♪ francine: the minutes show a fed prepared to hike interest rates as the data improves. defending deutsche. the first meeting since last year's shakeup and i almost 50% drop in share prices. and egyptair flight disappears with 66 people on board. we have the latest from cairo. i am francine lacqua in london with tom keene in new york. we will talk about the meeting. for our global travelers, there

is a huge search and rescue operation off of some of the greek islands where we have lost atck of the egypt airplane 2:30 local time last night. is very fluid. we are watching for the aggregation of headlines. we will have a map soon. i know we are going to cairo soon. it is a nation that has seen too many of these accidents. francine: let's get to the bloomberg first word news. here is nejra cehic with more on egypt. jetliner fromtian paris to cairo has disappeared over the mediterranean. egypt's prime minister says he cannot rule out the possibility of a terror attack. flight eight 04 was lost on radar at 170 miles from the egyptian coast. it was an airbus 823. andtian military aircraft

ships are searching for debris. we will have more in a moment. iran has launched a charm offensive for europe's elite. their meeting with their european counterparts. they're trying to break a deadlock in investments caused by the few remaining u.s. sanctions. credit suisse says the bricks of boat has already harmed the economy. there has been a slowdown in domestic activity due to employment decisions being delayed until after the vote on june 23. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am nejra cehic. francine: thank you. let's get the latest on the egyptair plane. we don't know if it has crashed. we know it has vanished. let's get to our cairo bureau chief. on the phone is our north african euro chief.

we have been talking about this. we have conflicting messages from officials. we know there is a huge search and rescue operation and authorities are reviewing passenger information on the disappearing flight. >> exactly. right now, so far, there has been a reluctance to say exactly what has happened to the flight. it is being referred to as missing or disappeared. the egyptian prime minister that theyaid on tv cannot rule out possibilities. he did not state anything beyond that. they're playing it close to the vest so they do not have to issue denials, retractions, or corrections. francine: we had conflicting reports. we cannot get to the bottom of if there was a distress signal

sent. aat egyptian officials got 2:30 local time. we have a picture from marine traffic of a graphic of the ships closing in on the last reported position of the plane. this seems like a massive search and rescue operation. this point, the most they can do in the best they can hope for is go to the last known position of the flight where they lost radar contract, or where radar contact was severed. use that as a starting point. it is unclear if they have concrete information that pinpoints a specific location as an area where they want to concentrate their search. confidence in an airline that is part of the elite of the nation. within this tragedy does

egyptair have the confidence of travelers in the nation? >> they have had some incidents. there was a hijacking in march. those incidents are more linked to the potential problems with airport security. the hijacking, it turned out that the hijacker did not have any actual weapons. incident ine an 1999 with the downing of a flight. the egyptians have resisted the u.s. explanation that it was pilot suicide. there are questions. by and large, the airline does have a monopoly here. often, the egyptians do not have an option the on that. there are flights that will take european carriers, but it is not bad. people are comfortable with it.

tom: one final question as we wait for news from the egyptian authorities. and the authorities in france. the idea of terrorism, the idea of the tragedies of the middle east in recent months and weeks, what will you listen for this morning? what will you pay attention to of the aggregation of the bloomberg terminal? >> you are looking for any clear indication that this is some involvement on the part of a d, or if this is a potential problem to someone smuggling in something from the airport. there are so many variables. i think we need to stand back and wait for some clue before we jump to any conclusion as to what might be behind this. tom: it sounds like an view.igent we will get to the event starting with the minutes yesterday.

the data, it is a change to data check. equities, bonds, commodities. euro, 112 point 22 is weaker. a stronger dollar over the last 18-hours. on the next screen, the idea of the two-year yield, a huge move in three days. i will show a chart on that later in the hour. the yen 110.06. euro-dollare 122.22. hasek resources, the industry group losing the most. because of the egypt air airplane we are seeing travel and leisure down. it is the second industry group losing the most. that is linked to emerging market. the egyptian stock market is down. snapshot a quick .

all are strength off of the dx why index, a blended index of old traditional trading partners. here is the range. we came down. we are nowhere near a dollar breakout to new strength. francine: this is what i made for you. i know you are interested in training and container ships. it is a great way of looking at trade around the world. on a day where we talk about the fed, this is what i came up with, container shipping rates. sluggish global demand show shipping rates. they lost 30% over the last year. if the fed starts normalizing, the dollar goes up, what does that mean for this industry? are joined by steven saywell. it is great to have you on the program. markets are repricing. they're taking seriously the fact we could see something in june. earlier there was a 4% chance of

a fed rate hike in june, now it is 34%. should it be higher? market hasthink the gone too far. i will push back heavily. the fed may want to hike in june, but will not have the market conditions. i will highlight three key points. it is data dependent. we don't think the data will be that great, particularly forward-looking data. the majority of the fed would like to hike. we do not know if that includes yellen and fisher. they said the fed is not a democracy. and if the dollar strengthens, markets, off, it makes it harder for the fed to hike. francine: it would be pretty are they atwhy pains of convincing the market that they are ready to act if the data prevents? is an interesting

question. it probably comes back to the 4% figure. the market is not pricing in enough risk. maybe the fed wants the market to price and more risk, even if it is not a 100% possibility, 4% is too low. the real will it do to economy of developed nations, particularly em? steven: we have seen relaxation of that trend. the dollar has come off somewhat. if the dollar picks up again, it puts a lot of questions out there -- what does it mean for the renminbi? what is it mean for flows into the em currencies? it is something we have to keep a handle on. it gets back to the feedback .3., th if the dollar rises, this is the market tightening for the fed.

