>> dancing to a different tune. donald trump announces the liens of dollars of deal during his first foreign trip as president. the u.s. leader calls in tehran. plus, ever the optimist. jamie dimon tells bloomberg exclusively about his global growth outlook. >> japan is growing. europe is doing rather well, all things considered.

that is all pretty good. >> and ready to walk away. talks, and the demand for a massive divorce payment. eu leaders meet in brussels to define their negotiating position. this is "bloomberg surveillance ." i'm francine lacqua in london. the president travels to israel and then on to the g-7. nato,o has a meeting with but let's check on your markets. we see a little bit of impact, following the bloomberg interview on oil. equity is trading pretty much unchanged, a little bit calmer. oil at $54. let's get straight to the bloomberg first word news. donald trump has told arab leaders that the war on terrorism is not a fight between different faiths. he also called for middle eastern allies to not wait for

america's help to crush terror groups. the speech was emanmeant to declare that this is not a war on islam. >> when young muslim men and women should have the chance to build a new era of prosperity for themselves, it has to be done and we have to let them do it. summitd's help, this will mark the beginning of the end for those who practice terror and spread its vile creed. reporter: back at home, president trump plans to propose $1.7 trillion in cuts as part of an effort to balance the budget. according to a republican congressional aide and a white house document obtained by bloomberg, the administration will issue a formal budget report tomorrow, which includes

$274 billion in cuts over 10 years in programs, including food stamps. remains optimistic in president trump. he says even the traditionally view shows the economy going faster than expected. >> europe is doing actually rather well, all things considered. 2%,ica is moving along at give or take. even the imf, which is always warning about death, says the world could roll over -- warning about stuff, says the world could roll over faster. the russell campaign for reelection was dominated over arguments regarding deepening inequality. voters endorsed his efforts to steer the nation out of

isolation through the landmark deal with world powers. european union ministers meet in brussels to discuss the brexit negotiating positions. this comes after the u.k. threatened to quit talks, and less the divorce payment was dropped. even one billion pounds for a settlement would be a lot of money. let's get back to the other stories we're following. oil of course, pushing higher again this morning after saudi arabia said oil producers are al l producers agree on output cuts for 102018. the kingdom's oil minister spoke to me this weekend. >> i have not heard of any country that is against the extension per se. everybody wants the extension because we realized we have not

achieved our objective. so, we are now joined by our european economist and peter montalto. peter and gilles, welcome to the program. peter, if you look at oil, and we will have a conversation with kennedy -- i spoke with the saudi oil minister. he is confident that we are expecting these output cuts to be extended by nine months. will this filter through the european economy? >> the european recovery is driven by many things. oil prices could be one of them, but there is this resurgence of confidence in loosening credit conditions, which are bleeding through as well. oil is one of those small components. the eurozone recovery story has been very sharp. that is going to help the oil

price as well during the medium run. francine: gilles, what is your take on the oil story? it seems that no matter how hard opec tries, at some point shale is going to come through in the u.s. even more. it is almost capped. >> we have this situation where the problem is, it would be more interesting to wait to strike. within the economy itself, we the passed the peak of benefit of lower prices in the eurozone. it has helped consumer spending tremendously. it is something we will lose as the price of oil rises. that is tied with our general concern, which is we have had strong data in the eurozone over the last few months. our contention is that maybe this growth rate is going to be hard to sustain. in terms of the growth rate, we

have already peaked. the potential is higher than what we have been used to working with. oil was one of these tailwinds that is less supported right now. francine: let's specifically talk about oil and opec this week. forst of all, thank you t coming onto the program. we caught up with the saudi oil minister. he was confident, but cautious, saying the country's he had spoken to were ready for a cut. is the market now pricing this in? >> i think so. we have seen a nice run-up in oil. the saudi oil minister appeared with the russian oil minister 20 days ago and said we would cut for nine months. oil is up a bit more today. i don't think it is totally nailed on, though.

it is interesting that the oil minister will speak with the iraqi oil minister. iraq is the second largest producer and is trying to maximize its own production to shore up its fiscal position. he still means to put the final building blocks in place, but i don't think he would have told you what he did unless he was sure he could get it done. francine: this is basically a dry expanse on the texas and mexico border. >> that is exactly right. when they announced these cuts last autumn, al-falih was clear he expected the earnings six months before he got the market where he wanted it. that is clearly not the case. he now says he needs another nine months to get the rally. shale supplies opec and everyone in the market. that has been driven by the sheer amount of oil and the

efficiency of these premium wells. they are drilling six different wells, miles alolong. the shale industry is changing fast. francine: are we talking about a range? will this change the way you look at europe, if it goes up or down $10? >> basically, it is entirely dependent on market pricing. that is becoming an issue for the ecb. approach,ick to their the problem for them is going to be potentially, they are forced to revise the inflation forecasting down come june. that is the moment they are supposed to tighten and start to pre-announced. that depends on where the market is. it is forcing them into very

acrobatic decisions. we are in the same situation. we want to move away a little bit from simply taking this forwards and just making a bet on what would happen if oil stayed at the current level. we did that when oil was at $48. if you do that, you have inflation falling below 1% at the end of the year. it gives you a sense of the sensitivity of the entire discourse on the health of the economy, on this decision this weekend oil prices in general. francine: thank you. we also have a great chart you can find on tv . this goes back to what we were talking about with oil. stay with "surveillance." plenty coming up, including dancing and dealing. president trump uses his trip to the middle east to announce

billions of dollars in agreements. donald trump called on the world to isolate iran. this is bloomberg. ♪

francine: "bloomberg surveillance." let's get straight to the bloomberg business flash. reporter: ford is devising mark fields jim hackett. the specialist has been leading selfautomaker's moves into driving cars. hackett will move up into the position. the company said it cannot confirm any media speculations.

