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tv   Bloomberg Daybreak Europe  Bloomberg  June 16, 2017 1:00am-2:31am EDT

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a deal withaches creditors paving away for a .5 billion euros of emergency aid. we did as much as we wanted and it was something. leaves stimulus unchanged saying private consumption will support the growing economy. pressure grows on the uk's embattled prime minister. the death toll may reach triple figures. anna: a very warm welcome
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everyone to bloomberg daybreak: euro. i am anna edwards. you am matt miller joining here in berlin. an interesting day. it does not look like we have seen much move in risk assets as a result. even though the policy announcements have been with no change. anna: we have had a lot from central banks. we have also heard from the central banks and the boj clearly on a different path at the moment at least from the the doe -- even from the boe. i want to talk about the equity markets. we have a great chart, the world equity capitalization near parity.
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$75 trillion seems to be the magic number whether you're looking at global gdp or global stock market valuations. at the bottom, we have the ratio between the two. at the highest since 2008 relative to the value of global gdp or. not necessarily suggesting it is overvalued. it seesill lynch says global stocks as overvalued. it is a nice and simple way to look at stock market valuation. matt: fascinating chart. let us take a look at the movements inside the risk assets overnight. we have a rise in the nneka i and a rise in the dollar against the yen. -- we have a rise in the nikkei and a rise in the dollar against the yen. still interesting to see if they were going to announce any down
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draw in stimulus, they did not. like the u.s. laid out their plan for reducing the balance sheet. the boj did not. the nikkei -- you can now 111 yen for your dollar. a hawkish bent as you had three dissenting votes on the governing council. you can see that the pound is a little bit stronger. your .1%. in the last few days, there has known -- 0.1%. in the last few days, there has been little change. lasthas been there for the few days. or four days ago, we were down below 1% and now we are back above 1%. only three basis points. the bank ofg --
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england surprising many people with that 5-3 call. let us get the bloomberg business first word news. juliaette: the creditors from greece has agreed to release euros to athens. and the commitment has been reinforced to extend relief if needed but stops short of providing definitive steps. capping a key chapter of the country's bailout. the u k, anger is growing over the deadly blaze that devastated a tower block in west london. the tragedy has highlighted divisions in british society. the official death toll from the fire currently stands at 17 with the police morning that fatalities may reach triple figures. the international monetary fund has said the euro area's economic recovery has gained momentum however it did warn
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that some of the region's high debt countries may face difficulties when monetary policy accommodation is reduced. at the same time, the fund cautioned that core inflation is at under his -- undesirably low levels. in the u.s., special counsel mueller's move to investigate whether donald trump socked to get the fbi to back off has angered to the president. tweeting about the subject three times in the last 24 hours, the most recent one red -- cricket -- and they talk about obstruction. u.s. military is said to be beefing up its presence in afghanistan of according to the associated press. donald trump has authorized aid of appointment -- a deployment. the pentagon said no decision has been made yet in recent months.
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generals in the region recommended adding more than 5000 troops. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: an interesting session here in asia. the boj has been the main theme of the day. it is getting close to the 27,000 point level. which it did reach when we heard the boj decision. the yen dropped further against the u.s. dollar. yes trillion market also rebounding after yesterday's selloff. mixed movement coming in the chinese equity markets but the hang seng is looking better. having a look at other stocks. toshiba once again in the news. they are offering $19 billion for its chip unit. we are getting more detail on
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whether that will be sold off to pay down to chivas debt. -- to pay down to chivas -- toshiba's debt. a strong forecast for its revenue. the demand for the infant formula particularly from china remains a strong. we are waiting for comments following the boj decision. change to the no stimulus nor have we heard anything about whether they are going to start unwinding the stimulus program. this chart showing that the boj has cut its long-term bonds. we look at the white line here -- some analysts adjusting that it is underway in the boj is well below its global peers in try to normalize its policy. we are awaiting that announcement from kuroda.
