president trump orders accrue missile attack after accusing me using chemical weapons. backed the strikes. we have the very latest. today, investors await the latest u.s. jobs report. will a strong membership to

market expectations for more rate hikes in 2017? and talks with tusk. theresa may hosts the european council president at downing street. this is bloomberg "surveillance ." good morning. our top story. the u.s. has launched a cruise missile attack against syria two days after accusing a a ssa'd's regime of using poison gas to kill scores of civilians. the syrian air field from which the chemical strike is believed to have been lost was tomahawk missiles. during the election campaign, president trump vaulted past u.s. leaders for getting embroiled in conflicts. he says this action is justified. president trump: it is in the vital, national security

interests of the united states to prevent and deter the spread and use of deadly chemical weapons. there could be no dispute that syria used banned chemical weapons, violated its obligations under the chemical weapons convention and ignore u.n.rging of the security council. putin condemned the attack is an act of aggression that will cause damage to relations with russia. officele, theresa may's says the u.k. government fully supports the action. let's take a look at how markets reacted to this. waythis really nin a overshadowing the job support that is coming later today and the meeting between xi and president trump happening in mar-a-lago. you can see the 10-year treasury yielded down one basis

point. it earlier hit its lowest level since november dropping its lowest at 2.29%. the yen, a weaker dollar off by .2%. money moving into the safe avon is gold.et that gold hitting its highest since november at 1.2. and oil in fact hitting a one month high. wti above $52 a barrel there. now, joining us live from florida where president trump is meeting with chinese president xi is bloomberg's chief white house correspondent. great to see you. so, this meeting, of course, between president trump and president xi overshadowed by the offense overnight. into contextase, for us how this latest action fits with donald trump's foreign policy up to this point.

this is the first test of president trump's foreign policy in the first time he has used aggressive military force against a foreign government . last night here in mar-a-lago he was meeting with the chinese president xi when he left the hisings and met with national security team and ultimately decided to deploy those 59 tomahawk missiles deployed from two navy ships on a syrian airfield, the same airfield where u.s. officials believe some of that chemical weapons was used earlier this week by the syria president bashar al-assad regime against innocent civilians, women and children. so, clearly this is a shift not only in tone but also in policy. i can remember covering candidate donald on the campaign trail and he would say that perhaps a regime change against assad was not something that his

administration with focus on. 80 days into his administration, clearly he is signaling not only to the united states but also to the world that he is taking the assad regime seriously. he has received praise from germany, the united kingdom, as and europeane allies for this response as well as from top lawmakers in both parties in washington on capitol hill. there have been some dissenting voices. congressrly those in who feel that he perhaps should have gotten congressional approval ahead of the missile strike, but i can tell you that i spoke with one senior aide to paul ryan, a republican, who told me that the trump administration reached out to multiple allies in washington and on capitol hill as well is around the world to alert them this attack was coming. it was not something he was trying to hide. nejra: as you say, perhaps a

shift in tone. i'm wondering, will this change the tone at all for the visit of becauset xi jinping, before we got these developments overnight, there was a real tone of friendship struck. >> that is a great point. in fact, the two areas that president trump as well as president xi wanted to focus on during their two-day summit in palm beach, florida, was, of course, trade, but also foreign policy with a special focus on north korea. ae chinese have come out with statement saying that they hope to utilize political measures as a result of syria. so, that is a bit more of a tempered response. not expectingll a joint conference today from president xi and president trump. yesterday we did receive word from sean spicer that there could be a joint statement of

sorts, but that, of course, was before all of these developers had unfolded. nejra: thank you so much for that. let's bring in our global cohead deutsche bank.at great to have you on the program. i want to get your first reaction to the developments overnight. we have seen a move into the safe haven assets, but nothing very extreme. would you say that is in line with where the market is on this in terms of not really being able to assess it until we see some sort of more clear response from russia? makes sense.nk it you have the symbolic element of this being the first military action by the new president or the real question for markets is whether this is an isolated event or at a broader shift in the geopolitical allies and relations between the u.s. and russia. so far it does seem to point to a lot more narrower attempt at limiting and what the assad regime is doing.

to the study does not mark a bigger shift, it makes a lot of sense that the market reaction has not been that big. nejra: if we look at the 10-year treasury yield, we saw a test some technical peers with the fibonacci level on the blue line. we have been talking all week about how 10-year treasury yields have been stuck in this range. i did see a comment from someone this morning, though, that said that off the back of these geopolitical developments, we could see that yields go as low as 1.85%. is that something you would agree with and what would it take to push it to that level? george: to get these bigger market events you need to see evidence that this is, what happened overnight is broadening out into bigger policy changes out of the u.s., particularly in relations to russia. i think it is very unlikely we do see such a big move in treasures if we do not see such a big change on the political front. what the treasury market has been burdened with is this very large shot position that has

been in place since the start of the year. that is where it gets trickier. if you have these events, they can be -- because high-yield has been a fairly consensus since the start of the year. nejra: i was asking kevin about it just now but these events have to some extent overshadow the first day of the meeting between donald trump and president xi jinping. so far they seem to have struck a cordial tone. what are markets going to be looking for concretely out of this? out of the second day of the meeting. i do not think we can be looking for a lot. it is going to be the tone, the body language, the fact that they are building a working relationship. in the sense of concrete policy, i think we have to wait. as soon as the meeting is over, we will focus on the treasury report around currency and ablation. and the details around trade

policy. but we are not going to get any of that out today. the market will look at the body language but a thing expectation is pretty low in terms of what would come out of it. the currency manipulation, with that be justified for donald trump to bring up, given how the yuan has been trading in a range recently? george: it is interesting because if you look at what was happening before the election, it was a high issue on his agenda. since then, his treasury secretary has been saying we are just going to be following the standard process in terms of branding china a currency manipulator. if you look at the criteria that needs to be fulfilled for chila na to be branded a manipulator, they are not fulfilled. it is below the threshold. the reserves, the intervention is actually the other way to defend a weaker currency. so, the criteria not being fulfilled and maybe that is one reason we are not going to get c hina being branded, not today or

over the next few days around this meeting. nejra: do you expect any sweeteners to be offered either way, if anything to look like something has come out of the meeting ieven if nothing was done? george: we have been getting evidence of that overnight. some potential for quite cooperation between china and the u.s. on the investment side. i think we will see some positive headlines just to help make the atmosphere positive. but in terms of market relevant news, i think there will be a lot more contained. nejra: we will get on to market relevant news after this. but let's get the latest headlines now. sebastian: the u.s. has launched a cruise missile attack against syria. the pentagon says 59 cruise missiles were aimed at hangers and planes and munitions storage. syrian state tv said six people were killed. the assault comes after white

house accused assad's regime of using poison gas to kill scores of civilians. vladimir putin condemned the attack as an act of aggression against a sovereign state that will cause considerable damage to relations with the country. in london, a woman injured in the westminster terror attack has died. the 31 year old has yet to be identified by police believer to romanian national who was visiting the city. she is the fifth person to die sood slam the car into pedestrians. he was shot dead by police. samsung has shrugged off scandals over safety and corruption claims. it reports higher-than-expected revenue. $8.7 billion. those are your bloomberg headlines. nejra: thanks. u.s. jobs data at

1:30 p.m. u.k. time. nonfarm payrolls are expected to have risen by 180,000, compared 2235,00050,000 -- expansion in the previous month. it will be scrutinized for how donald trump's campaign to create and retain american jobs is progressing. our guest is still with us. to ask about this jobs report in terms of how consequential it actually is. would you agree that it is less consequential for monetary -- another rate hike made up the imminent, or is it needed to confirm expectations of a rate hike path? george: what is interesting about the job reports is the stability. we have been growing at a very stable pace over the last one year or so.

