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tv   Bloomberg Daybreak Europe  Bloomberg  August 29, 2017 1:00am-2:30am EDT

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anna: a grave and serious threat. shinzo abe calls for increased pressure on pyongyang as north korea file -- fires a missile over japan. clicks i am agreement that we must convene and emergency u.n. meeting and increased restaurant north korea. manus: america's gulf coast braces for another hammering after devastating floods sound gasoline rises higher for the session. anna: the gloves comes off in the latest round of brexit talks. we are live in brussels.
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a warm welcome to bloomberg daybreak europe, our flagship morning show from here in london. manus: where waking up to her -- we are waking up to a complication of global risk, north korea bringing tensions to bear. the on markets are moving and this is the impact, 78.02. the lower dollar or risks and north korea, the daily prophet says we need to start paying attention, gold is at 2017 highs. it is not just a technical move. positions are the most bullish and 11. , the prime 12 hours minister of japan said this is a grave and serious threat. launching the missile over japan
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. the markets seem to be rattled more than they were last week. anna: markets are rattled and the gold went through $1300 a troy ounce. going onomething else with gold even if it is just about dollar weakness, to what extent does that matter if this is the driver, if this is happening in the gold markets. let's put up the border risk radar. and other assets we are keeping an eye on this hour. that is not what it looks like an markets, down by .4 of 1% on the msci asia-pacific, things a little diversion. the north korean market and the asx one of the worst fallers and the japanese stock market ring hit by the strength of the end. quite a lot of impact from this geopolitical story. manus: we have looked at it a couple times. 108.81. to get the
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manufacturers. that you have got here, it is raising the dollar-yen but nowhere near the highs of the year. one could say there is a little bit of a underpricing going on. you can attach 108 point 13 which is the april 17 and after that mind the gap. anna: money going into the yen and this was frank. the korean won coming under pressure and the australian dollar coming under pressure as a corollary to that. tropical storm harvey off the coast of texas and louisiana regrouping for a second pass and that is why we see upward pressure coming on ethylene few -- gasoline futures. storm gathering momentum. if this goes to port arthur toward the louisiana border, that is when the story gets another leg. $30s: the cost between
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billion and 100 billion. the question for markets is in terms of whether this has more pervasive effect on retail sales. what might that due to the federal reserve? it is a question we put to our guest. anna: here is juliette saly. juliette: north korea has fired an unidentified ballistic missile over japan rattling asian markets. the u.s. and its allies wait a response. the missile landed 200 kilometers of hokkaido in the japanese ocean. the prime in nist are agreed with donald trump to increase pressure on north america -- north korea following a functional. that transposition matches of the united states. north korea's missile launch poses a serious and grave threat on an unprecedented level. i am in complete agreement with
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president trump that we must convene an emergency u.n. meeting and increase pressure on north korea. tropical storm harvey has drifted back into the gulf of mexico and it is poised to recharge before crashing ashore on the texas louisiana border tomorrow. with an estimated 20 inches of rain still to come, predictions of the cost of the damage rage -- range as high as $100 million. 30% of the nation's refining power is under threat from the flooding. donald trump discussed of puzzle to build a hotel and condominium tower in moscow on three lawyer.s with his weighed thetion proposal from september 2015 to 15.ary 25 dean -- union's chief
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brexit negotiation or -- negotiator has accused the u.k. of not being serious and called on britain to be more clear about its position. twoking yesterday as the sides opened a third round of talks. he expressed his mounting frustration with the key eu leader summit eight weeks away. concerned,nest i am time passes quickly. l -- welcome the u.k. governments paper and we are very careful. u.k. positions on this is necessary to make progress. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the missile from north korea has
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been the major market mover here in asia. you have seen risk off across the board, the yen rallying, handling about 108 to the dollar so we are seeing the nikkei down five .5 of 1% in late trade. the hang seng index also breaking its recent run of good gains down .41%. have a look at the kospi, also low. s was down over 1% in early eoul trade. a solid is after it had first half earnings report. elsewhere we are seeing in new zealand chorus which is a wholesale and retail can indications company. it is one of the worst performers in the region, it has had a number of downgrades and cut its own earnings guidance.
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9461. look at vtb we have seen this would come through from a lot of chinese and hong kong companies, we are awaiting the big four banks and you can see here reflected in the blue chart we are seeing a rebound coming through in some of these companies reporting and greater china. this is on rallies of 24 and 25% in the china and hong kong indexes, outperforming a lot of the amp's in terms of earnings. manus: thank you. north korea has fired a missile over japan reigniting tensions words between pyongyang and the united states. anna: south korea has promised a show of force in response to shinzo abe spoke with president trump iphone and describe the launch as unprecedented. manus: the world leaders including abe and trump have had phone conversation,
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agreeing to more pressure on pyongyang. nothing from the white house formal yet. what kind of responses could they be weighing at this point? rex tillerson is still, was on sunday still in favor of negotiations. have seen the u.s. trying to get dialogue going again, praising kim first-rate. this was very provocative act, shooting the missile basically directly over japan. now to go back to the drawing board in a sense. and they will be looking at what u.n., japanwith the has called for an emergency session of the yuan security council. what sanctions can they implement, can they tighten? including food and fuel exports to north korea which are a vital economic lifeline for the regime. in the last round of sanctions.