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you, juliette saly in hong kong. the bank of japan, speaking about corroded, has maintained its monetary stimulus program saying improving private consumption will support the growing economy. 7-2.oard voted , we are joined from tokyo by brett. what are you watching for from the news conference? >> in particular, people will be watching for the debate about exit. there could be a bit of doug of war. the bank of japan does not want to talk about exit yet but pressure is building from investorsawmakers and and people looking at other central banks exiting saying where is japan at? the big problem for kuroda is that inflation is consistently
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low. he may be forced to say a little bit to acknowledge that the boj is considering exit. we should not expect any more details. anna: you think they are a long way. the boj did change one thing, its assessment of consumption today. in an ocean of other unchanged policy. how will that impact household consumption? householdments on consumption are very encouraging. what we are seeing in japan is interesting. the economy is doing pretty well. five quarters of growth. on our way to a six quarter. the boj says consumption is looking better but we just have this consistent problem with inflation, a key goal of the boj is to raise inflation. we need to see more happening there. the real problem is the disconnect between inflation and the economic growth looking not
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too bad. kuroda'sroded is -- term as governor ends next april. what does that mean for government policy? >> we expect to see policy unchanged during his current term which runs through april. or is a great deal of interest as to whether he will be reappointed. many think there is a good chance of that or if there will be a new governor. at that point, we would expect to see a change in policy. anna: brett miller in tokyo for us. let us continue the conversation regarding the boj. by -- we are joined by two guests. a quick word about when we will see any commentary. it seems the boj is incredibly keen not to talk about any exit strategy. what is your expectation as to
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when that will come on the radar? even as we see them dialing back there bond purchases on the quiet. >> i think it is going to be quite a while. there is no drama corrode -- kuroda here in japan. they want to keep everything steady. ultimately, economic conditions are good. improving modestly. there is neither a sign of a big coming. no risk of any bubbles. at the same time, you have a situation where price pressures are few and far between. the bank of japan, it is very much steady as she goes. matt: jim, what do you think about the bank of japan being pushed to talk about a reduction in its balance sheet? it seems like the ecb is pushed to normalize policy. many central banks are getting pushed ahead of the curve
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considering where inflation is. >> that is right, match. the problem for the bank of japan is that they are in a nasty box from a policy point of view. dependent onn very monetary policy to stimulate expansion. they have kept fiscal policy quite tight. that is politically almost inevitable given the sheer level of government debt. but, there could be some fiscal moves to help expand the economy. thes a fine thing for lawmakers to pressure the bank of japan to taper but they have to do their bit about stimulating the economy. the other thing is structure reform. there has been very little in japan. that is the third arrow of abenomics. they are not going to do it by monetary accommodation alone. more moore fiscal boost -- fiscal boost. on the structural side, the third arrow.
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has abenomics delivered much? all, on the fiscal side, there is quite significant fiscal the rest. -- fiscal thrust. 4.5% of gdp. fiscal policy is at the margin, net positive here. the more important thing is that the private sector is very slowly starting to kick in as an engine for growth. on track.eing exports most importantly, you see domestic business investment expenditure starting to kick in so you find that private risk takers am a and turner's come for the first time in about 10 years, committing public capital into japan and that is where growth is going to come from. matt: what do you think the bank of japan wants to continue --
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but, do you think the bank of japan once to continue to support that with the weaker yen? do they feel ok with the yen at 111, 112? the bank of japan, first and foremost, wants stability. byrestled confidence introducing negative interest rates at the beginning of the year. that forced a lot of shockwaves and uncertainty both on to corporations as well as to banks. this year, for 2017, the mantra stability,y, stability and i think that is exactly the right thing to do. if you are a private risk taker or a consumer or a private investor, it really want -- really what you want to know is uncertainty or stability. anna: with the boj making no on the privatey consumption side of things, is
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it time to think about what we have heard from the central banks this week? the fed, not only hiking rates but seeming more hawkish than people expected. itsecb increasing conversation about exit from stimulus and the bank of england surprising this week with the hawkishness if not the decision in the end. how is it the boj needs to be mindful of other central banks? >> i am not sure it is happy but i think that the problem here is that japan -- the bank of japan cannot yet declare a victory which is essentially what the federal reserve is doing and essentially what the ecb is trying to do. it is trying to point to the positive sick else in the european economy as a reason to get into the taper and to move off the asset purchases, zero rate.
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victory yet.claim i agree that there will be an attempt for stability but what the boj, what the japanese government would like to see is stability with a bit of weakness in the end. they would rather it be 120 to the dollar then 111. what do you think of the problem of getting inflation up? it is not only a japanese problem. do they have specific issues that the recessed at -- that the rest of the world does not have or is this a broken phillips curve? we do not have inflation. i personally do not want to inflation. i want wage growth and productivity growth which go hand in hand. there is a lot of technological innovation. and disruption in many industries going on.
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that is keeping things in check. great news. the key issue is productivity growing? can corporate profits continue to grow? i think the prospects are part -- are very good. investments are kicking in which means the potential for productivity and profit growth is very high. matt: thank you so much. japan's ceo in tokyo. we appreciate your time this morning. global investor ceo. here are some highlights. atis eurozone inflation 10:00 a.m. u.k. time. take a look at how the numbers are faring. an hour and a half later, there is a rate discussion out of russia. on sunday, we get the second round of voting in the french legislative elections. anna: political risk is not quite what it was a few months ago in the french context.