i think we will need a very big surprise on the employment numbers to trigger any sort of shift in the way the fed is thinking. we have got the minutes a few days ago, and there we were getting strong indications the to twoee's converging more rate hikes. i think it will take a surprise on the headline number. what is more important over the rest of the year is wages and whether the wage component of this report starts rising and that the inflation tension is going up. i think we will gradually shift from the headline number to the importance of wages. a: just to go back to that headline number in terms of the big context, there is a great 7573, showing how hiring is shaping up to be the best start to the year since 2012, something you just alluded to, actually. that, in thatt context, and then say, ok cut, we need to shift and look at wage growth, what sort of wage

growth figure would cause concern for inflation expectations? i have spoken to some people who said even if we get that wage growth at 2.7%, that is actually still, you know, we should be looking at 3.5. george: that is exactly right. i do not think one number can cause a big shift but the key question is the trent. we have been seeing evidence of a trend of wages picking up, but it is very moderate. the question is do we get consecutive job reports. if you look at the minutes from a few days ago, this is no longer just a question about the pace of freed rate hikes. it is about balance sheet policy. the market may be underestimating the potential for the fed to start balance sheet reduction over the end of the year because the minutes wide signal thiere's agreement that the balance sheet reduction could start it when we look at market pricing, we do not think that is priced into the markets. that is interesting.

the markets underestimating a might happen this year. all of the discussions i was having yesterday was suggesting that that is what the market is focused on. george: we look at various measures of the bond risk premium. that looks at the return required to compensate you for the risk you are holding. if you look at the bond risk premium, update big driver of that is the size of the fed balance sheet. it is still very depressed. so the market does not seem to have adjusted, even though everyone is talking about it. if you look at that bond risk premium and you look at the prospect of the wind down of the ecb balance sheet, it remains very low. quick one. put aside the reaction to the geopolitical risk today for the dollar and treasuries, if you put that aside, trading a little bit sideways all week. risks asymmetric in that a weaker than expected number from the jobs report today would have a greater effect on markets been a better than expected when. if so, how low could we see the dollar and the 10-year yield go?

risks arethink the quite symmetric, actually. the reason is because of position. the market is very well-balanced heard a lot of the dollar long positions that were there at the start of the year have been pared back. the technical picture is more difficult because we are at the lower end of that range. in currency space if you look at the euro against the dollar, we are in the middle. we are not anywhere close to seeing a big out of volatility. nejra: interesting. the risks are symmetric. great to have you on the program. now, up next, we focus on the future of the world's second-largest economy with an exclusive interview with the chief advisor to the china banking regulatory commission. this is bloomberg. ♪

nejra: you are watching bloomberg "surveillance." a reminder of our top story trade u.s. has launched a cruise missile strike against syria targeting hangers, planes and air defense systems at an airfield. the attack, which comes after the white house accused the of using poison gas against civilians, killed six people. intact as ans the act of aggression against a sovereign state that will cause considerable damage to relations with his country. trumps president xi and

meet face-to-face for the first time, let's focus on china and the future of the world's second-largest economy. i'm so pleased to introduce andrew shung, chief advisor to the china banking regulatory commission. he joins us for an exclusive interview. mr. shung, so wonderful to have you on the program. thank you so much for joining us. so, a very key meeting between two of the world's most powerful than, or the meeting in mar-a-lago today, what will president xi jinping need to get out of the meeting for it to look like a success at home? >> i think cooperation is absolute. president xi said there is 1000 chinas why the u.s. and should cooperate in no reason why they should not cooperate. i think the world economy depends upon the. and so, the two relationship is

extremely important. nejra: absolutely. i mean, one of the things that we have been anticipating that perhaps might come out the meeting, though we are unsure if it will or not, is labeling china a currency manipulator. do you think that is justified, given where the yuan has been trading this year so far? mr. sheng: absolutely not. i think the chinese have been spending a lot of money keeping stable.inbi to everybody's advantage. you know, so there is no reason to call the chinese a currency manipulator. nejra: is china continuing to clamp down on capital outflows? think, you know, the issue here is that you must realize that chinese capital outflows have been fairly large. and that is a natural process in

which chinese capital is going , invest abroad, and that is quite natural. the chinese reserves have gone trillion.illion to $3 the exchange controls have always been in place. to compensate or, rather, balance between capital outflows and domestic policy stability issues. i think the people's bank is doing a very good job maintaining that right balance. nejra: but are the restrictions increasingly impacting companies day to day transactions, such as paying for overseas invoices and salaries, for example? mr. sheng: no, i think, you know, what the actions on the stopcing issues are is to companies over inflating their invoices, you know, as a

backdoor way to export capital. anhink that that is enforcement action that is natural in any country. nejra: what about nonperforming loans? have we seen a peak in bad lo ans? the nonperforming loans is a concern when the economy is going to a transition phase from an old economy to a new economy. china's economy is moving towards an internet economy faster than anybody else, including the united states. and therefore, there is a transition cost to be paid as china moves out of the old smokestack economies which are polluting, excess capacity over manufacturing, etc. these areas, of course, are the exposures. but the chinese banking system is very healthy, we are very high capital adequacy ratios, and managing nonperforming loans to restructure of the problem

borrowers. nejra: andrew sheng, chief advisor to the china banking regulatory commission, thank you so much for joining us. great to have you on the program. up next, as the u.k. and the e.u. tier four two years -- prepare for two years of brexit talks. this is bloomberg. ♪

nejra: welcome to our weekly brexit show live from bloomberg's headquarters in london. reminder of our top

story. the u.s. has launched a cruise missile strike against syria targeting hangars, planes and munitions storage and air defense systems. the attack, which comes after the white house accused assad's regime of using poison gas against civilians, killed at least six people according to syrian state tv. vladimir putin condemned the attack as an act of aggression against a sovereign state that will cause considerable damage to relations with his country. let's take a look at how the markets have reacted to this. unsurprisedly we have seen a bid for safe haven assets. the 10-year down one basis point at 2.33%. we did see it dropped to its lowest level since november earlier, dropping as low as 2.29%. the yen has bid, dollar-yen, the dollar .2% weaker against the yen. the yen heading for a weekly gain. money moving into gold, up 1%,

at its highest level since february. we saw it hit its highest earlier in the session. crude oil spiking as well, hitting a one month high up 1.7%, above $52 a barrel. now let's get a roundup of the week's main brexit stories. sebastian: some of britain's top officials headed out for global trade measures this week. theresa may was in the middle east while chancellor philip hammond and the governor of the bank of england mark carney went to end it. on a visit to the philippines, liv fox told bloomberg why the region is key to britain's economic future. >> asia-pacific is the center of gravity for the global economy. so, there are enormous opportunities here in both terms of exports but also of investment moving in most directions. we're looking to see how we can expand u.k. exports which are too low, and we have to get

those exports going up in both goods and services. e.u.tian: stocks -- as the debated its negotiating position for brexit talks. nigel farage accused of fellow mp's of acting like the mafia before withdrawing the discretion after protests,. only to replace it with the word gangsters the e.u.'s chief brexit negotiator says the u.k. must settle the details of his divorce before discussing any future free trade deals or risk trashing out without an accord. theresa may and donald tusk agree to look for ways to ease tensions as britain leaves the european union. the pair met yesterday for their first face-to-face talks since may triggered the formal process. global news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. this is bloomberg. nejra: thanks so much. we have got some breaking data for you on the u.k. economy, actually, just crossing the

bloomberg. so, february industrial production falling 0.7%. the estimate here was actually for a 0.2% rise, so that is a miss there. we have also got manufacturing output falling .1%. the estimate was for a 0.3% gain. sterling reacting off that. 1.2434, the second day of declines for the pound. my first guest on today's brexit show has high-level experience negotiating with the european union in his time as prime minister of sweden. he led the talks that saw the country joined the e.u. in 1995. recently, he served for 8 years as sweden's minister of foreign affairs. carl bilt is in our stockholm studio. welcome to blumberg. so great to have you on the program. thank you for giving us your time. you obviously have extensive diplomatic experience. i'm wondering, as we go into

these difficult negotiations between britain and the e.u., is there a way to go about these diplomatically but with both sides getting what they want? if not, where are we going to see the shortcomings? bilt: at the end of the day, there has to be some sort of agreement. i think we are heading towards, at the end of the day, it will end up with a comprehensive free trade agreement between the european union and the .u.k. it is going to be roughly like the agreement with the ukraine. there will have to be a flanking agreement on a couple of issues -- services and important part of that. but in order to -- one must settle the divorce proceedings. those are likely to be difficult and acrimonious. and then it is going to take some time. there will be a need for some sort of interim agreement as well. the risks are more in the process at the moment than they

are in the final solution. nejra: i mean, mr. bilt that is where the key sticking point is. wants to address a trade agreement simultaneously with the exit arrangement whereas the e.u. once a focus on the exit arrangement first. should the u.k. give up hope of getting any kind of trade deal with the e.u. within that two-year timeframe? mr. bilt: yes. complete a trade to within the two-year timeframe, that is not doable. even if one were to settle all of the divorce proceedings within the next two weeks or something like, which is not going to happen, the trade negotiations are going to be complicated and will take some time. but i think it is important that once one has agreed on the essentials of the divorce deal, one reaches the agreement on the outlines of the final agreement, the trade you, or whatever you call it, or partnership or whatever will be the name for it.

