anna: a date with downing may, who willa she choose? japan's chief cabinet secretary denies report the government is considering helicopter money. and european commission said theyjohn claude should speed up investment treaty talks with china. he speaks in beijing, later this hour. ♪ warm welcome to countdown. i am an edwards.
manus: i am manus cranny. iraq get on board, business is coming. that is the message in the market. maybe i am overly excited. have a look at this. the morning of brexit, you and i were here, it was 5:00 a.m. talking about the demolition derby happening. here we go. this is the msci all-world. there is the brexit referendum, down she went. the msci as rally for a fourth day in a row, up 8% from the worst position. we have reapplied, redeliver to value, 3.5 trillion whiteout is back on the agenda. is a new record in 13 months. stoxx 600 up 4%. there is no doubt about it. fromthat midyear moment, that real sort of panic moment in the markets, you have this search. it is going to be ok. there is no playbook. it is called the lehman moment.
stimulus boots out there. anna: we will see how long that president atry price the moment. at the forecast, forecast in line. let's have a look at the risk radar and show you various assets. the japanese story, the chief cabinet secretary denying that the government is looking at helicopter money. that had led the yen down, up as many of the counterparts hold that two-day journey. on the back of what they had to say. 1.49%.year u.s. bond at treasury bears on charge on tuesday, jumping two months, but prices on the rise today and the yield is down. as you can see, we will explore this with guests later. pimco increasing the bo
market. we have oil moving lower stomach down 9/10 of 1%. 36.37.. we h data showing u.s. stockpiles increasing. copper as well in there for you, more than $5,000 a ton on the u.k. listing of copper stimulus. itund the commodity space, seems to be pushing some of the commodities higher. and in shanghai, prices going higher on geopolitical moves in the south china sea. manus: the bank of england begins the two-day policy meeting. stocks are rocking in asia. is it to rosalind chin. yen'snd: manus, the credibility will be adversely affected, as they weekend with so-called helicopter money. those comments came after japan's tanking third quarter,
officials considering it as an option, later denied by the cabinet minister. bonds,rs in robi russian rates begin to rebound. manages $102hich billion, says there is massive psychosis going on related to the starvation yield. call me old-fashioned. but i don't like investments where you are right, and don't make any money. the big two-day selloff this year, as demand falls and yields tumbles to unprecedented lows last week. returnse, pimco total have increased u.s. sovereign debt to the highest in a year and a half. securities counted for 39.7% of the fund's asset last month, up from 36% in may. pimco return is the biggest,
with $86.4 billion in assets. reimagine its to economic model, with financial services at the heart of it. now the country has voted to leave european union. that is according to the outgoing eu financial services minister, jonathan hill. these look to bloomberg. capshan: get your thinking on, whereby the british government needs to rethink what the offer is. and i think that with the expertise that they have, knowing how the markets work, knowing how international trade works, knowing what it is that attracts people, they need to come up with, you know, their top asks, and work with the government to come up with a proper strategy. the premier says beijing can achieve the growth target of 6.5% through continuous reform and innovation
beard he was speaking at the eu china business summit. and the country's steady economical benefit. he added that china formerly supports eu integration. and bernie sanders has formally endorsed hillary clinton as the democratic residents will nominee. the vermont senator and for mer nomination candidate joined in new hampshire, saying that she is far and away the best secretary for the challenges facing the u.s. global news 24 hours a day powered by 2600 journalists and analysts in one hundred 50 countries. you can find more stories in a bloomberg at top . thank you.ind chin, let us check the markets. david ingles has the details. we had a couple of strong sessions coming out of japan, still those japanese markets on the rise. david: yeah, third straight day. i think overall, the wind continues to blow in favor of
equities. we are putting together quite a week so far, at least three days in, we are looking at japan up 9/10 of 1%. well about the high, about 200 points above the peak. it has been a remarkable three days over in japan. at one point, in fact japan was putting together the biggest three-day rally in six years. that being said we are still going to see the rally, very broad in japan as well, 85% participating in the rally. the rest of asia looking like this. another 2.5% up today. and basically back to 12 month high here, is worth noting as well about -- excuse me. what is happening today is the volumes are back in a big way. that really underscores just a huge amount of money that is out there just waiting to get place. that being said, i want to focus on this emerging bit right here. a little bit of a weak spots in laysia and jakarta, but the reason i am zeroing in on this target is that when you talk about bull markets, we are
seeing more asian markets become a member of the club. so we are looking at seven bull markets in asia right now. you have thailand, india, philippines, vietnam, and so on and so forth. we get taiwan at 3%. another 3% in singapore. hong kong in the club as well. it is a bit -- that central banks will continue to provide the money to play around with. that is the expectation. it also underscores the weakness and the growth outlook as well. but that said, 30 again. in a complaint. david, thank you very much. our focus is squarely in the united kingdom we get a new leader later today. it is theresa may, replacing david cameron as prime minister. she will really come under pressure to name her brexit's czar. the pound is heading for the longest winning streak in two months.