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but the committee divided. find out how the bank of england was split on how to tackle issues. this is bloomberg. ♪
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anna: welcome back everybody. bloomberg daybreak: europe euro. in london.ere alarm bells are ringing for some policy makers of the bank of england even as it kept rates unchanged yesterday. three officials voted for a rate increase. all five voted to maintain rates. that is the biggest division in six years. in a week that also saw wage growth. pointing to growing concern .mong officials the pound rose yesterday. this morning, we are seeing it
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extend its gains. still with us in the studio is jim, principal ceo of global investors. let us talk about the u.k. the bank of england has to deal with the situation it finds itself in. surprised. been most were surprised to see that split vote, 5-3 yesterday. >> it could easily have been a draw or have gone the other way. i think they were right. defending sterling would be the wrong thing to do right now. the only thing that has kept the british economy chugging along since the brexit vote is the weakness of sterling. anna: and you see that as what they reacted to yesterday. down isng the rates leading sterling drift which i think is what they need to do. depends on how the brexit talks
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go once they get started. expect, they are rocky, you will see a further head to business confidence. the fear of the heart brexit may reemerge. brexitfear of the hard may reemerge. at this point, it is very uncertainty. end to the hard brexit, i think you will see a weakness in sterling which i think is the only way to keep growth going. greater you seek chances that there will be no brexit after last week's vote? >> a fascinating question. there is some chance but it is a small chance. there seems to be an unwillingness to really think back. although the brexit referendum a year ago was very narrowly won
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by exit come up with think there is a reluctance to go back. i think it is significant that in the election, neither prime minister may or mr. corbyn were in any way retracing the brexit vote. there is still a low probability politically but it is on the table potentially. all of these new scottish conservators are not brexiters for example. matt: i have also heard talk of a safe brexit. how concerning to you is inflation? should alarm bells be going off at 2.9%? is there a risk that we are on a slippery slope? >> the inflation you are seeing in the u.k., almost uniquely in the developed world, it is a direct function of sterling weakness. is a nasty side effect of medicine that the british economy needed because of the hit to the confidence from brexit. that hit to the
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pound. it has helped cushion the blow of the brexit vote. picking up on the inflation impacting wages. we have u.k. cpi in the white shooting up to two point 9%, surprising this week. but wages still coming down. and data suggesting that it will not get any better. why are there three members who do not see that squeeze on consumers as something that will weigh on the economy? >> think the ones that were voting for a rate increase were actually basically just trying to defend sterling and stop the squeeze on the consumer. i think the problem -- anna: trying to address this by bringing inflation down with a stronger pound. >> i think that is premature.
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confidence will not be easy to maintain through a very uncertain political brexit discussion. a slight pause from berlin so i will pick up. you watch from afar. aboutst explain a lot u.k. politics to your clients in the u.s. the administration has been distracted by this dreadful fire in west london. dup suspect that what the is preoccupied by is the irish border. it would be a very bad at this became a hard border. the good friday agreement was very dependent on an open border ireland and the republic of ireland. i think that is probably the thing they are held up on.
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if you follow the logic, if you want to and open border, then it only works if at least northern britainand preferably are in the global market. anna: this is bloomberg. ♪
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matt: welcome back to bloomberg daybreak: year. -- europe. it is 2:30 p.m. in tokyo. willour from now, kuroda begin speaking at a press conference after making no change. investors will be hanging on every word. let us check in on the markets and for that we go to guy johnson. guy: let us talk about what is going on. currency markets. japanese yen, down by 0.2%.
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the dollar index is a little better bid. up by 0.1%. pound is a little better bid as well. we will see how that reads into what is happening with the equity markets which at the up i 0.2e called percent. u.s. futures are positive as well. it positive start over there but not by much. talking of which, take a look at what is happening in terms of the charts. this is a fun one i found this morning. something to pay attention to if you are a pair. i am hearing increasing concern about what is happening in terms of where we sit with u.s. indices right now. a drop out of the formation. i am told by those of a more technical persuasion that this is quite serious and we should be paying attention to. someide potential for
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reversals. talking downside reversal, let us look at bti. the critical level is 44. that was the big drop we saw in the candlestick in may. the real level to look out for is 40. that takes us back to this time in the summer last year. something to pay attention to. this as we continue to watch what happens with the story coming out of the states and how opec is trying to do. anna: very interesting. a new edition of daybreak is available. the is a look at some of stories that have made it into this morning's edition. .he cover story the bank of japan kept its stimulus program on cruise control saying improving private
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consumption will support the growing economy. it maintains a policy balance right at negative 0.1%. it will also seek to boost its bond holdings. voted seven-two ticky policy unchanged and the governor who faces mounting pressure to discuss tapering will brief the press in tokyo at 7:30 a.m. u.k. time. the european market will be all over that one. story is in the u.s. the washington post reports that robert mueller is probing the business dealings of president trump's son-in-law, jerod kushner. investigators are also examining the finances of other associates including michael flynn and paul manafort. or thenvestigations, reports of that investigation continue to broaden out. anna: daybreak focuses on
