind of problem the fed had. joining us now is alessandra. off inset the fireworks portugal. is he going to walk back from that? is he going to be excited when? say itdra: what we can is going to stay the european eg well. more patients, at the same time the stimulus can be eventually pared down when the time comes. as the economy improves. this is what he had said. there was a strong market reaction. he is going to completely contradicts at the same time he is going to sound no rush here.
stop -- he stop the euro from going up aggressively? alessandro: it is just the nelnet they are taking apart -- in account. the last time was 2014 when the euro was really strong and draghi verbally intervened. whether he will try to talk down the euro is one of the things to look out for today. guy: why see going to jackson why is he going to jackson hole? alessandro: he made a change in his speech which changed the stage for qe a few months later. whether he is going to set the stage for september, this is
what to look forward to. guy: what would surprise you today? not you, what would surprise the market today? removesro: if the ecb -- the ecb says it is ready to sizease qe in duration or if there is a need. if the mention of the sized so they can buy more every month. other sign that another sign the ecb is confident the inflation is there and the moment is approaching when they will release purchases. going to be an interesting day. team, plenty of coverage as we work our way through the morning into the afternoon. we're going to bring you the policy decision 12:45 u.k. time. for five minutes later with the mario draghi press conference.
there are a number of ways to follow this. you can watch it here of course. you can watch it on tv go. tliv to the function. you've also got the life go function. we have got it covered from every angle possible. aberdeen asset management, what would surprise you? >> you'll have to work hard to be surprised by mario draghi. keeping that balance between not upsetting the market and making it clear there is a path to change here. it is how clear he wants to make it. i think he is god's dust is going to say -- he will get pushed in the press conference. he will make a december -- decision in september. the central speech, he did not do that by accident. change is coming. we are going to run out of bonds for them to buy bike new -- june
of next year. i think this is going to be the least -- >> i think you rise we saw coming through the end of june and july, i think that rise just allowed steam to come off the u.s. and u.k. as well. the build inflationary pressure has been white high. the misallocation of capital this morning. it is not great. not what you want to see 40 forward growing economy. this is part of the problem. beenthink germany has angry the u.s. and u.k. lower.
i think you see that reaction in september which we could do. guy: what is your year-end target? actually getting a point in time right is going to be next to impossible. yields are going to continue to rise. >> people are expecting that kind of september leak but we have seen again and again and again things that everyone asked is expecting come along and they push the market. guy: if the euro -- it is about rate of change here. upwards, islerate there a point where you go, actually the ecb is going to have to look at this and think maybe we scale back exit from stimulus and make it a longer drawnout affair because we are worried that currency is going to impact us?
alessandro: a reflection of the eurozone on its front was. some of it is important. a lot of it is domestically driven. the bank is going to be pushing hard in september for withdrawals of stimulus. he may well talk about it more. you saw in 2014 he got very concerned about the level of currency. really comes higher that he will stand aside from that. is continuing to tighten up on germany. we bounce off 100 basis points. >> we saw a bit of a reaction. we saw the volatility in spain
is more around italy. italy politics have come and pushedd that inevitably spain higher as well. like a low more beater periphery. unemployment in spain has been coming down pretty well. i think the economy is healthier than it was. we will get an independent referendum that is not legally qualified, i don't think that is really massively relevant to a global bonds perspective at the moment. it doesn't feel wrong. where equity markets where they are. the thing that pushes i don't know, less about spain and more about -- guy: still to come, joining us from aberdeen asset management. aremember if you are
customer, you can do this. tv . here's the landing page. interactive tv, radio, and even coverage. i want to focus on this bit over here. right now is the press conference which you can watch live. -- can kick here as well click here as well. the press conference coming up later on. then you have got the decision coming up later on about event coverage. videos also look at the that we suggest, most recommended, click on the most watch which is antony jenkins yesterday. next, they've done the niceties. as he sucks like that -- at the second round of brexit negotiations, much to the chagrin -- brussels on the u.k.
the 50 this morning. stoxx 600 down by 2 -- 20%. that does not add up. i will tell you what is happening, the markets are coming out under a lot of pressure under the banks. abb saw a bunch of stocks not on the screen here but are certainly suffering this morning. more detail in the u.k. in the scene surrounding brexit. toresa may is being urged the brexit strategy. ,he latest global frank -- bank the first serious consultation since taking office. port -- thehe second round of meetings with negotiators cleared with the joint press conference today.
the senior investment manager at aberdeen asset management. you pointed out to me very early in this process, are we overdoing expectations for what should or should not have been achieved is thus far? > we're looking for results like this. >this is incredibly complex. incredibly complex negotiation. 40 years of legislation, 40 years of economic integration. a clientalking with monday who remembers his childhood of only getting one from the u.k.. they're very nice. your average consumer is going to be going at, there choices will be made for them. that is one area where -- >> bbc radio interview underway at the moment, we say we can survive with no brexit deal.
the rolesting paper on of ecj and soon-to-be started cases. there and coordination within the. there is not coordination within the government about what the line should be. we are back talking about the possibility of a harder brexit crushing out. i don't want to survive, i want to thrive should be the message business.n -- british go> over the cliff of a no deal brexit,> how that looks, it is going to be hard to begin with but it may smooth out. we were speaking yesterday that you could see a real big q1 growth in 2019. a lot of stuff is produced, put in the right place. it doesn't matter where the goods are, you get a crash off from q2. it inove it out, put another and trade those goods as if they are still -- wow, okay.
