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tv   Bloomberg Daybreak Europe  Bloomberg  July 31, 2017 1:00am-2:30am EDT

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manus: geopolitics and focus. abe and attract agreed more action is needed on north korea. china and russia need to add pressure to kim jong-un. president says he holds that will not be a need for further retaliation over u.s. sanctions after he slashes half of countries diplomatic missions. profit jumps, europe's largest bank and announces the share buyback of $2 billion. we hear from the finance director. >> we are happy with the first half of 2017 performers. revenues are heading in the
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right direction. good credit control and good cost control. one, theck to square alliance states a list of demands on qatar just as new data shows a new economic pain. ♪ manus: you are very welcome to bloomberg daybreak: europe, our flexion morning show in london. i am manus cannae -- manus cranny and anna edwards is out for the day. haefele.teful
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54 euros sensitive you are in the first half, net income comes in at 440 million euros. they expect further organic revenue and profitability. think tiger beer and vietnam. these markets are the driver. mexico, vietnam, nigeria. year of sees a full being unchanged, first-half -1.8 oneomes in at 1.18 billion. those are the numbers for heineken. we will have a conversation with the ceo, he joins the bloomberg team at 7:30 a.m. u.k. time. revenue, $10.37 billion. this is the market we are focusing on. thenic revenue growth 5.8%, market estimating four point 2%.
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it's the dollar. 50.58 is your bt number on this. says the dollar index is at the bottom of your screen. up by an eight on the dollar index, up slightly on the bloomberg dollar index. it is a fading confidence in the trump administration on repeated political missteps. even as economic activity data stabilizes. i have taken the move. any dollar chart it says dying, dying, dying. we lost 2.2% in july, the fifth six -- fifth consecutive loss. are we all so oversold? 29.32. you are technically reaching and
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oversold. d period in the market. the losses pile up as the political drama rises. do you step in and look for tax as being the next driver that could take the drop -- the dollar higher? politics of the world, ballistic missiles being fired by north korea. equity searched, so what? you have these markets that are rising, china stabilizing. purchasing managing index slips slightly, but billy's, rio, all trading higher. this is dollar korean won. it has turned around. you have strength coming back into the korean won. abe and trump has gotten together and said north korea poses a grave and direct threat to the united states.
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they are talking about doing more. what does more mean for markets? right now they do not seem to care. in terms of nymex crude, we are up, but can we stay up? first time since may. to that extent, that his faith you will see a compliance. august 7 and eight, abu dhabi will be the place to be to comprehend compliance in the market. the first word news in hong kong with juliette saly. juliette: manus, thank you. vladimir putin says he hopes there will be no need for further retaliation against washington. his comments came after it's diplomatic mission left by two thirds of fresh sanctions approved by congress. the move marks a new stage in the kremlin's deep disillusionment with donald trump on his campaign to improve ties but failed to deliver.
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china's factory gate tile back a notch. the manufacturing and purchasing managers slowed to 51.4, short of forecasts. officials educated the slowdown to high temperatures and floods. while some had regular equipment maintenance. japan's factory output rebounded as global demand supported economic recovery. industrial recovery increase, beating forecasts. may reflected a golden week holiday when factories cut output. the saudi led alliance that severed ties with qatar restated a list of 13 demands that must be met before talks could start. the foreign ministers of saudi arabia and the uae said there will be no compromise. a charge that they have repeatedly denied.