it takes pressure off of the fed to follow through. insight, it gets the red line to increase toward the. plot -- the dot plot. monetary kabuki. yesterday, june mentioned six times by the fed. we will look at the banking business. they get a bid with the fed shenanigans. it has been an ugly week for the banks. christopher wheeler is in new york. christopher wheeler, next. good morning. ♪

tom: good morning. bloomberg "surveillance." francine lacqua in london, i am

tom keene in new york. the airliner crash across the mediterranean sea off the shores of egypt. we will bring that information to you as it becomes available -- as it becomes available. christopher wheeler has had 15 meetings with esteemed clients in new york. his head is a jumble with atlantic equities in london. ready to go through security at the american airports. you have to get repaired. christopher: absolutely. i am taking an early morning flight. i don't want to take one in the middle of the day, i think it would be tricky. tom: let's look at the charts on union credit. the rightpplying medicine to find a bid on bankshares in europe? case ofher: in the deutsche bank, as we have discussed, it is a long haul. has talked about

sorting out the platform. tom: does he have two to three years to spend? christopher: i think he does. we are confronting a tougher market in terms of the continued problem with italian loans. tom: bring up the deutsche bank chart. deutsche bank underperforming down over the last six months or so. every conversation i have with economists is on the italian banks. why do we circle back to italian christopher: banking versus other nations? i think it is because if we look at the industry, there are fantastic banks in italy which have consolidated over the years. there is the legacy of italian

bankruptcy laws, how easy it is , thatlect bad debt gives investors fears. italian: i know the banks are big deal. we will speak with the italian finance minister. we heard from john cryan who probably has the toughest job in banking right now. he said deutsche bank is .ommitted to the markets how can he convince the markets it will not get uglier at deutsche bank? a difficult that is one. he is committed to the target unit because that is the dominant business and deutsche bank. unlike barclays which had a credit card business or swiss bank with a wealth manager, his domestic bank is challenge because domestic banking is not .rofitable he has commit to the markets business. this is about small victories to show that we are making progress in what is a long haul. francine: at the end of the day

he needs to make sure the markets believe there is space for this bank. other it be unfounded or not, this is the biggest fear for investors. it is a top six to seven kyl in equity trading. it makes for an important pile in the market. also the clue is in the name, deutsche bank. it is a major part of germany. that is important. tom: when i look at where we are in the balance between earnings, the income statement, revenue and non-revenue growth in expenses. what are they waiting for? in america we do this better. inyou see a cultural shift the operating officers of european banks to be more american-like? christopher: in germany you have problems with the labor laws. how quickly you can let people go and get them off of the payroll. i think you are right, there has not been the more aggressive

approach. the u.s. banks are pushing back on costs on the check of anemic revenue flows. it is not stopping. tom: if they do the cash call, can they do it? is out with a cash call to build their new car. say deutsche bank cannot raise money with five phone calls spirit of are they waiting for? christopher: it is more about getting the business in the right shape. starting to get earnings momentum. they have raised a lot of capital in five years. john cryan accusing the bank of hiding something, saying that is absurd. do investors believe it, do we believe in it, do you believe him? john is putting his reputation on the line. he has a great reputation as an investment banker and as the cfo. people are giving him a lot of

credit for that. how long that lasts, i'm not sure. the behalf of the president and the united states of america, i apologize for our security system at the airports. christopher: given what is going on today, i shouldn't be complaining. tom: yes. safe travels. atlantic equities and european banks. coming up, michael mckee in an important interview, more important after the minutes yesterday. jeffrey lacher of the richmond fed. this is bloomberg surveillance from london and new york. ♪

francine: that is the french foreign minister speaking at an impromptu news conference after meeting with the families of people on board. saying 56 people were on board. it is a fluid operation. we know there is a search and rescue operation under way. 16 of those on board were french citizens. it was 20 minutes before landing that we lost contact with the airplane. too early to speculate on the causes of what happened. at the moment, all we know is there is a huge rescue operation by air and navy. the egypt air airplane vanished

at 2:30 a.m. local time. tom: the search for knowledge and details. tell us what he is saying with your wonderful french. moment, he isthe saying, i'm trying to listen and , we need to verify. we are for extra information. we need to make sure the information is correct. i think, tom, where we have had high checks that did not turn out to be hijacks. -- wee had explosions need to remember the am-370 airplane vanished from malaysia, do not want tos do is to give an idea they need to retract. we have conflicting messages and a lot of conflicting reports. we need to keep an eye on it. when you look at this, it is difficult for the markets to have any idea of what to do with this. it is difficult to price in.

it is difficult coming off of the foc minutes. that is a shock coming to the market. you could argue that is hitting risk in emerging markets and when you have a shock like this they will play together. from that perspective, it is hard to ascertain where one stops and one begins. francine: stephen is right. it is difficult to price and is right.-- steven it is difficult to price and difficult to know how markets will react. i a lot of travel stocks are under pressure. 18.5% lower. they were already worried about .ither a tax, 2016 in general any kind of uncertainty regarding airplanes as do speculation adds to a little bit of a dampener on the stocks. tom: i would point out separate

from the egypt air tragedy, oil is south. most of that is in the short-term on dollar strength. we can touch on that with mr. saywell in a moment. francine: we continue with travel and leisure stocks. we will talk about security with the eurostar international ceo, nicolas petrovic. he has taken a lot of measures since we have had the geopolitical uncertain d. -- uncertainty. he will be coming up next in an exclusive interview 10 minutes from now. ♪

francine: egypt is deploying naval ships to search for the paris fromoute two cairo. we just heard a news conference

from the french foreign minister . he said he had just met with the families and relatives of the passengers. that it was too soon to say what happened. he said his first priority is to wait for reliable information regarding the aircraft. we know that there is a huge search and rescue operation under way. we have to tread carefully. let's get to the rest of the bloomberg first word news. here is nejra cehic. canada, residents who fled a town ravaged by wildfires will be allowed to return and a couple of weeks, probably. 80,000 people were evacuated from fort mcmurray. it cost the oil industry one million barrels a day of production. its forecast for the u.s. economy to grow 2%, down from 2.3%.

they blame a week first quarter. and they expect the fed to raise interest rates twice at most. forrates americans pay obamacare are going up. they want to raise the amount customers pay for individual health care plans by an average of 17%. the sticker shock it could cause problems for the law and its supporters. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am nejra cehic. francine: we are monitoring the egypt air flight that has gone missing. it vanished overnight. the managing of the firm international corporate protection and steven saywell. this situation is fluid and we have conflicting messages. after anormal so soon plane is lost or vanishes. >> in the circumstances you are right.

it is an anomaly. it is an unusual situation. there has been a lost connection by radar to the aircraft. come in many respects, vanished. there will be a lot of speculation. there are different and conflicting reports that will come out now as to what could have then the potential cause. there will be leaning toward aviation experts as to what their diagnosis is of the situation. bearing in mind that this light had been in transit for a time. only when it was coming into its last leg it disappeared. francine: we heard from the french foreign minister saying that he wants to wait until he has reliable information. been abreast of the situation, is there anything that points to terrorism, or is it too soon to say?

