>> a champion of the trade. the chinese president pledges billions to the road initiative, telling where leaders it's you the project of the century. strike has taken more victims as people return to work. chancellor'sn party moves big in the latest election test before the national vote. good morning. this is "bloomberg surveillance ." i'm francine lacqua in london.

it is monday morning, time to look at your data and what it is telling us. there is a little bit of a rally european stocks.oc crude is the story of the day $48.93.the nymex is up the tory government, after the weeks we had from the labor manifesto, the pound 1.2924. we will have more on those equities rising in the optimism surrounding the chinese international spending plan infrastructure, but first let's get to the bloomberg first word news. >> an unrivaled global cyber attack will continue claiming victims today as people return to work. even after hospitals and other facilities gains the upper hand against the malware, it affected organizations and businesses,

including the national health service, russia's ministry of interior and nissan. saudihas jumped after arabia and russia said they favor extending oil output cuts through the end of the first quarter of next year. the energy ministers of the world's biggest oil producer spoke at a joint news conference in beijing. >> we have to the conclusion that the agreement needs to be extended. we will not reach the desired inventory levels by the end of june. theefore, we also came to it will probably be better at the end of the first quarter of 2018. >> north korea says ebola stick missile launch yesterday was the successful test of a medium long-range rocket and has vowed to continue pushing ahead with the program.

america's ambassador to the u.n. says this shows kim jong un is in a state of paranoia. in germany, chancellor angela merkel's party decisively won election in the country's most popular state. this hands the opponents they do -- this hands the opponents a human leading to feed. the prime minister will say whether the conservative party wins the general election and will entered his measures to safeguard wages. minister, scotland's says a vote for her party will help protect the economy north of the border from the impact of brexit. >> it is whether you voted leave, or yes or no in 2014.

if you vote snp, you are strengthening my hand to make sure scotland is her during these negotiations. reporter: global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. francine: thank you. president xi jinping calls it the project of the century. pushing for globalization. some of the leaders have been in beijing to hear about the initiative that will connect china with asia, europe, and africa with infrastructure and investment. tom mackenzie is in the capital for us. what are china's hopes for such an ambitious project? tom: we have been getting more details about this vision,

china's attempt to recast globalization in its own image. we have heard from xi jinping a pledge of additional $70 billion in funding for the initiative, and don't forget the credit suisse reserve. china could commit up to $28 billion for this. we have seen some of the policy banks, plus private banks like standard chartered, getting on to form a framework about financing. and in asia has told us about a $5 billion credit line they have for a high-speed rail link. are there has been he likes of the chairman of china's biggest oil and gas company telling us of $20 billion worth of deals he has been doing. as you .2, they are concerns here. on germans are holding back

this project. they are concerned their companies will not be given a level playing field. they are asking, are european companies going to get the same look as chinese companies? we have heard some concerns from christine lagarde from the imf. she wants to make sure these projects meet environmental standards. a range of issues needs to be addressed here for many here, and i have not touched on the geopolitics. india is remaining away from this summit because they are so concerned about china's activities and the partnership with pakistan. we are as nothing more detailed today with a communique from the chinese side. francine: we will have more from tom throughout the day. we also have two great guests this morning, but china's factory output, we found out about this morning and it was dialed back again in april.

what we are seeing with industrial output, rising below expectations. retail sales increasing less than perspective, 10.7%. fixed asset investment coming putting in the rural areas, expanded. let's get to our guest, nick us, but and also with investor with more than 40 years of experience in emerging markets, he is mark mobius. thank you both for joining us. mark, let me start off with you because china is your specialty. what do you make what we have heard so far? they are trying to take care of this financial leverage, then maybe we will see a little bit -- a lot of the data coming in short of what analysts expected. >> i think we will reach the 6% target this year, even with this pullback. the pullback has been long and

coming. some of these companies have been overleveraged. a lot of these individuals have been buying theses trusts and the government is rightly concerned. the moves they are making are good and they are early enough so they can' head off a crisis. at the end of the day, they will meet that target. particularly now, with this one raod program, this would put a lot of companies in the money. francine: are you concerned that there is either a regulatory misstep, or that you have to stabilize one, you have to make sure there are not too many outflows and you have the third kind of trinity they have to deal with. it will be difficult to stabilize the economy on all three fronts. are you concerned about a financial crisis? > >> there is no question that impacts the

exchange rate, but at the end of the day, they have the levers to regulate and make sure money does not go out too quickly and they have already begun that effort, so when money goes out, it is very targeted and specific. francine: nick, what is your main concern about china? >> when you look at china, what a lot of people miss is the quality of the growth rate. it is a lower growth rate, 6% to 6.5%, but look at the fixed asset investment. that really demonstrate, looking forward, a much better quality growth rate from china. francine: nick, what i was curious about, president xi jinping is doing globalization and has committed $78 billion in infrastructure. this is really a country that wants to be very open? or is this the kind of -- they want to remain closed inside? >> the country wants to trade more. that is the key, isn't it?

when you look at the global economy, traders have slipped off. going forward, trade will increase. displace,can they the u.s. and trump administration as the most global country in the world? >> there is no question that the u.s. will be impacted. i have no doubt they will have to join the program. there is a lot benefit to be achieved by u.s. companies. they will have to be very careful to not favor chinese companies unduly. there weris going to be enough for everyone. francine: it was going to benefit the most? neighboring countries quest direct >? >> the neighboring countries will benefit quite a lot. and europe will benefit quite a lot because the europeans will

get a piece of the action, and trade will increase to medically once the program -- will increase dramatically once the program is completed. francine: how does this translate into your world of fixed income? of the size of the infrastructure investment, you have the marginal demand for commodities increasing. the this also does is, at margin, it will add to reflationary pressures. and and mark stay with us. >> bidding for the spanish competitor. the 16.30 4 billion euro offer would create the world's biggest operator of toll roads. they are seeking to boost earnings by acquiring assets outside of the home company. andsaid profit is on track

it plans to pay a dividend for the first time in three years. germany's biggest power producer says the energy trading is helping compensate for the weak power prices. the company plans a dividend for 15 euro cents this year. the manufacture of diagnostic testing equipment is in talks to purchase the dutch drugmaker. according to people with knowledge of the matter, an agreement could be reached this week. ofrmo fisher has a value $3.8 billion. neither company could be reached for comment. g-7 finance ministers have signaled a truce with donald trump's administration using a communicate. said other nations are starting to understand the administration's economic

agenda. >> people are much more comfortable today now that they have had the opportunity to spend time with me and listen to the president and here our economic message on what the trump economic agenda is. and that is about creating growth in the united states, which is good for us, and i think will be good for other parts of the world. francine: still with us, mark mobius from templeton emerging markets group and from jpmorgan, nick gartside. when you look at all of this trade, trade wars, protectionism, can we be sure it has abated? or do you look at the trump administration to give you an idea of what the psyche is? >> it has not abated yet. there is a lot of bargaining to be taking place in the coming years. i think the strategy of the trump administration is to have bilateral agreements to get around these multilateral agreements that have been the

straitjackets for many of these countries, including the u.s. this is not going to happen overnight. generally speaking, i think it will be beneficial for everybody concerned. morell enter into a lot flexible magoo cheating between these countries -- more flexible negotiating between these countries. francine: is it beneficial for all countries involved, this bilateral trade? when you look at the fixed income space, do you pick emerging markets, or do you see them as a whole, just when you trade? >> in aggregate, it is beneficial. debate is here with us for a long time to stay. the other reality is, look at global supply chains, very highly integrated and correlated. when you look at the fixed income side and emerging markets , the message is, not all emerging markets are equal. some are commodity producers,

some are commodity exporters. you need to cherry pick there. we look at emerging markets and it has been the surprise of the year, in terms of positive returns. francine: which ones do you pick? the structural reforms? >> you get a bit of that, and the ones where there is high yield. i top from the fixed income standpoint, for both currency and bonds. russia, indonesia and even turkey looks pretty exciting for us. timeselding two to three with what you would get from treasury yields. francine: mark, i know you are big on the frontier markets at some point. markets areier important, but in terms of size and liquidity, we have a problem because you cannot put too much money into these markets. we are seeing a lot of opportunities in the countries we just mentioned. simply because many of them have been beaten down during the last three years, ending in january

of last year when we started to see a recovery, but still, many of them are far below where they should be. we see a lot of opportunities in these countries, whether it be brazil, mexico, turkey, particularly in asia. both india and china are growing at 6% to 7%. francine: how do you deal with political risk? i'm talking about geopolitics. , butxample, suouth korea also some of the neighboring countries. >> korea is the bellwether of what is happening around the rest of the world and that is because of this communications revolution, because everybody has a smart phone and can communicate and learn what is going on in their political atmosphere, we are seeing big and the reforma taking place under the new administration. and this is going to be

beneficial for markets, generally speaking because the shareholders will get noticed again. that is important. francine: nick, as we start talking about the balance sheets , can you absolutely be sure there are no emerging-market temper tantrums? >> they should not be. when you look at the emerging markets, there are gigantic balance sheets from the bank of china. they have been a lot of qe. the balance sheet is not far from the size of the fed's. when you look at other emerging markets, there are smaller government balance sheets. the key for emerging markets is global growth. the economy is growing again, so coupled with these and valuations, they are attracting capital. francine: post a with us. up next, the global hack attack. we have the latest on the unprecedented cyber strike. this is bloomberg. ♪