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it fueled speculation the crisis could be resolved. oil in new york reflate rose above $50 for the first time since may after said the partners will meet next week. it's set to take place after saudi arabia said it would step up pressure on countries that are not complying. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . bit of a shaky start to the trading session in asia, but we are seeing upside coming through in hong kong, up 1%. their stocks are on track for another monthly gain, the best since then you are. hsbc, it shows it popped up 5% in hong kong. good.rket is
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the deli and futures are limits up and we have seen upside in china even though the pmi number was a little bit of a mess. it shows we are seeing expansion in the second-biggest economy. having a look at some of the it's going to be a competitor to charter. there is a question whether he wants to tie up its swift -- sprint business. shen hello energy in hong kong is doing well. 443%, thecrease by back oncoal miner and coal prices. it shows you just how well hsbc c-shares do on the back of these buybacks. they have announced a $2 billion by back. last time they and asked a $2.5
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billion by back last year. we saw earlier in the year a $1 billion by back. we have seen hong kong shares rise 2.5% after the lunch break. cheers globally in london and hong kong up 50% in the last months. they are doing something right. manus: they are indeed. that was a conversation we had with mr. mckay, the finance director. we will hear more from the finance director of hsbc shortly. japanese prime minister shinzo abe has hit out at china over the lack of action in north korea. following a phone call with donald trump, they reported the international community needs to apply more pressure to the regime of kim jong-un. japan, as well as the international community, having closely coordinating and build our efforts in order to resolve the north korea issue peacefully. they have been dismissing these
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efforts and unilaterally escalated the situation. the international community, including china and russia, need to accept the facts we should apply more pressure. president trump and i agree we need to take further action. strong words from shinzo abe. let's get to hong kong. daniel, good to see this market. the rhetoric is heating up. so far, china looks unmoved. what is their calculus? who is going to blink in this game? >> the view from beijing is that they want stability on the korean and its look. as awould view a war catastrophic event. on the other hand, they see the collapse of kim jong-un's regime as a destabilizing factor. it could lead to a refugee crisis on their border and
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potentially put u.s. troops on the border, which is a strategic threat from china. they do not see at the moment they need to impose crippling economic sanctions on kim jong-un. they think that regime needs to remain and they do not see u.s. allies will in a trigger on a work that could kill millions of people. manus: it's amazing how this has escalated in terms of rhetoric, quite aggressively. what is the next step? how can the united states actually ratchet up the pressure ? there is a few things they could do and that analysts are now expecting. that could be a dramatic move against china. , secondary sanctions really, to punish china for its dealings with north korea. that has all sorts of eventual ramifications which could
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escalate and lead to a full-blown trade war of sorts between the two biggest economies. that is the fear. beyond that, there is not much to be done. nikki haley said they cannot do much there because china and russia are blocking those resolutions. it has to be the u.s. acting with its allies to put sanctions on china or of potential military strike, which would be a catastrophic event. manus: thank you very much, daniel. daniel kincaid, our team leader. let's welcome our guest host for the next hour. welcome, good morning. i go away for three days, i come back, the world looks as if it is in a much more risky edition. is that a fair take? whole, if you read
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the markets, you would not have realized that. volatility remains as much subdued. risk does have a big tongue. you are going to have volatility and all that. it is a fair assessment from a geopolitical perspective that the risk has increased. taken notehas so far notice of that. so we may be in some sort of an increase volatility environment. having said that, we have said that many times and this thing has not really manifested. the market is taking a view that , i have -- i think right now what is trying to market is global these. let's take a couple of big moves. i started the show with the
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dollar index. you look at the asian equity market, politics is about. the prism of fx is the prism of risk. clients sayen, our they want to take a little bit more protection. if so, are they doing it? road? we on an implosion is that really what is driving the dollar? guest: what is driving the dollar is accommodation of many things. politics, right now the u.s. is being seen as a major source of uncertainty, which is not been the case in the past. the repricing of the euphoria, which for me, was unjustified. it's sad to say it has been priced out to a large extent. we are coming out of a massive dollar malaysia. it has extended rate
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differentials for a wide margin. this has been correcting right now. it's accommodation of all these things. -- it's a combination of all these things. still you say it's overvalued. it's difficult to stop and reverse that trend. guest: that's right because you see, the issue the market typically goes through phases. momentum takes over and that was especially the5, second half of 2016. by our estimates, the dollar rose 15-18% overvalued. now this has started to be reverting, being corrected. is the gravitational pull of the fundamental evaluation, but at the same time, you have this political mess in the u.s. administration stumbling on one
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mess after another. thing you mentioned is growth. we at the gdp on friday and some emi's from china this morning. -- pmi from china this morning. it's hardly gone off a cliff. these are stable. i had a conversation with the hsbc finance director and that seems to be the tongue. have we passed through the eye of the storm on china in terms of renminbi? growth? of guest: what i can say is that the data so far in the first two quarters of 2017 have surprised on the upside. they have instilled caucus and in the market for both outlook alex in china. it is mounting problems with the credit bubble, but it seems the authority has been handling the situation, especially on the growth for quite smoothly.
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i do not know if we are past the eye of the storm because in a couple years, this double might burst and lead to something much more serious. for the next 6-9 months, i do not see china representing a .eadwind for global economy on the contrary, i think it represents a tailwind. manus: the consequence of a weaker dollar is something which pboc is going to have to deal with. the capital flows are beginning to be pulled back. they are pulling back on the reins. it's always hard to benchmark the past and growth. this is what we are worried about. we talk every month when you came in. about capital flow. guest: that is definitely right. least thetflows, at base of capital outflows have significantly slowed down, which is a welcome development.