street,s to downing easing some of the political uncertainty following the eu referendum. anna: mark carney is a two-day meeting, ahead of a rate decision announced tomorrow of course. it is the first since last month's brexit vote. they are expected to cut for the first time since 2009. according to a majority of economists in the bloomberg survey, 54 people hold predict a 25 basis pots to 0.25%. joins us this morning. very good morning to you. there we go. we filled the political vacuum. the pound is down all over. jane: not quite yet. the bank of england tomorrow, i am not convinced they will cut interest rates. and hypothetical moves next month and a month after, deadly as we start to get economic data. when you get the bank of england's inflation report in august. we will get more of a sense of how the economy is going to be impacted or has been impacted by the uncertainties created around
the brexit vote. i'm that sense, that we work out the economics, and that will have a new story i think for sterling. mean, the markets have rallied a great deal. the bank of japan, helicopter money is a story we will discuss. the bank of england, the fed possibly on hold. will he possibly want to hold his powder dry. charts,three this is cameron's legacy to the united kingdom, the ftse. markets, and the british pound, smacked, wallop, banged. it was all done in the past three weeks, to be fair. this is your chart of the hour. why does mark carney want to hold back? all, the last couple of weeks we saw a huge amount of monetary stimulus, by
the weakness of sterling. and you look at gilt, the curve has pushed lower interest rates across the board, down. we have seen some banks financing lower fixed rate mortgages. i huge amount of stateless coming through already. huge amounts of liquidity. the banks what they have done already, i think it is really very notable. i think the fact that they were so prepared, there was so much liquidity, has been partly why markets have been reacting this way. i think we took the panic out of the system and that has relaxed confidence. i think the bank's have done a good job. we have not had any economic data yet, apart from a couple of surveys. and i think you might want to keep interest rate cut in his pocket, in case it deteriorates. anna: 55% i think, the economist we surveyed, said they think there will be a cut tomorrow. it is hardly -- the market is not sure. but those who do not think they will cut think it will cut in
august. is that the new inflation report? jane: he gets a new set of forecasts as well, a bit more economic data two. it might be something that he keeps for later. and he could do more targeted lending, now that is something that could be up there, whether or not it will actually push more lending into the system obviously remains to be seen. because obviously that depends on demand. but i think that good lending might be another way. manus: i know we will all get excited about this, carpets and tiles. and i got very excited this morning. she didn't really. you mentioned inflation. i want to bring it in. this is the first moment i have had linde group, the white line. produces hedlund carpets and tiles, sterling of course has dropped, 12% post-brexit. causing them to have to raise prices by 6%, first out of the
gates, i know it is a small sort of indication. but this is the potential, inflation repercussions post brexit. jane: another reason the mark carney may not cut immediately. if he does not cut this week, he might see sterling rally of it. that will make him -- you have seen the ftse go up, now we have sterling recovery and carney would be helping to do that. the cost of inflation is i think i'k a concern of the bank of england. i will certainly the forecast for inflation will be pushed up, and it will be the right type of inflation not demand driven inflation. and that is not necessarily a good thing. anna: you're good to hear from one of them, if they say anything about import inflation as well, because some of the building materials they are using could be subject to those kind of pressures. i suppose mark carney is also going to want to talk to theresa to getd the brexit czar,
an idea the article 50 and when they play the trigger that. do you have thoughts, jane, obviously theresa may has said not until 2017. that seems to be the time everyone is working through at the moment. does that matter for where sterling goes, for how quickly we see storing certain of find -- jane; who are brought on quickly, that would bring more volatility. it brings more uncertainty. obviously we still have that uncertainty to come, but if it turns out a slowdown, will perhaps get a better vision of how it will affect the economy. anna: jane foley stage with us. manus: we have a fairly full action-packed day ahead. we will be discussing this afternoon, david cameron visits the queen, gives his recommendation. followed by theresa may, becoming the u.k.'s new prime minister. anna: on the other side of the atlantic, philadelphia fed president patrick parker speaks
anna: welcome back to countdown. 1:8 team in hong kong, hang seng up, generally a strong session for equities over in asia this morning. let us to the bloomberg business flash. here is rosalind chin. has sealedell, amc the biggest u.k. takeover and the brexit vote. buying the cinema chain odean, majority-owned by chinese billionaires, and the acquisition will widen his lead as the world's largest leader of
movie screen. they have been negotiating for three years. the plunge the pound helps seal the deal. airbus says it is cutting out the a380 in the face of dwindling orders the biggest passenger plane. it once predicted 1200 over two decades, but it is only with 126g 193, currently on the order books. the breakeven rate of 27 rate last year, but will cut that only about one per month from 2018. yamaha motor shares have surged on the news on the nikkei 225, that sharp will be removed from the main board on august 1. sharpe said they have exceeded assets, and sears have dropped 40% from the february high. the company agreed in march to sell a majority stake. and that is your bloomberg business flash. anna and manus? manus: rosalind chin, thank you very much with the latest.