francine: this is "bloomberg surveillance." unrivaled global cyberattacks will continue claiming victims today as people return to work. the malware has affected organizations and businesses, including the national health service, and nissan. the scale of the attack is staggering. >> this is something we have not seen before. the global reach is unprecedented. >> how many countries question mark >> over 200,000 victims in

at least 150 countries. francine: let's get more with the bloomberg tech reporter. , nickill with us, gartside. vulnerable? horrible? > it >> most of those affected by this attack had not applied the patches, and they were using outdated operating systems. you must stay up today on your systems. the other big lesson is how easy it is now with the spread of these hacking tool kits online. and very sophisticated of what used to be the purview of nationstates has become easy to exploit. francine: is it just updating? >> it would not have cost very much to have presented this, but

once you have a situation, it is very expensive to fix. ounce the lessons is an of possession is worth a pound of cure. francine: in the past seven to eight months, we saw central banks from emerging market countries being under cyber attack. >> bangladesh lost i don't know how many tens of millions of dollars by such an attack. i believe we will see more and because more h and more organizations are depending upon the internet and depending on globalization. it is very dangerous, what we are facing with the spread of the internet globally. francine: with pakistan entering the emerging market index, what is your favorite frontier market? >> in terms of the frontier, i would say vietnam. they are doing everything right,

making all kinds of very good reforms. i believe they will be growing at a fast pace going forward. but there are a number of other good front your markets that could be interesting going forward as well. francine: jeremy, going back to the attacks, if you look at central banks around the world, are they taking precautionary measures question mark is there a body that looks into it? >> bitcoin is the preferred currency for these attacks because it is considered anonymous. one of the interesting things about it is you can trace each of the transactions being made. you can potentially trace it back to someone. if you can then put that address with a name and face, which is what law enforcement would like to do. going back to the central banks, they are under a lot of pressure. but they are also taking precautions, because they know it is a lot of money and that was a real wake-up call, what happened with bangladesh. francine: is it linked to social

media? you believe there is less volatility in the markets because traders and investors are looking more at social media, and so they understand less. >> there is no question it has to do with social media. with a smart phone, you are on social media, you are on the internet, you are in a database. and a smart guy or gal can really mess up the whole system on a global basis. francine: what about the global stress index? it is going down -- and this is linked to your point. will this continue to go down? >> i think it will stay around this level, maybe go down a bit more. i think the reason for this situation is, with social media, with the kind of news we are getting, false or not false, people are not sure what the facts are, people are quite

confused. therefore, when people are confused, they tend to pull back and not trade. or, if they are trading, they are trading in very small increments. latility?ot create volai francine: what are we expecting in terms of hacks today? >> we have not seen much yet this morning, but the expectation is there will be another wave, targeting the same institutions that were targeted on friday. francine: up next, we the two peter hamrbo. -- up next, we speak to peter hambro. ♪

francine: this is "bloomberg surveillance." let's get to the bloomberg first word news. here's nejra cehic. nejra: china has laid the

foundations for a new trade routes, calling it the product -- project of the century. president xi jinping pledged $70 billion to the initiative as he repeated his support for globalization. anaking of challenges, unrivaled global cyber attack is poised to continue claiming victims today as people return to work and turn on their computers. hospitals and other facilities gained the upper hand against the first wave. the malware affected organizations and businesses including the u.k. national health service, russia's ministry of interior, and carmakers nissan and renault. north korea says a ballistic missile launch yesterday was a successful test and has vowed to continue pushing ahead with its nuclear program. america's ambassador to the human says the latest action shows kim jong-un is in a state of paranoia and that washington will tighten the screws on his regime.

in germany, angela merkel's party decisively won and election in the country's most populous state. her social democratic opponents .nded a humiliating defeat she seeks a fourth term in september. in the u.k., theresa may will pledge to broaden employment countryn britain as the pulls out of the european union. the prime minister will say that if her party wins the general election, she will introduce measures to safeguard pensions and wages as well as gig economy workers. scotland's first minister says a vote for her party will help protect the economy north of the border from the impact of brexit. >> whether you voted leave or remain, whether you were yes or , your you vote snp strengthening my hand to make sure scotland's voice is heard and we don't sacrifice jobs and our economy. nejra: global news 24 hours a

day powered by more than 2600 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine? francine: thank you so much. peter hambro is stepping down as chairman of gold miner -- after pressure from shareholders. o cofounded the company. i'm pleased to say mr. peter hambro joins us. mark mobius is still with us. peter, why are you stepping down? peter: all good corporate governance says you have to have a nonexecutive independent chairman. i have been an executive chairman for 23 years. it is probably time i step down. the people involved in this are great experts at mining the market and we are people who mine the mine. different type of culture. a lot of media's

reports saying you were forced out by russian investors who asked for your removal. peter: they indeed requisitioned my removal and also the removal of three other nonexecutive directors. wayshere are two different of buying a company. you can do the normal thing, which is to pay cash close to the net asset value, pay a premium for control, and that way all the shareholders benefit. i'm a shareholder. if you are a listed company, you can do the same thing and pay with cash. alternatively, you can pack the board with people who are your representatives and take it over that way. francine: you are confident the company -- i don't know if it is better hands, but in good hands when you step down.

when will you step down and how long will it take to turn around? peter: turnaround we've already done. we had a very bad time in 2015. we've refinanced the company. the banks were paid off in full. the bondholders were paid off in full. they got shares at five which are now 7.5. this was done by the present board. since then, we've gone back to profit. our first quarter of 2017 is exceptionally good. it is not the time to change the board. francine: how long will you stay with the company for? peter: i'm 72. i'll be 75 in january 2020. our plans, as we currently got them, for the underground mining, the pressure oxidation, the exploitation of our exciting new deposits, will be in place, and we should be back into profit dividend paying. that would be my view. francine: peter, i want to bring

mark into the conversation. peters company does gold and iron ore. what is your take on gold? mark: we think gold is the place to be. you are seeing a lot more cash around the world in search of safety and gold is where it is. i think you are going to see gold prices continue to move up over the long term. francine: to you agree with that, peter? peter: i'm sure that gold is the right place to be. you've only got to see everything that is going wrong day by day, hour-by-hour, another missile, another cyber attack. what we're seeing today is not about me and the nominees. it is about a properly run company being able to get on with its business for the benefit of all the shareholders. francine: peter, if you look at iron ore, iron ore, are you expecting iron ore demand to go out and is that on the back of china, or are we too optimistic about china's growth?

peter: we've seen the announcements of what china is doing now. they need a strong economy and a strong economy in china is going to be very good for iron ore. the iron ore business we have is one of the lowest cost producers, and it is 19,000 miles closer to china. francine: mark, how do you look at iron ore, and talking about trade, if trade breaks away, or if you have unilateral, is china strong enough to absorb all this demand for iron ore? china, demand for iron or is a global phenomenon. if you look at the price, of course it is going all over the place because of the speculation , but if you look at the supply-demand, it is a straight line up. it continues to increase. the demand for iron ore, i believe, is going to continue growing not only because of

china, but because of india, other countries, and the program is going to demand iron ore in many directions. francine: thank you for joining us. peter hambro, chairman of petropavlovsk, and mark mobius, chairman at franklin templeton. thank you. stay with "surveillance." the german chancellor's party wins big in the latest big test before the national election. russiaaudi arabia and say they favor extending output cuts. we hear from the saudi energy minister next. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." i'm francine lacqua in london. let's check on the markets with

mark barton. mark: european stocks hovering around that 21-month high. this is the euro stoxx 50. strategists are cooling on the prospects for further gains as investors pour a record amount of money into the region's equity funds. the euro stoxx 50 index of the biggest area stocks will end the year 3.8% lower than friday's close. that is the orange line. that is according to the average projections compiled by bloomberg. it has been quite a rally for the european gauge. love this function. go, oil, highest level in two weeks after saudi arabian and russian energy ministers said they are in favor of extending a production cut deal. this is a sentiment indicator for analyst. as you can see, 71% of analyst

bearish 9%,on wti, neutral 19%. look at the difference between a week ago in all those different stances. bloombergc,e got a good function also on oil, hedge funds undoing all their wages on this oil rally. futures have gone back to where they were before opec agreed to cut. silver lining is that this is how money managers lay the groundwork for a rebound and the study drop in u.s. supply may be the fodder analysts need to start anew. let's finish with this chart, spreads on e.m. debt near levels last seen before the credit bubble burst. this is a bloomberg barclays index. that could signal improving conditions in fragile nations that were vulnerable during the 2013 taper tantrum.