>> be sort of index will come through people's minds. lots of volatility around growth is baked in. it is just how much you can negate that. >> it does not stop you thinking i want to be buying fund little bit businesses that might have more frictional problems to deal with in europe. it is still a good product. we're looking at the us smith yesterday who printed in sterling euros. really good business, producing cardboard boxes. this is a good business. they bought a big acquisition, deleveraging over the next few years. that is going to be more important than brexit. u.k.-based, but very global. guy: talking of retail sales, we have retail sales data about 9:30 this morning. how important is the consumer in
your understanding of the british economy? clearly it is a integral part but it doesn't seem to be -- we are rotating around trying to understand what the consumer is doing in the u.k.. >> the u.k. consumer is the canary in the coal mine to the u.k. economy. in a moment the canary is not looking healthy. personal debt has risen. the bank of england is concerned about it as well. the emergency rate cuts we saw around brexit. guy: they have taken 25 back and that they kind of -- we are back on an even keel. that was an emergency rather -- measure. the economy did not do what we were expecting it to do. we don't feel like we are in an emergency situation, we will take that back and review the situation for their? -- from there?
>> it is going to be ever so seasonal. the weather has been lovely. people tend to change their habits quite a lot. i know you're going to depart but it does change the have a lot. i think it is going to be particularly difficult for putting that went on with the election as well. that took a lot of people's attention. we will watch the data, we will break it for you on bloomberg. senior investment manager at aberdeen asset management is going to stick around. we need to continue our conversation about market positioning, head of the iraqi statements. something to note the move index of which is a volatility measure for u.s. treasury, continues to print new lows. where's the treasury market right now? a very important figure in your
do in the m&a front and where it goes from here. cbs, movee five pretty quickly. what is the right price? >> this is reflected what i think if people's view of the race. if they get continuing news to in the acquisitive, more balance sheet. however, they do a big acquisition, this is going to go into the 60 kind of number. , plus territory. is, 38 basis point is not going to cause you a lot. the moment with credits having come so far so fast, if m&a is played their markets, these kind of things if it comes down --in, i will be thinking
guy: spain it nothing. and mario draghi stay silent on the stimulus exit plans? do nothing. stimulus plans unchanged, out of step with the rest of the developed world. he sees no risk of the economy overheating. yeah. trump urges republicans to delay a recess to provide health care. is he at risk to prevent his first year and six months today he has been in office without any major a compliment? -- a couple spent? -- accomplishment? guy: matt not here this week. he will return next week, i am sure.
how things are shaping up to of things can work with european equities. we are trading higher, around .5% with the back on this morning. actually some of the other markets that are moving around europe. the market is up .6 -- .3%. it is dropping. i'm interested to see whether the ftse catches up over the next few minutes. let's take a look at what is happening with sterling. special is right now. a fairly big move to the downside. i'm struggling to see anything specific that seems to be generally yes -- generating this. positioning may be part from parcel from what we are seeing. at.92 is where we are session lows. let's turn to what is happening on one side of that pairing in more detail.
president donald trump has told the new york times he never would have appointed jeff sessionshad he known recused himself from the russian investigation. donald trump jr. has been asked on july 26. a pressure on the team at home. deval patrick forces have ended unceremoniously, canceling -- canceled. kathleen hunter is joining us now. he just exposes how easily the president is being needled why this investigation. i would not have put them in place. this is major support we're talking about. if i thought he was going to recuse himself. he is clearly extremely annoyed. >> it is particularly
interesting giving that one of the aspects of the stories is unusualsident trump is in a loyalty pledge from certain people in the administration. it is quite interesting somebody would demand a loyalty pledge is willing to go so public against one of his early supporters. the interesting aspects is that obviously when it comes to people that work with him, he seems to view loyalty as important but does not show that loyalty when it comes -- when it comes to something like jeff sessions when you mention it was his first senate supporter. someone that really has tried to go to bat for him. we've seen different at the -- sit -- we have seen differences emerge.