a chemicals company with the market value of $14 billion. clariant 52% of the entity. the global headquarters will be in switzerland with operations run out of the u.s. the ceo will succeed the helm of the world's biggest cement maker. the appointment takes place on october 16. he announcement said that would resign in july. that is the bloomberg business flash. francine: u.s. president donald trump has told leaders that the war terrorism is not a fight between different faiths. he called on middle eastern allies to not wait on

america's help. donald trump: young muslim men and women should have the chance to build a new era of prosperity themselves. it has to be done and we have to let them do it. summitd's help, this will mark the beginning of the end for those who practice terror and spread its vile creed . francine: the speech was an attempt to ease concerns that the trump administration discriminates against islam in the wake of the attempt to ban people from some muslim majority countries from entering the united states. he is scheduled to travel to tel aviv aboard air force one today in what appears to be a direct flight between those nations. let's bring in bloomberg's executive editor. still with us, gilles moec and peter montalto. thanks for being with us.

this was a trip -- the first leg of the trip had to be a success for donald trump. a success because of the deal the announced and some of the money he got in the u.s.? >> i would argue these are some of the best moves donald trump has made since becoming president. he brought home $10 billion in deals for u.s. company. a lot of those leaders, starting verythe saudi king, were approachable on what trump is doing. it was great imagery. he was doing a speech on the world stage. he looked very statesmanlike. francine: he was very strong against iran. what will israel ask of him today? >> the opposite things. maybe he does not want to deal. i think there is very little

chance we will get a peace deal. he is making a lot of stop there. he is singing netanyahu -- he is seeing netanyahu. any u.s.not much president could do in that part of the world right now. trump seems to want to nudge them together, but i don't see a lot of progress. francine: how does donald trump make the seven days a success question mark stay on message and do what? look presidential? >> looking presidential is easy to say, hard to do, for donald trump, or anybody. they are keeping him far away from the press. we have had a few backroom briefings. i think he will be kept far away from us. if he looks statesmanlike and presidential, he will come out of this looking pretty good for the outing. francine: what is the biggest news in washington question mark >? >> james comey will be

testifying sometime after memorial day. we know comey has a lot to say about this, including the allegation the donald trump asked him to shut down the investigation into michael flynn. he has bad news waiting for him. francine: peter, how does this translate into your world? i was there. again, we did not really get a chance to see the president, but it did feel he was considered good for the middle east. does this translate into the markets for the economy? >> i think people are looking for a continuation of the strong relationship there, as well as bringing iran in from the cold, which it seems they have been put back on ice, given the rhetoric trump was using against rouhani after the election. i think the problem for markets there is there is very little new news coming out to shift the narrative on either iran, after coverage, i, or the

think it is overdoing it. but actually, for iran, there is a huge amount of potential to think about as the underbanked labor market as well. it is still seen as far too long term for investors to latch onto. francine: what did you make of the first trip of the president, gilles? it seemed he wanted a deal. he is a businessman. he got it. i don't know how much of this will come through. but did it change any of your views on the economy? >> not at this stage. what remains the point of focus for us in the market as well is the fiscal package and what we get during the second half of the year, in terms of the f iscal push. the rest is a bit peripheral to this. from our point of view, we are

at 2%, which is still below consensus for the u.s. the rationale behind this was to say, the market is betting on a very quick announcement of a very big fiscal push. it is not as quick as people were expecting and it is likely not to be as big as people were expecting. as far as we are concerned, we remain cautious. q1 was disappointing, and it always is. we have potential growth in the u.s., which is slightly below 2%. to be above that, we need some sort of policy push. we know it will not come from monetary policy because the fed is normalizing. it was supposed to come from fiscal and we are still waiting. francine: let's stick with the middle east now. rouhani's election shows the world has chosen engagement over extremism.

want to steer the nation out of isolation. anchoromberg market's yousef gamal el-din is there. how do they expect to navigate relations between the u.s. and saudi arabia? yousef: it is a steep struggle. he is trying to selling agent with the u.s., which has been the platform and a fundamental part of his campaign. as you mentioned, a resounding victory for him. again, the endorsement for his engagement with the west. what it comes down to the is the fact he will have to find ways to reinvigorate negotiations with partners outside of the gcc and the united states. the words coming out of this meeting, president trump saying the iranian government gives terrorists social standing and safe harbor.

also adding all nations of conscience must work together to isolate iran, denying the funding for terrorism. iran's foreign minister has tweeted, this harsh rhetoric is the basis of the trade deal that has been reached and foreign asicy or simply milking ksa part of the $80 billion. it becomes a lot more difficult now and ironically, he had been campaigning on the platform of being more liberal. yet, this latest result puts him in an even tighter corner. francine: i was really struck by bloomberg's piece, saying rouhani was the lesser of two evils. but westerners vastly overestimate what an iranian president can do. what will be president rouhani's challenges in the second term? ultimately, we

have been saying this throughout our coverage. you are looking at two key candidates during the election and they are still operating within the confines of the islamic republic and they have to report to the republic. having said that, he has a few options, trying to navigate what looks like a burgeoning strengthened u.s.-saudi relationship. the carnegie endowment came out and said there are few major countries who believe iran is the greatest source of instability in the region, meaning the latest round of sanctions that countries like china and even europe, there are some european countries, some of the largest trade partners of iran, the eu foreign-policy chief has congratulated the iranian president and they are intent on making more deals going forward, jumping on this opportunity that has been created. francine: thank you, yousef