it shows valuations have reached expensive territory. so says pine bridge investment. expensive territory. francine: thank you so much. chancellor angela merkel is picking up a tailwind ahead of germany's federal elections in september. criticized for her stance on refugees, merkel's reelection campaign is back on track with a win in the country's most populous state. france is preparing to find out who emmanuel macron will pick as his prime minister as he begins his first full day as president. let's get the latest from the two capitals. chad thomas is in berlin. caroline connan is in paris. chad, a vital win for merkel. chad: what a difference a year makes. a year ago, people were talking about whether merkel would run again. now she's coming off of three state election victories. the last one last night, that is

a really important one, germany's biggest state, about 20% of the population. it is also a social democratic stronghold. the only other time merkel's party has won this state in the last few years was 2005. that was the year that paved the way for merkel to become chancellor. we heard from her spd challenger, martin schultz, and he acknowledged they have a rocky road ahead, but he vowed to win in the election of september. francine: so he's given no indication, martin schultz, that he will stand down. for the moment, he's sticking with it. chad: for the moment, he's sticking with it. it seems unlikely they would dump him at this point. we are only four months away from the election. certainly the spd is meeting today, discussing their election platform, and they have to look

at what is not going well for them at the moment. francine: thank you so much. chad thomas there, our berlin bureau chief. that's go to paris with caroline connan. first day on the job for macron. when do we know who he picks as prime minister? caroline: we should know the name of macron's new prime minister probably before midday french time, so very soon. we know what macron wants. he wants someone who's got experience in parliament, someone who's got the skills, but also with a new face. we also know the new president likes people who have experience in the private sector and also what a signal it could be if he names someone who comes from the right-wing or the center-right in france, to respond, to distance himself from all the critics who see him as the heir of francois hollande. one man seems to take all these

boxes. [indiscernible] of -- in the west of france. the 46-year-old could be the new prime minister. we are waiting for the confirmation from the president, emmanuel macron, but the particularity is that he used to juppe,spokesman of alain the right-wing candidate who ran in the republican primaries november and lost against francois fillon. this would be a strong signal from emmanuel macron towards the center-right. francine: in terms of priorities, i know he has to sell assets, he wants to reform france, but how much will he be distracted by general elections

coming up in june? caroline: it all depends on this new coveted. this new cabinet, this new prime minister, will lead the battle for emmanuel macron to get his majority in parliament in june. if he does name this center-right prime minister, the idea in france is that he could form some kind of coalition with the center-right in order to push through reform and to get a majority. if he doesn't manage to get a clear majority from his own candidate, from his new party, which is of course just one year old, so still has a lot of work to do in order to get this majority. francine: caroline connan, thank you so much. still with us, nick gartside. what does that actually mean? politics in germany and france, what does it mean for spreads? nick: it is key. you've got stable politics, a

great economic backdrop in europe. what that means is tighter spreads. that goes down further. what it also means is yields go up. you look at 10-year german bonds at 40 basis points. they are short at those levels. and the ecb now have the ability to remove a lot of that policy accommodation. francine: a lot of the worries will follow in italy and what they do with the banks and if they go to early elections. nick: it is not all over in europe. you've got the june elections in france. you've got italy, which is still the big thing in the room, the unknown. if you look at the history of europe, it depends on french-german cooperation. you look at europe at the moment, it is back. optimism is at day. francine: is there not a danger that the ecb needs to be more coolheaded so it doesn't by so many bonds or -- i don't know if

they raise interest rates, but certainly don't stop cutting rates, right at the time where it is extremely vulnerable. nick: when you look at an economic perspective, that recovery pretty entrenched. the risk is actually that they remove policy accommodation earlier rather than later. such loose policy has a cost as well as a benefit. francine: what is the biggest risk? i'm thinking of oil. with oil creeping up, it seems that europe didn't benefit from lower oil prices. will they be hurt a stronger ones? nick: maybe it goes 10% higher. the reality, when you look at european economic growth, it is now self-fulfilling, self-sustaining. credit to the ecb. they've done a good job lowering bond costs and getting a lot of that growth that is now self-perpetuating. francine: thank you so much, nick gartside, officer for fixed

income at jpmorgan. up next, continuing the cuts. saudi and russia agree to extend the production curb. we will talk about that next. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." let's get straight to the bloomberg business flash. here's nejra cehic. nejra: let's start with m&a. the penitent family's atlantia is bidding. the 16.34 billion euro offer would create the world's biggest operator of toll roads. atlantia, which owns rome's two airports, is seeking to boost earnings. rwe is higher this morning after it said profit is on track and it plans to pay a dividend for the first time in three years. germany's biggest power producers and efforts to boost plant efficiency and contribution of energy trading is helping compensate for our prices. the company finds a dividend of 50 euro cents this year. thermo fisher, the manufacturer

of diagnostic and testing equipment, is in talks to buy raytheon. according to people with knowledge of the matter, an agreement could be reached as earlier is this week. on is worth about $3.8 billion. neither company could be reached a comment. that is the bloomberg business flash. francine: crude has jumped after saudi arabia and russia said they favor extending cuts through the first quarter of next year. the energy ministers of the world's biggest oil producers spoke at a joint conference in beijing. >> we've come to the conclusion that the agreement needs to be extended. we will not reach the desired inventory level by the end of june. therefore, we also came to the willusion that ending probably be better at the end of

the first quarter of 2018. francine: still with us is nick gartside, chief investment officer for fixed income at jpmorgan. when you look at the price of oil, what is the price of oil that you model your yields at? nick: we think 55. it goes back to where it was at the start of the year, around that 55 level. francine: this is basically my favorite oil chart. it looks at the number of rigs. even if russia and saudi cut production, then you have these u.s. oil rigs coming back online. it stays within this range. is that why it can't go higher? nick: it is more than that. why do we see the sudden drop? you had weakness in the first quarter in the u.s. and china. you had crude stockpiles in the u.s. significantly higher as well. both of those things together drag the oil price down. still $10 or 10% from

where we are. what gets it back there is those recent production cuts. francine: overall, what is your best fixed income play? ors it make into commodities the inflation story around the world? nick: the first is when you look at high-yield bonds. you've got spreads close to 4%. with that backdrop of more stable prices, there's no reason that can't approach 300 basis points. the other idea is more a play on commodities and it is emerging markets. when you look at those local emerging markets, on average, you have a yield of 6.5%. that looks attractive doubled with currencies in some cases and generationally cheap levels. francine: your biggest risk at the moment? nick: growth is way stronger than anyone expects and fixed income yields just look absurdly low. francine: thank you so much for

staying with us for the hour. nick gartside, chief investment officer are international fixed income at jpmorgan. "bloomberg surveillance" continues in the next hour. tom keene will be joining me. we will be talking yields with philippe gudin. we will focus on china. this is where your markets are at. it kind of encapsulates our stories nicely. optimismrising on about this china international infrastructure plan. that is giving a nice little boost to some infrastructure companies here in europe. we are looking at oil and commodity currencies. this is bloomberg. ♪

francine: protecting cyberspace. europol sasys the on

unprecedented global hack attack will continue claiming victims. chinese president xi jinping pledges $78 billion for global investment projects as he calls on global leaders. russia say they are prolonging the oil output cuts into the first quarter of 2018. this is "bloomberg surveillance ." i'm francine lacqua in london. tom keene is in new york. it is not only about oil. there is a lot of geopolitics. the new look at the spread between germany and france, italy, and germany as political risks seems to be slowing down. tom: it seems everybody is traveling, except for donald trump, he is done at the h.r. office try to figure out what to do with his administration. the cyberattacks, this is a huge deal. francine: that is why they dropped me in.

we also saw the pakistanis central-bank being attacked with cyber warfare seven or eight months ago. first, let's get to the bloomberg first word news. reporter: we are going to start with that story, that global cyber attack. it is expected to climb are victims today. more than 200,000 computers in 150 countries have been infected so far. the attack's technique were stolen from the u.s. agency. companies such as fedex and nissian were affected. most of the british hospitals affected are now back to normal operations. north korea warns they knew rocket could carry a large nuclear warhead over long distances. dictator kim jong un watched the launching yesterday and it could hit u.s. forces. the u.s. ambassador to the united nations, nikki haley, says the latest tests show kim is in a state of paranoia.

saudi arabia and russia want to extend oil cuts through the first quarter of next year, saying this necessary if users want to sure up oil prices. president xi jinping has pledged $78 billion for what he calls the project of the century. disagree to connect china, asia through infrastructure. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. tom: right to the data. i have one board today, not much moving. there we are with some future bounces. lift., that

we will cover oil in all of our hours of "surveillance" today. francine: equities are rising. this is mainly because a lot of them are optimistic. in europe they are pretty much flat, but there is still a quite a lot of optimism in certain assets. this is 78 billion yuan bet president xi announced. oil and commodity currencies are surging on indications of a supply cut. 113.58.ut the yen, tom: we are looking at russia and international relations. how about old, boring inflation? this is core and u.s. cpi. inflation drops down, a true disinflation. here, francine, is a little bit of a rollover, which gave pause

late last week with core spi 2% level.under that francine: this is but i chose for my bloomberg terminal, a very simple oil chart. for a long time, it was in this range of $45 to $55. we are still a ways away from $55. because when the price of oil goes up, oil rigs, you can put on the tap mucher quicker than anything else. it would still be stuck around $55. oil jumping to around $40, along with the australian dollar and mexican peso. the opec deal of cutting production could be extended. we will keep an eye on oil. we also have to talk about cyber. k hader attac over 200,000 victims.