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the other thing that has played into that, apart from the efforts of chinese authorities to put capital controls in place, is the fact the fate of the dollar has been fated. -- faded. people did not want to pile into dollar assets and therefore it is working in favor of other currencies. this is something welcomed by the ecb for an entirely different reason because it holds the tradewinds euro from depreciating irrevocably. china has the biggest weight in the index, so to the extent that the dollar in for shades -- it is a bitciates, more restrained and that is why you have seen a big diversions. euro-dollar is up 11%. more. we will talk
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coming up on daybreak, the traits, theresa may's top brass clashes over there post-brexit plan. this is bloomberg. ♪
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♪ 6:22 in london, 1:22 in hong kong. it is daybreak europe, let's go to the splash with juliette saly. juliette: mitsubishi financial group is considering answer them and paris for its basis of security operations after brexit japan's biggest said it has never done candidates for the two cities, but a final decision has not been reached. global banks are expanding offices in the eu to maintain thes for the market before u.k. formally leaves the block in 2019. softbank is planning to make a direct office of charter
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communications after the company rebuffed its proposal with sprint. plans toese company make the offer this week although the plan is not complete and could change. sprint is scheduled to report quarterly results tomorrow. hong kong billionaire has agreed assets for six like 1.9 billion u.s. dollars. it serves corporate customers and residents. hutchison telecom indication hong kong holding shares surge the most in six years. that is your bloomberg business flash. manus. manus: a split has emerged within theresa may's cabinet over the government's post-brexit plans. philip hammond claims a consensus was formed around a three-year transition phase and that has been criticized by the trade secretary, liam fox.
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economic optimism among u.k. companies has fallen 70% in july, the lowest level in six months according to the barometer. our guest.g in slightly,ing ever so but it is this gordon's of politics that since into fx. thatscordance of all text slips into fx. politics is a difficult thing to trade. david bloom last week said i am not trading politics. you trade politics? guest: no, you do not trade politics and that is why it is difficult to trade sterling on a short-term basis. it will depend on whether you will take a medium-term the. concerned, brexit has been a negative. we have a lot of uncertainty, what is important to me is
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happening at the time when politics and economics in the eurozone are moving in the right direction. that is why i think, and we will discuss earlier, cable is the wrong currency to look at. factor,he week dollar the euro sterling you want to be looking at. direct we31, 128, a can dollar story. weak, 1.28, a direct dollar story. don't know the extent of the damage that has been inflicted on the u.k. economy because of the brexit referendum. it will take us time to assess the structural damage. it will really depend to a large
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extent on momentum and it will depend on flows. claritycast do not see and that is largely because it euro-dollar may start getting uncomfortably high in the next six to nine months for the ecb. 90-95 is entirely feasible. portfolio flows have started reversing away from the u.k. eurozone. manus: we will carry those thoughts through very shortly. breaking news coming from the swiss national bank. a profit of 1.2 billion swiss francs. francs, firsts half exchange rate profit of 1/10 of one billion swiss franc's. first half that results of .9
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billion swiss francs. you are seeing a weakening in the swiss francs against the euro. there has been a chip in the movement. it is a profit for the smb in the first half. this is bloomberg. ♪ we check our phones 85 times a day.
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just 2:30 in the afternoon, breaking news on the bloomberg terminal. this is the global drug company raising their outlook. they see business earnings, broadly stable in 2017. the second quarter net income for some of the came at 7 sanofi came at 7 billion. the picture there remains in the diabetic world. they had a new drug which is
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getting good feedback. 1.7 billion. they raised the outlook, they see the business earnings being broadly stable in 2017. that is a nice bit of guidance from the sanofi ceo. we continue the conversation with the cfo at 7:30 a.m. u.k. time. markets, if you look at markets, you would say to yourself, politics occurs. that's where risk seems to be playing out in today's session. 4/10 headingee or for its seven monthly gain. the industry groups and how it is playing outcome of material stocks, commodity producers very much out on the front foot outperforming at 1.2%. as sox also outperforming
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energy stocks. we are seeing in the commodities space, copper heading for its best month since anyway. iron ore is surging and oil. we saw it go above $50 a barrel. this is opec and its allies meeting next week for production cuts. oil moving higher, the link on last week's gains, moving about the 200 day moving average the first time since may. i am looking at the dollar. we talk about equity and commodities. we are seeing yen strength, the 10 year treasury yield edged slightly lower. when we look at the dollar, there is a great story on the bloomberg talking about the dollar a proxy for politics. i know you showed this early. you look at the 14 date rsi, most sold it i've years. if this goes about 30, that's where it could be a buy signal
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for the dollar. it looks as if being bearish on the dollar is becoming a consensus trade. manus: the very latest on the dollar there, one more line coming from the ceo. he is not the ceo in a hurry. that is the line coming from the sanofi ceo. therefore it the second quarter profit ahead of analyst estimates. the chief executives trimmed costs. they will spend $2 billion buying back stock. i caught up with the finance director and he gave me the first interview of the day, happy with the banks capital position. guest: we are happy with the first half of 2017's performance. we have revenues heading in the right direction across major businesses and regions. good credit control and good cost control.