>> it is too soon to say. you are looking at different factories and components trying to assess what has gone wrong. france, whereom we know it is a focal point for international terrorism right now. what we have seen in the last year did draw attention's the two could there have been a terrorist plot? lean toward to aviation assessment given the flight was so far extended into its journey, and rarely will it have a technical instance. the approximation is 10% of flights will have an instant so far into its flight at cruising altitude. tom: that is where your expertise clicks and, 10%. air.s away from egypt in the united states we are having a massive uproar over the length of security lines at the airport. you mentioned charles de gaulle.

oure is a mystery when luggage disappears. you are the pro. tell us about the security of our luggage when it goes through and into thele airport -- whether it is heathrow, jfk, or charles de gaulle. >> i would not go into great detail for obvious reasons. one does not want to compromise existing security measures and toers of security used process the luggage, screening and scrutinizing it for trace elements are indicators that it could the malicious or conceal an ied. i think that in terms of the baggage processing and screening , it will vary from country to country. of the that in the wake attacks suffered, the level of security at charles de gaulle one would assume would be at the highest levels. if there was a terrorist connection, i would say that it

possibly, only possibly, it is speculation on my part, it could have come from an internal asset . someone who had access air side to bypass the screening process. tom: the differential between the security and mechanical security of major airlines versus those we would suggest are smaller, more regional, or other nations. it is a delicate issue. traipse over that. it is a major airport and will be leaning on a number of security measures. processes, that is to secure the integrity of its passengers and people passing through that hub. as we have seen with egypt air, there was an incident of a hijacking in march by an individual who hijacked a

egypt.e internally in it is indicative when one is traveling through an internal or domestic flight within smaller hubs, the security might not be at the same level of international ones. francine: our heart goes out to the families of those affected. any advice you would the global travelers? is one of the safest forms of transportation. in the current climate of international terrorism, most auntries will be adopting stringent security protocols and measures. in terms of the ratio of someone of a terrorist event by aviation delivery will be pretty small and relative senses. a delicate question, as it unfolded recently, will we wait

days, weeks, and months for a study and scientific analysis? or, do we get a press release them some organization if this is tragically terror? will: if it is a terrorism event, a lot of this information as to what were the causes and reasons for the airplane , and ultimately where it ended up will be down to search-and-rescue attempts which are being undertaken. the recovery of the data recorder and black boxes. ultimately, one has to because his at this time when information will come from a variety of sources that there could he terrorist organizations or groups that could claim responsibility. until one take that has good corroborating evidence to substantiate that. climates, thent fact many people rely on international transport, needrities will know they

to expedite some answers or explanations to the general public to reassure them. francine: thank you. des of international corporate protection. we have conflicting messages. we know that egypt has diploid air surge and naval ships to find the airbus a-320. leisure stocks are under pressure. down 18.4%. we do not know what happened. it is unfair to speculate. given the action in the stock market, people are worried about a terrorist act. we are back in 2 minutes. ♪

francine: this is "surveillance." we are bringing you breaking

news that we have on the egypt from cairoon route to pairs that went missing off the coast of the african country. we know there were 66 people on board. the situation is fluid. we heard from the french foreign minister who said 15 nationals were on board. conflicting messages if there was a distress signal sent to egyptian officials or not. we are joined by the eurostar international ceo, nicolas petrovic. steven saywell from bnp paribas. would haveknow we the security scare. the situation in egypt is ongoing. the first thought is, are your passengers safe? yes.as: we have a system in place for the eurostar travelers.

we check all of their luggage, we check everyone who has access to the train, passengers -- we are working closely with the authorities in the countries where we operate. yes, i would say on the egypt disappearance -- we will have to wait to see what really .appened the first few hours, it is very sad. francine: we heard from the french foreign minister it is difficult to speculate. we need to make sure we have reliable information. attacks in, the france, it has been a tough moment for france and belgium. as it impacted your passenger numbers? it has. of course, you have the effect immediately after the attacks theireople postpone

travels. it rebounds quickly. in europe, they get used to the threat and make decisions. the attacks iser that a lot of people outside of europe, especially in southeast asia, are nervous to come to europe to enjoy the summer. we see an effect for which is more long-term, i think. tom: when you look at train and i can't, believe it is 20 years of the miracle of the eurostar and the tunnel, it is remarkable. tell me about the dynamic day-to-day of choice of plane versus trying. our job was really to focus on the market to explain what it was about. would you take the train?

the leisure of passengers came quickly. the toughest was business travelers, but we managed to get them on board i literally offering a service that was better than the airlines. now we have a high market share that is competitive, because the airlines in europe are very active. tom: do you aspire to take over amtrak on the east coast of the united states? pro for been a train years. i can tell you from experience moving london to paris, some of the challenges on the eastern seaboard -- what would be your advice to amtrak, new york to washington? nicolas: i'm not sure i would give advice. people there are good there. it seems to me from talking to a few of them in the past, there is a culture. there is a market of people who love a high-speed train or

something with a high level of service, but the tracks date back to 100 years ago. they need badly big investments. i would say it is more for the government to see what they can do. tom: north of new york city on the way to new haven, took theut, lafayette train tracks. he took the train tracks there with washington. they are that old. francine: we should get this show on the road and take nicholas with us. colas with us. how much do you worry about the brexit? nicolas: it is a worry for us. we have benefited from the eu regulations. it has helped our business, cut costs, and increased travel. phone, thes a brexit