says helis fed chief does not see a recession around the corner in the united states. speaking at an event in michigan, he said he remains cautiously optimistic. >> the u.s. economy has been growing more slowly than we would all like. i think that is safe to say. but it has not been terrible. it has not been great. as you look around the world, the u.s. economy has done pretty well compared to europe as an example, especially given brexit and the uncertainty about the u.k., and what does it mean for the eurozone? weighedeel also in on japan, sang the policy would not work in the that states. the cleveland fed president said qe is the best, nation in the market. cabinetanwhile, japan's has denied report they are introducing so-called helicopter money. that comes after a newspaper reporter the policy as being considered as an option to boost
the economy. meanwhile, the chief currency analyst suggests that the yen's would be weekend. foley is the senior affect stratiegist. helicopter money in japan, ben roda, helicopter ben in the early 90's. the you think we are moving to some form of new helicopter money, whatever that might be? is that when the world is going, jane? jane: the reason being that ben bernanke is associate with that is that leaving japan is what we have these discussions. but it is difficult to determine what precisely is helicopter money, and how do you precisely make that different from quantitative easing, etc. e told, with a
net fiscal status package, maybe some more bond issuance, for the first time. so there is likely to be a lot coming from the government.now i think it is fortuitous if you like, that we have this rally in the stock markets generally. have the rb government, the coalition, that really stole victory in the upper house election. that really strengthens this haveopinion that we get this fl stimulus package. and altogether, that really has improved and weekend yen. the japanese authorities are so clever they will ride this out, they see the market optimism, but whether or not that can really turn japan's fortunes around, 25 years old. anna: the more structural reforms perhaps, around helicopter money, it is difficult to pin this down. when they use this term, they
talk about different things. it seems to have a life of its own, so frightening the policymakers that the reaction of japan suggest people do not want to track that kind of label, even if it is a bit like quantitative easing is been done before and. it will be fine with what it is, monetary direct transfers to central banks, to citizens in the private sector. it seems like no central bank really want to get labeled with this right now. jane: and again this comes down to credibility. obviously for japan if you have a credibility issue, you will have pressure on the exchange rate. but isn't that what japan is trying to associate? yes, there might be a benefit but over the longer medium-term, you cannot have a central bank that has been ability, that is really not a good thing. manus: i wonder to what extent it is that qe in many ways was about government bonds, about providing structural and systemic support. whereas i suppose what ever this kind of helicopter money might
be, if you go myself, jane, this kind of thing. look, your team, which are the analysts and your cohorts in the markets, dollar-yen back last year, the last time we saw the analysts in the market spree much in sync, year we go. there is a converging of min ds. 105 even where the market thinks we will be, if there were ¥10 trillion, some form of additional stimulus, where does that take the great dollar-yen train? jane: it should weaken the yen. we have had so much stimulus of the years, and yet what we have with the yen because it is a safe haven currency, and often tends to pay more attention to the general fundamentals. so for instance, if we have awful lot of stimulus and the environment today, which is quite good today, you imagine that the yen would weaken. forget more bad news, maybe next
year maybe that chinese growth or some other global event, then it will be very difficult for the yen to weaken. people will be in a safe haven trade. anna: let's move on to the dollar a little bit. in the introduction to this conversation we are talking about the latest commentary coming from the fed, one thing that was set overnight which was interesting, the brexit impact really hinges on what it does to the dollar. because other fed officials have been playing down whether brexit has any impact on the u.k. economy, which can understand given the risk appetite where it is never do you go along with that then? jane: i think it is a very important part of it. to be honest, we don't really understand this point the real positive effects. it will take perhaps a year maybe longer to really work that out. enforced.l be if we go back to 2014, the latter half of that we saw the dollar really rise. maybe about a year afterwards, only then we can to get real
pushback against the dollar from the u.s. treasury. so we know that during that timeframe is affecting the bank profit results, and again, if we were to see the dollar strengthening again, that has an impact on corporate's and therefore policy. so yes, i think the dollar is a really important part of this. manus: it is interesting that loretta said the last thing, the depreciation of the dollar, is a threat to the u.s. i want to talk about the u.s. benchmark, the treasury, with the biggest rally in quite a mile. pimco loaded up on treasury, they loaded up them out. 2010, ilowest since think the backlash begins on zero rates and negative rates. would you agree? jane: i suppose it has been exacted the same story with equity markets, i think many investors out there have been pushed into taking risky assets, which they were not normally go comfortable with because they are seeing yields.
nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. ♪ manus: it is 6:30 in london. 1:30 in hong kong, lunchtime. and we have a new edition of daybreak. available on the bloomberg terminal and on your mobile. the function, year to go. this is the cover, i really love the covers these guys do. it is talking about the first china, the huge international ruckus between the neighbors in taiwan. to patrol the south china sea, the u.s. has really praised the ruling became for yesterday which rejected china's claim on part of the south china sea.