then it is going to take quite some time to go into the details of it and finish what is going to be in thousands of pages, most probably. nejra: should security cooperation be part of the negotiations, and how should the u.k. and e.u. go about that? there are security elements that are parts of the cooperation with in the european union. that is primarily europe po l. the danes have some difficulty. but i hope that will be the possibility of some sort of solution. they can't be fully part of europol but they can be associated. military things are primarily nato intelligence and other issues outside of the e.u. and are operating according to other schemes that will not be affected. thea: mr. bildt, you led

government that negotiated and signed sweden's accession to the e.u. what is your assessment of the e.u. today in comparison to the when you entered in 1995, and what does the future look like? mr. bildt: of course, it is a different bird. primarily because of enlargement. the big thing that happens -- apart from the euro, which is important in itself, but it was the fact that was the enlargement. 100 million people bringing stability to central europe, the baltic states down to romania and bulgaria. that has been to mentally important for the peace, prosperity and security and stability of all of europe. then we are seeing a gradual deepening of cooperation, notably now with the need to get together to handle the refugee crisis. rocky times with

the economic crisis but we are. out of that. the economies are doing fairly well so, i think that the rocky timey own country but in other countries we have seen a surge since brexit. forh is less out of love brussels but out of sort of the recognition that leaving is a messy process. and life outside of the european union might be difficult. ildt, formerb prime minister of sweden, thank you for joining us this morning. up next, after theresa may and held their first face-to-face meeting since the triggering of article 50, we mp.k to a pro-remain this is bloomberg. ♪

nejra: welcome to our weekly brexit show live from bloomberg's headquarters in london. we've just got some breaking lines across the bloomberg from russia's foreign minister. talking, of course, about these u.s.-serious strikes that happened over. probably nog, casualties among russians in the u.s. strike, saying that the serious strikes are further undermining ties with the u.s. the u.s. strikes look much like raq campaign and they are an act of aggression. of course, we have had various reactions to the u.s.'s action.

the u.k. coming out in support. russia opposing it. let's check in on the markets, anna edwards has been following all the action. we have been seeing quite a bid for haven assets. anna: absolutely. also a move away from russian assets to connect back with what you are commenting on. i brought up the gmm function. you can set this to show you market moves. i've selected the headline, u.s. launches strikes on syria. that broke at 2.14 in the morning u.k. time. russia dominated, the ruble selling off to insure against russian debt default and more expensive for the russian government to borrow. the markets we think that supposedly present -- the ra prochement we thought we would see since trump was elected. the higher oil price that we saw

as a result of the tensions in the middle east coming to the fore. the british pound losing steam in the last half-hour since we got that manufacturing production data. the haven assets, very nicely pikced up -- picked up by this chart. thisold, the japanese eyn, is the oil price. you can see the spikes we saw in trading activity around the breaking of that news. it is a to point out that the unwound as we are gone to the market day. investors have questions what this means -- where are the broader implications and perhaps we have yet to get to the bottom of that exactly. this is 7608 on the bloomberg. this is volatility in euro stocks. thetility has climbed in last three weeks. this is the longest winning streak in volatility term since

the brexit vote, suggesting as the political calendar looks very packed for 2017, investors increasingly nervous about that, and putting her money to work in the options market to reflect that. nejra: thanks so much. anna edwards. now, my next guest was one of the more than half of conservative mp's who back to remain vote in the u.k. last summer, during the debate on triggering article 50 he said he was sick and tired of being told that holding the government to account amounts to trying to block brexit. the former culture minister in the u.k. government, welcome to the show. thanks so much for joining us. obviously, the outcome, the fact that we are going into brexit is not what you wanted, but what do you make of the letter that theresa may sent to the e.u. and the way negotiations have begun? >> i think it is very early days. it is a two-year process but i have argued it will take much

longer. i'm not sure i agree there will be a hard stop in march 2019. i think the letter is a fine opening gambit but this is a very fluid situation. there are so many moving parts that we have to discuss. i think it is impossible to say what is going to be the first issue. are couple ofere points to emerge and i think it is quite clear the european union wants to finalize our divorce bill before we start talking about trade. and i think the government will move towards that position. i think there has been movement be on the letter with theresa may indicating that free movement might well continue after 2019. i think that would be welcome to a lot of businesses that rely on european telik. personally, i'm concerned that the government linked security to our deal with your. i think it is an all or interest to continue to cooperate on security regardless of what happens in terms of trade. nejra: absolutely. we will suddenly talk more on security later, but on reaching a trade deal in the two years in conjunction with the exit talks, you were saying that that is

looking unrealistic. how could theresa may's government sort of sell that to the public in the u.k. as a success? >> i think that is going to be the challenge for theresa may. those of us who are very pro remain have been concerned about the government hard brexit tone. having said that, i can sort of understand where theresa may is coming from because i do think this is going to be a very fluid process. anything, as i say, i do not think it will end on march 201 9. there will be some bell and everyone will go back to their positions. some things will carry on. some element of free movement will carry on and some element of paying into the e.u. budget will carry on. and theresa may will find it hard to sell that back to a brexit public. that is why i think she has been uncompromising in her position and the train yourself as a hrd brexiteer, because i

think people trust her. she is overwhelmingly popular as a prime minister p she can sell it back to the british public. i think people have to be realistic because europe is our main trading partner and we have deep ties. nejra: how do think she should approach the issue of scotland? >> scotland is a tricky one. i understand the scottish position because they voted for a referendum, in referendum before brexit. now they are saying things have changed. and i agree with them. having said that, without wishing to come across as ifense si -- a fence sitter, agree with theresa may this is the time is not right. the right time for scotland to have a referendum, theresa may has not ruled it out, is to have it after brexit is completed. once the terms of a deal are clear, and i think the main elements will be very clear by march 2019, then scotland and the u.k. as a whole can return to this issue. i think theresa may is right to say that you have just had a

referendum. brexit just change things but we cannot have a referendum when we do not know what the terms are going to be. nejra: i think there is a risk that she will have to relent and give them a referendum earlier than she wants. >> i think people know what is going on. to keep it high in their agenda in terms of their elector strategy. i'm a tory, so i'm partisan. if they can distract people and talk about independence and also increase the grievance agenda, that suits them. i suspect in the back of his mind it suits them quite well to wait a few years. .k. cultureformer u minister stays with us on our special brexit program. up next, showdown in syria. the latest in the wake of the u.s airstrikes and the market reaction. .that and more still to come. this is bloomberg. ♪

nejra: welcome to our weekly brexit show live from bloomberg's headquarters in london. a reminder of our top story. the u.s. has launched a cruise missile strike against syria

targeting hangars, planes and ammunitions storage at an airfield. the attack, which comes after the white house accused assad's regime of using poison gas against civilians, killed at least six people according to syrian state tv. vladimir putin condemned the attack as an act of aggression against a sovereign state that will cause considerable damage to relations with his country. let's take a look at how the markets have been reacting. still seeing that bid for safe haven assets. the 10-year treasury yield down one basis point. we did see that drop to the lower end of the range, hitting 2.29%, the lowest since november. dollar-yen 1.1068. we are seeing the yen come back but it is heading for a weekly gain against the dollar. l gaining, even if not as much as earlier. gold hitting its highest since november, up 1%. and oil spiking as well.