question is the uncertainty and the effect on our biggest customers and on the consumers. we can see that people are nervous about spending at the moment. aancine: when you look at fax, the euro-dollar, we are talking about pound, the ceos have to deal with the long-term and short-term effects of fx on a basis. anything we see in terms of shocks will have an impact on the ceo worlds. we have discussed a lot of political uncertainty that is already in the price. stirling is very weak. euro sterling was recently trading close to .80. our model suggests it should be at a big discount. see polls to

signaling less of a political risk in the u.k., more in line with the u.k. remaining in the eu. things rallied on the back of that. more polls are important, at the moment and the underlying fundamentals of the u.k. economy. francine: does it have an impact on your business? how many tickets are bought on this side of the channel? 50/50? nicolas: no. we sell a lot in euros, but a lot in swiss dollars. the exchange rate is important. in a different way, commercially. in the pound is strong, u.k. consumers go to pairs and vice versa. for us commercially, we change our policy according to the fx rate. welcome.lity would be francine: very diplomatically said.

we will be talking about emerging-market currencies next. a quick update on our top story. egypt is deploying naval ships to search for egypt air airbus. the bottom of the board, the egyptian stock exchange is down from 2%. ♪

francine: communication with that 2:30804 was lost a.m. cairo time. we don't know. everything is fluid and we have conflicting messages. 56 passengers.d that has been corrected from 66. seven crew and three security personnel. we know there is a large search and rescue operation under way. we will keep you up-to-date with breaking news. this is what else we are watching. we will get data on u.s. jobless

claims at 8:30 a.m. new york time. william doublent eagle deliver a speech at macroeconomic trends. we will get new home sales in the u.s. for the month of april. tom: later today, michael mckee of bloomberg "surveillance" in conversation with jeffery lacker of the richmond fed. look for that during "surveillance." 8:30 will be when we address mr. jeffery lacker. that is an important interview. we have steven saywell, the .lobal head of bnp paribas pushing back about june certitude. let's go to a chart we have shown many times, i call it the lollipop chart. the two-yeared, yield with each meeting over the -- last 18-months.

a rebound to zero point 89% on the two-year. you do not abide the progress of the june meeting. why? there: as i mentioned, are three push backs we would focus on. we think it is data dependent. we do not like the data. we do not know who was in the majority to prefer a june hike, dudley, and yellen, fischer. and the market, if that is doing the tightening for the fed, they may not need to do it. far more into commodity currencies, you are looking for aussie weakness. can you convince me they care about australian dollar

dynamics? steven: i'm not going to try to do that. a piece of information i would highlight is the way the fed looks at the dollar is different to how we look at it in markets. dollar yen or sterling, the big china, the.s. are eurozone, mexico, and canada. these are the ones the fed are focused on, china is the big one. francine: you do not believe a june rate hike, but if we see divergence earlier than expected , can they stomach a dollar rally? steven: we in the market will jump to what it means for , but the currencies are focused on, particularly china, is how the fed looks at it. china is not fully floating. francine: if it does hike what doesan expected, it mean? commodities in general will be

hurt significantly. are they ready? steven: we think commodity currencies are under pressure. we don't think the rally in oil or iron ore are sustainable. we have seen the cracks and iron ore. we are bearish on the countries exporting. canada, brazil, and russia -- we think they will remain under pressure. tradeis our tope recommendation. a focus is inflation. it is falling. this is why the rba cut rates. we think they will have a surprise rate cut then. tom: i know you drive a ferrari and there is the romance of fx, but over to the real economy is what matters. of mentioned the dynamics australia. even though we have a better economy in the united states, how lonely are we when we look at global gdp? steven: unfortunately, i don't

drive a ferrari. i think this is a key thing. when you get back to the global scenario, it does not look fantastic. the biggest driver is china. there is stimulus coming into china. we don't think it will be sustainable. we think the impact of chinese up commodityg prices will be short-lived. tom: thank you for your patience as we look at the continued news . i want to show you what we use internally at bloomberg. aggregating the bbc and others. we will continue this story. ♪

.

tom: say june 6 times and markets move.

this morning the dollar is busting out all over. june 15, decidedly a live meeting. american decline is coming. the wall of worry is your opportunity. of u.s. trust says, don't bet against america. this morning, a story we continue to follow. a jet is lost over the mediterranean sea. this is "bloomberg surveillance." live from our world headquarters of new york and london. it is thursday, may 19. i am tom keene with francine lacqua. the desperation of no news on the downing of this jet. francine: we understand a lot of the relatives of the families involved or were on that flight now want to go to egypt and egypt is offering some flights this afternoon. the ap saying the airplane crashed off the greek island. officials we have spoken to will not deny it, but they have not confirmed it, either. it is too soon to know. tom: let's continue on this

story from london. >> a very fluid story. the search is on for the egyptian airliner that vanished over the mediterranean. egyptian officials told the associated press it has crossed, -- crashed, but bloomberg has not confirmed that. was at 37,000 feet on a flight from paris to cairo when it disappeared from the radar. it was around 117 miles from the egyptian coast. it was an airbus a320 caring 56 passengers and 10 crewmembers. greece and france have joined the search and rescue operation. iran has launched a charm offensive aimed at the financial elite. andainy and policymakers finance executives are meeting in london with her european counterparts today, trying to break a deadlock in investments caused by the few remaining u.s. sanctions. we says the brexit

vote has already harmed the british economy. the report says it is been a slowdown in domestic activity. part of that is due to investment and impleme decisions being delayed until after the vote on june 23. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. francine: let's get the latest that hasyptair plane disappeared overnight. let's get straight to our cairo bureau chief. what did we actually learn in the last hour or so? we heard from the french foreign minister saying we need to remain cautious. there is no confirmation so far of what happened to the plane. >> exactly. no one has come right out and said what they think may or may not have happened. i think they're keeping all options open until they get closer to finding out or even locating the plane and seeing what the situation is.