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they are probably going to try to push to see what more they can do to pressure china on that front. anna: they let themselves further to go on the sanctions question should they wish to, should china wish to. what do we know about the missile that was launched in comparison to previous launches? daniel: this one looks like an intermediate ballistic missile. not an icbm like ones that were fired in july that could threaten the u.s. homeland. this was a bit of a shorter range and it flew at a flatter trajectory. if you look at the map you can split the top of japan. normally, north korea will shoot these rings strictly into the air at a much higher trajectory and it would land in the cf japan rather than flying over japan and going into the pacific ocean. they did threaten to fire this southern -- over southern japan toward quantum and they did do that. japan's foreign minister took
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that is a good ring and said that north korea flinched in the wake of u.s. threats. manus: you mentioned the un security council there and using the words of japan, this is unprecedented. this is going to come at a difficult time for abe in terms of managing this. japan is clearly rattled over the incident. what do you think their next he hasill be from abe, called from the special meeting but what can we expect from that? under pressure, he has seen his popularity rating fall. he wants to show that he is a strong leader. japan has had a pacifist constitution since world war ii. this might help to pick up from
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a series of scandals that have heard him to show he is a strong leader and to push for missile defense to strengthen japan's overall military capabilities. which has been a key platform of his. anna: thank you very much, our bloomberg reporter joining us from hong kong. always. see you as theeed to get your take on state of global risk and what that should be doing to investor sentiment as we sit here in august 2017. we have gone through a period of heightened geopolitical tension. and it seemed to die away. know the do not response of china or with the yuan will say. -- what the u.n. will say. central banks will be stepping back and assessing the situation.
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it does have a bearing on where risk assets go over the next few days and weeks. manus: something has happened in gold. riskuched on it in the radar at the start of the show but there is something more of a momentum here whether it is dollar weakness, there is a compilation -- a consultation of risk.- conflagration of that ite are assuming will be managed neatly, the markets have been pricing this in and there has been no wobble as of yet you have these number issues going on, we are entering a phase where the ecb is going to have to get a clear steer to and 20ket about tapering and this makes it more difficult. we are seeing these coming together but the political risk at the moment is very clear. anna: if this does end up ring
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managed and what we see about risk aversion, nothing more serious than that, that will not help the doj because of the rise in the end. interview saying more qe is what they are carrying on with. and every time something geopolitically tense happens, they are heard by the strength of their currency. david: they are and it extends to where they might be doing qe4. they are throwing out this massive surplus. are saying is a move by japanese investors, andds in japan are so low toward markets internationally. it is going to u.s. treasuries and the gilt market and problems for the markets. manus: we did this interview and talked about
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inflation and growth but they had some hearty information, job applicant ratio is the highest and's 1974. i do not know if this is a robust. you should see wages rising but we have not had that, the momentum the market would like to see and this is the global conundrum. david: absolutely. they are falling to these exceptionally low levels. up.s have not fired all the central banks are looking at this. in the u.s.uation and the u.k. and the eurozone, they look at this and go, how much further could unemployment wages accelerate? anna: it is a conundrum being faced by central bankers and governors around the world. we will get your thoughts on the u.s. and european jurisdictions.
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manus: here's what we're watching, there is an interest rate decision out of israel at 2:00 p.m. u.k. time. anna: theresa may starts a three day trip to japan tomorrow. manus: friday, a big data point, the nonfarm payrolls. coming up. anna: tropical storm harvey is poised to hit the coast again. we will focus on the impact on the nation's energy industry. this is bloomberg. ♪
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manus: and has gone 1:19 p.m. in hong kong. the market is focused on a risk off move not at least as of the north korean missile situation. --organ chase and you can that is the yen gaining and strength, the dollar down. let's talk about the other major
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global incident. as hurricane harvey which is off the shores of texas. anna: the floor -- flooding is showing no signs of receding. tropical storm harvey is poised to regain strength before crashing ashore once again near the texas and louisiana border tomorrow. 30% of america's refining power is that risk. -- at risk. the energy companies are restarting some of the findings on the texas coast but a lot of this is contingent on what is billed as they reenergized harvey rio perching land again. -- re--approaching land again. maderricane harvey landfall over the weekend near corpus christi. plantsstarting to see
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and corpus christi restarting now a couple of days later. the focus is clearly on houston. the houston ship channel is the largest refining petrochemical complex in the world. several plants are still shut down and as you said, the storm has moved offshore, it is slightly strengthening and it may hit again near the texas-louisiana border. louisiana has a ton of oil refineries and it has the u.s.'s and the export plant exports of being stuck in louisiana because no ships can go in and get them out. that is where the focus is turning from south texas to houston and louisiana. anna: and focusing on the lng exports and toward arthur and what effect it might have on that part of texas toward that louisiana border. how is the energy market reacting so far in terms of prices? we talked about gasoline and also divergence between different oil markets.