gamal el-din. craig, how do you view this? what is the end game of the president in the middle east? is it possible that he makes foreign-policy they're much more messy? -- policy there much more messy? >> i think it is very possible. he is grumpy he has to have this iranian nuclear deal. they are trying to pull out of it. they are realizing the u.s. will pull itself out of it, but the rest of the country's will still benefit from it and iran will still be able to do whatever iran is doing. i think he would love to put iran in a box. he thought he could strike a grand bargain with putin to sit on his allies. all of that has crumbled away. right now, i think he is fighting for a holding pattern. he just does not want it go get worse. he loves to pull those business

deals for home. francine: peter, what does it mean for president rouhani? if he does not have the support, or the half support like he had from the previous administration, how does he reform the country? >> he has to find a balance, operating within the constraint. i think the real problem there is he has unemployment sitting at 12.7%, slowly grinding higher as the labor force expands and more youth enters the labor force. there is very little he can do under a sanctioned regime, though they are being lightened slowly, unless you have the u.s. on your side. banks are so risk-averse. he will not really have a meaningful shift in capital growth until the u.s. is meaningfully on the side. i think a balance of slow reform, whereby he is attempting to open up things. that is why we saw him move on social media so quickly before, actually. sense, it is a

relatively limited path to ref orm. francine: right, but is this because of the system or who the president is? >> i think both. he is a product of the system in the past. therefore, we have to wait and see. francine: thank you all for joining us today. thanks toon, and peter montalto and gilles moec stays with us. up next, brexit talks seem to be in chaos. they start today. what happens next? this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." let's get straight to the bloomberg first word news. here's sebastian salek. sebastian: oil has extended its gains after saudi arabia said

all producers agree on prolonging the deal through the first quarter of 2018. the energy minister also said the extension into next year will help producers reach their goal of training global stockpiles -- trimming global stockpiles. >> i have not heard of any country that is against the extension. everybody wants the extension because we have not achieved our objective of bringing global inventories to a five-year average. sebastian: donald trump has told arab leaders the war on terrorism is in a fight between different faiths. speaking in saudi arabia, he called on middle eastern allies not to wait for america's health. the speech was an attempt to ease concerns the trump administration discriminates against islam in the wake of an attempt to ban people from some muslim majority countries

from entering the united states. >> young muslim men and women should have a chance to build a new era of prosperity for themselves. help, this summit will mark the beginning of the end for those who practice terror and spread its vial create. sebastian: back at home, president trump plans to propose $1.7 trillion in cuts to poverty programs as part of an ever to balance the budget. according to a republican congressional aide, the administration will issue a formal budget request tomorrow that includes $207 billion in cuts over 10 years to programs including food stamps. remains's jamie dimon optimistic about the global economy and the prospects of reform under president trump. speaking to bloomberg, he says even the traditionally cautious imf sees the economy growing

faster than expected. than it is growing more has grown in 15 years. europe is doing rather well. america is still chugging along at 2% give or take. that is pretty good. even the imf is now saying the world is going to grow a little faster than expected. sebastian: hassan rouhani has promised to reach across ideological and social divides after his successful campaign for reelection was dominated by arguments over inequality. the moderate cleric won a resounding victory as voters endorsed his effort to steer the nation out of isolation through its landmark nuclear deal with world powers. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm sebastian salek and this is bloomberg. francine: thank you so much. ministers from around the european union are meeting in brussels to discuss their brexit negotiating position as the u.k.

government has restated its threat to quit talks unless the e.u. drops demands for a divorce payment as high as 100 billion euros. frexit secretary david davis warning negotiations could be plunged into chaos. let's bring in simon kennedy. gilles moec from merrill lynch is still with us. if it's chaos and the u.k. walks away, what is the reality of them walking away and who suffers most? >> they have to have that warning out there. there's a couple of fronts, one bashing brussels or raising the specter of a fight with brussels domestically. the british argument is they don't want to be punished in these talks, so they can't go in and imply they will never walk away. this no deal is better than a bad deal language very much an attempt to tell the e.u., don't go too far in trying to punish us. we will walk away if necessary.

whether that is true or not remains to be seen and will come clearer during these negotiations. francine: are these negotiating tactics -- with president macron, does it mean brexit will be tougher to enforce or easier to enforce? pretty clearbeen on what he wants from the u.k.. it doesn't seem like he's into a soft version of brexit. one thing to keep in mind is that the europeans are going to insist on what makes europe protective of its citizens, to fight the internal populist push. if the u.k. is pulling in the other direction, it is very tempting for any politician to use the brexit negotiations to negative..u. is not this argument actually helps the stance of those who want to keep

a very hard view on brexit. another thing to keep in mind is that it might be part of the posturing, but if you are ready to walk off the table, you have to be able to say, if the u.k. leaves and if there is no negotiation in the end, what would be the u.k. model? singaporedeas about 2.0. francine: who is questioning that? gilles: the issue is, how do you sell it internally? what we've heard from the government in the u.k. in the last few weeks is they are moving towards what used to be called a one nation approach which is fairly social, that wants to the fairly interventionist on market and economic issues. if the plan b is to do exactly the opposite and go into a supply side, deregulated

economy, to try to attract investment, you probably have to sell it a little to your public opinion. otherwise the positive conditions might not be met. i accept that in the negotiation it is probably normal to expect that someone wants to walk out, but walking out is sellable only if you have a credible plan b. francine: i guess you can argue the problem is there's no real opposition that has a chance to gain ground in the election. simon, talk to me about financial services. have we understood better on whether they are ready to fight for it or is it something theresa may is happy to let go of? simon: the trade issue was front and center of the recent article 50 vote. it did mention financial services quite prominently. seenroblem is, and we've members of her government move away from that since, taking a

back burner during the election, they said there could be a risk they have to put finance aside to get a deal on manufacturing and the like. the question to europeans as well on how much they want a financial sector within the continent, some discussion there. germany a bit resistant and paris more of beat -- upbeat. the u.k. won't want to be promoting it too much in case the europeans see that is something they can go after. francine: thank you so much. another great chart, this is volatility on pound-u.s. dollar. you can see there, the yellow line is basically the 50-day moving average. thank you so much. simon kennedy and gilles moec from bank of america merrill lynch stays with us. stay with "surveillance." plenty coming up, including -- >> even the imf is now saying the world is going to grow a

little faster than expected. francine: jamie dimon on why he's upbeat about the global growth outlook. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." let's get straight to your markets with mark barton. mark: it has been a choppy day so far. we are up 0.2%. last week we fell, first and biggest weekly drop since november. oil companies among the gaining industry groups on the european benchmark. saudi arabia saying oil producers are participating in cuts and they agree on prolonging that deal through