the egyptian president is holding a meeting of the country's national security council, which is obviously an indication of how seriously officials are taking this situation. they are now, i think all on a wait and see approach and do not want to commit to anything. francine: we understand the isition -- egyptian military cooperating on the search operation. we also are expecting a news conference i believe in 19 minutes from now from the egypt aviation ministry. we hope to learn more. >> hopefully, yeah, in about an hour and a half the ministries --ding a press conference the ministry is holding a press conference. they have also sent out aircraft to aid in the search operation along with vessels. tom: i want to caution everyone. there is a lot of what i'm not going to call misinformation,

but within the scramble of modern news, it is a blur. we are trying to bring you all of the authoritative resourcing weekend. there's even a discussion about which map to use. discuss egyptian airspace. it is not three miles off alexandria, is it? >> well, what they're saying is the plane went down about 10 miles into egyptian airspace, but it is roughly about 180 miles or so off the egyptian coast which would indicate the airspace is extended quite a bit farther out than the three miles. i don't know exactly how far out it is. tom: what did you learn from the french press conference we heard an hour ago? >> that they seem to be playing it close to the vest as well. they're saying, let's remain cautious. at this point, there is nothing to allow us to jump to any kind of conclusions or reach any kind of definitive assessments as to whether the plane went down as a

result of mechanical failure or other. tom: we will continue to aggregate the news. thank you so much. we will continue to aggregate the news. for those of you at the bloomberg tallman -- terminal, all new sources that we trust worldwide is proved to be very, very helpful. tlivgo with a terminal. a quick data check. foreign exchange center, after theollar, euro, festivities yesterday. on to the next screen. the vix showing the recent churn. two-year. at 8:30 this morning with michael mckee interviewing jeff lacquer. francine: european stocks falling, on the back of the fed

showing basically officials want to raise interest rates next month if the economic pickup stays supportive. watch out for emerging-market stocks. euro-dollar and for good measure, i want to show you some of the travel stocks on the back of the egypt air airbus disappearance. disappointing figures before we heard about the airplane disappearance. down from 17%. francine and i particularly with francine's ability with the french language, will continue to bring you what we know about egyptair. right now we will pretend the markets matter. it never ends. we see these tragedies time and time. these are removed from market, but not removed on the confidence of the global system. >> that's right. raises a lot of questions and minds, what happened, what didn't happen, and the blur of the media looking at what happened. institutional work in

retail high net worth work. what is the level of wall of worry? is it 1998? is it 2008? or is or some character different? >> i would say more 1998 it is since they're worried about what is happening in china, the election, friendly, -- tom: the geopolitics. >> not 2008. that was panicked. we are seeing a heightened level of concern, no doubt. francine: given the uncertainties are running egypt, how do we price risk? at, look atook companies with good cash flows. janet yellen is set a good job at the central bank. how do you price it? two me, you just about the noise of look at what a good asset classes going to offer you over the long term. stripping at risk means stripping out the noise. francine: you are talking about the fed.

probably the most significant news with heard in a while. what is the endgame the fed try to give us yesterday? are they really thinking about a june possible like meeting or is this about getting the markets to reprice risks of normalizing? is 2% bernanke says it action. they talked a lot yesterday am a spooking the markets. i think we're looking for a july rate hike. i think the fed is talking up the economy. the numbers are getting stronger, but i don't think two rate hikes is out of the question. tom: the idea where getting from many is the idea of the markets lifting for the fed. the markets "tightening." here is where the fed is on the bets out. here is where the market is. the bet year is this comes up. what do we mean when we say the

market is tightening for the fed? >> you have to be careful where you are in the emerging markets and risk assets. we have to make sure if the fed is wrong and the economy is weaker in the markets are right, then you have a disconnect that creates a lot of volatility. tom: within that volatility and you saying, no, they will go to july, can you be in risk assets now? >> i think so. if you are an investor, sure. whether it is south korea or mexico or even brazil, something showing a lot of uncertainty. if you are an investor with a two or three year horizon, this is a good time to take some risk. tom: we called up secretary clinton and said, you have to be on with joe quinlan because joe was still the one in america who believes america is not in decline. we will address that in this hour. optimism on the state of this nation. let me to a data check. it is a global data check. futures negative seven and they euro trading weaker off of

power straight. june, june, june. june, june, june. six times june mentioned in the fed. we continue to monitor the headlines of the plane crash off the shores of egypt and greece. good morning. ♪

francine: this is what we know so far, on route from paris to cairo with 66 people on board, the plane went missing over what we understand the mediterranean sea. aboutaises concerns whether it was a crash caused by deliberate act or a mechanical failure. tom, i know we have to be extremely careful because the situation is ongoing. there is a huge search and rescue operation under way.

we have conflicting reports. it is very fluid. we are expecting a news conference from the egypt 70ation authority in about minutes from now. tom: it is amazing to see of all of these tragedies, twitter i think is very responsible this morning. we are learning in real time about speculation and rumor around these tragedies. we will bring you the headlines as we can. the headlines will be made in richmond and washington this morning. michael mckee will have an important conversation which you can evermore important with jeffrey lacquer. we will have that on bloomberg radio and highlights on bloomberg tv worldwide. michael mckee, why did this interview become more important since the minutes were released yesterday? michael: in one word, june. they used that word over and over in the minutes suggesting if the data cooperate, they are ready to go next month. this is what it is all about.