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>> you hit it on the head area because the refineries have been the biggest impact, gasoline prices have shot up. there is a diversions between global and u.s. oil is you the refineries in texas are connected to the wti benchmarking oklahoma through a series of pipelines. them being shut down means there is less demand for that oklahoma oil which is keeping wti depressed relative to the print price in europe that sets the market for what -- most of the world's production so you're saying that gap between wti and brent's been out later than five dollars, the whitest it has been in two years. you're seeing a couple of interesting tangles from these storms shifting global energy flows. manus: thank you my the latest on harvey. news oh andk at the we talk about the impact, this
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is one of the fastest growing states. to would ask -- to what extent will this storm and hurricane be localized versus a bigger set piece for the economic landscape for the u.s. about this, itnk is growth positive. you have the cleanup operation -- drivess of wages up wages. normally you think over six months, these things [inaudible] this is different because of the energy sector. what has a second-round impact. these disasters can not to have wider implications. positivethey can be especially in the cleanup. anna: we have to wait for some
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of the floodwaters to receive before they can work at what damage has been done and how long the impact last. as could get tied into conversations around the debt dealing and the salability of debt. we have seen that in washington around where the money is coming from or if the money is made else is nothat available. trump has said he hopes that no shutdown is going to be needed. buildinge context of the border wall. how nervous are you around september and that part of the story? >> we are assuming we get through this and we moved to the fed shrinking the balance sheet and so forth. there are so many different things going on right now. it is more difficult not to release funds to help out texas. it seems ridiculous that would be -- there would be some tussle in washington that would stop this happening but who knows? anna: republican leaders are saying previously, not wanting
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to send in a back its sandy in new york and that is being mentioned. what --et me tell you the queen of charts will be happy. i managed to destroy my own version. this was hurricane katrina, the and the superstorm sandy. these caused aberrations in the jobless numbers but tied to that, the could impact the fed, .t could unseat the fed tie these couple of things together for us. spike around the time of a disaster. normally you would expect in the for people tork increase and employment to pick up and invest it's going to that region and wages to increase.
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katrina, $10.9g billion of wages were wiped out. >> we just have to see. the fed has to look through this in a sense, who knows? anna: what was your expectation about more in september from the fed, is that your jackson hole takeaway? >> jackson hole was never going to be policy. the central bank is trying to push this to a degree and [inaudible] also [inaudible] the fed was on target in the balance sheet and tightening. anna: our guest stays with us. manus: after the resumption of talks over the uk's exit from the eu, how concerned is russell's about progress on brexit? we will bring you the latest thinking as round three opens up
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today. what does it europe make of the position papers and will it the all about the brexit bill, is there common ground for these two to meet in the middle? this is bloomberg. ♪
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anna: welcome back. it is 2:30 p.m. in tokyo, the yen is strengthening. up, thean won coming risk of sense in the market as a result of the north korean missile test over japan. let's get an update on the broader market reaction. i have the asian equities here looking at the msci asia-pacific index heading for its biggest rock been almost two weeks. if you look at broad-based losses, financial and tech stocks underperforming but also rock-based losses across various regions, losses and japan, south
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korea, also in hong kong and china as well. the msci asia-pacific index is lower and we are talking about the yen and gold. we have broken through 109 but the yen at a four-month high against the dollar. gold holding about 1300. 13.16 dollars an ounce. we broke through 1300, it is trading at its highest us year and also we can see here's the 120 day correlation between gold and the end. -- the yen. that is something to keep an eye on as money must into that safety trade. while we are seeing risk off across the markets where we are seeing risk on is industrial metals. this is copper and reopening after the bank holiday, copper $7,000, hitting -- heading for its highest close in three years. gains in nickel and aluminum and
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saying. the appetite for industrial metals continuing in this session. manus: thank you. bring you the read of the morning. he entitled it brexit is beginning to look like no brexit at all. of talksrd round between the u.k. and the eu gets underway. he said it is absurdly difficult to identify specific changes that will affect people's daily lives. he makes the point that there is little difference between the start of the major parties and they are talking about transitions, one a couple of years and 14 years. perhaps will not any change if transition looks like now. no change in daily life until 2023. manus: he said brexit is looking like a classic case of the mountain referring to the mouse. the labor party will push for a
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transition which will preserve the economic arguments including membership of the european union's common market and the customs union. let's bring in david. to james hayden and then we will get david. joining us from brussels. what is the mood around this third round of brexit talks? we saw the two men side-by-side for the first time since july in round two. >> this is the first round after the round in july and they are together again. they look nice, they look friendly and all, the words were quite the opposite. there is a lot of tension in the room at this point, a lot of frustration on both sides in terms of how the talks are going. the u.k. side and david davis is calling for more flexibility on the part of the eu and the eu is saying in order to push these talks forward at all, we are