the u.s. has praised the ruling. claimingd that china's over 80% of the region illegal. china has countered by lodging at the pathetic protest. keep an eye on that story. certainly one that will not drop away. anna: and on daybreak, on the terminal, something of a mass psychosis drove the bond rally. this is the word from jesse gudnlach, driving the bond markets are now. he says: the old-fashioned, but i don't like investments where if you are right you don't make any money. pimco loading up on treasury, right now. anna: your off the downing street straight after this program. on the radio show, you we do the rest of the day. waiting for theresa may, the new british prime minister, who is she going to put in the various important houses of ministry? who will be the brexit czar. replace georgeto
osborne. and you have opposition in disarray, jeremy corbyn. anna: jeremy corbyn, that is the big news overnight, because he has to get the support of lawmakers and house of commons. that would've been a challenge for him after the recent no-confidence vote. so how will he performed this time around? remember he was in power in the opposition labor party because of his support of the cause it down a street. it has been reported that he will be staying at downing street, as the number 10, even when the camero move outns. sovereign bonds falling. nejra as the latest for us. risk rally continues. we see japanese stocks recouping brexit losses, the benchmark msci specific index rising toward the 2016 high, rallying for a third day. look, it will get technical here. the 100 day moving average, that
is the line in green, actually climbing above the 200 day moving average in yellow. that is right. it is a golden cross. and this signal hasn't happened since way back in september 2015. we see further gains? this suggests that perhaps we could looking at dollar-yen, saying it strengthening, holding a two-day drop, the worst since 2014. we are now at 104 spot 30. after it was told reporters that it is not true the government is considering helicopter money. what this chart shows is that for the first time in a year, the dollar-yen spoptt, and the year-end forecast are almost in alignment. it what you are seeing at the end. though we are pulling away on that price as we see the yen strengthening today. set forn the sterling, the longest rally since may. that is four days of gains.
getting ahead of theresa may taking over as prime minister, as you were saying later today. we are at 133 on sterling. going back to the risk rally, copper and nickel getting a third day of gain. manus: thank you very much. gold snapped a two-they lost. yousef joinskets's us with the chart. is it just a japanese moving up the gold market? yousef: good morning, manus. always helping to check in with gold. we have been watching this one very closely because we had capital gushing into safe havens. and we have seen that trend over the last few days, left you session feared let me pull up the charts, please do put up as well on your bloomberg. we pulled up the performance on gold, and we crossed with a rally that is happening across the emerging-market equities. and you can see a classic
correlation, for those seeing the correlation, this is one of your classic correlation, from the bank of england. policymakers in japan, automates optimism fitting into the equation. as result of that, you had several analysts downgrade the forecast for gold for the third quarter of 2016. now it is the medium estimate at $1285 and out. yes, manus, gold is trading slightly to the upside. but who knows how long that will last, given the euphoria we are currently seeing in those other markets? anna: thank you very much. let us return to the u.k. story. after have been discussing, the u.k. will get a new leader later today when theresa may replaces david cameron. she will immediately be under pressure to name a new brexit czar, who will oversee the exit from the european union. the pound is headed for the longest winning streak in two
months, easing some of the political uncertainty following the eu referendum. manus: director of research at intelligence, and former chief editor of the observer newspaper, gentleman, thank you very much for getting in here to do have this discussion on quite a historic day. let us take of you first of all, of course nothing new in an unelected prime minister in british politics. white a few over the past 100 years. theresa may, she was in the remaining camp, not a very vociferous voice. who should be? >> she will be the person who ultimately makes the call on the negotiations. she will lead it. the open questions, that she would meet up with a brexiter in charge of it. i would not be surprised if he goes for a woman, rather than a man.
i think she may go with patel rather than michael gove or chris grayling. but the big judgments will have to make is britain going to stay in the european economic area? we get reports from germany and ireland today, what the irish prime minister and the german chancellor would like, minimal disruption as possible. or is she going to take a wto relationship with the european union, allow her to control immigration, but a big disruption of capital flows and trade flows and financial flows, which could precipitate a u.k. recession? that is the big call. she will make it, not the head of the brexit negotiation team. anna: she will hold the power. in the interview she was talking may chipel, theresa being the cause of winning in politics. what you make of her more generally than, in terms of listening to the thing she has
said from the clues she has given, following the labour party the last election. >> i read somewhere -- will: look, i liked her speech in birmingham. i think her view of george osborne as the chancellor, who did not do deep economic reform, is the correct judgment. i like the way she was talking about fiscal stimulus, infrastructure spending. i like the way she is talking about deep reform of the way kind of companies behave. i like her emphasis on actually binding the country together. it is what is needed now. i think she will be pragmatic, like angela merkel. she will be a bit of a kind of magpie. she will choose policies she likes from across the spectrum. anna: conservatism, and being a pragmatic person.
manus: let us bring you to the conversation. if it is patel, for medical young lady who i have met on a few occasions, who is the best person to go head-to-head with angela merkel? should be a woman, a very strong brexiter voice? >> it should be a strong voice. and i think theresa may is probably the best choice. but to me, the most important conversation is with someone much more hawkish than angela merkel in brussels, i don't think that is the main challenge. i think it is the conservative backed party, let us say the conversation in the british public these days, which i think has not come back to the reality that this country needs to choose between access to the single market and controlling immigration. i think the debate is nowhere near settled. of leadingber
conservatives have said to me something unexpected has happened as a result of the referendum. they have become re-conversant because of europe. and actually going into the referendum, half-half was a split. 70-30, 70 inre favor of the european union or at least economic area, and quite a narrow group of mps, a kind of very deep euro skepticism. anna: what does that mean for negotiation? will: i think, and your judgment i will take, i think if there is any kind of concession at all made by the european union, it may be allowing allowing emergency government, allowing the british government to say that the european business can work in britain, if they have jobs first. she will stay in the european economic area. anna: some people say that includes a break already, one so
carefully worded, and i think even others have used it to some extent, but around that point that whether people in general are allowed, as opposed to those who haven't wanted to go to. : negotiations haven't even started. i like to make two points. one is the emergency brake that was offered to david cameron earlier this year, that was a concession he got as a member of the european union, not just any member but one of the big three. i think there is strong interest from the european side to make such a good deal, to get a member of the club, not your coming from the outside. i think it is as good a deal that was offered early this year, that is .1. point two, specifically again look at france, you have hollande who is a presidential election next year, sending a very strong signal to euro skepticism's that flirting with it is a bad idea. these are dynamics that i would
you a very close eye on. will: yes, i mean the deal that was actually offered cameron was not an emergency brake. it was a rather sought to deal, on being able to kind of look at people to benefit. but the emergency brake was not what he got. had he gotten that, i think he would've won the referendum. i like your point. there is scope here to cut a deal. the open question is whether ireland and germany and holland, and some other eu countries who would like to have a close relationship with britain, can actually persuade the french, spanish, italian, and central europeans to go along. that is where the conversation goes. manus: the whole point is that theresa may, they want control of immigration. that is what they have voted for. that needs to be delivered for a successful negotiation. sorry, i am being subjected. i am saying to you over 50% voted. will: i don't know if they did.