wti crude holding above $52 a barrel, hitting a one month hig h. with me today on the brexit show the former u.k. culture minister who supported a remain vote in the u.k.-e.u. referendum. on theat to have you program. with these develop its overnight, it does seem pertinent to talk about security aspects of the brexit negotiations. you've been saying that it perhaps was not the best approach for theresa may to in any suggest that security might be a bargaining chip. >> i don't think we should tie up security with our negotiations with the european on trade, which are two separate issues. even more with what is going on in syria, for example, the huge security threat that faces the west and europe, this is the time we need to be united. the u.k. is a key member of nato. . that is not on the table the mosto probably

advanced nation in western europe in terms of cyber security and surveillance and intelligence. would to suggest we withdraw cooperation with our european partners i think is fanciful. our security depends as much on sharing intelligence as the european security does. we are able to spot terror cells operating in europe, that keeps us safer as well as keeping our european neighbors safe. it should not be a bargaining chip, and we should deepen our cooperation as much as possible. nejra: i am glad you brought up cybersecurity. slightly separate to what we are talking about today in terms of this is and syria, but something, you know, you're very much the expert on, having worked for the department of culture, media and communications. where do you think the lines could be drawn here, and what would be the biggest threat in these negotiations with cybersecurity? >> we offer a very closely with our european partners on cybersecurity. for example, the wrigley tours come - -the regulators come

together. offcom not want to see losing its influence. it's highly regarded by our european partners. we are about to incorporate the data protection law that europe has just passed. we negotiated together on net neutrality, which is a way of ensuring that traffic can move freely around the internet. all of these issues are issues on which we can cooperate. there is a kind of weird brexit opportunity because i always thought the should be greater corporation between the u.s. and europe. because we know that there are many states involved in covert, cyber war against us in terms of undermining our businesses but attacking our infrastructure. we need to cooperate with our european partners absolutely. nejra: thank you so much.

the former u.k. culture minister. thank you for joining us on our special brexit program. a wonderful opportunity to have you on the show. bloomberg "surveillance" continues in an hour. guy johnson will be joined by tom keene out of new york, and they will be talking to former italian prime minister letta and a leading economist. in the meantime, they will be bringing you all of the latest on the u.s. strikes against syria after the gas attack. all of this raising the stakes with russia as well. this is bloomberg. ♪

♪ tom: previous attempts at 's behaviorsad

failed. president trump orders in attack on syria. secretary tillerson says putin was complicit or incompetent. it is jobs day in america. is there jobs growth in a fully employed america? president xi hears firsthand from president trump of the syrian attacks. this is "bloomberg surveillance." i am tom keene in new york. guy johnson in london. how will the united kingdom respond? guy: i think firmly with the united states. we have had comment from the ministry of defense which backs with the president decided. the point that you made that the president of china heard it from the president of the united significant.ly is

it is easy to draw a line between syria and north korea. tom: we will be covering syria and jobs day. nicholas burns will join us in the next hour. briefing,orning here is taylor riggs. taylor: 59 cruise missiles were fired at a syrian airfield after accusing bashar al-assad's regime of using chemical weapons to kill civilians. trump: a targeted, military strike on the airfield in syria from which the chemical attack was launched. 7lory: syria says at least were killed. russia calls the attack and aggression. that thein has argued chemical spill was the result of

syrian forces hitting a chemical arsenal. president xi jinping's in florida and they will have discussions today. president trump is expected to openpresident xi to chinese market to of american goods and pressure north korea on their nuclear weapons program. the verge of giving president trump his first legislative accomplishment, on the verge of confirming neil gorsuch to the supreme court. they had to change to a simple majority. and the u.k. london employers having trouble finding workers, frexit may make it harder. london has the fastest drop in workers in 15 months. the recruitment and employment federation is across the u.k.

companies had trouble finding employees, especially in finance and technology. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: a data check on what did not happen overnight. futures spiking down in the 9:00 hour, negative three. with a lift up, $.66 on west texas intermediate. guy has important bank of england news. the yen 110.67. markets, calm. guy: let's talk about the other numbers we need to focus on. we did see a move out of the range of the u.s. treasuries, we are back in that. german yields, we have seen weak

manufacturing data, weak housing data. bankve the governor of the of england speaking at an event in london, urging banks to have contingencies for brexit outcomes. .o comments on monetary policy he is addressing financial regulation. there should be no bonfire of financial regulation, but he says banks will protect their retail core. will do ise different. we have so much news flow we will do shorter, sharper, focused interviews. we must speak with kevin cirilli in florida with the president. what is the likelihood of further attacks? kevin: president trump said repeatedly he does not want to broadcast specifically what his military strategy will be. he said as much during his press

conference in the rose garden flint he described the syrian 's actions against civilians utilizing chemical weapons as "heinous" saying it lines.""many, many red diploidomahawks yesterday, being fired into the same battlefield where the -- deployed yesterday, being fired into the same battlefield where the attack was ,aunched, sending a message receiving praise from counterparts in the united kingdom, germany, and france. xina, with chinese president in the united states, saying they hoped to realize a political response. the only player so far that has criticized this is russia. the uss porter is roughly

1000 miles to fire a tomahawk missile. turkey does not have that luxury. how will the turks respond to what is going on south of their border? ments, ihose develop will have to get back to you on the military angle. secretary of state tillerson saying russia was either complacent or incompetent in their dealings with syria. russia saying they do not approve of president trump's military strike yesterday. again, at home in washington, this has received somewhat praise from both sides of the aisle, including from the top democrats in the senate and house. senate minority leader chuck schumer and house minority leader nancy pelosi saying this

was a measured response. there are some dissenters who said they would have preferred president trump get congressional approval. that is the politics angle. no word if we will hear from president trump again today with havedent xi, but we could a joint statement of some sort later today. guy: let's talk about how the chinese are responding. about drawingking a line between the response on syria and the response on north korea from washington? kevin: when president trump , he saidn mar-a-lago he wanted to talk about trade and foreign policy, particularly focusing on north korea. now, the shadow hanging over their second day of talks is syria. guy: thank you, great work. bloomberg chief washington correspondent kevin cirilli

joining us from florida. let's bring in another voice into the conversation. good morning. was this a proportional response? depends on your point of view, doesn't it? the russian point of view, they describe it as a crime last tuesday resulting in fatal criminal code poisoning that requires an investigation, making allegations about what secretary tillerson said that no doubt this was a chemical warfare attack by the syrian government. says thisn government needs to be established and the use chemical weapons from turkey, there have been several documented cases of this during the history of the syrian war, and this needs to be established. from that review, any response

is disproportional by definition. guy: what happens now? tracksident putin's record is never to do nothing. he always reacts. we will have a rhetorical reaction in a few hours time in the united nations security council where the usual bitter speeches will go on. for something more concrete, secretary tillerson said regime change was back on the agenda. last week he said the opposite 's future is a matter for the syrian people, like the russians have been saying. he has put the ball in the russian court saying what are you going to do? putin combines strong reaction

and can be aggressive. that is a tricky balance. if i predict something i will almost certainly look stupid within days, hours, or minutes. withthank you for being us. all of us have a collective memory of how long we got our intelligence on russia decades ago. do we have good intelligence of their military assets and ability to extend the distance to syria? do we know what the russians have and what they are doing? >> the intelligence failures almost always have to do with correct interpretations of the counterparty's motives and goals, rather than hard intelligence about this or that piece of military hardware available in the theater. you don't have to be in

intelligence to know that russia deployed advanced capabilities in the syrian theater and control the airspace. it does not allow them to take out cruise missile attacks, but would allow a russian response. i know that is not the scenario. of directa question .ilitary confrontation what i think investors should focus on is if you have a proxy war, the proxies can run out of control. that is what we should worry about. tom: thank you for being with us. we will continue our discussion through the morning on american jobs day. in the next hour, nicholas of theinvestor burns harvard kennedy school will join us in the 6:00 hour.

from london and new york, this is bloomberg. ♪

guy: the market is more relaxed about what is happening in france. you can see that between the bunds and the lac. does that reflect reality? pen'sarn that marine le chances of winning are underestimated. we are joined by the former prime minister of italy who said would threaten the eu's existence. what is your read on the french election? a the french election will be

eu lag indoors. be -- will be not only french elections, but the european elections. willif mr. macron wins that solve europe's problems? step.is a good for the first time we have a french leader campaigning with the european flag the hind him. french situation to the german electoral campaign where both are pro-european, after the 2 elections, france and germany, we can have a european relaunch if macron win s.