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in a strong capital position as you mentioned, another $2 billion for us to buy back. we are honest and today, over the last 12-15 months, will make a $5.5 billion buybacks in total. that is for their support of $.51 per share dividend we paid out last year and we certainly expect to pay out this year as well. about 63% oflk profitability. mr. gulliver this talking about opportunities you see that. how strong is china? that is what the world is trying to debate. it may your insight take. guest: we continue to see good progress in our mainland china business in the first half of the year. one of the outstanding features was getting approval for what will be called hsbc securities, the first foreign bank majority-owned security companies and mainland china. that for us is a huge strategic
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step in helping us connect international customers with a security market in china. the approval will get that venture up and running before the end of the year and build from there. in terms of core banking and retail banking and global markets business, we continue to see progress coming through mainland china in the first half of the year. growth continues to be pretty encouraging and clearly we have taken a strong focus on underwriting and it risk management in the marketplace. manus: you think the capital flight story is done and that wealth management adjustment has been handled well? have we passed the worst of the potential storms in china? that's an impossible question to answer. a great deal depends on central monitoring all see is being managed and that varies from time to time. the regulation authorities in china make sure they have the
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right controls in place and try to force them to extent possible. our role as an international inc. is to ensure that we support those efforts. manus: i'm looking at some of the numbers. you are pulling it out of the back in terms of the european growth story. give me some complexion. the profitability in europe is quite outstanding in this quarter. give me a sense of the european recovery story for you. guest: two of our businesses that have outstanding first half's and second quarters, global banks and markets from very strongly with good revenue progression coming from an equity business, coming from global liquidity and cash management. coming as we support a large multinational trading corp. its international institutions. retail bank management also a good quarter.
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more broadly across europe, we are seeing each business continued to develop nicely. i would not call it a raging but ity at this point, is encouraging progress compared to most recent history. the news about geopolitics, we wake up with north -- more concerns with north korea. when you travel around the world and talk to the financial elite, what do they talk about in consideration of geopolitics? on a concert about trump and does that stop them making decisions on the u.s. side? guest: it brings uncertainty for decision-making for any business in the world. our focus is trying to provide insight to have that in tax market -- how that impacts market opportunities across the world and provide the sport they need. there is no doubt that you political uncertainty whether in the european environment by
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brexit and further afield, informs decision-making and a business level. that being said, we have been seeing good progress across the broad base of the markets whether it is in the americas, middle east, and asia. i think this is a feature of how we can adapt to and support our customers on it ongoing aces. -- ongoing basis. upus: the stocks are trading 2.55% in hong kong. 26% and hong is up kong is up 32% in the london market. these are the share of buybacks, one of the most generous. this bank pays out more than any other european or u.s. bank. let's have a look at the screen. when billy dollar by back there. another $2 billion. that is a very generous bank.
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talk about let go. you can talk -- like go. about the lives go. raging, is not exactly we will get a snapshot at 10:00 a.m. london time with reading on unemployment and core inflation. let's bring in the cohead strategy at union credit. listening to mckay, he says i would not describe europe as a raging, what it was strong. his numbers are a little soliloquy really of the recovery. that is the challenge for draghi. if the euro going to challenge that momentum? guest: let me say two things on that. on the recovery, i think we should get used and we should of been used to the fact we are not going to see a rocket recovery because there is rigidities in the eurozone and that is unknown
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fact. what is important about the recovery is that they are broad based. when you look at the dispersion of growth rates, among the member economies, you will find it is at the lowest it has been for some time. that means not only the eurozone but group is doing well, the strong growth is broad-based. as far as the euro is concerned, -- manus: we are on the highway to fair value, i like that. guest: the ecb is aware that the euro is undervalued. and it is related to the fact that the euro is going higher. quarterly rising was there in toer to basically tried loose lending, try to put the economy back on track, try to put inflation back on the up. the latter is definitely
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remaining stubborn. the outward cap in the eurozone is closing at it but faster than people expected. we tease a good sign going forward for wage and price expectations. as far as the euro, the of session of-- the of the ecb, -- the of session of my of the ecbobsession is out of hand. the other thing we have to bear in mind, the ecb does not look at the euro-dollar only. it looks at the trade rated index. from that mistake, we have seen a strong euro but there is a big divergence in the euro-dollar. the euro-dollar is up 11-12% this year. trade is up 4.5-5 percent.