2018. that big opec meeting takes place this week. riggs targeting crude in the u.s. are on the longest run of gains since august 2011, climbing from 80 to 27. check out emerging markets. see how the decrease in oil price doesn't seem to have had a big effect on assets across the space. the white line is brent crude futures. the blue line is the msci emerging market index, best start to a year since 2009. the yellow line is e.m. fx. test start to a year since 2010. oil's choppy year not impacting emerging-market assets. euro-dollar, ending last week in positive territory. this means that calls are more expensive than puts. that is the first time that has happened since october 2009 when

the common currency concerns were building. the greek crisis hadn't quite blown up. one-month implied volatility for sterling rising for a sixth day, longest stretch since january. volatility rising from the lowest in 17 months on may 12. a couple things happening. david davis saying the u.k. could walk away from talks with the e.u. the gap between labour and conservatives is narrowing according to the latest polls. francine: thank you so much. jpmorgan ceo jamie dimon is he still optimistic about the global economy and prospects for reform under donald trump. he spoke exclusively to me this weekend. jamie: the world is going to double in size the next 12 or 15 years. there are plenty of opportunities, plenty of threats. we spent a lot of money on technology.

we operate around the world. when the emerging markets grow twice as fast as the developed markets, we are comfortable with our future. francine: can you break down your units where you want to defend market share and where you want to push it? jamie: i want to grow everywhere. clients want multiple vendors and suppliers. that is understandable. publicly, investment banking in certain areas may be harder to gain share, but that doesn't mean we can't gain share in that part of the world. we just know it is going to be harder. francine: what about fixed income? a lot of your competitors are trying to beef up that. jamie: we have a good share there and i think it will be hard to gain. yeah, look at the number, but if you look at what we can do better, we have plenty of things we can do better. a lot of it is technology. we have to maintain our share. competition is a good thing.

i've never been worried about competition. francine: as long as you are better than them. jamie: that is our goal. francine: jamie dimon, we spoke in paris a couple months ago and you talked about regulation. what is the mood now? are you still as confident for wall street? jamie: when you talk about regulation, the trump administration wants to deregulate certain things. most of us in business think regulations have been holding back growth. that has hurt all citizens of these countries, not just jpmorgan. i'm still optimistic they will have some regulatory reform. after years of regulations, it makes sense. it makes sense to look at what can be done better, what can simplify the burden of business, what can help people expand employment and grow the economy. no one is asking for wholesale throwing out of regulations. just improve what was done. francine: what did you make of

glass-steagall? confusednvestors were what that could actually mean. jamie: glass-steagall wasn't part of the problem. no one i know says that was the problem. i think they are saying, deregulate smaller banks differently than bigger banks. that is understandable. i don't think it is going to stop our ability to compete. francine: would you be opposed to any foreign acquisitions? are you on the hunt? jamie: i wouldn't take it off the table down the road. francine: i don't know if it is a region you want to beef up or specific operations. jamie: there is no area we can't grow organically. we can add bankers in countries, private bankers, investment bankers, corporate bankers, branches overseas. there may be acquisitions in technology in countries that make a lot of sense. francine: like syntax?

jamie: it could be payment related. customer service. we've already announced having onlineself-investing an account opening. right now you can buy and sell -- we got a $400 million fx trade on the mobile phone. we're adding services. francine: how much do you think business will be transacted on that? jamie: a lot. if you look at the consumer side, it is already huge. built a will be moving -- bill pay will be moving there. we've already seen fx. you will be seeing some equities. it is how you want to access the services of j.p. morgan chase. francine: how are the animal spirits in the united states and the world economy? jamie: pretty good.

japan is growing more than it has grown in 15 years. europe is doing rather well. america is chugging along at 2% give or take. even the imf, which is always warning about stuff, is saying the world is going to grow faster than they expected. francine: that was jamie dimon talking to us over the weekend. still with us is gilles moec. we were talking with jamie dimon about animal spirits, about regulation that trump may or may not put in place. what does it mean for dollar strength. this basically looks at dollar, net long positions, lowest since august. well, it's actually backed by the macro data. when you think of it, what we have now is the u.s. rather at the lower end in terms of gdp growth, in terms of surprise

indicators and so forth. the rationale six months ago was, the u.s. is growing faster than most advanced economies. on top of that, we get a big fiscal push. inflation is close to the fed's target. they will have to go quickly on monetization. fast-forward and you can take almost everything down. the eurozone is doing better now than out of the u.s. core inflation has been disappointing recently. more hesitation on the fed stance. it is not the big surprise that we have the market where it is today. you could start thinking maybe things have gone too far. francine: what does it take to take it back? if things may have gone too far, how should the market interpret the memo leaked before he went to saudi and was hailed as the dealmaker?