big relaunch of european integration. in the case of a marine le pen victory, it is game over. you wonderful to speak with , particularly with your family's heritage over generations of italian politics and attempting stability. help me with the question, how donald trump are the marginal ?oters in europe how much like the president trump voters are in france, italy, or other nations? do they exist? enrico: trump is influencing your ian politics because of his attitude towards the establishment -- influencing european politics because of his attitude towards the establishment. trump is influential for the marine le pen campaign. is what willlear

be the influence of the night's attacks. it will create a gap between france and putin. tom: you are qualified to talk about the productivity of a future europe. week inet a longer work france? a longer work week in italy? or, will that not happened? italy neednce and both country's internal reforms, european investment growth back. important for europe to have france, germany, after the , determined to relaunch

investment at the european level. we had draghi and the ecb working for european stability and recovery. it is not enough. not only can the central bank be tougher tack and asked. we need european institutions and government, but we need a clear pro-european relaunch. guy: can i ask you a quick thetion about administration and how stable it is? last theink he can administration into 2018? enrico: it is necessary to get to the natural end of the legislature. the natural end is february/march. i hope the elections will take place not before february/march

2018. i hope the elections will take place after an electoral law allowing the country to get elections without the fear of an unstable legislature, and second to have economic measures to avoid sanctions for excessive deficit procedure that the european union is today saying to us. tom: the 55th prime minister of etta., enrico l it is jobs day amid the news of the american attacks on syria. we will focus on the american economy. stay with us. this is bloomberg. ♪

the international head of european equities joining us on set. a very muted reaction to events overnight, the market getting used to these stories and the muscle memory is to ignore them. is that what we are seeing, or is there something else to watch? top downof these events are disturbing markets less and less. even the temperature around the french elections, the stakes that were raised by the former

italian prime minister. the market has been relatively relaxed around the french election. guy: someone say that valuations seem stressed and i am struggling to find things to buy. markets theveloped story is more mixed. the u.s. market looks more extended from a valuation perspective, but you could argue that many companies leading the market in the u.s. are structurally higher growth and higher multiple businesses and you can make an accommodation for that. other markets in the u.k. look attractive on a long-term basis. relative to bonds, that is important to consider. tom: one of the great features of the last five years is the under estimate of

double-digit returns. are you thinking of doing double or high single-digit returns, or do we resorted back to a cloud of dust whether we are investing domestically or internationally? understand thei question, are you saying people have been consistently surprised on the returns from the equity markets despite conditions? i would say my view is as we look forward over the coming years, you might see less strong returns from the market averages. havee well due and could consolidation and markets, but that does not belie the possibility of substantial returns in individual security. you could enter a phase where the averages mean less for the equity investor. tom: paras anand of fidelity this morning.

greatly appreciate his attendance. nouriel roubini from the stern school of business and america and the international relations with of the attack in syria. this is lake cuomo in italy. there?i not guy: i have been once. this is one of the few events that puts davos in the shade. tom: this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." am tomnson in london, i keene in new york.

the attack on syria, we will give you coverage throughout the day. later, dennis ross will be with us. burns willnvestor join us from boston, the harvard kennedy school. scheduled inni moments. here is taylor riggs. taylor: pressure's president is condemning the u.s. strike against syria, calling it an act of aggression. u.s. warships fired 59 cruise missiles after accusing bashar usingad's regime of chemical weapons to kill civilians. president trump made the announcement from his florida resort. president trump: i ordered a targeted military strike on the airfield in syria from where the chemical attack was launched. taylor: the kremlin argued the

civilian deaths were a result of forces hitting a weapon arsenal. word of the attack came as president trump was with president xi jinping peered it may underscore the president's contention the u.s. is willing to take action on its own if china does not pressure north korea on its nuclear weapons program. to openident wants xi chinese markets to more american products. preparing to reverse policies that restricted offshore oil policies. the president will issue an executive order giving oil companies more opportunities to drill offshore leading to s sales in the arctic waters.

a 31-year-old woman was knocked the the river thames when man drove a vehicle into the crowd. he was later shot by police. i am taylor riggs. this is bloomberg. you have to live the old world to understand some dynamics of the united states, syria, europe, and russia. i can think of nouriel roubini as someone who links these 2 worlds. war and in turkey, raised in italy, working within the clinton administration. good morning. in turkey, raised in italy, working within the clinton administration. good morning. extend itse u.s. can

force upon europe, the middle east, and russia? in the world in which economics in geopolitics are connected, administration policies have geopolitical risks. is decision to strike syria a bit of a wag the dog element. if you're felling on domestic policy, you may need a foreign policy crisis. a few days ago they were saying we don't care about dictators or what they do in their own country. with president xi, he wanted the signal to be about north korea. there is no military option in north korea. you cannot find the nuclear bombs, even if you can find them , they could destroy south korea in a matter of minutes. this is where economics is

connected with geopolitics. tom: the mystery over the quality of the russian economy that backs mr. putin. is russia a frontier economy, emerging market, or a mystery we do not understand? it might be all of the above. it is clear the country is in long-term economic decline, becoming a revisionist power becoming more aggressive in the balkans,st, syria, the and the pressure is on europe as well. economically it may be fragile, but geopolitically it is becoming a revisionist power, and a dangerous one as well. guy: good morning. we have seen the u.s. urging europe to step up for its

moreary spending to become bell occurs in the eyes of moscow. how does europe do this? does it work? you see it happening? is clear that europeans will have to start because more on defense there are security threats coming from the middle east, russia, north africa, and they should spend more. for the u.s. to say that nato might be obsolete, maybe the eurozone and european union will not survive, is not supportive or a constructive attitude that should be given to your best allies. allies and signaling views against russia and potential enemies of the united states. ins the mr. macron w

french election, his answer is more europe and deeper integration. i might be slightly overestimating the point, but put it together for me. will europe these saved by more europe? be saved by more europe? nouriel: you need more integration, but my concern is even if he were to win it is not obvious that some of the integration pressures will go away. if le pen has more than 40% of the vote, the core of the country is against reform. may not be able to build trust with germany. is not france,

germany, or portugal, it is italy where an anti-europe party may come to power next year. tooy is too big to fail and big to be saved. the populist risk is in europe dutche the results of the election and likely results of the french and german election. they will be risks for europe ahead. the if we can turn to american economy before the attack on syria, will you advise the presidents of the united states and china about the border tax. factor involved in the calculus of a border tax? what would you advise president trump is the key feature of why it would not work? nouriel: it won't work for many reasons. illegal,e is it is second the value of the dollar

may appreciate and trade benefits will not be there. does not appreciate, inflation will rise. the people that will lose the oft will be the bottom 10% the income distribution. it is a regressive tax. it might lead to trade wars with the rest of the world. the bad news is it is a bad idea, the good news it will not pass in congress. there are not enough senators or representatives that will pass a border adjustment tax. the financing will not be there. the $2 trillion of revenue losses were supposed to be financed by the savings coming from the health care plan. now the money is not there. you'll have to do a reform that 30% to, maybe from

35%. time that use that with president clinton working on fiscal affairs and the advisetional tilt, to the present congress to expand the deficit, or stay deficit neutral, spending neutral, tax neutral with the new budgets? nouriel: if they expand the throughexcessively military spending, if, corporate tax cuts -- first, you will have market consequences. the dollar will go much higher. that will crowd out the recovery. white,as been elected by blue-collar who will be damaged by a stronger dollar that will reduce growth and hurt jobs and income among manufacturing.