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russia. central bank is poised to cut the key rate again but economists artform by how much and how many more cuts the governor is planning. cpi is near the 4% target. the rising food inflation may change things. has --reece's creditors have reached an agreement. this should pave the way for an of billion euro tranche eight. european commissioner here moscovici struck an optimistic tone on the outcome. it is a very good deal. a much better deal than what we
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decided one year ago. a much better deal than but we could have done one month ago. matt: we are in luxembourg. greece has gotten a pay out at least for now. what are we -- when are we going to hear more about the debt relief? >> that is the key question. as you know, i was here three weeks ago when that was the question then as well. greece did get that disbursement. that box has been ticked. in terms of debt relief, eurozone finance ministers sawtek to offer more clarity on the future of greece's debt path. but where they stopped short was providing definitive steps. they said those would come at the end of the program in mid- 2018. the big question overall has dissipation in
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this bailout. some say that other creditors at the eurozone have been seeking in the deal they got last night was not enough to ensure the ims f'sticipation -- the im participation. christine lagarde said she would recommend a standby 14 month loan to the tune of about -- dollars. that is the key phrase -- debt sustainability. whether they're still needs to be a little more outlined of the definitive steps. anna: that is what they have agreed. was this compromise everything greece was looking for or did they have expectations of something more? >> it was not everything greece was looking for. ideally, what greece would've wanted would be the recognition from the imf on debt sustainability that may have made their bonds eligible for the ecb's bond buying program.
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i did speak to the greek finance minister after me -- after the meeting and this is what he had to say. >> there will be debt relief. at the end of the program, there will be debt relief. it has already started in the short-term measures. more relief measures will be coming at the end of the program and depending on their performance at the greek economy, there may be more debt relief. is it as much as we wanted? maybe not but it is something. something he is referring to was the proposal by the french where a provision was added to where the debt repro filing would be calibrated to greet growth. if greece grew less than expected, it might have to repay less of its debt. there was a positive meeting at the end of the -- there was a positive feeling at the end of the meeting.
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a luxembourg official said everyone was 90% happy with the deal. anna: thank you very much. from joining us luxembourg. jim is still with us here in the studio in london. greeks, theythe did get a little bit of debt relief but not enough to satisfy the imf or the ecb by any stretch. >> that is right. the greektirely with official when he talks about needing further debt relief. that is the problem of the imf. rulesnot permitted by its to lend and is -- and it is pretty plain to everyone that the greek debt level is too high to be sustainable given the power of the economy to repay it. that needs to be solved at some stage. in the meantime, they got an interim deal, really because greece cannot appear to be
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tottering on the exit. with brexit going on, they need to keep the rest of the union intact. matt: do you expect that the imf -- do you expect they will get real debt relief to the point that they have sustainable debt and then the imf will come back in with more money? >> a kind of have to. i think the aggressive moves that the eu will make to keep greece on board will amount to the sort of debt relief that the greek official is looking for. if that does not happen, you have a real problem with greece staying in the euro with greece not being able to devalue to stimulate the economy. the debt relief is a grinding process but it really has to happen politically. is the big thing stopping is the problem the german
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elections? >> absolutely. the german elections. and beyond that, it may still be the german politics. the perception by many in germany of the greeks are freeloading which is not entirely fair but it is there. that politically will be the issue. anna: i have this charge. btb 90. the greek creditors at loggerheads. this is gdp. and the level of greek government debt. you are suggesting that even after the german election, there may not be a softening of this stance. will be gradual and grinding. i am not holding out hope that it will be one big event. if you look back at the history, there is no question that the greeks borrowed too much. it was kind of pushed upon them by the european system at the time. i think the german idea of allocating blame is kind of
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futile. i think ultimately, this will grind towards a resolution rather than be a big event. i may be wrong. there may be room for more optimism but it still feels like a long process. matt: is there more room for pessimism? is there no room to think that it is too soon for any kind of that neutralization or debt forgiveness and eventually greece will be cast off from the eurozone? >> i think that is politically unlikely. greece has got its financial of thebut in terms operational side of the economy, the current balance, leaving aside the capital accounts come greece is able to stay in the eurozone. i think they will probably politically get there. but you know, you could see a innge back towards populism france and germany.
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it is going the other way at the moment but you could see that happen and that is how you have a crunch. it is fundamentally a political process. we heard the greek official talking about the achievements they has made this time around and the deal they have done. think the perception is that chancellor merkel will get reelected fairly usually because the germans are doing quite well. berry low unemployment. in comes are ok in germany. there is no room for a marine le pen in germany. i think she is ok. anna: thank you so much. movement -- the populist movement. -- we will be speaking to the particular finance minister at 9:00 a.m. q k time -- and 9:00 a.m., u.k. time.