they did know what they were voting for. admittedly afterwards, a leading leave campaigner said we will not really get immigration down. and of that 52%, 70 million, my hunch would be that three or four them not vote for immigration. otherwise an issue, it would have voted remain. another chunk that believe, immigration was the number one issue. certainly the number one issue in part of the conservative party, a deal as possible. anna: we will watch closely. just briefly before we let you go, can i ask you about the labour party? is it going to split? will: it is. without a doubt, jeremy corbyn will almost certainly, and labor mps will not work with them. we will watch a new force emerge in britain. for me, that is a sad moment.
it means that mrs. may, if she governs well, can expect to win in 2020 and maybe again in 2025. anna: a long time horizon. thank you for joining us. we will have the author and former chief editor of the observer newspaper, and car sten, thanks for joining us. manus: your chiefs are in china, attempting to strengthen ties as the u.k. moves to distance itself from the bloc. we are live from beijing. that is next. this is bloomberg. ♪
takeover since the brexit vote, buying the cinema chain odeaon. owned by a chinese billionaire, and the acquisition will widen his lead as the world's largest leader of movie screen. they have a negotiated for years. and the plunge in the pound helped seal the deal. outa's says it is cutting dwindling orders,for the world's biggest passenger plane. they want to get rid of the jumbos over two decades. but they've only delivered 193, with 100 more currently on the order she. they have 27 deliveries last year, but they will cut that only one per month in 2018. and yamaha motor shares have sharp,on news on removing from the mainboard on
august 1. sharp said that liabilities exceeded assets, and shares dropped 40% from the february high. the company agreed in march to sell a majority stake. and that is your bloomberg business flash. anna and manus? manus: thank you very much. the eu chiefs are on a two-day visit to china, a huge summit where the focus will be on the economy. the european commission's vice president told bloomberg that beijing had been watching brexit closely. they aresurely, concerned. their concern about stability in europe, not only because of brexit but also because of the rising populism. so they indicated very clearly the strongest of court europe. manus: bloomberg's tom mackenzie, a very good day to you. trying to divine what the message would be to theresa may,
what would that be as we start these discussions? well, manus, the message from the chinese will very much be they want to see negotiations proceed, as quickly and as smoothly as possible. the meeting is now happening behind me at the bank, for the presidents of the european commission, john claude junker, will be giving details on what they're talking to the chinese counterparts about. you heard the chinese are concerned about brexit. they want to how the negotiations will proceed. they will take some comfort i believe in the fact that theresa may is now the prime minister, or will be by the end of today. and that it's happened more quickly than expected. the u.k. is a crucial partner for china, and the european allies, particularly on the market economy status that is so important for china.
talk us through what the latest is from the conference. i saw that john claude junker is talking about equal assets in european countries, as in europe. so this has been a crucial demand from european businesses and european politicians here. the fact is that chinese investment in europe has grown considerably over the last three years. but in the other way, and has not worked out. there is not an equal playing field. european companies cannot come over and by 100%, or finance banks, logistics, telecom. the europeans are pushing for more of an equal playing field. they want to see more of forms. they're very concerned about subsidies, and the chinese say that distorts the market. they have been pushing the chinese on that. jean-claude yunker says there has not been enough reform, he points to the fact that the
chinese are putting more party emphasis and control over the state owned him buyers, which ep back fora st many. there are also concerns about the rule of law. they want this treaty, that does not seem to be much progress on this at this stage. but the most they have is a couple of billion euros worth of investment or european structure. manus: tom mackenzie there with the very latest in beijing. emerging markets are squarely back in focus, taking china out of the equation, i prefer to use the term, emerging markets on the side, trending higher. the fed is on hold. and you have the volatility dissipating. let us bring jane foley back into the conversation. squarely in flagrant emerging markets have had a rally. the fed positively on hold.