russia's central bank was also hit, but the attack was successfully thwarted. we are with jeremy khan. us is xeniah wickett. what can you tell us about the cyber attack? >> the expectation is there will be a second round of this, that the attackers might have fixed one of the flaws that allow them to turn off the attack over the weekend. there's this expectation we will see another wave. so far with reports this morning we have not seen a huge number of new cases, but we very well might. francine: i know a lot of the automakers were hit, a lot of the health care, and one of the spokespeople their says operations have resumed. who is most will rubble? >> we have seen that health care is very vulnerable.

it is hard for them to shut systems down and to do systems upgrades. they also tend to not be as good about making sure the systems are up-to-date. some of the other areas under attack our financial services. they tend to be less vulnerable, but that is where the money is and criminals keep going there. those are the industries that ten to get attackedd the most. industrial companies, it is unusual we have seen carmakers affected by this. they are not usually the people attacked with this kind of ransomware. however, most anybody could be affected by ransomware. this content was very indiscriminate. it went to anybody who had this particular security flaw. francine: when you look at risks around the world, is this one of the bigger ones? >> absolutely. generally speaking, we have been afraid of things like nuclear and biological weapons and now people are putting cyber in the same category.

it can spread extremely fast. you can also be target it. -- it can also be targeted. there is no question that cyber attacks are a significant issue for any government out there. tom: jeremy, within all the articles i have read on this, is there somebody to blame? i don't see a lot of blame going out? do i blame microsoft, tim cook? >> i don't think you can blame tim cook for this one. maybe other things, but not this, tom. there is a little bit of tit for tat between microsoft and the nsa at the moment. wrote at's lead counsel blog post in which he said it was the fault of the national security agency. they should not stockpile these kinds of powerful tools. it is too easy for them to get out. that is what we think happened in this case. on the other hand, some people were saying, it is microsoft's job to patch the stuff.

and some people are saying when microsoft made the decision to no longer support the operating systems of old, it left these other people will v vulnerable. microsoft did give them the option to pay to extend the services. it seemed they did not pay that money to microsoft to continue to have their systems. tom: in a bloomberg article, one expert says, these cyber criminals, it sounds like this from the movie "the matrix," but if we assume it is those people, are they attacking russian computers just as a smokescreen? is there any linkage between the russian government and russian language cyber criminals? >> i think the answer is, we do not know at this point. there have been cases where there are linkages between certain russian criminal gangs and elements of the russian

government. i don't think we know that in this case. there does seem to be a link to russian criminal things, but i don't think anybody has made a link between those gains and the russian state. tom: i guess you could get out your quill and paper and pencil and not use your computer to write. i guess they are doing that at the health care system. how will chatham house spin this or research this forward? >> there are two parts to it. what are we doing to protect our own systems? our i.t. system has been on this all weekend. the question is, how do we treat this as an issue that we research, that we delve into, that we try and actually analyze what it means? it is not so much who did it, so we are not sitting there trying to figure out who was responsible for this attack, but we are looking at the consequences of the attack. francine: jeremy, going back to some of the central banks. it was most vulnerable?

there are many attacks to central banks we don't know about. >> there are many attacks on central banks. people were somewhat surprised on the successful attack on the bangladesh central-bank last year. i think there is a sense that these central banks in the emerging markets are more vulnerable, have invested less in the kind of cybersecurity that you would expect a central bank to have in place. in general, there is a ton of money in central banks. you can make off with -- instead of a few million, maybe tens or hundreds of millions. on the other hand, central banks in general have good security systems in place. and even in the developing world places. a lot of these attacks target lower hanging fruit, and it tends to be smaller and local financial institutions, are you make up with a few hundred thousand. that is fine because these are very low-cost attacks.

it does not take much expertise or money to mount one of these attacks. you can make a pretty the profit margin by attacking small, local institutions. rancine, the way you protect your phone from cyber attack is to coat it over the weekend with slime. francine: four wrapping paper. -- or wrapping paper. tom: jeremy, i learned a lot. thank you, jeremy kahn, writing it up for bloomberg on these serious issues. we will continue with xenia wickett. coming up, a really special treat. james is at fletcher and he is the expert on cyber theory and cyber attack. he will join us during the 8:00 hour. stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get the bloomberg business flash. purchasehas offered to abertis. , $17.1ce billion. people with knowledge of the matter say a deal could be reached this week. thermo fisher gnostic and testing equipment and is based in massachusetts. createso fisher diagnostic and testing equipment and is based in massachusetts. the project of the

century. while addressing almost two dozen will leaders in beijing, he said $78 billion in financing will be spent on the plan. initiative and road is rooted in the ancient silk road and focuses on asia, europe, and africa, but is open to all. all countries can be partners. the pursuit of this initiative is based on extensive consultation and the benefits will be shared by all. francine: the growing role comes a president trump's prepares for his first foreign excursion. let's get back to xenia wickett. also with us, philippe gudin. , on me a sense, xenia your take on china. there is this huge initiative, meant to be great for infrastructure, but at the same time, china came out with figures today where growth was

not that good because the swelling average means authorities have to crack down on it. >> it is fascinating what is going on in china. you have to remember, this is not the first thing that xi has come out and said, we will stand up for the global system and move the agenda forward. previously he said, we will stand out and move the agenda forward for the environment. you are very much thing this kind of xi jinping take advantage of the opportunity that is the perceived american withdrawal. china is stepping up and people are talking about this in terms of a new marshall plan, bigger than the marshall plan of the middle of the last century. this is really china flexing its muscles in a different way than it normally does, through investment in infrastructure and helping the countries. francine: if this is a

response to donald trump, does woat mean it could make t chinas? >> i think we already do have two chinas. gdp is already increasing and becoming more unequal. we already have a china that actually wants to grow and expand and take advantage of the space around it. that has always been the case. is that has changed now it now funding opportunity. china has done that quietly historically and it is doing that more overtly now, as america is being seen to withdraw. tom: i love your idea of the equivalency to the marshall plan in the time of truman and eisenhower. is there any benevolence here? you have to sell me on the idea that $78 billion will be spent benevolently?

>> what country does not have an angle. to see economic growth internally, china means to increase its spending, increase the infrastructure around it. that will be an incredible opportunity to spend on their savings. that is what they are taking advantage of, of essentially being a more central player and engaging more with the outside world. june politically and economically, absolutely. tom: how will the united kingdom approach the bee benevolence of china? >> i think they will approach it the same way many other europeans will, which is to say it taking advantage of it where they can. no country is altruistic. the same goes for the united kingdom. the same goes for much of europe. very much saying, we will take advantage of this where we can. francine: will it benefit from this big silk road, europe? >> yes, europe will definitely

try to draw some benefits from this change of the relationship with china and the u.s. europe has a role to play. it will be to boost its trade with asia and with china in particular. francine: what do you think if we go on a trading basis, if we look at these global trade agreements dead in the water, and we negotiate bilaterally, who wins? where do you place europe? >> not necessarily in the first place because of course, the main winners would be in asia. but europe is one of the big blocks in the world. clearly, the game is between europe and the u.s. if the u.s. keeps distance, europe will jump on this. rkets again, very quiet today. we will continue to look at them and their correlations.

helping us will be carl weinberg. he has been nothing short of a miracle on japan. we will also discuss china and mr. trump with carl weinberg. stay with us. this is bloomberg. ♪

>> we have come to the conclusion that the agreement needs to be extended. we will not reach the desired inventory levels by the end of

june. therefore, we also came to the -- itsion that ending by will be better at the end of the first quarter, 2018. francine: that is saudi arabia's energy minister, khalid al-falih . russia and saudi arabia favor through the end of the first quarter of 2018. kennedy, what does this actually mean? even if they cut production and extend the output cuts,c a can l stay above $50? >> this is significant twfor tw reasons. it puts flesh on the bones from what we can expect from the opec meetings next week. people were pretty sure they would continue the agreement until the second half of the