he was in trouble back home. gilles: the point i made at the beginning of our interview, the main focus for everyone should be fiscal policy. what we can expect in terms of fiscal push into 2018. if that happens, you can forget about the fed. it means that gdp growth will be above potential, inflation will be stronger, and we will get stronger yields in the u.s. this uncertainty is warranted. six months ago, the narrative was, great news about the fiscal push very quickly. not happening. francine: what does this mean for the 10-year? seems the market is not expecting anything, which is probably wrong. there will be some sort of fiscal push. there will be some sort of decision on tax cuts by the end of the year. it seems that the bond market

has given up on everything. you could even argue they've given up on the idea that the fed will be normalizing at a slightly faster rate. all this probably is going a bit too far away. there will be something -- if there's nothing on fiscal by the end of the year, the republican party will find itself in a very complicated position next year for the midterm elections. it is our baseline scenario that we end up at this stage with growth slightly above what we had. that should be consistent with the market taking -- [indiscernible] at this stage, they've given up on everything. francine: thank you so much. we won't give up. we will look at french, spanish, and german young. coming up, travel from mariano rajoy as pedro sanchez returns as leader of the spanish socialist party. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." pedro sanchez has won back the leadership of the spanish

socialist party after promising to mount tougher opposition to the minority government. his victory signals an increase in hostilities with the prime minister. still with us is gilles moec from merrill lynch. what does this mean for european politics? is there a danger the market underestimates, because you have a new moderate french president, the markets ignore any kind of political uncertainty in europe? gilles: the markets think about two different things at the same time. there was this massive focus on politics in the run-up to the french elections. since the french elections, no one is interested. it doesn't mean that we are completely in plain sailing environment. it means that we have a chance next year, after the german elections, to get a second wave institutional progress in the e.u. whatever france and germany concoct together, will still

need to be accepted by the other countries. some other countries are getting more complicated. netherlands, the negotiation failed. austria, they are getting early elections in october. and now spain. spain works with a minority government. rajoy can carry roughly 170 seats. sanchez campaigned on the idea that he would actually stop the support from going to center-right. there is the possibility we get into early elections in spain as well. francine: looking at the 10-year spread. inles: we had two bumps 2016. those coincide with elections in spain. this, any ofll this is for immediate consumption. it is not going to start anything immediately.

but it is another complication. i'm just mentioning it because the market is so relieved, so relaxed. there's still a lot of, look at things to achieve next year. francine: thank you for staying with us. gilles moec from bank of america merrill lynch. "bloomberg surveillance" continues in the next hour. tom crean joins me out of new york. we will be talking to norman lamont. we will talk about brexit, oil, after our interview with the saudi energy minister, and your markets. your markets are a little on the move. this is bloomberg. ♪

francine: benjamin netanyahu is -- at the u.s. president

after defense deals and a scathing message on iran. extending gains. saudi arabia's energy minister gives oil an added boost after telling bloomberg everyone is on board to extend output cuts. jpmorgan's ceo, jamie dimon, says he's positive on regulatory reform under u.s. president donald trump. good morning. this is "bloomberg surveillance ." i'm francine lacqua in london. the coherent men today is time tom keene in new york. we look at oil and geopolitics and the crossover with economies. tom: two of the stories in america, the bombshell resignation we may see of mark fields at ford -- this is huge news for american industry. also the budget coming up. the president can't go away without worrying about domestic affairs. grover norquist will join us on

taxes. francine: let's get straight to the bloomberg first word news. let's also talk about ford. here's taylor riggs. taylor: there's a shakeup at the second-largest automaker in the u.s. mark fields, ceo of ford, is being replaced according to a person familiar with the situation. the new ceo will be jim hackett, a turnaround specialist. since fields took over in 2014, fords'traditional car business has struggled. shares have fallen and investors have questioned the company strategy. president trump is moments away from landing in israel after wrapping up his visit to saudi arabia. in riyadh, the president dialed down his past rhetoric on islam. he told muslim leaders the war on terror is not a battle between different faiths. president trump urged them to drive terrorists out of their countries. >> young muslim men and women should have a chance to build a new era of prosperity for

themselves. it has to be done and we have to let them do it. with god's help, this summit will mark the beginning of the end for those who practice terror and spread its vile creed. iranr: scathing attacks on as the king accused iran of being the spearhead of global terrorism. jpmorgan ceo jamie dimon is optimistic about prospects for regulatory reform. dimon spoke in an exclusive interview with francine lacqua. dimon was asked about the prospect of a new glass-steagall act. smallere deregulate banks differently than bigger banks. that is probably understandable. let them sort that out. dimon says even democratic lawmakers understand that it makes sense to look at the regulatory burden on

businesses. north korea is ratcheting up tensions in asia. testong-un's regime launched another ballistic missile. this one flew about 300 miles. the launch comes a week after north korea tested a rocket they said could carry a nuclear warhead over long distances. in brussels, finance ministers are meeting to try to break a logjam on the latest greece bailout. greece and its supervisors agreed on economic overalls. key creditors are at odds over how much relief is needed. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much. let me get to the data check. the markets fairly quiet with 95.76 onistinction -- the spread. the spread is flatter, flatter, flatter. that is very interesting given

the real quiet that was out there. equity futures were exceptionally quiet this morning. francine: they are a little bit quiet but we did have last week a little volatility. what i'm interested in is oil advancing for a fourth day. the other thing i'm looking out for is the british pound dropping after the u.k. threatened to walk away from talks on the e.u. i want to show you vix. nothing huge. 1.1172.lar, tom: this is a huge story. here's forward and gm, always a comparison in america. down to equal miserable. off 40% from 2010. -- here'sk fields where mark fields took over from alan mulally. what a difference. here's mary barra of here doing well, breaking even overtime.