the policy of excessive fiscal expansion is a bad idea. tightening sooner, faster, let alone a more hawkish fed. it increases interest rate for the dollar in the reaction to the fed with the fiscal policies that will damage the real economy. guy: thank you. u's nouriel roubini joining us from lake como. capital raisethe is done. 1.4%.akes bbk's ratio to this is bloomberg. ♪

guy: guy johnson in london, tom keene in new york. we go from the shores of lake where we find manus cranny. the vice chair of blackrock. he joins us this morning. thank you for joining us. morning and see an important move from the president of the united states of america hitting syria. what is the geopolitics message to xi jinping, who he is having dinner with, and russia? >> geopolitical risks are elevated. this is the first manifestation of it. need for greathe

power cooperation to be reestablished on firmer footing. the two big hotspots are the middle east and north korea. both require great power cooperation. in that sense, it is fitting that he american president is meeting with the chinese president today. it underlines the need to reestablish some form of cooperation with russia so these things can be tackled effectively. manus: if i look at donald trump's presidency, could this be a defining moment for he reaches globally to define who he is? >> part of the purpose of this meeting is to get to know him. many world leaders are trying to figure out where it will go in terms of policy. this is an opportunity to take another step, and i think it is important. manus: let's talk about economics. larry fink and jamie dimon

rallying concern about usa recovery. what you want to see from the trump administration to shift that argument? >> the markets have anticipated on u.s. economic policy that has yet to materialize. we are seeing question marks on how the administration will deliver on what has been priced in and expected. the other part is the animal spirits. we have yet to see capital expenditure, the next leg of the inflation trade in the u.s. surveys suggest sentiments are seeinge, but we are not the translation into capital expenditure and investments, the piece that is critical in establishing the next leg. what is more important, tax or re-patronization of

dollars to the united states? it is important. it is unclear how it will be funded. it is all connected. we will see what comes out of the process. mark carney urges banks to consider a contingency plan for brexit. is that something you and larry fink talk about, contingency plans for blackrock? >> governor carney is saying repair for all potential outcomes. we have a situation where you could have a deal in 2 years, a long transition, or no deal. manus: a cliff edge situation? >> that is the most critical one because that will lead you into space where it is not clear how you go on. the prime minister emphasized no deal is better than a bad deal, so we have to think about a

situation where there could he know deal. manus: disaster recovery, what does that force you to think about? relocating staff? >> the way we are set up, there is no urgent need to change anything. we have entities in europe, we conserve our clients. in a broader context we want to be closer to our clients any help. we spent a long trend to be closer to our european clients, that sector has grown in importance. we will continue that. brexit could accelerate that depending on the outcome. manus: before we started the conversation, deutsche bank got above 98% commitment to the capital raising. did you support the capital raising? >> i certainly welcome the increase in the capital base.

deutsche bank is an important part of the european banking situation. manus: are we getting to the point where europe is nonperforming -- we caught up in -- y and he said i read one of your offense. are you optimistic? do you think we are moving past the worst, or are we at the beginning of a new situation? >> we are past the beginning that it is being acknowledged as a problem. europe to remember that is financed by the banking system, not capital markets. and you have large stocks of nonperforming loans, it is an impediment to growth. the in pl problem in europe -- in europe is critical to getting growth sustained. the vice chair of

blackrock. tom? tom: greatly appreciated. we have more coming up. an exceptionally busy day. he'll gross will join us from janus capital. will join us from janus capital. also, ambassador burns from the kennedy school in boston. this is bloomberg. ♪

guy: live pictures of the kremlin. moscow's reaction is interesting in terms of the evolution of the bombing in syria by the united .tates overnight destroyers and over 50 cruise missiles. let's get to how everyone will step forward from this one. let's get to one of the best minds in bloomberg. from government coverage. andrew, we have seen some response from moscow, what should we expect now? wasew: the response

expected. were who backed assad critical, and those fighting assad were in favor. we had a more nuanced reaction from russia recently and that not only were they critical, but toy suspended an agreement avoid hostile encounters over syria. this is important. these are very crowded skies. this was the hotline to time the u.s. and russian forces, allowing them to avoid shooting each other out of the sky or bumping into each other. agreement, we have seen accidental bombings. now that it is taken away, the risk rises more. the next steps will be crucial. tensionscatapulted

between the u.s. and russia to the highest they have been since the trump presidency. ramp does it go, does it up or do they deescalate? tom: with the united and the response from saudi arabia, saudi arabia closed the embassy in damascus in 2012. making the amir of dubai tough language against syria. how does the dynamic of the persian gulf change? gcc states have been aligned with the u.s. view in , arming orsad supporting in different levels. attack.come this this is not change the balance of power in syria.

it was a targeted strike. they knew the assets they wanted to get, they warned russia it happen.g to it was localized, the death toll was 6 people killed and dozens wounded. for 59 tomahawk missiles, it was precise. the balance in power has not changed. the question is, does the u.s. come back with more, do they take more ownership of the war, or is it one and done? tom: let me frame "bloomberg bill gross will join us. zentner will join us from morgan stanley. hoss what join us, and

ambassador burns from the kennedy school. nicholas burns on the response from president trump to what we see in syria. the major message is markets barely moved. oil with a little lift. a substantial move higher, $13 higher. the data check is one that is surprisingly calm given what we have seen overnight. kevin cirilli is in florida. there is the data, gold up $13. we will go to kevin cirilli in florida in moments. this is bloomberg. ♪

tom: years of previous attempts at changing assad's behavior

failed, president trump orders an attack on syria. russia considers the attack "far-fetched pretense." wastillerson says russia complicit or incompetent. in this hour, ellen zentner. president xi hears firsthand from president trump of the syrian attacks. this is "bloomberg surveillance." from our world headquarters in new york. i am tom keene with guy johnson. syria is front and center. is this the end, or could there be more? to: we are starting understand the reaction function from the trump administration, and can we draw a line to north korea? burns to join us.

and we hope dennis ross can join us. now to give you a morning briefing with our first word news, here is taylor riggs. theor: navy destroyers in mediterranean fired 59 era missiles at a syrian airfield after accusing the bashar al-assad regime of using chemical weapons. president trump made the announcement from his florida resort. : i ordered amp targeted military strike on the airfield in syria from which the chemical attack was launched. says seven people were killed. russia calls it an aggression in violation of international law. they argued that the chemical spill was the result of syrian forces hitting a rebel chemical arsenal.

president trump and president xi had dinner in florida and will have discussions today. president trump is expected to pressure president xi to open ds andto more u.s. goo put pressure on north korea for its nuclear program. ticket to the point of confirming neil gorsuch to the supreme court, the senate had to change the rules to a simple minority rather than 60 votes. that may destroy what little bipartisanship remains in the senate. london employers have trouble finding workers. brexit may make it harder. u.k.,ey says across the

companies reported difficulties finding employees, especially in finance and technology. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. . am taylor riggs this is bloomberg. let's do a data check. the news is that the market has moved very little. with curve flattening. $52.47 on texas intermediate. brent crude, near $56 a barrel. 110.62 yen. guy: the news surrounding greece which may affect the euro/dollar. the main voice of the euro group, an agreement on the main greek policy element.

havederstanding is really a political agreement, maybe not a technical agreement. pension measures of 10% of gdp in 2019. the politics is fascinating. we have seen the administration backing down on key areas. will that spark an election in greece? tom: let's go to florida, palm mar-a-lago.an what is the president's agenda? kevin: later this morning president trump will continue meetings at mar-a-lago with .hinese president xi jinping clearly that developments with the missile strike in syria will cast a large shadow over this. yesterday secretary spicer said when he will be getting a joint statement from the global leaders. this was before the missile strike.

you asked me about the turkish response. there are headlines that turkish officials are urging the establishment of a no-fly zone and safe zone. that meshes with what this administration has said. have anyou don't answer, i will understand, but is one of the goals to get russia to leave syria? kevin: this is the first time that we have seen president trump and vladimir putin at odds publicly. secretary of state rex tillerson's comments saying russia was "either complicit or incompetent" in their involvement in syria and accusing them of not holding their bargain in the 2013 agreement. it is a sign this administration is looking to take on russia in

.erms of policy with syria chairman chancellor angela merkel, who has not always been the most praiseworthy of president trump, did praise him last night. guy: how has this affected talks with the chinese? kevin: this is casting a large y summit.er the 2-da president trump said his main issues were trade policy and national security with a focus on north korea. when i was at the white house covering the press conference in the rose garden, he said when asked point-blank about syria, he said he did not want to give away his military strategy. he was thinking of dropping the missiles. korea.ted to north this is sending a signal not only to syria, but also to north korea. with reportsrilli

from palm beach. we now go to ambassador burns, nicholas burns. professor of diplomacy at the harvard kennedy school. good morning. are we practicing diplomacy with our military power? : sometimes diplomacy is integrated with military force. president trump was right. becausemessage to assad of his repeated use of chemical weapons. you are just talking to your correspondent. it is a signal to north korea to russiaand in a way and china, that this administration will strike quickly. tom: do you think it is more than ever that secretary tillerson and other cabinet

officers need to fill offices? nicholas burns served undersecretary tillerson? nicholas: the trump administration has to act quickly to fill out the administration here they do not have some cabinet officials, the kind you need to implement the follow-up to this. what they have to do, this looks to be a single military action them all of the comments from the administration. there will not be a repetition, the united states will not dig in further militarily. it begs the question, what else has to happen? president trump has wanted to establish no-fly zones and safe havens in syria. that is something secretary clinton supported. the turks came out this morning

saying they believe that should be the case. will there be a diplomatic process where the united states pushes governments to launch negotiations to localized cease-fires. that has conflict pulverized syria. something of that nature needs to happen. tom: the map is remarkable and crowded of the eastern mediterranean. what would be the response of israel, and how can president trump and his administration speak to israel? nicholas: the israelis came out quickly to support this. i doubt that the israelis would be involved militarily. one difficulty is that the russian air force is over syria. the administration briefed journalists and said they let to the russians know ahead of time. that was prudent. it is one thing to take on assad