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matt: you can watch the show using tv . follow all of our charts and functions and influence the conversation. at the bottom of the video stream, you will see a blue link . you can click on their to ask a question of the guest on said or anna or myself. -- maldinied lichens -- mulvaney. this is bloomberg. ♪
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anna: welcome back everybody. a slight move to the upside of trade. over in hong kong, it is 1:36 p.m. that is where we find juliette saly. juliette: nestle has said it
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nave phil u.s. confectionery brands. it's a new leader respond to sluggish demand for chocolate. but the shift. a sale of the unit with revenue of $922 million last year would be the first major strategic decision by schneider. by japanese investors has offered about 19 million dollars for toshiba's semiconductor division. the was private equity firm has the backing of state-supported innovation network corporation of japan and the development bank of japan. a spokeswoman for toshiba declined to comment. takata plans to file for bankruptcy as soon as next week. the company is expected to seek countryon in its home
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first with its u.s. subsidiary filing for chapter 11 bankruptcy shortly afterwards. it would pave the way for a sale of the airbag maker behind the biggest safety recall in automotive history. that is your bloomberg business flash. thank you so much. with asset prices reaching record highs, the ceo of the world's largest luxury company says a crisis is unavoidable. the ceo spoke out with in paris yesterday. she started by asking him how much the company is investing in startups. >> we are investing in startups of many kinds. fashion startups. i think that is the best example i can give you. we invested, it was a start up. largesty, it may be the
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retailer of beauty products in the world. at thehave started beginning of 2000, a digital operation based in san francisco where we have one of the best digital teams and the world. and it is extremely successful. we are the number one seller on the web of beauty products in the u.s. startups,w to manage and how to make them go. development is -- caroline: you're talking about the u.s. market. trumpt with donald before. what is your take of his position in office and your
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business there? think we are in a very strange period for several years. -- companies you have a lot of money. assets like stock of stock ise price extremely high. crisis willhe happen in the next two years. inevitably building up now. at some point, they will explode.
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since i am in business, i have seen prices in almost 10 years. a political one and not a financial one? is stemming from the economy. one question about your meeting with emmanuel macron. is it creating the best inironment for startups france? >> i am very happy with emmanuel macron. there will be a chance to reform tonce which will contribute giving more strength to europe as a whole. do you -- president mick's budget director
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mulvaney expects the federal reserve to continue to run its policy even as it rounds unprecedented policies. fed laid out plans. investor's ceo is with us. what do we -- what did you make of the fed and what it says about the balance sheet? some say that in tone it was generally more hawkish. and that this would be quite speedy at reducing the balance sheet in the short term. with that surprise you are would you have a different assessment? >> i think what they are doing is what i expected them to do. ifo not think therefore, they carry on on this track, that the runoff of the balance sheet is a big d stabilizer for the u.s. bond market or interest
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rates. i think the fed was right to put 25 basis points on the rate. not because of inflation. there isn't a inflation in the u.s. and it probably is not coming. technology and demographics are deflationary forces. i do not think inflation is a reason to raise rates. even with low inflation, the beginnings of a wage growth, the u.s. economy will be healthier cost ofodest positive short-term capital. i think it is as simple as that. i think you will see another 25 basis point increase later this year. you are on a track that leads to a flatter yield curve. i don't think the tenure has to move very much in those circumstances. fed: jim, does a hawkish drive investors to action? you want to take advantage and that you want to take advantage of low rates before they get higher? >> it would tend to make
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borrowers want to move quicker. but a lot of borrowing is floating rate and it is linked to the 10 year. a ten-year bond is what drives the u.s. mortgage rate. i don't think that is changing anytime soon. at the margin, that is probably true. i do think though that a bigger impact of this is that slightly higher u.s. short-term rates, at a time when there is not much tightening in monetary policy elsewhere, will tend to lead to the u.s. remaining the favored destination for global capital investment. dollar to stay with a fairly solid too strong to. anna: we have seen a little bit of that in assessments. this chart shows the u.s. surprise index in the white. this has been following. -- this has been falling.