this is the distressing trend the board have seen at ford motor company. francine: nice chart. this is my chart. it is a little more simple, very simple in fact. production cut for opec. it looks at what the impact of these production cuts -- i'm trying to figure out how much they had to cut. at the moment they are at 24 million barrels. this is about psychology. because it has been telegraphed so much that saudi arabia will stick together to reduce production for nine months, i don't know how they wow the markets. i had an interview with the saudi energy minister. how do you move the needle now? that is something he was shying away from. one will soon land in tel aviv as president trump

makes the next step on his first foreign tour. the meeting with israeli prime minister benjamin netanyahu comes after trump's visit to saudi arabia where the president signed trade deals worth up to $350 billion. trump issued a tough line on iran. >> from lebanon to iraq to yemen, iran funds arms and trains terrorists, malicious, and other extremist groups that spread destruction and chaos across the region. francine: joining us now on the phone from tel aviv is bloomberg's chief washington correspondent, kevin cirilli. we were together in saudi arabia. you made your way with the white house press corps to tel aviv. what does israel want from donald trump and what does the trump administration one from israel? >> we just got to jerusalem from tel aviv where we landed.

i can tell you this is all about iran. this is one of the similarities that we heard from over the weekend, that both saudi arabia and israel have in common, their opposition to the iran deal. onsident trump focusing trying to put up a unified front with religious freedoms in terms of meeting leaders of the muslim world, the jewish faith, and then he will head to vatican city for a meeting with the pope. there is no question he's hoping to leave behind the controversy he faces at home as he again embarks on his first international trip. francine: we know the president changed a couple of words. our reporters on the ground did a great job trying to analyze what it meant, if you was trying to be more friendly with saudi arabia. will that be questioned why israel?

>> i think there's no question that this was a different tone from the candidate donald trump versus president donald trump. at a briefing with reporters, senior white house officials said they thought it was stronger given the stature of folks that were in the room. just from my reporting on the ground, you saw this with your interview with jamie dimon in saudi arabia, as well as in my conversations with commerce secretary wilbur ross, the saudi's were impressed with the caliber of ceo's and the $300 billion worth of business deals, including a saudi arms deal that we saw over the weekend. they also were impressed with trump's opposition to iran. , speaking toting saudi business leaders on the ground, there's no arguing that they do have concerns for this president's previous rhetoric. tom: how exhausted is the

president? he was essentially incoherent during the speech. there's a lot of spain in washington that he's just flat-out exhausted coming off the travails of washington. how exhausted is he? trip -- he wasa supposed to give remarks at a twitter forum focusing on cybersecurity and utilizing social media. his daughter did make brief remarks there. we have to see. this is a five nation state journey. we will have to see what his time in israel -- [indiscernible] fromwe are 50 years on 1967 and the israeli war. the symbolism of the president going to the wailing wall by himself without mr. netanyahu, explain what that moment will be. think agoing to be i historic moment.

i think the image of that will speak volumes. let's pull no punches. this is a president who has criticized for his remarks not only about muslims but also jewish people. this will be a very historic trip. francine: thank you so much, kevin cirilli in jerusalem traveling with the president, then on to rome, the vatican, nato, and sicily. joining us is bloomberg's u.s. executive editor for government, and our guest host, steven saywell. thank you both for coming on. howg, tom was asking exhausted was the president. you were following his trip closely. was he exhausted or were they packing his schedule too much? craig: a lot of us said, they are really dragging this man through a lot. i don't want to make excuses for the president.

it is his job, but i think there's a little staff work that they might have thought who their principal is. it is a high-stakes moment. the president is a human being. if you are in that room, giving a big speech, that is a stressful moment. he was very lifeless in the speech. he stumbled over some of the words. they need to give the man some rest. francine: which is probably why he canceled the conference some of us were at. what does it tell us that he signed deals, $100 billion in certain cases, $300 billion, is this a success? craig: i think the past two days have been some of the best of his presidency. he came to the office saying, i'm a businessman. i know how to talk to ceo's, cut deals for america. he brought home in a lot of deals. he brought home a lot of actual

contracts, military hardware, that will create jobs in america. for a lot of american voters, they are going to tone down some of the noise about james comey and the rush investigation and say that is our guy. tom: very in the news flow, i can't remember if it was saturday or sunday, i believe mr. previous is heading out of dodge, back to washington. how much in their mind is the uproar in washington? craig: it is in their mind every minute of every day. you can have a nice trip, a big ceremony, but the white house is on fire back in washington. that is never far from their thoughts. they managed to get through the weekend without any major new bombshells coming out. but james comey, the fbi director that donald trump fired, has promised to give open testimony after memorial day. he is not going to hold back from saying things that are going to be very damaging to the

president. i'm sure it is on their mind constantly. francine: tom? tom: sorry, i missed that. francine: the pageantry going on in israel, right, tom? tom: when we are looking at the pageantry in israel right now. i'm sorry. when i look at what's going on back in washington, stern p -- mr. priebus is going back. why is he going back? craig: running a white house is a big job. steve bannon is heading back. it sends a message of panic or concern. if you are reince priebus, chief of staff to the president of the united states, where could be more important to the then at his side as he makes this journey through some of our most important allies. i think a white house that is trying to tamp down the notion they are panicked about the rush investigation is feeding that

notion by sending top officials home. francine: if we focus on his trips, the president arriving in israel, then he moves on to the vatican and rome, then nato in brussels, then the g7, where is the most risk for him to not look presidential? is there a point where you are more worried? craig: i don't worry much about donald trump's delivery, but people who do would be worried about nato and the g7. these are friends but they are more like frenemies. angela merkel, emmanuel macron, these are people that are very grumpy with the way trump has talked about europe, about nato. they didn't know what the unit sates -- the united states wanted to accomplish. i think that is a place where they will not be such a friendly audience. i don't think merkel and macron care about how donald trump looks on this trip and they are