.ear for i'm not sure the oil market is totally aware of what a big deal this is. these are the world's two biggest producers. 20 billion barrels a day between them, working hand-in-hand. although they are in a slightly weaker position because of shale, it seems to be an important development. francine: how much do we know about the shale producers? >> look, i think when saudi arabia adopted the new policy to get with opec and non-opec countries in the autumn, they did not expect the strength and speed with which shale came back. that is why they are having to adjust their policy, and make the cuts go on for longer. that said, there are people who

think it will start to have an effect during the second half of the year, there will be an imbalance and inventories will fall. francine: what do we know about demand? >> that is the important question. this depends on the demand remaining strong and if there is any weakness in the global economy, that will make opec's task harder. francine: thank you, will kennedy. we will be back with philippe gudin. we also speak with will simon about the state of retail, over expansion, and currency swings. this is bloomberg. ♪

so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. francine: these are live pictures of the chinese president speaking in beijing. this is basically president xi

shedding light on his vision for his diplomatic trade initiative, pledging $78 million in infrastructure. what he has been saying is growth and -- growth will be boosted. he also says the nation will continue to support e-commerce and he will strengthen economic policy coordination. we will get back to that. it had a little bit of impact on treasuries. we also know the russian president putin is speaking a little bit later on. we are keeping an eye on that. let's get to the first word news. -- an attackcyber on computer systems. more than 200,000 computers in 150 countries have been infected with ransomware so far. authorities say hackers used original to infect computer files, making them inaccessible

and demand ransom. uk's national health services recovering after being one of the first targets. fedex and automakers were also affected. in germany, angela merkel's party decidedly one --won. beating the social democrats. the social democrats won less than 31% of the vote, the worst showing since world war ii. that boost her momentum for the national election. in france, macron has become the youngest resident. he said in his speech one of his main tasks is to bring self-confidence like to the french. it government malaise and security concerns drove extremist parties to the highest ever vote party the presidential election. g7 finance ministers meeting in italy have signaled a truth in their trade disagreement with the trump administration -- a truce with her disagreement with

the trump administration. important. reductionism is off the table. i think the rest of this agreement on the fact that trade has to be inclusive. i am very satisfied. of course, we need to make steps forward. there are different views across the g-7 and the g-20 for that. but i am confident we can reach common views even on these issues. taylor: u.s. trade policy is likely to come up when the g-7 leaders meet later this month in sicily. 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: thank you. thank god there is a global cyber attack, something to take our attention away from mr. trump and russia. there are about eight or 10 other ideas as well. we will have much coverage of this this morning. michael cannon will join us on the death of obamacare and trumpcare.

joins us,ia wickett head of u.s. program out at the kennedy school. and with us as well, philippe gudin. , would you please explain the level of the destruction we are observing now within the administration, and does that bring any form of foreign policy for the nation to a complete halt? >> absolutely not. you have some really experienced characters in the u.s. a administration at the moment, secretary just -- secretary defense, national security adviser, tillerson seems to be finding his feet and he is going to be traveling along with the president later this week. so you absolutely have some incredibly experienced individuals who have spent their careers, and some cases, working on foreign policy. you are seeing an american foreign-policy move forward. in some cases, not to the liking

of many other countries. you continue to see trumps america first. you're seeing it in the trade policies. this is clearly coming out in the g7. we have a trump visit to the .ato members i think it is early next week. another airy -- another area of controversy. i think it is not that america does not have a foreign policy. it is more than a foreign policy -- tom: not that i could get obama foreign policy on the back of a three by five card, but what is trump foreign policy? do you have a clue? >> first of all, you know that policy isreign america first. it is much more focused on what is in america's direct vital national interest. narrows a much more

education of america's interest and likely to continue to do that. style, andt trump's said something that will cause him problems, is not so much what america is doing, but how it is doing it. problems.is causing the fact that he moves one side to the other. he says something about china and then reverses that and says something else. the fact is coming to fish and steam are not always behind him, so they are saying one thing while he is saying another -- the fact his communication team are not always behind him, so they are saying one thing while he is saying another. much of the what is getting support. it is more how he is doing it. and the fact that it is constantly changing is causing them a fair amount of friction and uncertainty. francine: vladimir putin is saying u.s. internal political fight may affect the world economy. how does europe deal with this? europe is in the middle geographically of the u.s., caught between the u.s., russia, and china. is their influence that europe can do and have, or are they too

focused on domestic problems? >> i think europe will have to take a role at a global level. of course, we have domestic problems in europe and we need to solve them out, but part of the problems are also competitiveness with the rest of the world. i think europe has to take a place in this game, as i said earlier. nevertheless, i think the big focus going forward in the next couple of weeks is going to be about how to make europe stronger and to improve the functioning of europe. we will talk about that later. francine: and focus on german and french politics. is there anyone in europe that donald trump trusts? the angel of merkel visit to the white house was somewhat -- i don't know how you describe it, cold? >> yes. i'm looking for to the first meeting between mr. trump and mr. macron. francine: which could be on the

25th on the margins of nato. >> that is going to be an interesting meeting. obviously, donald trump was not a great supporter of macron during the campaign. he was more or less saying good things about le pen. i think that has been a bit who leing, when you know pen's. nevertheless, it will be interesting to see if these two guys can go along together and whether this could be sort of an alternative -- definitely, will be close to each other and i don't expect them to have different messages to the u.s. u.s. y chart was on the you can see this bit of a rollover into 2007. do you just assume inflation in europe? do you see that recuperating? >> it is very weak. we see some up and down in

inflation because of oil prices and commodity prices. in terms of core inflationary pressures, we are still pretty weak --in a week situation. even in germany where we are close to full capacity, we don't see any big inflationary pressures. it. not very worried about the ecb is not worried, either. they just repeat and repeat they don't see self-sustaining pressures. they will have to normalize, but nevertheless, inflation apparently well above 2%. francine: the trump administration would benefit from a stable europe. do they know and embrace that? >> donald trump has said during the campaign that he supported brexit. he stopped the saying that. i think it is clear that some of

the people that donald trump trusts within his team -- again, mcmastersmattis and -- ensuring a stable europe and that being a positive for the united states. i think of is something that donald trump is increasingly buying into. but is there somebody in europe that donald trump trusts? i see the answer is no. i don't think there is anyone he trusts. as far as he is concerned, america has to look out for itself. and that means it is always america first and every other country will have their own self-interest. that is his attitude for the united states, and he makes resumption of every other leader as a same attitude toward their own country. , thank youwickett for getting us started here on a monday with so much of what is going on is that we will continue with mr. gudin. coming up, a most interesting conversation. about eight ways to go here with mr. brady of texas.

most interesting. that is in a 9:00 hour today. worldwide stop from london, from new york, this is bloomberg. jeter's new york. ♪

francine: these are live pictures. this is the official residence of the prime minister of france. we are expecting the new wasident, who is in -- who inaugurated yesterday, to replace the prime minister. president that announces it, but the secretary who will announce who the new

prime minister will be. we are expecting in the next couple of hours. on german and french politics. angela merkel is picking up until wind at of the elections in september -- a tale wind in the elections of september. our campaign is back on track. fory, she will host macron the first meeting after his inauguration. let's get the latest from mark gilbert. we were talking about who trump talks to in your. are you absolutely certain that means we willkel see the revival of this french-german access -- axis. >> yes. i think will reveal the trust between the countries and try to

reshuffle the european union. this merkel has been having macron as a partner. macron could possibly revive the french economy. this is what germany needs. they need a strong partner in order to revive europe. francine: what can he get done? do we need to wait for the elections? will he be distracted? >> the elections are in four weeks. i have no doubt that macron will be able to find a majority in parliament. you need understand, we're in a conference of reshuffling of the landscape of france. bitrepublican party is in a of disarray. i think many of them are ready to work with president macron. ,hen you have the new party

which is the party founded by macron. if you look at opinion polls, and people in france want to give him the majority. i was looking at the bulls yesterday. -- i was looking at the polls yesterday, giving 30% to him. the center-right and the centerleft, there will be people ready to work with him. one ine pen had been the the politicale, landscape in europe looks so much more settled than it might otherwise, which has to be great news for the economic outlook and for the markets. tom: let's bring up a chart. france-germany spread. there is the crisis. here is the angst about the

french election. here's a very nice well, well structured recovery as well. mark gilbert, within your reading of the french press, how long will the labor up or be against the new president? >> i think the appetite is there for change in europe. i think macron has the willingness, has the backing now to implement some reforms. it is not going to go that fast, but i think with the euro now looking safer than it has a long kicked theece can down the road. everything is stacking in favor of europe at the moment. those labor market reforms that macron needs to introduce, you have to be optimistic at this point in the political cycle, at least, there is the chance. tom: what is it in for the germans to assist mr. macron

with this reformation? what is the motivation of the germans to meet the french halfway? >> the motivation is first to make sure that mr. macron is going to make his own work in france and also they want to discuss the future of europe. for sure, over the last couple of years, the influence of -- france was weak economically. if we are the situation where france is able eventually to implement reforms and get some economic strength, will be the right partner for germany. tomany is definitely willing have a strong partner. they don't want to be the leaders on their own. have merkel -- francine: is it almost a given that martin schulz will be out of the race?

it looks a lot more unlikely than it was a week ago that he is a real challenger to angela merkel. >> we still have four months to go, so we need to be careful. performance ago in france, -- four months ago in france. when he was announced as the candidate, there is been a boost, definitely. thatr with martin schulz it would have been with another leader. but i think german people -- remember, germany is strong economically. there is no real need to change anything for german people. i think they hate uncertainty. it was certainly go again -- to lead,he spd is able i'm not sure, but what is clear is i'm not sure the spd is a strong economic line, economic view. in many countries, social democratic parties are split.