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manus: say the objection to a stronger dollar has dissipated. where is the tolerance? where is the tolerance for a rising euro? in terms of where we are, let's say. another 3%, 4%? guest: i do not think these guys have specific levels in mind. it has mostly to do with the pace of appreciation. if we wake up tomorrow and the trade with the euro is up 3%, i am short they will stop making noises. in terms of the direction of trouble, the ecb has made peace with the fact the euro is going higher. manus: i get the point in terms of we need a qb and we have qe and it is doing its job. is it delivering and its job? according to the inflation numbers. would you buy into the australian?
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workers, get out there and asked for a pay rise. we can't to it all. guest: it is always very difficult to say whether a specific policy, whether physical or monetary, is doing its job. you never know will happen to inflation is it was not there. ,hat i do know right now looking through the years of draghi, especially since 2012 when we went through whatever it takes and had the anniversary. confidence in that central bank. market has confidence in the ecb. definitely been a tailwind for the eurozone. we are getting there, we are not there yet. we are getting there. manus: sound like another politician. i josh, i josh.
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stay with me. this is the cohead of strategy at union credit. if you are a bloomberg customer and you are watching, tv . you can pick up the whole of the ian mckay.with it mck two brexit, the plumbing of the financial system, you can influence the conversation and ask questions. there is a chapter there in blue. pop your question in there and you might see more of me if you can take more of that. and it is back tomorrow and it will be service as usual. coming up, going around in circles. the saudi led alliance reinforces its original demand for qatar. this is bloomberg. ♪
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♪ is 6:47 in london, 1:47
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in new york. if you are fishing your weekend, time to go home. world waking up to the where the united states could join japan against north korea, who launched the second internet -- intercontinental plastic missile in as many weeks. let's get the business flash with juliette saly standing by. quarter: hsbc's second profit has been analysts. bank hase's largest said it will buy back stock. the profit rose to $6 billion while revenue growth debt. -- dipped. >> we have revenues heading in the right direction across all our major diseases and regions. good credit control and could cost control. juliette: heineken has reported
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first-half profits that beat analyst estimates. the second-largest brewer said it rose 5.9% to 1.8 billion euros, helped by warm summer weather in europe and growing demand more expensive beers in asia. mitsubishi financial group is considering amsterdam and paris as a base for securities operation in the european union after brexit. japan's is bank said it now down the candidates to those two cities but a final decision has not been reached. mobile banks are expending offices in the eu to maintain access to the markets before the u.k. formally leaves in 2019. that is your bloomberg business flash. manus: they convert much. the saudi led -- thank you very much. the saudi led alliance has reinstated 13 demands that must be met before the talks can result the crisis.
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yousef gamal el-din joins us now. you have been at qatar to start the crisis and covered it in great detail. what chart had he chosen and white? -- have you chosen and why? it boiled down the demands from 13 to six brought pencils. scratch that. now they have to meet all 13 of the original demand. bloomberg understands the -- met anti has meet impasse. inis having ramifications terms of how key institutions are doing is us. international banks are servicing qatar from new york and london instead of divided because of the nature of the crisis. let me show you the economic toll this has taken on the economy. in terms of what is happening with qatar's net international
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reserves, a drop of 31%. billion,bout $24 imports were down your by year in june. the line in blue shows you the liquidity pressures. i have circled that in red, the beginning of june. it spikes up completely and the other thing to bear in mind. when you look at the other key metrics, how traders are seeing the currency trade 12 months from now. the saudi riau and qatari riyal have come to light. stocks were under pressure. we will see how sentiment evolves. manus: you taught me something new this morning. i have sibor and now i have kreidler. yousef: are you asking with the qatari interbank is, it's right here. kibor. like that.r, i
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yousef gamal el-din with the very latest. let's get some final thoughts. pasts been with me for the hour. geopolitics is everywhere at the moment. we set the gulf aside and russian relations. if i look at the overall trend in some of these markets, there is a shift from some central bankers in the commodity complex. let me show you iron ore because this one, i this morning. we are rocking it higher. china is studying, iron ore rising, what do you make of where we are with the trading in central banks at the moment? guest: let me say a few things. the us drilling dollar has gone higher this past month not because of monetary expectations but because of the recovery in iron ore.