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going to need more information from the u.k. side. information particularly on the brexit bill come of the so-called brexit bill and this is information the u.k. at this point has been unwilling to provide. betweenhe distance bonnier demanding clarity and a move on from ambiguity, davis is looking for imagination. this is the difference between reality and fantasy. when we talk about the government, those flurry of position papers we had in regards to exit, the eu has said it needs more and it needs more clarity. is the eu saying that britain has not done enough in terms of spelling out it stands? ts stance? >> that is what they are saying. the u.k. is saying look at what we put out there and the eu is saying, what a man -- wait a
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minute, we need to focus on the withdrawal issues in the main one is the financial settlement and the u.k. has been unwilling to come forward with what it thinks the parameters of that bill should be. so bonnier yesterday was clear in saying that is the thing we , we need tos on make progress in that before we can think about reaching this goal of some sufficient progress by october when the eu leaders are going to make a decision on this. use davidot afraid to davis's words back to him. we have to remember -- remove the ambiguity. all this is the backstory, how much progress do we expect from this week? >> it was not a very auspicious start with those comments yesterday. already, both sides have been tamping down the expectations for this week's talks. on the technical level at this point, we may see a little progress on the margins but nothing big.
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the problem is we have got eight weeks before the time when the eu is going to decide whether sufficient progress has been made in order to move on to the trade talks. this is something that the u.k. really wants but at the same time, this constructive ambiguity is not getting them there. manus: not yet. thank you for joining us from brussels. david owens is with us. when you read all the position papers and going back to the peace overnight when he talks about the labour party saying we would go for a transition which involves being part of the common market and part of the customs union. about-face, what do you make of this? >> it is a small move and they should have done that obviously earlier. they will have to test public reaction because -- tories.hat push the
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>> you have those who wish to see a softer brexit which implies jurisdiction of the european court of justice and no restriction of free movements of labor between the you -- au and the u.k. and for some people that is the red line. and some people would argue that is going against the [inaudible] we will have to see public reaction to what labor has come out with. if it is the case that the public seems to be in favor of what weber is suggesting it may cause more people than the tories to question their own leadership. that lesson for philip hammond and fox. they have massive problems on this. the repeal will going back to the house and we will be -- there will be ample opportunity for conservative mps
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who are not following their leader. what does that mean for the stability of the u.k. government? >> it increases the risk that we have another election sooner rather than later. i think most tory mps do not wish to have this election again because it throws out the risk that jeremy could become leader so forth. it will be very tricky. they should have done this earlier. it will make it very difficult for the tories to keep it in play. there is this long transitional phase having the european court of justice overseeing the u.k. if that is not seen as [inaudible] up aftercould end four years, something that looks
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like the norway model where the u.k. pays the money and has little say. >> that is quite conceivable, that may be the best of all worlds. not what some people voted for. clear. the thing that is the referendum was very simple, it is not a yes no issue. it is very complicated. manus: i picked this up from the guardian, europe would like 100 billion euros, the u.k. around 60, that would take you through over the numbers. but this does come down to the financial settlement that states the budget. you can move on. >> you can move on but bonnie's position is clear, they want that agreed in principle and there is a position paper on .hat they think
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manus: they do not want every journalist in the land working out with the brexit may be. >> you have to pay for the transitional phase and pay for access. manus: the longer transition would make the numbers look better. is some time to fill in the future trade relationship. agreedt is not what they to. the eu's best in interest. the longer this drags on for the more like he the u.k. concedes to the demands of the eu. be carefulto play, in this game strategy. it does not want the u.k. to face a cliff and the u.k. to
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spin out with no arrangements insight. to doin the eu's interest exactly what it is doing right now. manus: you make the point that this is about the flow of money. and the flow of investment. , thenger procrastinate flow of money dissipates and that changes the game for you. >> it does overtime. brexit to most economists is a long run cost to the u.k. economy. the longer this goes on, the more likely we see that cost being crystallized. we can see that the head of the u.k. did not [inaudible] the u.k., it is very volatile but the migration data highlight the eu nationals are going back home, that is completely rational in some ways you the more this goes on wraps more people become concerned but
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it is a long, drawnout transitional phase than what labor is suggesting. they will not face a cliff and will have less companies starting to make a position right now about what they should do in over a year's time. anna: we will talk about the european side in a moment. if you are a number customer you can watch the show on tv go. you can also get everything streaming, although charts and functionality, the various things we chat to our guests and you have the chance to join the conversation. you can ask that guess the question. anna: less than a month before germany's voters go to the polls and angela mark -- angela merkel still on target for more time in office. this is bloomberg. ♪
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manus: it is 1:45 a.m., futures are down .51%. as tensions mount in regards to missiles launched a north korea that traveled across to been which abe has called a grave and serious situation. the japanese foreign minister discussing north korea by phone. south korea of reviewing diplomatic steps to bring north korea to dialogue. recastllows from abe's for an emergency meeting of the un. all over the propagation we have seen. with donald agreed trump to increase pressure on austria. let's get a number business flash. le faces agoog deadline to tell the european union how it plans to comply