that is the consensus. this is the really rally. jane: quite possibly, nothing will stand in the way of that. and that is exactly what we are seeing. if you like, we can get the broader perspective as to why the u.s. treasury auction yesterday, it is the same thing. people are seeing a relief rally. they want little piece of that pie. and certainly for emerging markets, it looks pretty good. i imagine markets, the idea you have longer interest rates in the u.s., it is really big deal. that to stimulate growth in many emerging markets. and again we are seeing trade or investors really being pushed into taking on risk assets, because they're not getting any yields in the domestic bonds. anna: it is a sort of goldilocks for emerging markets, the fed on hold, on this talk of stimulus from elsewhere. it is sort of having your cake and eating it at the same time. which emerging markets does that benefit the most? jane: if you look at a
currencies such as the mexican peso, they are often looked upon as proxy for the region. because there is more liquidity. manus: that is what we have here. this is the past week against the dollar. you mentioned the peso, rand, this is quite a significant rally if you look at it. jane: indeed it is. the south african rand, people will in not because they want south africa, but because they want more liquidity and him get that in the emerging market and know they can get out again. the same thing happens with the mexico peso, for the resilient fundamental, that there has been a big relief rally in brazil in recent months. mexico,, south african rand, will be the perspective of the fundamental. and within that space, domestic fundamentals, play them off against each other. anna: we started this part of
the show talking about this conversation is taking place in china, between the eu and the chinese. talking about the emerging market side of that equation. on the european side, fascinated by the gdp figures. manus: go ireland. [laughter] anna: a brilliant story. what a 6% increase in gdp. who knows what this does fork or s per capita. companies inverting to ireland, being created in that irish economy. jane: the sad part is that a lot of the companies that have moved in, they don't actually employed very many people in ireland. that is a sad thing. but even so, the market expectation for that figure was i think 7.8%. that is a pretty strong forecast, 26% is out of this world. but i do think the last year, ireland still had the strongest growth rate in the developed world. at least one of them manus:. it has been doing well. manus:they have a low tax rate,
what perhaps george osborne was channeling. this goes back to of non-fx question, the disparity in wealth. in other words, it is corporate wealth which has been delivered. getting richer, the baby boomers getting wealthy. politicians will have to jane: deal with this. jane:because we did see them in power, but they did not get this after the election. the reason for that is the same reason that used the states across europe, people still feel disgruntled. people in ireland still feel they cannot afford housing. manus: no wealth in ireland. jane: for that precise reason, still a lot of work in reform. and you could say that all of the stock market gains, who owns the assets? wealthy people. this does not help. anna: it can lead to a big political rethinking, the labour party splintering as a result of his later leadership.
manus: a date with downing street. britain's next prime minister. who will should choose as her brexit czar? cabinet denies the report that the government is considering helicopter money, and warns it would harm the yen's credibility leaders say the eu and china should speed up investment treaty talks. you are welcome to "countdown." good morning.
anna: let's start the program over in china, with breaking news coming to us. jean-claude yunker and donald about theng eu-china conversation that is taking place in beijing. they are holding this joint press conference, and we will be hearing from donald tusk, talking about the south china sea at the moment, a topical geopolitical concern. we're hearing from donald tusk, who says the eu will continue to speak out on upholding international law. this ruling, he says, will be positive for resolving the dispute. the eu council president speaking in beijing. more commentary around the geopolitics. earlier we heard from jean-claude yunker about the access chinese have to europe and vice versa, making sure it is equal. manus: breaking news on burberry.
they've had a management reshuffle, christopher bailey stepping to the left-hand side as the head of creative. first-quarter sales between hundred 23 million pounds. dropped by 3%; the estimate was a drop of 5%. saunderlining retail sales came in s five. they were looking for a drop of 4%, so it being on that. burberry is a strong beneficiary of a weaker pound. the former ceo spoke with francine the other day, saying it's part of the equation, but we have been a global play er. head takes over as ceo under bailey's tenure. of course, what we saw there was a small challenge in terms
of the strategic direction. anna: we have numbers hitting bloomberg this morning, u.k. construction companies giving details of their expectations. .hey expect pretax profit up those are a couple metrics -- but crucially, on brexit, they say that brexit makes the outlook fall, the industry less clear. this has been an industry that has been really hit. you can see it very clearly on the chart, three months price movement. wasd of these numbers, ubs saying this could be a chance to buy the sector, saying it was oversold. they say they have taken measures to reduce risk. manus: if you want to know what it means in the burberry numbers, 90 million pounds of fx benefit in the full year. this is not attributed to
brexit; i am paraphrasing. futures are lower. london, paris, frankfurt. indicated downye. yen holding its decline. the tenure government bond yields, pimco loading up on their bond portfolio. dollar-yen down. up, demand atng the weakest level in government bonds. the weakest since 2009, backlash to low yields. anna: we have commodities in there. $5,000,ad gone over people loading of the shanghai because of geopolitical concerns. u.s., theed about the big story, and then we have the negative yields on the german tenure bund and the jgb tenure. manus: let's get out to rosalind