you look at the chart of their mandate. unemployment and inflation. unemployment has come down about as low as it is going to go. they think they have met that test. can they get the inflation rate a little bit closer to 2%? if we get some evidence of that by june 15, they're probably going to raise rates in june. the real question with jeff lacker, they said two participants noted that several of the benchmarks that policymakers used to figure out where rates should be implies the rate should be higher, imply higher values for the rate than it currently is. it does not say who those two are. we will ask jeff lacker. tom: izzie and over shooter -- is he an over shooter? is it a consensus opinion? not a consensus

opinion. it is not even the official policy, even though some in the markets think that is what the fed is trying to do. first they have to get the 2%, then they can worry about overshooting. thatlacker argues inflation is becoming a bigger danger than some others on the committee might think it is. we are starting to run out of slack in the economy. if you try to overshoot, you may go too far and it is a lot harder to stop and overshoot than it is to not do it in the first place. francine: i am looking for to be interview. there is also a danger of the dollar rallying. how much can the fed or how much does the fed want to cope with a strong dollar if we finally see the virgins playing out -- divergence playing out? michael: if you believe in a feedback loop, the fed can never raise rates because it will always have an impact in the markets. the judgment they have to make is how high will the dollar go

and what effect will that actually have on the u.s. economy? they noted in the minutes the dollar rose after they raised rates in december, but it did not have a lasting effect on the u.s. economy and it came back down again. tradersally, currency will tell you the dollar rises after a fed move and then it starts to fall back in the next six to eight months. we will see what they think about that. tom: michael mckee with jeff lacker at 8:30 this morning. also the thoughts of joe quinlan on u.s. trust. joe, it bunches up against the real economy. you are optimistic about america, but can you bring that optimism over coming out of a first-quarter malaise into a better 2016? >> i can. if you look at the shape of corporate america, improving global economic backdrop, i think our private sector's most resilient and competitive on earth bar none, including china. when you have a pullback in the market from the first quarter,

that is a time to step in if you don't have the good companies in your portfolio, from senegal's, industrials, that -- pharmaceuticals, industrials, that is when you go. when you look at the economy, best on the planet. francine: should we not wait to see a little more strength? >> not necessarily. the earnings were ok when you strip out energy, better than expected in many cases. u.s. corporations are focused on cost of stop they are very innovative, have a footprint unmatched by any others. pullbacks, ifhese they're not part of your portfolio, then you want to grab them now. tom: have we become slaves to atlanta gdp now? henlan folks, u.s. trust, writes his notes with a quill. it is a slow-motion analysis. have great respect for this. is there to and from -- too much

information now? notoo much information and enough inside, not enough time to think about what is coming at you. i think we are inundated with information. tom: what do you need to hear this morning? >> i want him to say that inflation is right in front of us. therefore, we have to move. i do not believe we are there just yet. tom: there you hear it from an expert, the nuance dear from jefflacker -- to hear from jeff lacker. a little rich, to say the least. michael mckee with jeffrey this morning on bloomberg radio. francine lacqua and i with the latest on the egyptian air crash. we will do that next. ♪

francine: the french president holding a crisis meeting now. he was due to give a news conference anyway about the state of france, but he is pivoted and started this news conference that you can see live on our screens to talk about the latest from this egyptair. extremely,ning extremely cautious. he says all we know at the moment is that this egyptair plane vanished, 66 people on board. it has raised concern over whether a crash was caused by delivered act or mechanical failure. what we're hearing from authorities, especially french

authorities, is caution. they say we cannot speculate. we are investigating, we are cooperating, and we will tell you more when we find out. tom: much more. of course, the tone you can hear is decidedly not lost in translation, from a president was had a few tragedies to talk about in the recent months. we're looking at the headlines. from the president of the republic of france, no an area favored nor ruled out on this egyptair flight. francine: hollande saying he has activated the crisis -- he called it a kind of crisis next, i guess which is where he talks to his government and also the main authorities about how to handle it next. let's move it on and focus on corporate use. -- news. in frankfurt, the cosi 00, coo, moore under pressure, share price losing in recent months.

matt miller is in frankfurt. we heard quite significant things. first of all, he is committed to a global markets unit. matt: he is saying is committed to this business, which is one that many of his competitors on the continental have reduced -- continent have reduced. of course he is going to be firing a lot of people and bonuses were canceled for 2015, but he said -- and i think he struck a very good tone. i was watching his speech. that he is going to stay with his is best because it still delivers a majority of the revenue. is,cine: the problem founded or unfounded, there are concerns on the market about where the bank heads from here. will he be a delay all of those concerns or most of those fears to rest in the agm today? it is rainy and cold this

morning. when john cryan wanted to talk, the clouds cleared up and the sun came out. he is not german by birth, he is british. but his german is so good and mean, the protesters were here beating their drums. they have left. he got a standing ovation from a few of the statements that he made. he struck a firm tone, but he seems to have a vision for the future. that is what all of the investors i spoke with before they went in to the agm are looking for. it seems he is pacified investors. it looks like he is going to get by with a vote of confidence today. francine: i try to listen as much as i could to this news conference, and easy to tackle all of the troubles and concerns that investors had head on. what did he say about past his conduct? matt: he said he hopes to put an end to some of the bigger

litigation cases this year. that is what people want to hear. they want these big cases that have cost them $14 billion since 2012 in the rearview mirror. of course, more cases pop up and he has got to try and control misconduct. he did say that is going to cost the bank, at least in the short term, some of its profits. they have to build these profits. they have to build up capital or else they're going to have to raise capital again. francine: matt miller, thank you so much, they're in frankfurt. we have to keep an i on paris. this is where the french president francois hollande is giving his latest news conference, talking about the egyptair saying we need to be careful with speculation. ♪

francine: you can see live pictures of the president of france speaking. he started this news conference talking about the egyptair plane. we know the egyptair plane went

missing overnight. mr. hollande is saying himself lane crashed in the mediterranean sea. he said the debris is being searched for for the moment. for thetremely cautious families of the 66 people on board, including 15 nationals of france, saying no scenario at the moment is being favored, no scenario is being rolled out on this flight. on this flight. we will keep you abreast on the news. let's continue with the news with some of the other top stories of the morning. >> in canada, residents who fled -- will probably be allowed to return and a couple of weeks. more than 80,000 people were evacuated from fort mcmurray, causing the oil industry about one million barrels a day of production. moody's has cut its forecast for

the u.s. economy this year. the new outlook looks for the economy to grow 2%, but down from 2.3%. moody's blames weak first-quarter and expects the fed to raise interest rates twice this year at most. the rates americans pay for obama care are going up. health insurance in new york or among those seeking increases. they want to raise the amount customers pay for individual health care plans by an average of 17%. the sticker shock could cause political problems for the law and its supporters. global news 24 hours a day. tom: thank you. it is always a good time to speak with joel peterson out of brigham run -- young university. extend was career -- extinguished career. joel peterson, as a new book