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and it shows how that is dictating what is happening to fed rate forecast. it seems the market is not necessarily believing that the fed is going to hike some more. maybe the market is to transfixed by the data. they say it is data dependent. >> they are data dependent up to a point. the fed is really looking more at the employment market than anything else. at ok, inflation, they look that and they have a target for inflation that they will probably under shoot. on-the-job side, you have unemployment not much above 4%. the fed things that capacity constraints will emerge in the economy. does not think that. as you saw from mr. mick mulvaney, i think they can draw more people into the workforce. that dichotomy in policy will get more important in the next 6-12 months. i think that has to be resolved. i would guess that the fed would continue with modest rate
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increases as a little bit of a compromise given the differing views of the data. matt: do you expect wage growth to come up? you did say that technology and demographics are holding it back. will that change? will continue to hold that consumer price growth. in the case of a wage growth, we have already seen some early straws in the wind of a wage growth. the last 12 months. small to midsized businesses have seen some wage growth. i think you will see more of that. the numbers are quite hard to interpret because you are trying to interpret small percentage increases that there are enough signs that is beginning to happen. so i am fairly confident that the outlook of the u.s. is not too bad. anna: jim, thank you so much for your time this morning. matt: we are going to be joined
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by former u.s. congress -- commerce secretary. an interview you do not want to miss. up next, how is rising inflation in the u.k. affecting retailers like tesco? ♪
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♪ -- the oj leaves us stimulus unchanged, saying private consumption will support a growing economy. we are live in tokyo. pressures grow on the u.k.'s embattled prime minister over the london tower block blaze. the death toll could reach triple figures. ♪ anna: welcome to "bloomberg ourets: european open,"
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flagship morning show from london. i am anna edwards. and i am matt miller in berlin. i am looking at european car figures that are breaking right now. new car registrations in the eu be moreng 7.5%, 7.6% to exact. i have a chart appear on my screen showing the exact numbers and the moving averages, which are important because last month we had a drop of the .6%, now we will have a bounce up. the moving averages show that car sales have rolled over in the eu. it looks like, although we had a positive number, things to go downhill from here. anna? anna: we will watch out for the story around that. let's talk about tesla as well. -- tesco as well.
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u.k. sales are up by 2.3%. one point getting some commentary coming through from the company. they saw a small improvement in inrovement -- in performance europe. it seems to me, the overall comparatives sales numbers came in below, but if you look at u.k. sales, they seem to have performed pretty well compared to those estimates. let's have a quick word about the broader estimates. we have a snapshot here of where we are on futures. was aequity session negative one, but not by much. asia-pacific closing down by 0.1%. sluggish,s a little but this is the european picture. it looks at the futures, suggests it will be stronger at the start of the trading day. no change from the boj, that was one of the lines from overnight.
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asian stocks were broadly higher at that point, with the topix gaining ground, taking pressure off any stocks elsewhere. the picture is broadly positive, but we don't a at conviction is in all of that. matt: absolutely. kuroda is going to stock -- talk in 20 seven minutes timeout of tokyo. the nikkei is up 0.5%. also showing some weakness against the dollar. the u.s. dollar can now by 111.1 6 yen. to see be interesting what kuroda says, if he outlines any plans to eventually reduce the japanese balance sheet, which is so much larger than gdp right now. also, take a look at what we saw going on in the u.k. after the bank of england -- here you see 0.06%, ands down by
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the euro futures in europe are down zero point 3%. investors are buying into continental debt. we did see yesterday the gilt rise substantially, and a little strength in the pound as well after the boe decision. anna: let's talk about what else we need to know about. in fact, let's talk a little bit about tesco. tesco just reported its third-quarter sales this morning. like to like sales coming in ahead of estimates come up for the u.k. a slightly different story when you look at overall numbers. they are using more context since the beginning of the year. andrea, let's talk about where we are with tesco on this story. is that the right assessment? the u.k. assessment looks ahead? andrea: u.k. is still the most
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important mask -- market for tesco. what happens in the u.k. is the driver of the company. the fact that the u.k. is doing better is very positive. anna: international is not the focus as a business. it has been moving away to international toward that u.k. business. anna: how well of a doing at the fixing? when i was looking at this number ahead of time, it says the u.k.'s biggest market, being tesco, has the best benefit in the drop of commander -- in consumer spending. that end of the market could do ok. can andi think tesco has done ok, but it would be very easy to get very carried away with these numbers. no doubt, higher food prices are helping, but the market has done nothing for the last few years about falling food prices
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because when prices are falling, they need to sell more volume of goods to make the same amount of value. it gives them a bit of with before they do anything, but it is a double-edged sword. if there is too much inflation, then consumers will go back to discounters, and that is what we have seen. you get the benefit without losing customers to the discounters. of the german discounters, matt is in germany right now. matt: i always wonder where the u.k. should -- where the inflation is hitting the u.k. hardest. here are barth -- you hear about marmite or top around, -- or tablorone, but what about tesco? andrea: they say they are passing on less inflation, but nobody will be able to escape a sharp fall we had in sterling. you can just see from the fact that sales have been rising across the board that there must be some food price inflation
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coming through. we saw a quick word on the broader sector, we had that statement from dfs, a small furniture retailer. oftook the edge off because what it was saying about the general election concerns weighing on people's willingness to go out and buy sofas and couches. andrea: it would be easy to mock them. but there is a broader point that is coming through for the last few months. consumers are getting worried. they are also seeing their disposable income squeezed from higher inflation. wherebig-ticket items, you have to spend a large amount of money, are going to be the first things that people cut back on. inelasticelastic and part of the equation. thank you, andrea. let's get the first word news with juliette saly. juliette: anna, thank you.