anti-sessions since he has been imported. it is quite fascinating. another page in the emerging story about donald trump's presidency. guy: one of the norms that is being bucked his family involvement in the process. son theoretically does not have a role but he did have a role in the campaign. it is the campaign on which we are focusing when it comes to upcoming testimony. do think is going to show up? say?at does he what about the questions? what did you know, what were you expecting, what interest -- information were you being at access? some any questions --so many questions. >> robert newer has signed off
on matt forte and donald trump jr. both testifying in public. ifis interesting that special counsel has been working on the investigation, they are willing to let these guys talk publicly. it definitely behooves the investigators. trump or trump jr. or one of his associates starts talking they put more evidence into the record about what their story is in the problem is that their story has not quite then the same all along. testimony,s upcoming i see your point but whether or not he shows up, i think even politically and legally it would be hard to avoid showing up. i i was donald trump jr. might try to get out of it. i don't think it will help him. i think it is only going to provide basis for further questions about why he did what
he did, why the story has not necessarily been consistent about that. i think is going to raise more issues with the trump administration. >> do you think he's quite keen to come over that he is being very open and honest and the whole thing he did with twitter releasing the email? that might actually push him to turn up. he thinks he's being clear with people. >> i think he thinks he is being forthcoming. i don't know what he thinks putting his foster has been he is forthcoming, transparence. it is worth noting that he only post to those emails when he knew the story was imminent. it is easier to be transparent but say when you know the thing you're going to be transparent about is on the web it anyway. that is going to be his narrative.
they're trying to be transparent. othere trying to tell thing that happens. if you look at it closely i don't think that really has been that -- how they have operated. guy: what are the implications of -- a public breakdown to the united states and china. tariffs?e get steel you wonder how quickly this happens. particularly that he is looking for a win. >> is looking for a win, looking for an opportunity to change the narrative from talk of russia. what have we talked about so far? there is a dispute between trunk and sessions, one of his biggest borders. told is about to testify. of --y can have some sort something they can characterize a trade on china,
issue, i think that is something that the white house is certainly love to have. i don't know the recent the moment the last 24 hours of necessarily made that any easier. we have seen the political volatility of the united states going up. -- ive seen volatility will bring it up again, a gauge of volatility in the treasury market -- we have been posting record lows this week. draw a line between one and the other for me. >> market goes up, volatility goes down. it is a short-term shift. i think we are going to see lower yields over the next month globally emanate -- anyway. you're coming off the trump list. coming off this boost we have seen through march. that is coming off of people's radars.
growth is slowing. all of our stories coming back right now. when he does of reality has again, there are pressures coming through. all of that is happening irrespective of what trump is doing. i'm wondering whether the market has sidelined him eight little bit. bit.m a little the 100 date window, he needs to try to get stuff done. the belief that he can do it now has tapered off. probably the biggest tapering story rather than the ecb story. guy: thank you both very much. kathleen hunter joining us on the politics coming out of washington. senior investment management at -- manager at asset management. we are not going to let luke go yet. transferring him to the radio station -- the radio.
i want to come back to what is has been happening with the pound. talking about the move we have seen this morning. it does appear that it is this interview that liam fox is doing or has done this morning. talking about the friends of the u.k. which survive a crushing out of the eu with no brexit deal. has put thisthink issue of that extreme scenario to details. maybe it still is but the trade secretary talking about testifying with a no brexit deal. they're putting that on the table as a risk for the eu. the market pricing in that fairly aggressively into the table rate this morning. that is what is happening. you're going to draw a line between those two. mario draghi speaks after the rate decision. a dovish surprise could spell disaster.
kept the monetary stimulus program unchanged. 2% inflation for the sixth time. he pledged to maintain the yield curve control program and asset purchases in line with economists expectations. the boj expects the inflation target around the fiscal year starting april 2019. versus the previous production of fiscal 2018. donald trump has told republicans they should stay in washington until they repeal obamacare. the move to start renewed negotiations two days after they enact in a new health care law collapsed. withpublicans last night house officials to hash out plans to move forward including revising a measure by mitch mcconnell. john mccain has been diagnosed with a type of brain cancer that
was discovered when doctors removed a blood clot. tissue tested after the procedure last friday revealed -- glioplastoma. president obama said he is an american hero. president trump has said he was not appointed attorney general just sessions if he had known jeff sessions would choose himself from overseeing the meddling investigation. he called the decision unfair to the president. in a wide-ranging interview with the new york times trump accused robert mueller of running an the conflict of interest. china to start constructive operation to lower the trade deficits. the statement from the chinese foreign ministry came up to high-level negotiations yesterday with the biggest economies unable to produce a joint statement.