this is not an exception from that respect. i think we need to see the progress. today we don't know yet what the manifesto will be. we have an idea that angela merkel will favor tax cuts and the spd will favor boosting expenditures. i'm not sure this is something very appealing for german people. ms.uld say, yes, certainly merkel is better placed to win the election. >> we could see fiscal -- >> in any case, yes, there will be some physical boost in germany whether it is from tax cuts or expenditures. francine: thank you. we will be back with mark gilbert and philippe gudin. you can follow us on bloomberg go. you can click on that and also

asked us to ask a guest a question. bloomberg tv go. this is bloomberg. ♪

the business get flash. over dobby investment company plans to invest over $15 billion. the firm says the softbank fund will be wrapped up in two to three weeks with none $5 billion of commitment. meanwhile, they plan to start to the new capital investment funds. jpmorgan has agreed to buy an office building in dublin that can hold more than 1000 workers. the 200 capital. building is not finished yet. the bank will pay about $137 million. dublin is among the city's jpmorgan is considering for an therged eu hub following brexit vote. the bank is expected to relocate several thousand workers from the u.k.. that is your bloomberg business flash. francine: thank you, taylor. the u.k. election is in everyone's focus. let's get back to mark gilbert.

we also have philippe gudin. i want to bring you over to my chart. u.k. savings, which is what is in white. weekly average earnings. aboutrd from mark carney the labor market that will limit improvement in wage growth will stop that is according to the you one item club. it goes against what mark carney was trying to portray. what will be the main focus of the campaign as we go on to the election on june 8, and will they actually be watching this in the brexit impact on this? >> in terms of pay growth, that is a big concern. projections,the they show weak wage growth. i remember going to a treasury briefing on the inflation report. irving king said, we are

terrified it is coming. wage growth never seems to arrive for the u.k. as your chart shows, those years of underperformance where wages group slower than inflation -- grew slower than inflation. that has not recovered enough to give people consumer confidence boost that they need best we get through brexit. francine: what do you see as the template? of aard of a warning challenging 2017, but still believe that wage growth will be close to 4% in 2019. >> everywhere in the advanced world, central bankers are seeing wages accelerate. it is been the case in u.s. and europe. we do not see them accelerating. settling --en waits wage settling. i think u.k. is not an exception. what i see on this chart is, first, the savings rate is at

historical low. that is a bit worrying. that means no room to absorb any -- any slowdown in wages. the second thing is what i mentioned on wages that, yes, you can expect them to accelerate eventually -- tom: thank you so much, philippe gudin of barclays, and mark gilbert. i think the wage issue is critical. i simply don't see the real wage growth. in the next hour, we address washington with kevin cirilli. we address cybersecurity with one of the best in the world. this is bloomberg. ♪

be careful out there. the global cyber attack continues.

"cybercriminals" attack moscow to the main. microsoft scrambles. macron travels to merkel. president trump is in a meeting with his hr. will commander spicer be shown the door? inflation is not inflating. this hour, carl weinberg. this is "bloomberg surveillance." live from our world headquarters. in your, i'm tom keene. from london, francine lacqua. -- in new york, i'm tom keene. from london, francine lacqua. i love a cyber attack. francine: i don't think anyone else likes a cyber attack because this is serious. tom: it is. take it: we do need to seriously, especially as we're expecting new ways of these ransom threats. however, i would also point to oil. oil jumping. we need to keep an eye on that. we're expecting the new

president of france to announce his prime minister. he is a little bit late to announcing it. we were expecting it an hour ago. right now in new york city with our first word news, here's taylor riggs. taylor: we are starting with a global cyber attack, expected to claim more victims today. more than 200,000 computers in 150 countries have been infected with ransomware so far. hackers used a technique purportedly stolen from the u.s. national security agency. among those affected, the uk's national health service, germany's national railway, and company such as fedex and nissan. most of the british hospitals affected are back to normal operation. new rocket warns its could carry a large nuclear warhead over a long distance. the testun watched launching yesterday. analysts estimate it could hit u.s. forces on the island of guam. u.s. ambassador to the united nations nikki haley says the latest test shows that kim is in a state of paranoia.

saudi arabia and russia say they want to extend oil production cuts through the first quarter of next year. they say it is necessary if producers want to reduce global image rest of the five-year average and shore up prices. opec and other nations did agree to cut output meet next week in vienna. china, president xi jinping has pledged $78 billion in financing for what he calls the project of the century. the money would be used to connect china with europe and asia, and africa are infrastructure and investment. among those attending the conference in beijing work russia's president vladimir putin and turkey's president erdogan. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. to the data, i only have one screen today. you know what happened last week. a little bit of flattening in the curve. oil elevated on american oil. francine: this is what i am

looking out. very much looking at oil. overall, a little bit of a reversal on european stocks. they were excited earlier this morning about the china $78 billion infrastructure plan. we saw stocks gaining. a lot of them are falling. inergy shares are gaining. weeksn and pound, four a -- four weeks away from the election. chart for carl weinberg. we will get to him in a moment. here's the rollover inflation in 2017. here's the break with oil. oil down, inflation comes lower. core is very stable. it has ebbed away a little bit. francine: a very simple chart, looking at wti and brent.

this is really the one i'm looking at, oil rigs back online. we have this agreement between saudi and russia segment will extend the cuts for nine months. look at this. every time the price of oil goes up a little bit, there are more rigs. a lot of people are segment price of oil is still in that van. of people are saying the price of oil is still in that band. been hit by ahave cyber attack. one of the largest attacks ever carried out with more than 200,000 victims. we're with jeremy kahn. thank you for keeping us updated on this developing story. we're expecting more attacks today. health and and -- automakers were attacked. >> yes, and quite a number of different industries were affected. francine: how can countries

protect themselves? >> the most important thing was to make sure your systems were up-to-date and install this security patches microsoft has it out. it seemed almost all of those affected was -- were because they had not patched their systems appropriately. tom: jeremy, thank you. a short visit with jeremy kahn today. i would like to say the interview of the day has updated with mr. trump and is a administration, but that is not true. this is the interview of the day. adam segal is with the council on foreign relations out of the have fletcher school in cornell. definitive experts on the madness we are dealing with with our computers. he joins us by telephone this morning. good morning. were you surprised by this attack? >> i think we have all been surprised by the speed and the scope of it. we all expected that the nsa

exploits that were posted online would eventually be taken advantage by criminal hackers. tom: the criminal hackers, and within our story by jeremy, we ,alk about russian language criminal people. who are these people? are they kids in their bedroom? are they a wing of some government? >> we don't know for sure. they're probably organized criminal. we know that in the past, the russian government has used russian criminals for their own purposes. the right now it is still too early to tell. tom: do we blame microsoft? i noticed apple is free and clear on this. if we know about this, and given the sophistication of people like you, is this something that microsoft should have dealt with and can they do with it right now? power -- partaid, of the problem is that companies were slow to patching. it is that entirely on microsoft.

some of the responsibility was on microsoft because they did not support people who are running an older system of windows to put the patch in. so right now i was it the responsibility is divided, primarily with the companies, a little bit with microsoft. francine: i was thinking back to some of the big cyber attacks in 2016, of course, the bangladeshi central bank into mind. how much are central banks will rebel and what about financials -- vulnerable and what about financials? >> i think the financials will be well-prepared. banks, and central that case been would issue was thatngladeshi is a system was hacked. i think they have learned a lesson and learned to has quickly. francine: will they have to spend more to deal with this? >> spending has gone up every year and will continue going up as the problem gets worse. tom: adam, is bitcoin a

legitimate currency of the public or is it going the province -- bitcoin the province of criminal activity? has been used a lot by criminals. what we're seeing is the underlying technology underneath , bitcoin being used for legitimate reasons by the financial systems, by insurance companies, by others. is beingitcoin itself increasingly marginalized, but the technology underneath it will be -- tom: thank you for the briefing. i'm sure we will speak to you more in the coming days. it has been too long since we have spoken to carl weinberg. he will sit with us for a solid two hours and we would not run out of things to talk about. -- he could sit with us for a solid two hours and we would not run out of things to talk about. dancing gdp idea, domestically or globally? >> the comey thing?

tom: the whole thing. is of thehe theme tweed, does it dampen gdp? >> a look at how foreign governments react. what we heard out of the g-7 meeting ahead of the summit coming up, we're learning how to work with the trump team. the trump team seems to have some distance from the president's views, expressed some independence on ideas and work with other governments on things like trade and the language of trade. i think right now we are in a cautious mode and the u.s. is kind of out of the mainstream of dealmaking on the global stage. it has put itself there because of the trump initiative. i think that is a negative for us. tois a pause in our progress become and remain the world leader. fencing go how will the trump administration deal with the big initiative -- prancing co how with the big initiative with china?