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with an order to stop discriminating against rival of shopping search services. the eu gave the ultimate unit 60 days to propose how it would stop its illegal content and 90 days to make changes to how it displays shopping search results. the changes they to be put in place by september 28 to stave off a risk that the eu could find the company 5% of daily revenue for each day it fails to comply. benchmarks -- they were seeking is ousting saying they -- he do the firm. he said investors gave him the right to feel the three seats. apples the ceo tim cook has collected 568,000 shares my half of them link to the company's performance and the maximum allowed under the long-term
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compensation program. based on last thursday's closing price, it is worth $89.2 million. he received the stock because apple shares outperformed two thirds of businesses in the s&p 500 over three years. in his -- it is his fourth consecutive payout at the top of the threshold for you facebook's life and -- rising star is leaving to join google. he joined the social network as advising onnd later products for teenagers in helping executives understand trends. he will be up project manager -- a project manager at google. that is your bloomberg is a/. deepeningodwaters are and houston, the epicenter of the u.s. oil industry. you have heavy rain and tropical storm harvey had inundated their fourth-largest city with an estimated 20 inches of rain
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still to come. been looking at the details on how they affect the energy markets. that is the prospect of additional rainfall that has the energy companies worried. round to it to call it that, wti rebounding up on monday. gasoline futures getting a boost off the back of the refinery outages. you're looking at 2.3 5 million composite and crude capacity off-line. we put that on a chart to pull up on your bloomberg. i will show you what is happening. this is your map and you have the dots in green and red. this is a cool chart, if you hover over the individual dots it will show you the details of the refineries. and details on refining capacity. along thelustered
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texas coast. this has a trajectory of the storm, where it is at and what kind of outages it is causing across the board. three important lines to point out along the story, the iea has come out and said they do not is -- isct, the market aptly -- amply supplied. these are the global immigrations are so critical to the story and jeffries is coming out and saying the inventory is unlikely to return to the five-year average level anytime soon. job.: great work, great let's turn our attention to germany, less than a month until the country chooses its next government. a large portion of the electorate is still undecided. choice is a complex one to make. take a listen. the alec voters cast
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with two votes to pick up a total of 598 numbers in two pilot -- parliament. the second is for party. the first is for a representative area out of the r8 of -- members 298 representative suozzi a see 299ugh the first boat and seats are filled proportionately. if a party's share of the local representative vote exceeds its percentage of the party vote, extra seats are added. these are known as overhang mandates. to avoid distorting the intent party,rs' choice of a other parties are compensated with extra seats. 2013, the cdu received 45% in individual vote more than for the party. that meant it gained 16 seats in the bundestag, 17 were added for the other parties to bring the
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bundestag to a total of 631 members. the party or pocket takes the most seats as the mandate to form the government. vitalion building will be . germany has not seen a majority government elected its 1957. -- since 1957. anna: complex stuff. looking ahead to the german elections, great to explain how the numbers come together. and see where it trends toward coalition building and gives you less to worry about. coalitions are normal and no one is worried. there has been lots of surprises in recent months. people are still more focused on
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italy next year as being the risk, not germany this year. manus: what do the next four years look like under merkel westmark she will leave a big stamp. that is not going to be about that, it will not give out mutual -- be about mutualization of debt. rying to leadre t to a solid europe. you have the refugee crisis as well that is ongoing and it is a huge issue for much of europe. with what is happening recently in spain. that has to be addressed. issue about europe is not form yet as aormed political union and is it still at risk? that is still risks
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stresses come back into the system. as long as the politics is moving in the right direction -- we do not need to worry too much, i guess said. in terms of not eating the legacy of debt, the question of mutualizaalization -- tion is not something german politicians have embraced. of this will come to the fore. this crisis in the eurozone, it was self-made. they do not have the welding walks, you have greece inc. backstopped and german financial
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system and the french system were exposed to greece and they never admitted that created has been about kicking this can down the road. they have to address this. manus: from a monetary point of view, the next set piece will be mario draghi and he set himself up for his greatest area -- aria of all. back to the euro. bl --are conditions and in blue. we are not in as good a shape, draghi stop the euro, does he need to? david: it comes back to if the economy is doing well. core inflation is creeping over 1% and the euro becomes
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secondary importance. , goingere is this view , we're moving toward tapering and we have a situation where the euro is going up in the trade weighted bucket but the eurozone economy is on the upside. huge issueecome a for the ecb because they want to taper next year. they want to stop buying bonds at some point next year. draghi would love to be in a position where he raises rates before he leaves. where he that is wishes to be. the eurozone is so open in terms of the exchange rate, it matters more to the ecb than the central reserve or the japanese boj. anna: thank you for your time this morning. joining us here in london. abes: next, japan's shinzo
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calls the missile launch an unprecedented and serious threat. what is next for kim jong un's regime? this is bloomberg. ♪
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♪ a grave and serious threat, shinzo abe calls for increased pressure on pyongyang as north korea fires a missile over japan. i am in complete agreement with president trump that we must convene an emergency you when increased pressure on north korea. america's gulf coast prepares for another hammering after devastating let's since gasoline -- sent gasoline prices higher for a sixth session. manus: the latest round of brexit talks, the eu tells britain to get serious. we are live in brussels.