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when i look at monetary policy expectations and i cap across the different commodity, i still see a bit a nine monetary policy expectations. we are talking about 50 basis points of hikes in the next two years or so. it is not something that can get you excited. it can if you can expect a bit more. i think the reason -- there is a chance that the move has been too fast for them to swallow. toy may take the opportunity talk it down a bit. again, as it is the case with the euro, there is something fundamental tailwinds behind the rally in the aussie that are still going to be supporting. i would be a buyer. manus: the other reaction on friday was that, not as
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aggressive gdp number out of america that shook the market little bit in terms of what the fed can do. no? thet: i think as far as dollar and the u.s. is concerned right now, it is not just the fed. let me put it this way. pricing of the fed would have to be extremely aggressive right now. to change the tide for the dollar. it is fighting politics and it a large over evaluation, which is not as wide as it was seven months ago. respect, politics remains one of the two drivers, if i could take two drivers, right now in the dollar market. of thathe consequence for the canadian dollar. if iron ore is the alpha for aussie, what is the quid pro quo for cash? we are up $50 again.
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guest: that is absolutely right. $52-50 three dollars a barrel. manus: whenever we look at currency -- guest: we try to give short-term dynamics. the dollar is still overvalued. perspective, we still have headwinds for dollar, meaning tailwinds for cap. short-term, the term might have been extended. i still think global output picture or oil prices and fundamentals argue for a higher unit. talk to me about the norwegian krone. it may have shifted baskets in terms of the monitor you put decided. he put it into emerging-market basket.
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read target at the top. you look at it from a slightly different perspective. guest: reality is, most people traded euro only. it really depends on what angle you want to try. if you want to trade oil plus weak dollar, it makes sense to trade through dollar downside. if you want to trade a bit more liquidity and the of bit more straightforward in the market is doing, the euro on the downside makes sense. if you are looking at strong financials, monetary expectations are benign. the market will be surprised on the upside and you have brent regaining momentum. you so much for sharing your thoughts with us this morning. the head of research strategy research at union credit.
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some stocks we will keep an eye on. we are an hour away from the start of cash trading. we have the first conversation with the cfo, a buyback on the way, heineken delivered the numbers, and sanofi delivers their outlook as fully stable in 2018. ♪
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manus: abe and trump agree more action is needed on north korea. the japanese leaders as china and russia needed to add pressure to kim jong-un. the russian president says he hopes there will not be a need for further retaliation over u.s. sanctions. hsbc beats profit jumps, europe's largest bank as it at ounce a share buyback of $2 million. we hear from the finance director. happy with the first half of 2017 performance. we have revenue heading in the
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right direction across all our major businesses and regions. good credit control and good cost control. manus: back to square one, the saudi led up alliance lifts demand on qatar. ♪ manus: it is our flagship morning show right here in the city of london. i manus cranny. -- i am manus cranny. anna edwards will be back tomorrow. we're going to be joined by the global chair and cio of ubs world management. let's take it's the markets, we are running. futures are opening. 1%.on is up by 1/8 of
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, you wouldeen going not think there is as much tension. hsbc will be one of the prime drivers of that market this morning. $2 billion share buyback. -- paris is down, tax up .7%. you're seeing the miners do well in the asian session. it just received is doing well. how does that carry through to the respirator? -- risk radar? we write a 3.7% gain. the biggest since january of this year. china stability. you have nice move it in iron ore -- movement in iron ore. the dollar-korean yuan did
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fall. all they -- abe and trump, korean yuan gains. it said au revoir. we peaked above 50 books this morning. the opec non-opec meeting in other dobby delivering something more for the bond markets. you have the french market of by 22 -- up by 22. juliette starley, she is my euro everyday day for the bloomberg first word news. juliette: right back at you. haveo abe and donald trump agreed more action is needed on north korea. after speaking to trump, he told is that the international community starting with china and russia must take the issue
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more seriously at increase pressure on the isolated regime. after it launched its second intercontinental ballistic missile in the month. theing financial risks, purchasing managers index slowing to short of the forecast. it'd treated be so down to temperatures in some regions and let's in others -- floods in others. alliance has reinstated demands that must be made before the crisis -- resolving the crisis could start. there would be no copper mines -- the blockade initially dropped the conditions, fueling speculation that the crisis could soon be resolved. global news 24 hours a day powered by more than 2700 journalists and analysts in more , you can findries
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more stories on the bloomberg at top . we have the close of japan and australia this hour. the nikkei closing a little down. is closing market higher by 4/10 of 1%. -- .4%. the iron or contract in singapore, surging 6%. we have seen some good moves in china as well even though we did see that number a little mess. -- miss. hong kong up by 1%. hsbc coming through with numbers and shares up by 2.5%. either stocks we have been watching in this session, softbank is it to be planning a direct offer for carter. after charter rebuffs its proposal for sprint to merge.