do you say you're going to work with china or still put america first? >> you hit the nail on the head because this is where we're losing ground the most in the area of trade. certainly, pulling out of tpp was a good idea, but not replacing it with something was a bad idea. china's -- there's a because in beijing with two dozen world leaders and a dozen finance representing 80 governments. this so crude initiative reaches 25% of world gdp and 4 billion consumers with china's projection of this world trade power prowess. the u.s. has left that conversation entirely. as a result, the was cannot remain in world trade unless it does something to keep that role. tom: we will be discussing vacuums tomorrow with physics professor carl weinberg. we will do china on the back end of the hour. coming up on bloomberg surveillance radio, thrilled to

bring you a wonderful book on leadership. on cybervridis attacks. stay with us. this is bloomberg. ♪

get to the's business flash. offering to buy spanish competitor in a deal that would great the world's largest operator of toll roads. the price, $17.9 billion. it is offering cash and share options in the takeover bid. in talks with pat the on. a deal could be reached this week. diagnostic and

testing equipment. it is based in massachusetts. toshiba is escalating the battle with its joint venture partner. toshiba is moving to block western digital employees from the unit the jacoby share. the reason, western digital has invoked an arbitration clause fromcould keep toshiba selling its chip unit. toshiba needs to sell the business because of massive losses in its nuclear power unit. that is your bloomberg business flash. may 3, george will and the washington post wrote a brilliant op-ed about the thinking of our president. we have on bloomberg view this morning, and absolute must-read. i will put this out on twitter five or six times a day. this is spectacular from the science writer. let's get to it --

tom: it is really being talked about with our president. is our chief washington correspondent. kevin, let's go to the day. our we going to see a new fbi director today? kevin: we will see it sometime this week. whether or not president trump decides to name whoever he is going to a point to the fbi remains to be seen, but i can tell you the pressure is now in the senate for there to be some type of quick resolution to what has completely turned upside down his ability to get through a legislative -- legislative priorities. tom: within your reporting, will he go to a senator of political or the grizzled pro? kevin: there is increasing pressure for him to go with the grizzled pro. when you talk to aids, do some of these lawmakers who have been

critical of president trump in the past and republican party but have publicly supported him on the firing of director comey, they seemingly would suggest that perhaps some of the reasoning that they were backing the president on this controversial decision was because they wanted influence a few he would appoint as his successor. tom: the other story, the idea of he has had it with his team and clean house. we even seeing cabinet officers like secretary roth singled out for underperforming. is it going to be mr. spicer, commander spicer, and the others or is this guy really going to clean cabinet officers out? >> i'm not so sure about the cabinet, but i can to you that this is reminiscent of during the campaign when there were -- there was several shakeups. there were three, mind you, replacements for campaign manager. seemingly, it was adjust that every now and then when there is this type of increased pressure, president trump asked her reset

the narrative. this could be an opportunity for him to do it. francine: president trump is traveling for the first time since he has been in office. will that be a distraction or will that be something that he needs desperately to be seen abroad with wins at home? kevin: a little bit at home. his first stop will be in saudi arabia. there is going to be discussions about energy policy and also the paris accord agreement and where he stands on that. it will be interesting to see if there are in any -- if there any new views on it. francine: steven mnuchin, trying to understand the trump administration and to understand the trump administration a little better now? kevin: i would note that for all of the chaos in washington inside the beltway last week, market seemingly were and rattled by all of the

controversies. perhaps secretary mnuchin is correct on that point in the sense that investors seemingly are less frazzled than during the campaign. tom: cavan, thank you's -- kevi, thank you so much. nunreal what we've seen. crowe weinberg with us. ton you distill this monetary policy and fiscal policy, do you just assume that fiscal policy is not dead, hugely delayed? >> he is mark on his expectations -- tom: how much? >> a small tax cut this year that is about it. tom: what does it do to gdp? >> nothing to really write home about. it is not the big overall that everyone was hoping for. it is a disappointment. tom: the critically, it has to take tenths out of gdp. do you bring it down under 3? thinkis the right way to

about it. 2%, 1/10 of a percent is more or 3.5%. at 3% there is no prospect of getting to the campaign pledge a president trump, which is to get us back to 3% to 4%. weinberg again with us later this morning. he will continue with us through the hour. this will be an interesting conversation. is from texas. he is a congressman. he is important. kevin brady on television and radio in the 9:00 hour. francine lacqua in london. i am tom keene in new york. this is bloomberg. ♪

>> we have come to the conclusion that the agreement needs to be extended. we will not reach the desired inventory level by the end of june. therefore, we also came to the willusion that ending probably be better at the end of the first quarter 2018. francine: that was the saudi al-falih.rgy minister we are with carl weinberg and

javier. we are talking about russia and saudi together in this to try and get back control of the oil market. >> you look at what has happened over the last year, the amount --joint press compasses that as conferences that have happened. coordinated statements. and workrly must go together to try to resolve the glut on the oil market. you look at how opposite saudi arabia and russia are on almost every political affair from and going 30 and 40 years back to afghanistan. it is remarkable that join together in try to do it. the key question is, is this going to be enough because the last time they tried for six

month's of cuts were not enough and now we are here with potential extension of nine months into the first quarter of 2018. tom: let's look at the chart. you nailed it 30 to 40 years back. 31 years ago, the opec collapsed. they are down here based on inflation and rising incomes. oil is dirt cheap. how is this saudi arabia different from the saudi arabia 31 years ago? >> it is very different in the sense that population has more than doubled. the economic needs are much higher. the financial needs are much higher. , theocio-contract -- morel regime and rigid. certainly, the saudi arabia regime needs to provide

financial return to the population. $45 to $50 is difficult. to price needed today satisfy the population is a lot higher. francine: thank you for joining us, javier blas, one of our key energy experts. stays with us. later today on bloomberg markets, we speak with bill simon, former ceo of walmart, about the state of regional. we will also be talking conservancies and consumer growth in the restaurant look at that at 2:00 p.m. in new york, 7:00 p.m. in london. this is bloomberg. ♪

francine: this is "bloomberg surveillance." live pictures from france.

a rather beautiful and quite elaborate palace. where expecting president macron to announce his prime minister soon. we were expecting that sooner. this is the view from the balcony. we will keep you up-to-date when we have any announcement on the prime minister. a clearer ideaus of what president macron wants to do before he goes on to general elections june 11 and 18. let's get to the first word news. more cyber chaos is expected today following the global attack on computer systems. according to the eu's law-enforcement agency, more than 200,000 computers in 150 been infected with ransomware so far. authorities say hackers used a tool to infect computer files, theng them accessible demanded ransom. uk's national health service is

recovering after being one of the first targets. fedex and automakers nissan and renault were also affected. xi jinpingresident has pledged $70 billion in financing for what he calls the project of the century. the money would be used to connect china with europe, asia, and africa through infrastructure and investment. among those attending the conference in beijing were russia's president vladimir putin and turkey's president erdogan. washington, democrats are keeping up the pressure on president trump over the firing of the at ei director james comey. they're demanding the president turn over any recordings he may have made of the meeting with comey. republican senator lindsey graham said president trump has an obligation to pick someone outside of politics to run the of ei. -- run the fbi. with the trade disagreement with the trump administration. they say they're getting along better with her u.s. counterpart steve mnuchin.

u.s.'s america first policy is a source of contention. i think there was no disagreement on the fact that trade promotes growth and has to be inclusive. i am very satisfied. of course we need to make steps forward. there are different views across the g-7 and the g-20 for that. but i am confident we can reach common views even on these issues. taylor: u.s. trade policy is likely to come up when g-7 leaders meet in sicily later this month. 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. thank you, taylor. the tailwinds with german -- is with angela merkel at of the september elections meaning the trend is on her side. her latest victory came original vote in germany's most populous state yesterday.

it marks the third straight defeat for social democratic challenger martin schulz. today the chancellor welcomes to french president macron. matt miller is with us. igneous and somewhat the chancellor will speak with macron about and where this leaves more and schultz. matt: they will talk a lot about european issues, but also about foreign policy beyond europe. they are obviously going to be meeting again in just a couple of weeks time in sicily for the g-7 leader meetings. and macron, a lot of people are saying count on working with merkel, a lot more in the future. previously the question was, would he work with martin schulz withd euro bonds or when european finance minister, or would he work with angela merkel? after the trauma and the spd received in germany's most populous state over the weekend,

looks more and more like you will be working with the cdu. francine: give me a sense of how macron and merkel will work together. i keep hearing this is a resurgence, but there must be points on which they disagree. matt: like i said, macron is for much more unified federalist europe. he is for euro bonds. he is for a single finance minister in the european union. angela merkel and her constituency are certainly not for that. while there both pro-europe candidates, they see a different kind of future for the european union. on the other hand, she is a steady hand for him to work with if she does indeed when the elections sentiment 24th. it will be her fourth term as chancellor of germany. away fromake a lot her. she could also take a lot away from him because she has been in power so long. she lacks the outsider quality or new, quality that he has.

quality that he has. they could be a good team for each other. francine: what are you looking at for martin schulz? i know he said it is going to be more difficult for september, but he vowed not to step aside. we of the federal elections september 24. is it a clear win for info merkel or in politics, a lot can happen in four months? inpolitics, like an happen four months. there were not a lot of people out there saying donald trump was going to be the next president of the u.s. last july or even last august or last september or even last october. things can change quickly. as martin schulz is concerned, what he is to do is paint this election coming up september as a true federal election. don't forget, the and rw election over the weekend was a regional one.

to try to dogoing is say, look, voters were voting on state issues, not federal issues. the election in september is about the country, not be state. tom: what do the people say? what do the media say within germany, the newspapers, are they greeting mr. macron with open arms? matt: there definitely greeting him with open arms. there is going to be a military welcome for him today. there is a lot being said about this franco-german relationship and how important it is. the media in germany is also what would be seen from the u.s. as a very left of center media. they are incredibly pro-europe -- at least, as far as the mainstream broadcasters. tom: matt miller, thank you, incredibly proserv village. what are your thoughts on this? i don't buy all of the happy talk for a minute. >> i don't know how this is going to work out between the two of them, but i am concerned and seeing how they can agree on what to do about brexit.