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increases creditors have a great to release 8.5 billion euros. the finance ministers also reinforced their commitment to -- they stopped short of providing definitive steps. it cuts a keep chapter of the country's bailouts and whether it could make large bond payments due in july. in the u.k., it anger is growing after the deadly blaze that devastated a tower block in west london. it highlights divisions within british society, wealth inequality, and frustrations with the political establishment. the official death toll stands at 17, with warnings that the fatalities may reach triple figures. the international monetary fund says the area's economic recovery has gained momentum, but it warned that some of the high debt countries may face difficulties when accommodation is reduced. at the same time, they cautioned
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that inflation remains subdued. in the u.s., special counsel robert mueller is investigating the finances and business dealings of jared kushner, president trump's son-in-law and advisor. to officials familiar with the matter, fbi agents and federal prosecutors have been examining the federal -- the financial dealings of others, including michael flynn and paul manafort. 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 bloomberg at top . there are close to hearing from governor kuroda, the boj believing its monetary stimulus is on hold as expected, but we are awaiting comments from that conference. the nikkei closing 0.6%, close to that 20,000 point level, which it did reach after the
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announcement from the boj as the yen weakened against the dollar. a bit of a turnaround coming through in hong kong with energy and tech stocks rallying today. we have seen toshiba in the tokyo section close higher. theres with reports that could be $19 billion for toshiba's chip unit. get wordca up, as we milk up in-- and a2 sydney. of's have a check with more this boj story, which we are following. this essentially shows you the white line is the longer 10 year bonds. we have seen the boj cut these thes after they and shorter-term maturity. some analysts say this suggests something is underway, but no
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change from the stimulus. the are awaiting those kuroda comments. matt and anna. matt: juliette saly in hong kong. we are going to stick with asia right now, but go to tokyo. kuroda is due to hold a conference in the next half hour. that is after the central bank 19 its monetary stimulus. the board voted 7-2 to keep rings unchanged, saying that -- to keep things unchanged, saying the economy will be supported. brett, what will you be watching for when corona -- when kuroda speaks? will be watching anything in terms of the exit policy for the bank of japan. we know that behind the scenes, the bank of japan is trying to quietly get some word out or at least they are thinking about how they will exit in the
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future. there is a big caveat. they are making sure there are no wrinkles going into the market. it is a long way from the exit, but they need to respond to the pressure from lawmakers to talk about it. we will see an interesting press conference. terms ofquestions in exit, but he will try not to say too much while keeping markets at pay, keeping people at a in terms of the pressure. we will get a little bit in terms of exit, not too much. anna: he did not change much, but one thing he did change was the assessment of consumption, which perhaps only build up the presence to talk about exit. what did they say about consumption in japan? significant.fairly we have seen consumption improve, and that is good news for the economy. a sixth its way for quarter of growth.
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the problem is inflation, which is not growing. the be edging to push inflation to 6%. kuroda is dealing with the same issues the other banks are facing. it is good with consumption increase, but a lot of other problems persist, and inflation is one of the biggest for the bank of japan. your timek you for this morning, afternoon if you are in japan. brett miller in tokyo. with negotiations on monday, we talk exit with david willis. he has interesting ideas about what we learned from the recent election. how that translates to brexit conversations. this is bloomberg. ♪ matt: welcome back.