going to make his life difficult. francine: will the president talk about israeli settlements and the embassy in jerusalem? craig: i don't he will talk about it publicly. he's had no present directions at all. a major press conference has been scrapped. we may not hear much from the president. i've got to believe these topics will come up. trump would love to cut the middle east peace deal. he calls it the ultimate deal. we are a long way off from that. francine: thank you so much. bloomberg's u.s. executive editor, craig gordon, following the trump trip. we will get back to steven saywell from b.n.p. paribas shortly. let's get to the bloomberg business flash. here's taylor riggs. taylor: there's a big transatlantic deal in the chemicals industry. clarion has agreed to buy huntsman in a deal that would create a company with a combined market value of about $14

billion. huntsman is based in salt lake city. founder jon huntsman has sought a large transaction since 2005. the world's largest cement maker is trying to rebound. lafargeholcim has named jen janice as its newest ceo. he replaces eric olson, who is resigning after an investigation into lafargeholcim's operations in syria. that uncovered payments to arms groups. activisttherlands, an investor faces akzonobel in court today. he is trying to pay the way for a takeover. akzo has rebuffed three takeover offers from ppg. the latest was valued at almost $30 billion. that is your bloomberg business flash. francine: thank you so much. we will get to crude in just a second. we have javier blas covering oil

with us. we want to get onto the trail of president trump in tel aviv momentarily. i also want to get thoughts from steven saywell. how do you look at the pageantry, the geopolitics? does it impact your world of fx or is euro-dollar driven by pure investment? steven: i think there is an impact. there's two things to focus on. first and foremost is, what is donald trump achieving as far as fiscal expansion? how is washington running? secondly, the oil price is very important. we believe it is one of the factors driving euro-dollar higher. we have a highly quantitative approach. one of the five key factors that go into short-term currency valuations is oil. that higher oil price is one factor pushing euro-dollar higher. if euro-dollar continues to move higher, it will be vulnerable.

francine: crude oil continuing its push higher after saudi arabia said all producers participating in output cuts agree on prolonging the deal through the first quarter of 2018. on saturday i spoke with saudi inabia's energy minister an riyadh. here's what he had to say. heard of not spoken or any country that is against the extension. we realize we have not achieved globalective of bringing inventories to the five-year average. francine: let's get to javier blas, our senior energy correspondent. what does opec need to do? this seems priced in. >> i think we are in a classic situation of buy and sell. if opec deliver that extension

of nine months when they meet in vienna, it is absolutely priced already an extension for nine months. can they cut deeper? i doubt it at this point. they may bring some additional countries. there's talk about turkmenistan, maybe egypt. these are countries where production is already declining. if they add, they will look nice on a press release but they will not change the global balance. i think opec can do very little at the moment to surprise the markets. francine: when you look at opec, the biggest headache which they have no control over is this new basin. >> the u.s. shale producers are really monitoring opec. i thought it was interesting over the weekend, with trump visiting saudi arabia. it is one of the few times i can remember that a u.s. sitting

president has gone to saudi arabia and there has been no talk at senior level on oil. a big factor in the market today is u.s. shale. there was no mention of oil or energy in the joint declaration. there was no mention of oil on the readout from the white house kinge conversation between salmon and president trump. i think that how opec is going to deal with shale is the biggest deal. tom: thank you so much. the people of israel, mr. netanyahu, waiting for air force one to land. we will have full coverage. kevin cirilli is with the president. we will come back with steven saywell. look forward to speaking with him. speaking of the dollar, what does it cost to print a budget? the answer is a lot of money.

your tax dollars at work. who else? grover norquist. this is bloomberg. ♪

miles, give or take a mile, that kevin cirilli has walked from riyadh to tel aviv, waiting for the president of the united states. mr. netanyahu with a fractious israel. the president will then go 33, maybe 36 miles.

somehow the legendary jerusalem traffic will not be a problem as he moves southeast from tel aviv to jerusalem. of course the pageantry in jerusalem. steven saywell with us this morning. it is always fractious with israel politics, isn't it? steven: yes, absolutely. francine and i were talking about this during the break, how does this affect markets -- our view is that the biggest impact is the oil price. whether this increase in the oil price we've had continues. probably the big issue here is the agreement of saudi and russia to these cuts. that is what the markets focused on. how credible can we take that commitment? we think that is really driving this spike higher. for us in markets, we think that is the key point. francine: thank you so much, steven saywell. coming up also on "bloomberg

surveillance," we speak with norman lamont, former u.k. chancellor to the exchequer and trade envoy. we also have our live reporter over in tehran. we have hassan rouhani going for a second term. look at those live pictures. we saw air force one touching down on the tarmac. we are now expecting the president and first lady to come down the steps. you can see president benjamin netanyahu accompanied by his wife, waiting for the president to arrive. we will have plenty more on that and geopolitics around the world. this is bloomberg. ♪

tom: in new york. francine lacqua in london.

exceptionallyan busy monday, here's the first word news. taylor: trump has laid it in israel. there will be an arrival ceremony in tel aviv and after that, the president will meet with benjamin netanyahu. the president wrapped up a two-day trip to saudi arabia where he souped up with hundred $10 in defense deals. he also toned down his language on his lawn. -- on islam. decades, iran is fueled the fires of timber. a government that speaks openly of mass murder, filling the , death ton of israel america and ruin for many leaders and nations. public, trump had never set the words "radical islam." wants to enact health care

programs for the poor. tomorrow, he intends to propose a project that would give cuts to social and entitlement programs. aat is according to republican congressional aide in a white house document obtained by bloomberg news. democrats say that it reveals trump's true colors. the housean of oversight committee says he will talk with james comey today. jason chaffetz says he is going comey'sy record of meetings with trump. the european union needs today to discuss its brexit position. david davis roots that the u.k. will quit talks unless the eu drops the demand for payment of $112 million. alien #that would be a lot money. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg.