it got off to a tense start as the u.s. commerce secretary wilbur ross had a trade imbalance and both canceled their press conferences. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. guy: let's take a look the markets. let's talk about where we stand. we broadly have a positive session underway. interestingstory is surrounding that interview on the bbc. there is really interesting stock stories out there that we are focusing on. helsinkiny listed in does big diesel generators etc.. it is a power company essentially. heavy engineering. pretty cool stuff. it has never traded like this. a record. up by 8.08. better-than-expected numbers.
really rising quite strongly on the back of that. a good piece of news this morning. the other end of the spectrum, i want to show you stocks on the move this morning. a profit money -- a profit warning. trading strongly softer as well, strong on the downside. every metric. on easyjet down by 5%. saab is down. -- it iswhere we are easy to be dominated by what is happening with the big central-bank stories. happeningk at what is to the credit space as well. moves in thesting unilever as we look at this kind of them in a story and how it could affect ratings and that
pricing. we cannot ignore the central bank story. by no means will we do that. coverage coming up on bloomberg. three weeks ago mario draghi should the market -- shook the market. expected to refine his message on stimulus reduction. rates are unlikely to change but draghi will be pressed on the tapering schedule. he will have to balance is mission -- his message. joining us now, chief economist out of from for. good morning. >> what would constitute a surprise from mario draghi today? >> a change in the policy a surpriseould be
given that everyone is expecting a change in september again. that would confuse markets if they take out the evening right now. he could see a more hawkish, more dovish. kind of confuse the markets. a correct assessment of the situation or whether there was some policy in that statement as well. you will have to refine and explain. tother just his language have all the options open for september. guy: do you think it is september or do you think he will actually give us the bigger hand at jackson hole? -- he cane can prepare in jackson hole. i would leave the major
announcements over here on the continent. we should not forget there is no immediate policy action becoming effective. i would be very careful in the language. we're talking about an adjustment on the volume of the purchases starting in 2018. committing to early would not really make sense. he can educate what they are likely to do -- indicate what they are likely to do if conditions remain benign as they are. inflation is kicking up as expected. here comes the big disadvantage. adjustery difficult to
as it acts. they just lingers now, it only becomes effective six months from now on. just on that note, where would you expect theb un -- the bund yield for the back half of this year? where do you see the yield being at the back end of 2017? >> exactly 1%. we are betting we will have a convergence between u.s. rates and bund yields. this with tapering, i discussion with the whole perspective that qe is coming to an end. bonds will not be purchased at the same pace and volume in 2018.
it will be ones down by june. -- winds down by june. ike knowledge there's something to digest. guy: where do you see the treasury yield? tighteningve in a 30-40 basis points. that tightening, you would assume the euro would continue to strengthen in that environment. >> exactly. that is the problem for the ecb and why they have to be so careful. it is all conditional that the euro is not going to jump above 120. already too low and moving very
very slowly. whatever to rocky is going to say in the press conference today or in jack -- whatever draghi is going to say in the press conference today or jackson hole allows the ecb to --ove a policy at auditions policy accommodations. guy: is it binary? where's the line? do what wean't expected to do and reprice. there's going to be a blurred edge. what does it look like? --it 1.17, 1.12 this one? play >> all we have seen before in the past 15 years, there never
is a line as it is always a combination of factors. the oil prices are definitely another factor. even if it shouldn't. we have seen that oil price in solutions -- influences the yield curve and much more than they actually should. that would be one thing. wage development. we see high wages in germany and the netherlands. a little bit lower profitability help core would inflation to move higher. we need to see signs for this coming through. guy: thank you very much indeed for taking time. joining usconomist ahead of that ecb decision. minutes later you get the
mario draghi conference. you can fall that on the tv . you can watch on television, you can watch that live. you can have a lot of coverage. easyjet down by 4.88. we will find out. what is going on? >> it has been an interesting morning. the carrier at the end of this year, upgraded their forecast. clearly the market has received a very well. as far as we can tell, the environment in this low oil price market, what they said this morning is she expects the decline to continue into next year. i think that is more negative than what the market was expecting. guy: it is actually the expectation and outlook, lower than the market had priced at? >> for next year.
she said the quarter is up, better than expected, on a flat spaces. still declined. the demand environment and overcapacity environment would improve into next year and that seems the case. they are bringing tons of capacity and focused it on the markets. everybody you talked to has said yes we are bringing capacity. >> not everyone. really crucial for easyjet, it is going to be a place for they need to keep an eye out. monarch, which they flagged as being weak candidates that will start waning that they have been pushing into in portugal and spain. so, within the easyjet market is the -- capacity is easing. guy: thank you very much.
francine: markets prepared to scrutinize draghi's delivery when the president faces the media later. will the drop any hints about stimulus? unilvever cuts costs and raises prices. and france's finance minister tells britain, we want our money back. the eu divorce bill and the 100 billion euro figure that will not go away. this is "bloomberg surveillance" and i'm francine lacqua in london. we have a great show for you. but first, to