this is the biggest single challenge both of those economies face and the opportunity, particular in financial services. the best ofis politics now that we are pushed the grassroots out of the equation. now let's focus on what can we take from britain? tom: the overlay to me is two separate coulters of labor within their different capitalism's, a labor dynamic that nobody is talking about. what is a labor distinction between the german dynamic, which you're one of the best in the world on, and the french labor dynamic, which nobody understands? >> the french labor side, the cameside of macron -- he from the socialist side to begin with. if he leans to the left of labor policies, we might get more concessions toward unions out of all of this. we might get some minimum-wage action. we might get things that are less beneficial to employers. on the german side, merkel has

shown a consistent stance on fiscal stability, and running the country with a very tight fist, trying to get businesses to be more productive through trade and other measures. we will have to see how that balances out. they don't necessarily have to agree on those things in order to be able for europe to move forward. i think on the key european issues, the idea of moving for to more europe rather than less europe is the key thing. francine: what does it mean for the trump administration and who president trump will want to speak with when he is in europe or pick up the phone to call someone in europe? >> that is a real good question. i don't think president trump wants to speak with any of them right now. i am curious to see what comes out of the g-7 because i don't see a lot of common ground on or a wife or i give issues. tom: carl weinberg, bringing in a bucket of cold water from new

york city as we look at franco-german theory. we will continue with pro one brick and look at china in a moment. tomorrow, well-timed. do you know the policy of the united states of america? edward alden will join us. he has a spectacular book about our trade history tomorrow. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." china's energy company says it will sign 20 but in dollars of deals during the forum in beijing. we spoke with the chairman about the outlook for oil. >> we estimate in 2017, the price per barrel would be around

$50 with possible short-term, but 60 u.s. dollars is not sustainable. the oil price will see a slow 2020.ry in 2018 to however, prices won't get back to 2014's $100. yourr: and that is bloomberg business flash. tom: thank you so much. michael cannon is with the cato institute. when senators walk in the room, their knees shake. whether it is obamacare or trumpcare, he is been knowledgeable in a harsh -- and a harsh critic of our politicians. mr. cannon joins us with carl weinberg. what is your biggest headache right now? it is that the exchanges keep collapsing.

got 43,000 people in east tennessee love no exchange plan options after december. -- who have no exchange plan options after december. it looks like the same and i looks theeorgia -- it same in iowa and georgia. a lot of oklahomans who have expensive medical conditions, but no way to get affordable health insurance. tom: you toward to shreds equal opportunity obamacare and trumpcare. i don't even want to go into it right now. what do moderate well again senators -- well thinking senators, what do they do given what you just outlined and critically as they rebuild health care, what are they going to do with it? >> that is not dealing thing happening. the coverage for the sick is getting worse. the only way to fix that is -- tom: what are senators going to do?

how do kabul together 50 votes so they can do that is the big question. no one really knows. tom: they're not going to do cato 101. what are they going to do to straddle two filled systems? >> i think it is the same failed system. it keeps in place the provisions of obamacare crossing the markets to collapse. them do-- i can't make the cato plan. unless they do something that gets rid of the regulations that are causing these problems, we're going to keep seeing this sort of collapse. tom: over every cocktail in england -- not that i had a few -- we talked about nhs in a more socialized medicine. what is wrong with the british system? >> you don't get this sort of innovation suffering health care in the region more people. you have quality problems. rationing for care. you don't get this sort of innovation.

you get the sort of new thatdures that make -- previously incurable diseases. francine, your reality, you have to wait in line as your kids get care -- get lousy care? it is free-for-all, access to all, like in many european countries. >> it certainly not free. there are all sorts of -- are all sorts of harms done by the excessive taxes in order to pay for the system. you don't spend as much on the british national health service as health care in the united states, but you do end up with a whole set of perverse incentives and problems in the system that actually we do see in the united states in our version of the

health system. i like to say in the u.s., with every type of socialized medicine as you find anywhere else in the world, but we have it all in one place. so we get the sort of rationing wage for care in our version of the national health service that you get in yours. francine: michael, i want to move away from the subject briefly. is your system in the u.s. better at coping with cyberattacks? nhs was hit by cyberattacks. what about the u.s.? a there's one advantage that diverse market-based system, you have multiple health systems, you will have multiple approaches to dealing with the cyberattacks instead of one nationalized system where if those trend of her get down to figure out one way to take down -- if it is one system, they only have to figure out one way to take it down. with a more diversified system, they have to find multiple ways and their competing on the

dimension of quality. how do you protect the system from that sort of attack. >> it is a mess. it is falling apart. what is the least bad thing we can do that has to be done at can be done in the next few months to fix it? dothe least that thing is to exactly what president trump promise to is going to do, which was -- and elected to do, which is full repeal, meaning you get rid of all of the regulations, all of this running, get rid of all of the taxes in the law. healthu replace it with savings accounts. you expand these tax-free accounts so the people can take the money or employers are spinning on their behalf -- their employers are spending on their behalf. it will drive down prices and it will be a little purchase insurance that stays with them from job to job. >> can you do that between now and december? >> i think it can be done. whether it will is the question. i think things may have to get

worse before they get better. tom: you have a provocative sentence" if hillary clinton was president." would we have the same conversation right now? >> i think it would be eight different conversation. i think republicans would still be united in overturning obamacare. tom: michael cannon, greatly appreciate it. many opinions trying to bring to you on obamacare and trumpcare. can't remember which one is affordable care act and which is the other. i apologize for that. i don't apologize for tv . if you ever terminal at your home, maybe at your trading desk, tv is way cool. not only do you get to watch tv, but you get to scroll down until burke-likea crow one chart like this one on oil. click on it and out comes the older block.

bonus round. you can steal the chart from us. how cool is that? this is bloomberg. ♪

oil currencies on the move

with an elevated oil. we want with the manila look. -- we went with the vanilla look. there's your forex report for this morning. francine: coming up shortly, bloomberg daybreak: americas. what you have on the show today? >> one of the things we're looking at is tax reform. we've been talking about it for months. commerce will get down to brass tacks. kevin brady coming from his home state of texas, about what this bill will look like. legislative language, tom. tom: i see the uproar. what is your take with mr. brady? >> the first thing i'm going to say, where does the ryan plan differ from the white house plan? which one is going to prevail?

their competing up on the hill. tom: thank you. >> and i will talk to you, afterwards. tom: on the radio as well. our single best chart. this is a different chart. i usually don't make it soupy buty with moving averages, i did here. here's the china consumption in 2006 and here is the tip point at the end of 2011 where china consumption rolls over to only 10% growth per year. this is the real question, windows chinese consumption -- when does chinese consumption bring us back? >> we're at a cyclical event in china, cycle around a very high trend line. tom: agreed. >> i think the chinese consumer is getting a break right now on food prices and they're going out to spend it. that is being a catalyst. we're seeing that in the retail sales numbers over the last few weeks. i know we are getting a new

retail sales number out today. we're hoping to see acceleration back toward the 9% or 10% figure. the would be a catalyst for economy to resume its long-term trend growth. francine: i spoke to you a little earlier -- i spoke earlier about the china investment plan. >> no question u.s. will be impacted and i believe the u.s. will have to join this effort and join the one belt, one road program. there is a lot of benefit to be achieved by the u.s. companies in this program. i think the chinese are going to be very careful not to favor chinese companies unduly. it is going to be enough for everyone, let's put it that way. francine: what i'm trying to figure out, the silk road, is president xi tried to take advantage of the trump administration looking inwards? does it mean they change their domestic chinese policy? it comes from the point of

view the u.s. is in charge here, and they are not. at this point, china's program links over the percent vick -- pacific. the united states is excluded from that on ideological differences. the u.s. cannot get in and play with china's silk road and all of the wealth that is going to thatate, all of the income will generate, unless it signs up and agrees to china's transpacific trade package. that is nowhere in the cards, as far as i can see. tom: very quickly, what do you want to see out of the administration? >> right now i am in the do no harm point of view. i want to see a rethink on trade. i think the notion that free trade is bad for the world is a populist way to get elected, but not a good way to grow the economy. tom: mr. ross going after dr. navarro over the weekend. if we had 10% or even 15%

growth of exports rather than 4%, which is in the realm of capability of this economy am we would be a much longer economy. tom: carl weinberg with us on "bloomberg surveillance." we will do that on bloomberg radio in a bit. tomorrow, an important guest an interview. no one in a major more optimistic than peter cooper of deutsche bank. he believes in 3% gdp. in london.cqua i am tom keene in new york. it is a beautiful early spring day. city.jeter's new york this is bloomberg. good morning. ♪

>> hackers take control of more

computers.0 global cyberattack. issues guessetary xi play, president plays out a frame work for chinese globalization. for new york city, good morning. warm welcome to "bloomberg daybreak" i'm jonathan ferro. catching a big 4922. nowhere.s goes it's a weak story for second day in the g7 space. euro dollar pushing 110. eco data. some later on today, you get the u.s. issues short term t bills. we get the flows for the month of march. later