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welcome to "bloomberg daybreak: europe." in london, i am manus cranny. anna: i'm anna edwards. check out what is going on in the markets, with the futures tell us. we will be looking like at the start of european trading day. was closed yesterday, so playing catch-up in the you site -- he case session. the ftse 100 down .8 percent, but risk off atmosphere, risk off attitude surrounding the missile launch from north korea. that is the overriding sentiment to be aware of. manus: money is flowing into bond, swiss and yen, risk aversal -- aversion hits nine-month high according to city. stocks dropping, a sense of crisis heightening according to mizuho.
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down quarter of 1%. these stocks are seeing a little decline. we have a whole host of risks coming up in terms of data this week. the jobs report in the u.s., what happens with storm harvey and trump. market, moneyx going into the yen and swiss franc, a rate from the korean yuan. you want -- up 2.7 percent yesterday, the storm gathering momentum, another pass at the texas coast possibly. this time around the area where the border with the louisiana lies. what impact will that have on ports? -- rose by one point 6%, those prices rise and that knocks people's ability to spend. bond market,n the treasuries in the u.s. trading at a nine-month high. up 12 up 12 pips -- bunds
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bips. anna: money going into some havens. let's get a first word news up with juliette saly. juliette: thank you, north korea has a -- fired in an identifiable missile over japan the missile landed about 1200 kilometers off hokkaido in the pacific ocean. shinzo abe said he agreed with donald trump to increase pressure on north korea following a 40 minute call. japan's position completely matches that of the united states. north korea's missile launch poses a serious and grave threat on an unprecedented level. i'm in complete agreement with president trump that we must convene an emergency u.n. meeting an increase pressure on north korea. juliette: tropical storm harvey has mixed -- drifted back into
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the gulf of mexico and poised to recharge before striking the louisiana border. with an estimated 20 inches of rain still to come, predictions of the cost of the damage range $100 billion. u.s. gas prices are holding recent gains with as much as 30% inthe nations drilling power the area. >> a condominium in moscow on three occasions. attorney michael: told the house intelligence committee that the from tower moscow proposal 2015 to 2016, he also said the emailed the press secretary for russian president vladimir putin to ask for assistance on the project. -- european union's chief brexit negotiator has accused the u.k. of not being serious about its withdrawal from the block and called on britain to be more clear about its position.
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as a thirder spoke round of talks began. he expressed frustration at the theyprogress made so far u.k. leaders summit eight weeks away. >> to be honest, i am concerned. time passes quickly. i welcome the u.k. government's paper and we have read them very carefully. u.k. positions and all separation issues, this is necessary to make progress. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more , you can findries more stories on the bloomberg at top . what we saw in terms of the north korea missile launch has really affected market sentiment, as you would expect, the yen with a 108 handle,
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japan's nikkei index closing down by almost .5%. also week this in australia, the asx close down by .8% lower and in late trade, the cost be up one .5%. interesting it is holding up better than what it did in early trade when we first started to hear the news, when it was the worst performer in the region. in terms of stocks, china ever grand, surging to a record, up almost .8% after a first-half earnings report and it cut its debt. we are also seeing casinos recover at her being -- after the following -- the typhoon there. you don't often look at new zealand stocks, but this is a telecommunications company. one of the worst performers in the region. several brokered downgrades following 2013.
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earnings of the big for chinese banks coming through tomorrow, we have seen a bit of a pickup coming through in earnings in hong kong and china. the first reversal we have seen in quite a few quarters. that is quite an encouraging sign and has been helping propel the chinese and hong kong equity markets, though today they are lower. we are seeing rallies of 20% and chinaspectively on the and hong kong indexes. so far, these earnings have outperformed a number of years in other emerging markets indexes. manus: juliette, thank you very much. markets.latest on the let's send our attention to north korea. the fired a missile over japan, reigniting tensions after rewards words earlier this month between pyongyang and the united states. anna: south korea has promised to show force in response. shinzo abe spoke with president trump by phone and it described the launch is unprecedented. the government followed the
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missile from its launch and was completely aware of its trajectory. safety of the people was our main concern. this act is a serious and profound threat to the security and peace of the region. we have launched a complaint with the regime in the most severe language. we have asked the yuan -- yuan to ask the international community to cease its provocation. manus: we will continue the conversation in a moment. to private company cinven sell to leonard bring. this deal is coming to fruition. anna: the red headline across the bloomberg and overnight, we were carrying a story focused on leonard green and partners was under a deal to peuire cpa global from its er cinven.