out, "the 10 laws of trust." a good morning to speak of trust with tragedy off the shores of egypt. joel peterson, you teach at stanford. n their award of 2005. there is time in executive has to stand up and say, this is horrific, this is difficult. that is the definition of leadership. >> it happens all the time. i think telling the truth is the job of the leader stop tom: i hear from other ceos it has become overwhelming now the percentage of time in managing the message. in the modern day of communication, it is a lot different than your time over the years. what is the new ceo do to manage the message? >> well, i think it is telling the truth. that people are smart. people have immediate access to information. and i think your job is to deal with the truth as it comes out. tom: within the book, what is

the law that is broken every day in that bond between employer and employee? >> i think one of the biggest ones is give medication. people do not communicate clearly. they do not tell people good news and bad news. they do not commit to kate before, during, and after events -- communicate before, during, and after events of people begin to mistrust. francine: i know it is a difficult position you are being put into answer this, but talk about security. security in airlines and airplanes is something that we worry about day in and day out. events like we find out today on egypt, what is your first thought? is to thest thought families, of course. also to the crew. airline industry cares a lot about safety everywhere, and it is the safest mode of travel. it is our number one priority at jetblue. -- our hearts go

out to those that have been hit by this tragedy. francine: does it impact in the short term the number of passengers you have? as chairman, you probably don't look at numbers every hour, but we had the euro starts ceo and he says on the short-term, it does have an impact, longer-term, a little bit less. >> i figure probably does. there is short-term reaction, but people have to travel. they want to have vacations, they want to meet family, and airlines are part of our lives. tom: how do you finance airplanes? do they give you an xl spreadsheet? the product at jetblue is new. i don't mean that to cast dispersion on egyptair or others, but the airline fleet has aged. how big of an issue is that? life, 30,have a long 40 years. they maintain them very well. this egyptair plane was an

airbus 320, the semi-quit meant we fly. -- same increment we fly. are you comfortable flying globally on what i call secondary carriers or carriers of other nations? what is the differential yet perceived over the years in airline integrity? >> i think the majors -- and you include jetblue and that -- i have a lot of confidence in them. i think overseas, we're maybe a little bit more -- francine: talk about this new book "the 10 laws of trust." this argues if you have employees in a company that trust each other and don't really question each other, then you become more innovative. that pushes back against, i guess, and believe that a lot of rivalry makes more innovation because you try and outsmart each other. >> i think you want that kind of challenge, you want conflict --

respectful conflict is the way you innovate. i think you want to encourage that. i think it is when a decision is made, you need people to get behind that decision. until then, you want debate. tom: you talk about the fictions of negotiations and discussions. you say negotiations are serial, not episodic. i was a just we have a presidential campaign right now that seems to be very episodic. we sort of stacker from moment to moment. how do we get a better discourse were we ever more polite conversation -- where we get to a more polite conversation? >> i think you see the trust levels are very low in the candidates. it is very difficult. innovative inner prices, young highesses tend to generate trust. when you get into political -- in the political realm, i think the trust levels go down. tom: that may be a good observation. joe quinlan, help me out.

here is a quote from the book. there is the chart of jetblue. "every conversation has a -- ose joe quinlan, does that is how like the quinlan household? >> the short end of that. tom: take me over from jetblue to the conversation at the quinlan dining room table. >> i think people are negotiating all the time. and get ingive everything. i think the more you realize these conversations are part of life and your negotiating all the time, the more respectful you are in the more long-term -- tom: you have like 42 grandchildren, right? >> 22. tom: did you force them to read

your book? >> no. tom: i'm serious, what do you do with the 10-year-old -- teenager when you want to look at the "10 laws" >> start them out very young. tom: short and brilliant on ofotiation in the back end the book. we turn to the data and the markets. the big move off the fed minutes yesterday. we're going to come back with joan allen -- oe quinlan. is a good dollar, a strong dollar, rather, good for the rest of the world? this is "bloomberg surveillance." ♪

francine: the latest on egyptair airbus on route from paris to

cairo, 66 people on board, went missing over the mediterranean sea. this raises concerns the crash caused by deliberate act or mechanical failure. tois way too early speculate. for the first time, we did hear the french president mr. francois hollande talking about a crash in the fact they're looking for debris. tom, this is an ongoing investigation. certainly, the search and rescue teams on the ground. we need to be very careful about what we know and what we don't know. of the u.k.ay coo flight safety committee and joins us now on the phone. thank you for joining us. what do we exactly know so far? is it too early to speculate what happened to this egyptair plane? >> we know very little other than the fact it was the crew had been in contact with egyptian air traffic control, which means summer probably inside or getting to the edge of radar cover, and a then

disappeared. whereone of those issues the search and rescue operation is obviously in full swing. they will be using military assets for that. it seems very unlikely the aircraft was -- has gone anywhere other than into the ocean, sadly. francine: if that is the case, i guess in the next couple of hours, we have a news conference from egypt and then we again have this search and rescue team, we will see whether -- if there was a crash, if it was deliberate or mechanical failure. >> i think it will be very unlikely to get that sort of information at this stage because, clearly, they will he took firstly find any wreckage that is findable and then examine it. seriouslyserious -- technical problem they have to go through. they will start by trying to firstly, to find it, and secondly, to get a hold of the

crash recorders which will give them some indication. there were suggestions the crash position indicator had gone off, which is a transmitter that goes on the flight recorders which will help them find that underwater. family isrbus -- the fantastically successful, but over 6000 of them flying and they have a tremendous safety record. last year, being the most successful, safest year since commercial aviation started. tom: i look at the moment that we are in, and with your military expertise as well, can satellites help out here? how much is our clarity, our window across the eastern mediterranean? >> i think it is fair to say the use turn med will be under some form of surveillance. whether you would detect