chin, who has your bloomberg first word news. good day. chiefnd: japan's secretary has denied a report that officials are considering using helicopter money. that comes after the newspaper said the policy is being mu lled. the chief of security says the un's security would not be affected. rushed into bonds last week will face a hard time making money as the market hits of bottom and rates begin to rebound. so says the chief executive officer of double line capital. "there's something of a mass exodus going on related to the ston so-called immigration." investments."ed
demand sags after yields tumbled unprecedented lows last week. pimco's total return fund has increased its holdings of u.s. government debt to the highest level in a year and a half. securities accounted for 39.7% of the assets last month, up from 36.4% in may. global return is the world's biggest bond fund, with $86.4 billion in assets. the u.k. needs to reimagine its economic model now that the country has voted to leave. that's according to the outgoing eu financial services chief, jonathan hill. he spoke to bloomberg. >> get your thinking caps on and be part of the process whereby britain, the british government, needs to rethink what it does. i think that with the expectations they have, knowing how the markets work, knowing
how the international trades work, knowing what it is that attracts people to london, they need to come up with their top asks and work with the government to come up with a proper strategy. rosalind: the chinese premier says beijing can achieve its targets of 6.5% to continue the fo innovation. he says china's economy has been resilient, and the steady economic growth will benefit european companies. he also added that china firmly supports eu integration. and bernie sanders has formally endorsed hillary clinton is the democratic presidential nominee. he senator joins clinton at a rally in new hampshire, saying that while it is no sigrid they disagree on a number of issues, she is far and away the best person for the u.s. global news, 24 hours a day, powered by our 2400 journalists
in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . anna: thank you. rosalind chin in hong kong. from luxury goods to high street discounters. manus: the deal of the day. steinhoff has agreed to buy the rest of poundland. this is literally as it says on the tin. 220 pence per share. bid comes in one pence over where it closed. anna: let's go to hong kong. david ingles has the latest on the market for us. a decent session over there. david: yeah. very decent. not as good as four hours back. we have certainly come off the highs of the day, eight minutes past 2:00. softness last
few hours, japan basically peaked in the session came out. this is where we are, still up for a third straight day. still very decent, but not as good. a lot of it comes down to dollar-yen. we know it has weakened substantially as we strengthen and when youollar are talking about it, the yen on asia emerging-market fx, the other end of the trade, with commodity related currencies, overall equity markets are looking like the wind is still blowing of equities. this is what you get when you have rising confidence, continuing to be more accommodative.
yet.en't quite there just we should get there the next two , taking gainsons this week to well over 2%. asia, a good number of these markets have entered bull markets, thailand and india entering monday and tuesday, 1% more and we might get taiwan. 5% more and we get the street sign. asia is looking good. a few hours left in trade. in about an hour we get the trade numbers out as well. manus: thank you very much. david ingles, on the markets. anna: the u.k. will get a new leader later today, when david cameron is replaced. she will be under pressure to
name a brexit czar. the pound is heading for its longest winning streak in months amid political uncertainty. manus: mark carney and his bank of england colleagues begin their today policy meeting later today, and the rate decision will be tomorrow. it's the first since the last month brexit vote, and they are expected to cut for the first time since 2009. according to a majority, albeit a slim majority, of those we surveyed, 30 of the 54 people pulled predicted 25 basis point cut. let's bring in the state street head of microstrategy. tim, thank you so much for joining us. let's get it out of the way -- are you part of the 30? do you believe we will get our first rate cut tomorrow? thinks carney will hold the horses back on the bridal. he was to see the data. they want to see what's really
going on under the hood. tim: it would be unusual if he didn't do anything after all the warnings. we are seeing sentiment polls having dropped quite a lot in the wake of the referendum. shorter-term measures the footfall, shops have dropped as well. the more real-time evidence would suggest that the fallout isn't entirely as positive as people might have hoped. i think it would be quite unusual, given how much he don't talk to the economy, and a risk for them not to do anything. a 25 basis point hike is certainly reasonable. i wouldn't expect a lot more than that; i think he wants to save some bullets for the longer-term. anna: and what does that do to u.k. assets? e, of whatchartie her prime minister's cameron has done to various u.k. assets, the
pound thing the one that has fallen. bigger moves on sovereign bond indices. gilt, 58% return on and the demolition on the pound in the last couple weeks under his tenure. tim: the interesting side of the gilt market, given how far yields have fallen and for the i thinkhave come, and if you look back to the experience following the financial crisis, how a much weaker pound really didn't rebalance the economy. they drove inflation higher. the bank of england let inflation run hot, because they thought it was transitory. there's a similar scenario that could make gilt less attractive now that we have collapsed 10 year yields below 1%. manus: are we heading -- w this is a consensus, that we
are beginning to hit the buffers in terms of where yield will go. u.s. yields, u.k. yields. the backlash, the end of negative rates. there's something of a mass psychosis going on related to starvation for yield. . call me old-fashioned, but i don't like investments were you don't make money. if you take your yield analysis on a bond or whatever, you take off the rate of inflation, you aren't looking at the smart investment, are you? >> for things like treasuries, that's probably right. if you look at the countries and economies were yields are negative and huge portions of the yield curve are below zero, these are current-account surplus currencies that have historically had low rates of inflation to use as funding currencies and risk trade. assets are nots. necessarily that case. they're current-account deficits.