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people were talking about valuing cpa global at $3.1 billion. we will see what details we get from that. let's return to the geopolitics because that is the guiding force behind markets. joining us is daniel ten kate. good to have you on the program. world leaders including abe and trump have any contact by phone. we heard from abe, not from trump directly, but we understand they have agreed to increase pressure on pyongyang. what kind of responses could they be weighing out at this point? daniel: we tend to see this after north korea does something provocative. this is a particularly provocative -- they fired projectiles over japan in the ,ast, but this kind of missile the prime minister of japan described as unprecedented. what they consider? they could try to tighten
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sanctions at the u.n., they are addicted this this month. they tried to get china to sign onto those but they were stopping goods coming from north korea to the rest of the world. what china is reluctant to do is stop food and fuel going from china to north korea, which is really the economic lifeline there. limited amount of economic leverage the u.s. and its allies have over north korea on the sanctions front. there is not too many great options for them at this point. about the's talk difference between this weekend previous launches we have seen. we have seen in the celebration in the number of launches, but talk me through the comparison here because it is about the direction ofhe travel, it didn't head towards guam. what are the differences here? daniel: that's right, north korea threatened to fire four of these intermediate ballistic whistles over southern japan towards qualm -- waters near
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guam, and this is what incensed the american generals, trump and so kim jong-un avoided doing that. he fired in an easterly direction over northerly japan. normally, they shoot these things into the air and they fall into the sea to the west. this was a flatter tragic to read that went over -- flatter trajectory that ended up about 1000 kilometers to the east. that is the big difference here and japan actually saw that as something positive. the foreign minister said north korea flinched because it didn't shoot it south towards guam. our bloomberg reporter, daniel, joining us with that. the head of multi-asset management joins us now. good to speak you this morning. drawn and amazingly to align in
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your notes that investors are getting rattled by geopolitics, said are contrary and sentiments indicate as a result, flashing a buy signal. first, the french elections, that has intensified overnight? >> yes, it would have done. the indicators i look at our volatility, market action, private investor sentiment, what company directors are doing, are they buying their own shares are not? all of those four things are saying you should be looking to buy rather than sell. the long-term fundamentals are growth is trucking along, a reasonable pace and interest rates are low, i think the stock work it has a further to go. this particular correction might have farther to go depending on developments, but i think it is a good time to start buying if you need to. manus: when we haven't had a healthy correction, we get all fizzed up over a small move to
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read do you make of risk aversion, according to parameters is hitting a nine-month high. your proclivity is not towards taking risk off the table? trevor: no, i would be adding to risk. the funds we outage -- manage we go from small weight in equities to fairly oversized weight. if the correction was deepened, we would add more because we find a very strong relationship between these short-term rises and risk aversion and future positive returns. manus: what does it take to put all the boots in? trevor: i think it would take for a five-week intense -- four or five week of intense correction. we are in week two of a mild out, weon, but by week would be quite aggressive. the thing i would point out for your viewers is, this is only the second of these signals we
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have at this year. the previous was the first round of the french presidential elections. it looked like marine le pen was going to be on the ticket and that was a roughly event, prior to that, it was the trump election, the brexit vote and the two big china devaluations in 2016. we get about two of these signals a year and this is one of them. anna: stumbling in the u.s. growth story do tear the is at this point? tropical storm harvey and the damage to texas, in the short-term, you see -- you would in the united-- states, having an impact on energy markets, but in the long-term, the prospect of rebuild and renewal. trevor: these sorts of natural disasters tend to destroy economic stock, if you like. but gdp is slow, it is all about rebuilding and their could be disruption that would affect gb
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-- gdp, but you would expect a mild positive in q4 for the gdp numbers. there could be an impact on the consumer from rising gasoline prices, but you can expect that be temporary. you could find this north korea related tension could flowing into fears about the debt ceiling. that would give you a longer period of disquiet. storm now harvey does play into that a little bit because it would cost money to wreck by the situation in texas -- rectify the situation in texas. manus: when you look at the backorder of the year, we have the debt ceiling and china, in terms of the next round of political in china, what is the risk for you in the near term for markets? trevor: in the near term, risk would be a debt standoff in the u.s. going to but for the route, i think we are looking at china and the party congress that would see a fairly sharp staving
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off of growth. we have had a lot of talk to make the economy look good for that congress. anna: some window dressing? trevor: a little bit. anna: thank you, trevor greetham stays with us. about time to get serious brexit. we are live in breakfast -- brussels. this is bloomberg. ♪
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♪ welcome back, this is bloomberg daybreak, europe. 8:19 in paris or berlin. let's check in markets now. 40 minutes from the start of european trading. back, it was a holiday in the u.k.. the full continent open in 40 minutes and we are expecting to be down by .6%, a risk off