, you do not want to buy accident create a conflict with russia in syrian airspace. guy: can i take with you said meaning that you think the intelligence came from israel? nicholas: i did not mean that. i meant that the israeli government came out with them minutes to support -- within minutes to support for the united states had done. communicatedates with allies before hand. i do not know if the israelis knew more than that. few days back, a different message when it came to syria. what changed, why did it change, how should we understand the reaction function of washington? nicholas: what surprised speed of whiche

this happened. the trump administration was signaling through rex tillerson and nikki haley that the removal of assad speed was no longer a priority for them as it had been for the obama administration. it did not look like they wanted to be involved. it looks like president trump personally was offended i've use of chemical weapons and affected eye how many civilians died. it crossed all of his lines. this bead of which this happened tells you ang, and lot about the leadership style of donald trump. much.hank you, very we will speak with richard haass from the council of foreign relations. the world in disarray as all nations readjust and recalibrate to the attacks we have seen against syria.

this is bloomberg. ♪

guy: guy johnson in london, tom keene in new york. it looks like we have an agreement in principle on greece. the main elements appear to be coming together with a deal including pension cuts and a lowering of income tax thresholds. these are the big elements of getting a deal done with greece. the question is, with such a narrow majority, does mr. think that he can

continue governing? will we see elections in greece? a deal done on greece, it seems. guy johnson, thank you. this is what we will do, richard haass will join us at the bottom of the hour. to give us a beginning on jobs zentner of morgan stanley. on a fed thatight would delay. all of this is linked to the american job economy. bigger andalk broader. a sterling -- a stunning divergence between confidence numbers and the math. you look at soft or hard data? data. we look at hard

it is tracking weaken the first quarter. a lot of that is optics and transitory factors. we are looking for a rebound in the second quarter. if you average across, every good economist averages, if you average across the two quarters we are a bit above 2% growth, in the pocket of what the fed is expecting and what we are expecting. the hard data would tell you q1 gdp doesn't look good, but a lot of that is optics. the soft data is read take encouragement if consumer and business confidence remains high. tom: the diversions with other nations. up the chart, this is great. here is everyone together coming out of the crisis. here is france, they have their

own election. germany, britain, the united , can we sayjapan into jobs day there is an american exceptionalism about jobs formation? ellen: it is not unique to the u.s., we have seen it in japan and other countries where we are creating a good deal of jobs, but very specific times. low-wage, service sector, associated with the low rates of productivity. we are creating jobs, but we have seen the wage growth, even with a low unemployment rate, increase, but muted. to get a more pronounced wage growth, we need jobs to spill over into the middle and high paying industries. we have not seen that yet. we have to drive the

unemployment rate lower. guy: is the credit impulse fading in the united states? ellen: we get a lot of concern about the slowdown down in corporate credit, the demand for cni loans from the corporate space. some of that is a surge in m&a activity. loan is weak until clarity later this year. on the consumer side, and we are of creditd signs health, balance sheet health, demand for credit is there. idens onredit box w deregulations slowly over the next 18 months, that is good news in terms of credit availability. tom: do you want to go back to your old call? dove,re dove, dove,

they would wait forever. switch.ere is the an fed has said we have outlook that growth should be 2% this year. core inflation will move through the 2% goal this year looking at a monthly basis. theyat outlook comes true would raise rates three times. our own model suggests they should raise three times. --ring any the barring any fiscal disaster, they are on track. the difficulty the fed will have maintaining the markets is when they draw down the balance sheet, does that mean fewer rate hikes? janet yellen will clarify that on day. tom: she will be joined by carl

riccadonna to break down the numbers. gross on all of our platforms at 8:30. from london and new york, this is bloomberg. ♪

london, tomnson in keene in new york. let's go to italy. we are joined by richard

. let's start with the united states. is the u.s. at full employment, and can we expect wage growth? i think the u.s. is close to full employment, but wage growth because so many companies are invested outside the united states. not in the 1970's and 1980's when most factories were inside the country. workers are fully employed, but with so many productions taking place outside the country, my guess is even with mr. trump's maximum efforts, wages will grow slowly. guy: can the fed hike rates and balance at the same time? >> in order to normalize monetary policy, they have to do

both. the question is in what sequence and at what pace? it is time for the fed to look at the balance sheets. if the private sector comes back to borrow, and there is so much excess reserve in the banking system, and you let the banks lend the funds out, you can increase american money supply many times. there are enough reserves to increase american money supply 13 times. potentially facing 1300% inflation rate. the u.s. private sector is still not borrowing money. it is saving money, even at ridiculously low interest rates. if you are the fed, you do not want to wait for them to come back. when the private sector borrows money, it will be too late to remove excess reserves without pushing interest rates much higher.

visit.o short of a we look forward to speaking with you again. goodnough time to give justice to his work. with the news flow, it is just extraordinary. ellen zentner will be joined by carl riccadonna. krueger will join us on bloomberg radio and television. gross, richard haass on syria. coming up. this is bloomberg. ♪

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.remlin moscow and washington, it will be most interesting for the next 24 hours. the ambassador joins us in a bit. right now with an update, here is taylor riggs. taylor: u.s. has raised the stakes. they fired 59 cruise missiles at a syrian airbase. president trump says the airfield was the one from where an attack. launched >> we fully support this strike. it was limited and appropriate and it was designed to target the aircraft in the equipment that the united states believes were used in the chemical attack and to deter him from carrying out future chemical attacks.

we fully support that. taylor: vitamins and called it an act of aggression against a sovereign state. where the attack came as president trump was in florida with the chinese president. it may underscore the contention that the u.s. will take action on its own if china doesn't pressure north korea on its nuclear weapons program. the talks are expected to include traded. the president wants to open chinese markets to more american products. finance ministers are close to breaking the deadlock over the latest bailout for greece. the group says there is an agreement on the overarching elements. greece would get about $7.5 billion in aid. go to athensve to to conclude organizations.

global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. guy: thank you very much indeed. things are coming down in terms of the yield that is being applied. we have a series of leaders speaking at the meeting in malta. that is during -- this is relating to greece are in are speaking about the agreement. they say the agreement is in place on principle. there will be regular reviews. he did not mention the greek midterm. they picked a number of big boxes. there are some technical details. has backed down so much, can he enjoy the benefits or will you have to go to the greek people? tom: very good. we have terrific news this morning. the ambassador is going to jobs us -- join us.

on jobs day, we are thrilled to have bloomberg intelligence. let me put up a chart that is going to upset rick. he is going to say tom, you're wrong. i don't care. this is the way the viewers and listeners think. adjusted forgrowth service sector inflation. even though rick is going to tell us it doesn't matter because inflation is lower, i don't care. this is how the listeners feel. where is the wage growth? ellen: where? it's where we are creating the jobs. workers,th care garbage jobs. the wages are accelerating in those areas, but they are the lowest paid in the u.s.

what is your job description? what would you like for dessert. that's where we are. that is the key news item. rick: these are low benefit jobs. that is where most the job losses occurred during the great recession. that's where the job recovery is happening. tom: how do you help mr. trump get better jobs in america? what is the prescription to get back to some semblance of when don rickles was in his prime. rick: the economy is creating jobs at a healthy pace. i think we will see better than that this morning. we are basically at full employment. we are at the point where this is a critical game changer. we had a sluggish eight years of the cycle. we have used up the labor slack and that naturally generates wade pressure. he doesn't have to do anything but sit back and watch it --

watch. ellen: can we get a jargon alert? if you look at it over the cycle, late in the cycle suddenly it does steepen. that's when we move through full employment. tom: you are killing me. is sheword guy johnson just said suddenly. got that? guy: i think it's expended. come back to you. why am i seeing a rise in delinquencies in subprime auto loans? rick: you are seeing a very unique situation. it's a subprime type issue. they have extended auto loans. some of the problems that were endemic in the housing bubble are evident in auto loans.