far be it from me to call an end to the bond market rally; a lot of money has been lost that way. but i do think there is a natural bound for those you can u.s. interest rates, these of the somewhere like germany. anna: we have distinguished in our conversations if we reach the end. we'll distinguish between these economies. tim: absolutely. and you have to distinguish between those and emerging-market bonds, where you had a tantrum three years ago, where you still do have attractive spreads. that is where you will see the interest pick up. manus: you spend a lot of your helping the guys and girls decide where they should have their currency exposure. here we are with sterling, a cracking good run, theresa may getting ready to hit the front door of number 10. which on a relief rally, dissipates with the reality of negotiation? or are we beginning to see the
development of the floor for sterling? tim: i think it is mostly a relief rally you could see it extended further. but i think these longer-term questions of the timing of triggering article 50, what the negotiating position is, what the cabinet is going to look like, whether it is who the brexit czar is or who the chancellor is, weather austerity will truly be reversed if you get someone like philip hammond in there. all these questions are still unanswered and what you have seen in the last couple days is the removal of uncertainty, which will be very good, but there is still plenty of uncertainty for the longer-term. anna: we are a know about theresa may, talking about next year. appointment of various officials we will hear about -- is that going to have an
impact on the pound? do we have expectations built in around who is going to lead it? >> i'm not certain that level of granularity has inbuilt in, simply because there are so many names. you are getting a few consensus names coming around, but the rest of the cabinet is very much up for grabs. there was an article this morning about how the gender balance is going to change dramatically, and that opens up a lot more questions, because some of these names we haven't heard in the discussions. manus: interesting, one of the names that came out -- he said he's work with the labour party. you will stay with us. next, negative on negative rates. japan's policy talks would not work stateside. central banks, next. ♪
anna: welcome back. we're live from london this morning. 7:20, and the pound is stronger. 1.3287. chief the minneapolis fed says he does not see a recession around the corner in the united states. speaking in michigan, he said he remains cautiously optimistic. >> the u.s. economy has been growing more slowly than we would all like. i think that is safe to say. but it has not been terrible. as you look around the world, the u.s. economy has done pretty well compared to europe, as an example, especially given brexit and the uncertainty about the u.k., and what it means for the eurozone. kashkari also said negative yield rates in japan were having negative effects on policy. echoed.ntiments were
japan seeshile, they're cabinet secretary denying a report that officials are considering introducing so-called helicopter money. that comes after the newspaper reported the policy is being considered as an option to boost the economy. meanwhile, the chief currency analyst warned that the yen's credibility would be adversely affected and the currency weekend if japan took such a step. manus: still with us is the head of macro strategy at state street. timothy, the great debate you think,do does state street think, we will get some form of helicopter money? >> i think the only difference between helicopter money and the existing qe is the mechanics of it, the permanence of it. in a way, given a lot of these qe programs will probably never be undone, we're in the era anyway.
the question is it forceful enough, visit accompanied by fiscal stimulus such that it is a key change from what we saw in japan. anna: so why is everyone getting so excitable about this phrase -- we've had this conversation, it's a continuation of what we have seen, it is hard to pin down, and some of the central banks of party been doing something. why does everyone get so excited about this? is it because of the additional fiscal stimulus? tim: that is part of it. there's also a psychology to it. people for years following the crisis expected these policies to reverse. this is not just a tacit admission, this is an admission that they will not be reversed, that you are financing fiscal deficits, the likes of which you could see for 2% to 3% additionally if the talk comes to fruition. it's that psychological,
semantic admission that this is permanent, we need this as a very long-term measure that isn't going to be taken back if and when things improve. manus: the monetization of debt in japan and in the united states, what does that do to the currency prison? we have dollar-yen, the analyst community back last year, they thought they were in sync. we have had a run-up to the biggest two-day drop since 2014. monetization of debt, fiscal stimulus. take me through them, the ramifications. tim: four dollar-yen, we are in a systemically weak environment. you have all the uncertainty, what that means for global trade and global integrationist policies that have taken passed over the past 60, 70 years it seems as if it is starting to
reverse, and that is making for lots more skittishness in market that is very yen supportive. over the near-term, i certainly see the scope for weakening around the boj announcement, if they do surprise expectations. that's another interesting component; expectations are rising. what you have to do to get a meaningful weakening of the currency, i suspect, it's a lot more than they are willing to do now now that expectations -- anna: one expectation around we spent allis -- week talking about fiscal stimulus -- is the emphasis, do we need to take the spotlight away from the boj? tim: the fiscal focus is far more important. you can count on the boj to deliver, some form of stimulus assuming inflation remains. i don't think you can talk about further interest rate cuts; i think we have probably reached the lower tier
there. manus: we have had a whole host of fed governors, fed presidents speak overnight. one was talking about -- it is too soon to judge how far brexit has impacted, but i'm interested in your view on the dollar. she is concerned about a lasting appreciation on the dollar, which hasn't happened yet. how do you look at the dollar and the fed? we had a bond auction where there has been a real kick back. the least demand since 2009. where is the next lockstep for the dollar? tim: market expectations have been pared back so much. becausemore positive, there's so little priced in. for an economy that's not doing too badly, they are approaching their targets for inflation, at their targets or close for full employment, you could argue there's a lot of underemployment, and that gives them pause, but as a dollar
nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. guy: welcome to "on the move." . senegal and 30 in london we are counting it down to the european open. caroline hyde is in germany, and this is what we are watching. a date with downing street. theresa may will become the next prime minister. who will she choose to lead britain's exit from the eu? sugar high. as the chiefes cabinet secretary says tokyo is not preparing for helicopter money. will the boj have to deliver even more stimulus when it meets on the 29th? and mass psychosis .