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atmosphere around the north korean missile test over japan. manus: stocks are lower, down by .6%. chief brexit negotiator has accused the u.k. of not seeing serious about the withdrawal from the block. has called on britain to be clearer about its intentions. anna: what is the mood in brussels around the third round of talks? things seemed pretty candid on the stage. >> quite candid, but as -- both david davis and michel barnier were very polite in the remarks before this third round, but you can tell they are frustrated on both sides. the eu is calling for more transparency on the part of the u.k. and the u.k. is demanding more flexibility on the part of the eu. i don't think they are going to resolve this week, we will have to see if there is a little
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progress able to be made in these talks. manus: the u.k. government has bided papers, that was in a to advance the brexit talks, laying out the u.k. line, showing clarity of vision. but the eu is essentially saying britain hasn't done enough in terms of spelling out its stance and when. this goes back to david davis's ambiguity, deliberate ambiguity which is what barnier is asking the u.k. to end. right, the u.k. has issued a bunch of position papers on a raft of stuff, including the european court of justice, which is in -- an important point down the road. rnier is saying is we need to focus on the withdrawal issues, the financial
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arrangement for when the u.k. leaves. this is one of the issues the u.k. has not in forthcoming on to barnier is saying we need deal with this now, in the next eight weeks if you are going to be able to show sufficient progress in order to move on to the paradox, which is something did u.k. has been amending. get: eight weeks until we to that leaders summit on which they decided sufficient progress has been made. thank you very much. greetham is still with us on daybreak. there could be a few headwinds in the brexit story in the months ahead, we get this meeting of eu leaders, will progress have been made? before we get there, likely some domestic test for theresa may under government based around changes over the weekend. labor favors single market membership and customs
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union membership during a transition. bank of two to four years. that is not quite how the government is putting it. it will be a real test whether labor can table adjustments to the government decision and get it through. you would have to tempt some tories to rebel, but it is a possibility they would be able to do that. is thereuld welcome would be more debate about the single market issue, because it is easy to state the referendum dealt with that, the referendum didn't. you had some saying before the vote we could stay in the single market. it isn't resolved in the public's mind, he needs to be debated. sayingour last guest during the transition. bang, we stay in the common market and customs union.
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david davis, as if your interpretation is he could be taking us up to a zenith point of confrontation. trevor: it does feel like that, things are being set up for a kind of we can't do business with these people, their are 26 governments, varying positions under therefore, we have break off negotiations. that may be seen on the british part as a tactic. manus: is that back to no deal is better than a bad deal? would that be catastrophic for markets? trevor: the pound has argued in weakening versus the euro for various reasons, and the strength of the eu economy is part of that. i think the pound would go down further. we may debt more of a single market transition or maybe some permanent agreement, a bit like single market which is upside for the pound but you don't get that from here. it feels like you have to go through some sort of crunch period because of a lost vote in parliament or negotiations,
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which could feed a downward spike. in terms of -- and you mentioned the strengthen the euro driven by many fact or's -- -- factors. when does that worry the ecb. some were worried, draghi didn't mention much about that in jackson hole, so now we wait for december 7 -- september 7 to find a more. trevor: we are starting to see from an equity point of view, the strength of the euro affect in the european upgrades and downgrades. starting to have an impact on the stock market a little bit. give it a few more months and you will get more movement. it would also affect inflation. we don't see a rapid tapering in europe, because inflation is very low, they are worried about moving back into deflation because the crisis can come back if they are into a deflationary slowdown. got ahead ofarkets
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themselves in the presumption of the aggression of the ecb to taper? trevor: a little bit. this is also tied up with the trump factor and the trump that are is not a game show. it is the fact that the dollar has been weakening due to missteps in donald trump's behavior and it is hard to untangle that from the euro strength. is it strong because of european growth or is the dollar weakening? anna: are you still buying euros stocks? backr: we're scaling because of the strength of the euro. we are overweight japanese emerging stocks. broad stock a market, a continuation of an upward trend we see with this current period of uncertainty, buying opportunity in that trend. anna: trevor greetham, royal london asset management manager. manus: the european market is up next.
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by .7%, riskower aversion rising, yen is stronger, money going into the end of -- yen and the bond markets.
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♪ guy: welcome to bloomberg markets: the european open." if you are in london, welcome back. first trade about to happen. today will be interesting. we will bring to the first trade plus a whole bunch of stocks that could be fascinating. i am guy johnson in london, matt miller is in berlin. north korea fires in the -- ballistic missile over japan. shinzo abe calls


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