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you are looking at a shot on the
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brandenburg gate on a cloudy mormon -- morning. let's get over to bloomberg's hong kong bureau for the business flash and juliette saly. european car sales bounced back in may after slumping the previous month. toustry registrations rose one .3 million vehicles after plunging by 6.8% in april. that comes after a brightening economic outlook and stability in france sets it back on the path to recovery. nestle plans to sell confectionery brands as it responds to a sluggish demand for chocolate, with a shift to faster growing businesses such as health care and coffee. andould be the first major strategic decision by the ceo, mark schneider. by chinese investors
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has offered $19 billion for toshiba's semi conductor division. with people familiar with the matters, the u.s. equity firm has the backing of the development bank of japan. a spokeswoman for toshiba to climb -- declined to comment. -- plans to file for bankruptcy. they seek protection in their and filing for bankruptcy short afterwards. it takes for a way of the sale of the japanese airbag maker, which is behind the biggest safety recall in history. juliette, thank you very much. here in the u.k., anger is growing over the deadly blaze that devastated a tower block in london. divisionshlighted
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within british society, and frustrations with the political in the broader u.k. politics. while we still wait for the conversation to take place, or the results of those conversations between the conservative party and the dup, let's talk what the lessons that have been learned from the election. that certainly is one of the focuses that we need to take into next week as, we look for the results from those conversations and the queen's speech. david willets is here with us today. let's talk a little bit about intergenerational fairness and what we learned about that as a result of the election. do you look at the stats on who voted for who? one of the positives is loads of younger people came to vote. anecdotally, that is one of the trends here. we will need to look at younger voices. david: we used to think it was a trend of declining voting by younger people, but this most
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recent election has seen a reversal of thattrend. the bad news is, they are turning out to vote because they are unhappy. they are unhappy about the fact that their wages are lower than people of the same age 10 or 15 years ago, and they are unhappy that it is harder to get themselves in housing. that is a message that all of us need to address. anna: is there warrant to the message -- do we give credit to the message that the labour party is putting out, which is yes, think about brexit, but look at austerity. david: i would not say austerity. there was an austerity theme in the general election, and that is against most general sector work where there seems to be a push back in austerity. for the younger people, it is wanting access to things that older generations are familiar with. and also having a decent funded pension. the baby boomers, people born
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after the war, we enjoyed those things, but we are failing to ensure that our children and grandchildren have similar opportunities. that means we need a radical approach to building more housing. we need a tougher approach to regulating the private financial theyand we need to ensure have the training and skills to enjoy increases in their wages. anna: match, jump in. -- matt, jump in. matt: i am a little confused because i am not as familiar with british society, but funds and pensions in the u.s. are a thing of the past. is that continuing in the u.k .? david: we have defined benefit there are not many open to younger workers. one thing younger workers are doing is earning the revenues that are generating the resources companies need to plug deficits. you find benefit pension schemes are not not numbers themselves.
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we have this auto enrollment scheme that is not generating anything like the kind of savings needed for the next generation to have a decent pension when they retire. to see more money flowing into it from individuals, from companies, and to build up bigger amounts of savings in the auto enrollment scheme. theresa may, when she first came on, i thought she struck a very conciliatory tone and it came to income inequality . a tory, she seemed to be concerned with bridging that divide. it seems she has been painted by the austerity legacy of her party, what with reducing the police staff by 20,000 in the u.k., making headlines over the last few weeks.
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is this going to be a real problem for her moving forward? david: i think the challenge that we face, my party, the conservative party faces, is if you look at the forecasts, the kind of forecast we produced that resolution foundation, you have got earnings and income that are about managing median wages that are falling. falls in disposable income over the next few years. that is not a great backdrop for it party fighting a further election. inflation is close to 3%. the cash flows in the values are relatively lower than pay growth. that is a backdrop on living standards. anna: that is the living standards conversation. we talk about the aging population, we talked about japan and their aging population , and that part of the conversation area and one of the things we try to deal with here
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in the u.k. before the election was the cost of elderly care, social care. that did not go well. where does the conversation go now? david: it did not work out politically for the conservatives, but the fundamental challenge has to be addressed. when you have the people need social care, it does not seem to me unreasonable that after they die, it is reasonable to look to their estate come a if they have substantial housing wealth, to make a contributor i -- a contribution to their wealth. sortu had a cap of the that has been proposed, if people knew there was a maximum amount in their estate, that might make it acceptable. but we cannot expect the general taxpayers, many younger with lower in the -- lower earnings, to have higher taxes. they are not having that protect when they could use that to pay. conversation around
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brexit gains traction. some people in financial markets have concluded from the election that a soft brexit is the only way forward. how do we square all of the circled involved there? how would a soft brexit be gaining control of trade policy and immigration and staying in the single market? they do not seem possible at the same time. david: in my the easier if there was a longer translate -- translation period. given the town table -- the timetable, when we could straightforward leave -- anna: is that what a soft brexit means? having a longer deal over more time? david: i think there is a growing consensus there will need to be a long implementation period. that will give us time to youtiate a trade with the -- with the eu in the future.
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would seem to be a very sensible way to proceed. matt: do you expect, lord willets, there is any chance in brexit that you allow the free movement of citizens across borders? david: i think a full-blown of free movement is hard to see. you mightdavid: want to protecte rights of european citizens here in britain and vice versa, and we need the contribution to our jobs market from skilled workers coming over, and from me -- for me the university workers. ensuring we have a flow of students and academics. great place are a for researchers and professors to enjoy the freedom of working here. we have keep those routes open. anna: no chance of grand coalition on the subject of brexit being called for? david: i do not see a grand coalition, but i would say
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within the new comments, -- commons, there are a lot of people worried about a hard brexit who want to see britain remain a key economic player in europe. anna: lord willets joining us. this is bloomberg. ♪ ♪
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you are watching bloomberg markets. i am guy johnson in london, matt miller made his way back to berlin. what are we watching this morning? where is the exit? the boj has the stimulus program on cruise control. will governor kuroda give us any clues on when it will be


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