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it got a broker upgrade from a pp but also on the bank of -- the back of this big surge. chinois energy looking good. china's biggest coal company thanks to the gain. it says it sees the profit rising by 143%. much investors like it when hsbc announces a share buyback like they did today. -- buyback. by like a-shares spikes. they did again earlier in the year and were expecting the same with the shares opened. hsbc in hong kong up 2.5%. manus: thank you very much. a great roundup. russia retaliates against the u.s. sanctions.
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tensions rise between north america and north korea. republican leaders are forging ahead with their own agenda. membersressional doubled down on their pledge to overhaul the tax code. kathleencompanies -- hunter joins us on set. great to see you. let's get to tax. let's get to perhaps what some would say they should have done in the first instance which gets to the tax code. how really prospect is it that we get tax reform? >> if health care was supposed to be easy -- if health care was hard tax reform will be harder. i'm not surprised we are seeing paul ryan and kevin brady, the tax-writing committee -- brady, the tax-writing committee talking about how important it is to do the tax code and how it
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will be there focus overall . one of the things they cited is there is agreement on locking the border adjustment tax. that, they cast that as making things easier. the thing is that the tax was going to raise $1 trillion. if you don't have that you're going to find somewhere else to make that money. manus: tensions are rising globally. what is next in the geopolitics pressure on china vis-a-vis north korea? >> it was interesting to see rexx tillerson last week. he talked about china and russia being economic enablers of north korea. that is the type of rhetoric we will continue to see out of the white house and the trump administration. it is going to be difficult, particularly given the trump administration's mired in its own staff shakeup issues. china,s of pressuring
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that has been the approach, it will continue to be but it will be a hard sell. manus: thank you very much. let's bring in the global cio from ubs wealth management area he joins me now. he oversees more than 2 trillion u.s. dollars in assets. great to see you this morning. as you are waking up this is frontgeopolitics and center on the bloomberg. every time i catch up with you you and i start the conversation with geopolitics. it sounds as if things are beginning to heat up. does that disconcert you in anyway? >> geopolitics is something that all our investors focus on. asy see this world today more complex and difficult to understand than ever before. that is a factor that ways of the market -- weighs on the markey.
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you talk of -- market. korea and these are important for political balance but on the other hand you would not see it in the index which is done really well. managing this dichotomy between global events and what the markets are doing is going to continue to be an important theme to the second half of this year. manus: let's pick up on some of the big themes. you are quoted in the story that we wrote that the dollar is a continuing mess. when you see the mess in terms of policy implementation and the united they of america, do you -- the united states of america,, do you think that unless you get something from the republicans on tax reform? >> we see the dollar as weakening versus the euro. there are a couple of factors, the european economy is doing well despite dovish comments
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from mario draghi. there will be talked of tapering as you get into the fall. don't forget we have this ceiling negotiation in the united dates. could be a rocky like some of the other political negotiations that have gone on. for foreign investors in particular, adding those incremental investments into the united states at this time is maybe not their highest priority. in --ve got both sides, an undervalued europe. intruding to u.s. dollar weakness. -- contributing to u.s. dollar weakness, -- weakness. manus: you say we have to strike a balance between fear and greed. if i look at the u.s. equity juncture,ex, at some
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maybe i should have a little bit of fear? >> yeah. the markets have done extremely well in the first half of the year. maybe you want to be more circumspect. we took off a tiny bit of risk by reducing our high yield. at the same time, the factors that have contributed to this ongoing rally remain in place. today is the fifth anniversary of mario draghi saying he will do whatever it takes. whatever it takes from central banks continues to be such an important theme that has stabilized is markets to drive them higher. manus: they have driven higher. the debate is, i'm interested to
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get your view. you have the fed debating what to do next and the possibility of a hike is a coin toss by the end of the year. the news flow all about balance sheet reduction in the united dates of america -- states of america? that should not unseat markets. they should run quietly in the background to taking -- back around. -- background. up, i way you set it guess i should disagree. i'm not a lawyer. banks, that the central particularly the federal reserve, has a variety of tools they want to use. whether they use the balance sheet or interest rate their goals are the same. they have earned credibility
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since janet yellen took over. the message should be do we see them becoming more hawkish? in this inflation environment it is difficult to see. as long as their hand is not , they may use different tools and try to get back to normalcy but they are doing it from the dovish side. manus: they are doing it from the dovish side. marketsrised the bond have not reacted just as aggressively. you see pretty big positions put on for your -- four lower yields. i think it is a moderately laissez-faire attitude. where do you see it going in the second half of the year in the u.s.? towe see the 10 year rising
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2.5 on the back of continued economic strength. nothing dramatic. had 1.8, we still have trillion in liquidity pumped into the world by central bank. despite all the talk of tapering or removal of stimulus there is still quite a lot of stimulus in these markets. manus: it definitely is. that takes me to the european central bank. i caught up with the hsbc financial director. you have done really well in europe, things are pretty strong for you. he said i would not call it a raging recovery, but europe has a whole new momentum. the euro, the tolerance level to allow the euro -- i am
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paraphrasing, to run higher. momentum? into that euro cannk that the strengthen and we think european equities can continue to do well along with global equity. it is a little early in the european earnings season to say it is going fantastic. i think it has been about as expected. expectations have been relatively high. what i think that we like about this earnings season is you're seeing the strength in the financial. that doesn't bode well both for lending and economic growth and the confidence you are speaking to. manus: we make up phrases here. the draghi to step. doing the macron. do you believe this man can deliver? i like a dance.