something like a missile launch, if that is what you're suggesting, is open to some debate. of course, if it was that sort of system, you would be looking at surface launch, which would be one of the navies in the area. that is pretty unlikely given what people know about the tension in that particular part of the world. i think it is unlikely. it is more likely to be either a loss of control or a security -related problem. those are the two things that tend to bring airplanes down the fastest, and we know, of course, the weather in the area was reasonably benign. the weather we have reported from bloomberg news, and all use this carefully and officially, cloudless. when you look at the integrity of our airports, what is your

rating on heathrow and de gaulle and jfk? hubs, inf the major fact, all of the major hubs, are very well protected security-wise. there may be issues when you go to some of the less well-developed airports around the world, in areas where the local security situation is less helpful than it may be in new york, london, or paris. having said that, of course, one of the ways around security systems is to have somebody on the inside. and i'm sure the authorities in paris will be looking at that sort of mechanism, if it does turn out to be security-related. francine: thank you for joining us today, coo of the u.k. flight safety committee of travel. we're just getting news from the u.k. prime ministers office. they have just been speaking to reporters. this is their morning briefing. he expressed the government's concern about the incident and said the u.k. is working with the authorities involved.

the foreign office says it is in contact with the family of a british national believed to be on board. pressures on the travel stocks, including those in egypt where the main stock index is down. ♪

tom: let's take a quick look at the foreign exchange markets. .eaker yen weaker chinese currency over the last number of days. dxy stronger. some of this will be clarified at the michael mckee, jeffrey lacker interview. francine: coming up shortly, bloomberg . i know we have to look at the fed in the markets, but you also have the news conference on the egyptair starting i think in an hour, hour and a half. .> the missing egyptair flight more details throughout the, -- more details throughout the

show. maybe even the reality that june is a live meeting. what i will say that stood out for me is the statement in the tone of the statement from the very same minute meeting, a marked difference between that and the tone in the minutes. that is a conversation i will reader.he mr. rick mr. quinlan is with us. he has been more than patient with our international news flow. your long optimistic on america. what did the gloom crew get wrong? >> their focused on washington. they're not focused on the innovative spirit of the united states, of the economy. good example is fracking. it happened without washington. that was a good example through the gloom and doom that we can still and of eight, can begin changing. tom: you go right to manufacturing. the answer is, amid the gloom, we have new orders growing

nicely on a nominal basis. we have recovered out of the crash. what is the "now what" for american any fracturing? >> there is jobs coming, but how much will they pay? there are some manufacturing jobs that pay minimum wage. i think we're going to have more factories working alongside of the robotics, but will they pay the average that we are accustomed 2, 30 five dollars to $40 is not going to work anymore in manufacturing -- that we are accustomed to? $35, $40 is not would work anymore in manufacturing. francine: it is possible in london the think about modeling a possible trump presidency, i don't know what that means for your spending, your governments, and also foreign relations. >> i totally agree with that in a sense that remember, we are a nation.or we have a lot of creditors that we own money to. a lot of trade is intrafirm.

it is companies trade, not countries. hugely disruptive the global supply train if we go down this protection span. we would be hurting ourselves, not the people we think we are hurting. francine: joe, how do you model it? how does the fed model it? is it too risky to raise rates? >> i think politically heading into the third quarter, there is going to be hesitation on the part of investment and consumers. i do not think the economy runs away. i don't see that. you cannot model someone that talks about raising walls, building barriers. we know that from history. it does not work. we have to hold our breath that it doesn't happen, that cooler heads prevail. and that every politician moves to the center. and that is a procter & gamble trading a believe 28 times forward earnings, we're pricing to perfection, dividend

growth is a yield proxy. my radar is up. is yours? >> yes. we have been in this low yielding environment for so long. dividend payers is a crowded trade, no doubt. so: joe quinlan, thank you much with your patience. francine, i needed update on egyptair. before that, i want to go to one tweet -- for bait read this him. you can see it nicely on the screen. we have concerned if this is a legitimate tweet. we believe it is. all areo say within reporting this morning, there is not one iota of fact in what mr. trump says about a terrorist attack.

francine, do you agree with me from your desk in london? this is absolutely right. we heard from the french president and the french foreign affairs minister, basically saying they do not want to speculate on the cause of the plane's disappearance. they say the airlines as the cause has not been confirmed. a of world leaders say they want to make sure they get their facts right. even though donald trump has better facts on the ground on the ground, here in egypt, we could infer from his tweet -- tom: i want to suggest with our conversations with our bureau chief in cairo, i think he was wonderful this morning, the backdrop of how egypt has faced these tragedies. obviously, i believe 20 is ago, 17 years ago, the horrific egyptair crash, but moving on to more recent events, francine, including the russian airline and the hijacking that leads to a fragility around these events this morning.

francine: yes, tom, and it is important, just remind everyone, we don't know the cause of what happened. we do not know what happened to the plane. it is not been identified. we can report with certainty these midair emergencies are rare, especially for a relatively new plane. if you look at the track record, there has not been anything substantially wrong and this was a plane from 2003. tom: the most important interview this morning, francine, he said for a plane to disappear this late in the flight, he would describe a 10% likelihood to it. so this is a very rare event. it is usually at the beginning of airplane flights. francine: it is. we have been -- again, this is very early days. what, 10 hours into this.

he said disappearance of an airline at cruising all to do, we understand, although this was conflicting reporting, that there was no distress call, again, it raises so many questions, which is why a lot of world leaders for the moment are just not speculating on the cause of what happened. tom: we will speculate that we will stay with the story this morning. liv with a bloomberg terminal, will aggregate all of the information we know. bloomberg will pick up the story on bloomberg television. lacker -- jeffrey lacker with michael mckee. joe quinlan joining us as well from u.s. trust. this is "bloomberg surveillance." ♪

david: bond investors prepare for action. fomc minutes show a central bank ready to hike rates. jon: management under pressure. a meeting in frankfurt.

david: a u.s. airbus and route utecairo from paris -- en ro to cairo from paris goes missing. we have the latest. a warm welcome to "bloomberg ." a very busy morning. we are waiting for walmart earnings to come out. here's the market situation for you. futures softer in the u.s. in europe, we rolled over, it is the federal reserve minutes aftermath in europe. dax -- we will get to the