ofs is not a good harbinger what happening elsewhere in the economy. we should look at overall loan defaults. they tend to be core lid with the unemployment rate. when that is low, wage growth is improving. that tends to be controlled as well. guy: can the consumer cope? carl: there is little increase in the cost and capital. they will see stronger wage creation during this year. i think they will deal with that. that is true for auto loans in the housing sector. the big mistake people make, they say mortgage rates are going up. housing is a three variable equation. it's the price of the house, the cost of financing, and the income trends that support affordability. tom: morgan stanley does spectacular analysis of american productivity. it comes out in a single sheet area of its got ted wiseman

small font. give us an update on productivity analysis. it's phenomenal. ellen: if you look at the trend alongside a complete structural drop in capital deepening, that is investment going beyond. tom: more jargon. on i am a beating you up jargon. investment levels are so low, we are not producing a lot out of those jobs. productivity has been flat in its back for six years. we're going to see better numbers in the first quarter of the year. basis, can we left productivity back to where it was? tom: can the time help us? >> the economy was growing at a 2% pace.

we were creating jobs more akin to an economy growing it three or 4%. pressing the most issue right now? job creationinue and the core engine of economic growth. tom: we're going to have lunch later and get you on for three seconds longer next time. i watched don rickles all last night. ihave to be careful of what say or i will wind up in the hr chair. this is important news and breaking now. mr. trump is considering replacing the white house chief of staff. this is according to mike allen. we will have much more on that during the day. kevin is an florida with the president. withg up, a conversation

the ambassador on american foreign-policy in disarray. this is bloomberg. ♪

tom: it's a map of an exceptionally crowded eastern mediterranean. israel to the south. damascus is 100 miles from the airbase that was attacked last night. it was critical to the left of the chemical attacks of april 4. these are the naval bases for russia. it is a crowded landscape in syria. we will be showing that much more through the day. now joining us is guy johnson in london.

the ambassador is joining us. that we said repeatedly have a secretary of state and the state department to empty to give a proper analysis. is tillerson desperately needing to fill spots in the pentagon as well this morning? is this now when they hire the establishment like you? theyrd: i don't know if are going to hire the establishment. they've got to fill out these positions. this is the first of any number of crises that will enter the inbox. and tod the inbox implement policy. that's 90% of life, implementation. you can't carry out a national security policy so thinly staffed. tom: i've been focusing on the presumed turkish response. let me ask you an open question. which player or factor in the

syrian tragedy are you most focused on this morning? richard: it has to be iran and russia. they are the two principal backers of the regime. how will they react, not just today or tomorrow or over the coming weeks and months? they are the ones who can escalate this conflict in syria or the iranians could bring hezbollah into the fray. they could do something out of lebanon into israel. those of the two most dangerous players here. guy: the first thing i read was your piece in the finance -- financial times. can i think about the timeline here are in my has the u.s. position changed so quickly on syria? richard: this is a defining moment for the obama presidency. there was no better way and i think more necessary way for donald trump to differentiate himself from barack obama than

by acting here. in some ways he forced himself with his emotional reaction to the photographs of children who it suffered from the chemicals. i think he boxed himself in. i think it was the right thing to do substantively. i would not say this is a turning point in terms of policy. this was a discrete attack on a single base associate with chemical weapons. this is not the united states jumping in with old feet to unseat the government. this is something more modest. this is still consistent with the overall approach of the trump administration to be very careful about international involvement. of: we've had a number things coming in over the last two minutes communicating that question. do you as result of what has happened understand the reaction function of the trump administration when it comes to

issues like syria and north korea? richard: no and a not sure they do. this is a loosely configured administration. you have any number of people with direct access to the present. you have any number of power centers in the white house. this just came together. it's possible things could go off the rails on another subject. this could be a turning point. i myself would not predict that. hereone of the great ideas is this is a tactical attack. two of our destroyers were out at sea, distant. they could send up a halftime whistle of a different character. they could go in on a single airstrip. then it changes. we have learned that through history, things go from tactical to uglier. do you have a fear we are heading in that direction with syria?

richard: no. we would face consequential issues over the next six months or year in syria. you are going to have the liberation of territory that has been controlled by isis. how are we going to take control of the territory so a group like isis doesn't recapture it. how are we going to take control of the territory so a group like isis doesn't recapture it. just as important, how do engineer something better taking its place? the large question about syria and the large questions about the region have been no way been answered. tom: the saudi's pulled out of their embassy five years ago into mastiffs -- in damascus. iran agreements is defined by the obama administration, are they under threat this morning?

richard: i don't think so. it's on both sides interest to not expand things. ist is really relevant here the push for regional primacy. there him push, if you will. that is so central, what they could do in yemen and saudi arabia. they have any number of instruments, its own military, using proxy forces like has blood, working with local shia populations. they are a serious challenge, even more than the russians to the united states. how deeply involved in this process to you think israel was? richard: i'm sure we gave them a heads up. i'm sure they welcomed this. guard,re they are on where he of how the syrians might respond. i have seen reports that the

government is talking about israel. that is exactly what saddam hussein did early on in the iraq war after the united states began operation desert storm. he launched missiles against israel. the idea of shattering the coalition and plays in -- changing the face of l. if theynot be shocked did something like that. tom: thank you so much. he is the president of the council on foreign relations. they have background of the various players involved in the attack in we will continue this discussion on bloomberg radio. at 8:00oss will join us on bloomberg radio. it's jobs day. conversations with jim glassman and bill gross. this is bloomberg. ♪

tom: you would think the market would move. not so much. dollar-yen is what everybody looks like to see safe havens.

slightlyly there, a stronger yen this morning. there is minimal market reaction. there is your foreign exchange. coming up on daybreak, and exceptionally timely interview with a member -- i guess he is still going to be with the administration by the time you do the interview? david: there are rumors about changes. you would think he would be by the time we talked today. the jobs numbers, we will have the first reaction from the director of the council on economic advisers. he is talking about bringing back classed eagle. this is the man who wanted deregulation. the will talk about tax reform and that continuing resolution. are we going to shut down the government in a couple of weeks? tom: we look forward to that this morning. how about the chart of the week

with alan? this is right into the labor economy. james dimon works for another bank. participationbor of men 25 to 54 and it ain't pretty. this is another time and place. this is when the wonderful don rickles was at his peak. here we go. down we go. this is 10 million jobs. how do we fix this? what is the social prescription to get men in america reemployed? ellen: you can see the pop up we saw during the housing boom when we were creating construction jobs. this is a long-term trend of losing those good producing jobs jobs, mack --

manufacturing and construction. education has failed to keep up with its responsibility of retraining the workforce. we have globalization. the globalization is a long-term trend that has helped this shift in the u.s. away from manufacturing to service sector jobs. that has affected that code word. i know you have alan krueger on later area he knows this deeply are -- he knows this deeply. global trade.out how do we get to fair globalization? ellen: it is through trade policy, but it has to be well thought out with concessions on the part of both parties. we will see what comes out of tax reform later this year. we have discussions about how to wrap up trade protectionism in a

corporate tax reform. all of these things are on the table for discussion because we are trying to figure out how we can level the playing field. we don't have any clarity yet and that's difficult for multinationals in the u.s. we see a positive business decision-making with a surgeon small business. he shape and tax policy that encourages money to come back in the united states? element: there has to be an influential part of the you -- white house this year. unfortunately, -- -- he has got to carry

the message forward of what the white house is looking for in terms of repatriation and lower corporate tax rates and adjustability across the board. that will give us a fair playing field. tom: you were great to sit on the same set with carl. thank you for getting us started on the jobs report. you stay with us for conversation. you see that throughout the day. david westin's conversation with gary:. bill gross on the jobs report and the american economy. stay with us. this is bloomberg. ♪

jonathan: the united states aims

airstrikes at syria. how much can be squeezed out of a tighter labor market before wages begin to surge. slammed.is he will be speaking to bloomberg tv. good morning. warm welcome. i am alongside david westin and alix steel. this is how the market is set up this morning. this is how the market is set up this morning. i'm looking to safety trade after the u.s. bombed syria. the vix is jumping 5% and gold is getting a nice bid, the highest level since november. crude is