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are you doing the macron? out -- i don't want to get and dance and embarrass my family and anything like that the shift in tone. and what that meant for many of our clients that we had moved away from this dreaded populism taking on a virulent and mercantilist strain moving more towards localization. macron certainly points in that direction. he is still talking about the kinds of reform getting done in france that have helped the spanish economy recover. i think all of that is a great positive. we covered your numbers on friday. we saw that reawakening of the proclivity to take risk.
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are you seeing a shift in terms of money more into europe? we talk about the flow of money coming into europe over the first six months. do you see the clients wanting to take more active positions in european exposure? >> well, what we have seen is that throughout this year clients have had more of a willingness to take on risk after the strong equity markets last year. actually having just gone through asia and north america, the interest for all regions is rising. isould say actually asia something that people are really focused on. maybe they don't necessarily but people crack it, are looking at the investments in infrastructure that are going on there. i think that is an important interest.
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in, andy as those flow importance of that is going to europe. manus: you mentioned asia. china debt this morning which did not really move the market. it was more of the same. we seem to be in a comfortable spot in china. what does that they do say to you about china and how to the clients look at? -- at it? is that the chosen methodology of the client and how do they look at china? >> i think clients are looking at asia more broadly. some of the things that result from the china investment, we do chinese equities. also thailand as well where they are going to benefit from that infrastructure investment. i think with china as a whole,
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one data point is not that significant. we have coming long way with china where we had a great fear of the for exchange reserves being depleted in a rampant depreciation of the chinese currency to a stabilization. i think that has gone a long way. we have seen china pullback on some of its investments to work to stabilize the financial system a little. they have done that from a position of strength and a position of confidence about their ability to keep the economy on track as we move into the politics of the fall. manus: always great to get your input on daybreak. see you in person very soon. the global cio at ubs management. coming up next on the show, europe's biggest banks beat the
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estimates. more with the hsbc finance director. this is bloomberg. ♪
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24 in hong kong. -- 2:24 in hong kong. i caught up with the chief financial officer, the finance director to get his first interview of the day. very hard for us to consider a country other than france or post-brexit operations. for us the transition represents up to 1000n possibly boys from the u.k. banking opportunities. transitioning up to 1000 employees to support our
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customers. a very natural move for us. all those capabilities and technology and capability are already present. tois the most efficient form adopt. the world plumbing of of finance is in london and it is a darn hard thing to get the whole thing to move. would you concur? there is a lofty challenge to moving the plumbing. >> exactly right. london is the foremost financial center of the world to at the drop of a had try to re-create that outside of london with the and manage theve complexity around that. a massive undertaking. if it were to have and i believe we would have to transition a number of years. our view is that london will continue to be any financial
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center in a post-brexit world. rolely we view part of our to try to leave -- lead in that regard. manus: eufinance record hsbc. financelion -- the director at hsbc. relative to the u.s., getting it right. let's have a look at the board. dubai is up and running. again by ag leveled group of countries against qatar , beating the political overlords there. stocks are set to open .1% higher here in europe. hsbc has delivered a stock politics is front it from the daybreak
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europe team. and edwards is back tomorrow morning and she will be here besides me. the european open is next. more to come on bloomberg. ♪
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♪ guy: welcome. you are watching "bloomberg: markets" we will bring you your first trade of the day shortly. i am alongside matt miller in berlin. when we watching this monday morning -- what are we watching monday morning? hsbc shares jump. the cfo of the business tells bloomberg he is also seeing progress in europe.


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