thank you. we're getting live pictures of tel aviv. you can see the pageantry of the government of israel with president clinton -- with president kenyatta who -- netanyahu.ya we do have two traveling reporters with trump on air force one. he was talking about the settlement. rex tillerson saying this is part of the discussion and he also said the sodium still won't affect any commitment to israel. you can see the door of air force one opening at the steps being put to the door so that the president at the first lady can come down.

rex tillerson also said the western wall is part of jerusalem. this is something we need to keep an eye on. flight, one of the first flights in many years, the flight to tel aviv -- is remarkable, the domestic policy and is really politics. it is extraordinary in the last 48 hours, the president had to order his cabinet to attend because they said they wouldn't shake the hands of the president of the united states. that is one example. francine: we also need to talk about the iranian president in a planger position after his to push for foreign investors boosting oil production.

we did have trump with strong words over the weekend against iran. let's get straight to the bloomberg markets anchor yousef gamal el-din. a realh will he be reformer? ousef: he has both ambitions. but it will be very difficult to do. it puts him in a corner and it more engagement with the u.s., the reply of the core of .is game a harder i'm truly shocked by a scale of how candid these comments are. the government said the iranian safe harbor and recruitment and calls on all nations of conscience to work

together to isolate iran and deny the funding for terrorism. we saw -- saying the rhetoric comes as a result of the big trade deal. the u.s. is milking the saudi arabia country for billions of dollars. president rouhani will speak later this afternoon. as trump begins his conversations in israel, we will hear more. francine: we are seeing live pictures there of netanyahu walking the red carpet to greet trump. give me a sense of what reforms president rouhani can pursue? there was a great bloomberg view piece saying that iranians a fake performer in a fake collection. i don't know if that is true. but is there a danger that the

westerners are overestimating the president can do? an element tois that. we have always point out that iran,lamic republic of candidates operating with the conference of the political system where the winner still has to work to the highest political authority. aesident rouhani does have resounding mandate from the electorate and he will work hard to try to navigate a way out of this burgeoning saudi arabia-u.s. alliance, which is a zero-sum gain. he is going to lean on countries like russia and china and even the european union. to try to find a way to be able to push the economic reforms. there are still plenty for them to do. but there's no doubt there will .e more concessions

francine: yousef gamal el-din, thank you so much. and steven saywell are here. thank you so much for joining us. give me a sense of what your take is on president rouhani? norman: he was outspoken during the election campaign, not just about getting investment into iran but also about improving relations with the outside world. he specifically mentioned saudi arabia and there's no need for this tremendous enmity between the two. i felt the dissent that trump could not even acknowledge, when he was in saudi arabia, what president rouhani had said. dewey really believe the only way to treat iran is to be unremittingly hostile? even when someone moves to

what's your point of view, not ton to recognize that and not respond in any positive way? no attention is paid to the security of iran. .he west goes on we have to look at this with more understanding of the iranian position. what you think president rouhani will focus on? and how do you think he will take the belligerent comments from trump over the weekend? i amn: we will see whether right or wrong and a few hours but i think you will respond in a cautious way. as the foreign minister responded in a cautious way. i think they will feel their way gradually. president rouhani has said that he wants to get the remaining nonnuclear sanctions lifted. that means he has to have either

direct negotiations with europe to get further sanctions lifted work with the united states. it is a difficult task for him. but he has made this an explicit ambition that he will try to do that. i imagine that there will be backdoor talks about that as well. tom: norman lamont, it is wonderful to have you with us. --now you don't go back to with the state of iran as a formal state government and how great is the gulf right now from where you sit in your study, the distance between the sunnis and the shiite? norman: i know exactly what you are talking about. the 16th century. there were she has before that. i think one of the points to

that his is much more flexible and pragmatic and liable to interpretation in the context of the times than is the who have is some of saudi arabia. most of the terrorism that the west suffers from comes from isil and al qaeda. francine: we are seeing trump going out of the steps of air force one with his wife. they are waving and they will be greeted in a couple of seconds by the president of israel, benjamin netanyahu. actuallywhat he will asked the president? this is his second leg in the first portrait of trump. we would do where we will be on wednesday and thursday and friday.

what strikes me, and i'm glad we have been speaking about iran, is because this seems to be the centerpiece between the sunni world and israel. behind the hugging and the netanyahund benjamin at the white house is the idea of a lot of sensitivity within the triangle of sunni, israel .nd the she has francine: how careful distro have to tread? will he try not to upset iran even more than he has? or does he not care? i think he doesn't care at all, and frankly, this is a bit of a mistake because they follow his words extremely closely. but i think trump is trying to do is solidify the alliance between the sunni arabs and israel and they are getting closer and closer against iran. i think this is a dangerous policy.

i am not saying you should be cautious about iran and i'm not saying we shouldn't watch them like hawks. but if they are taking a more constructive approach. we ought to show in some way that we are listening. how do you strike that balance? if you were too brief trump, how would you prefer? i think yet to tell the iranians that he is aware of their own security anxieties. that the west is not out to change the political system of iran. the there will not be the pursuit of regime change as an object. that we want to have good relations but it is up to them as to how they run their country. if you're just joining us, from tel aviv, the president of the united states is on a state visit to israel.

i'm guessing 36 miles with traffic being notorious going into jerusalem. somehow i don't think the president will have to worry about that. francine: i was going to say. he certainly had a motorcade or two in riyadh. a lot of traffic in saudi arabia but it was on the complete lockdown. tom: he will visit the church of the holy sepulcher along with the western wall, fraught with the symbolism. with the delicacies of israeli-palestinian politics. francine: i wonder, this first foreign trip. the president chooses to sign deals with a huge amount of money in saudi arabia. accounts, he actually seems presidential and he was greeted like a king in saudi arabia. andhe traveled to israel

caution is the word of advice to put give him. then, rome, the vatican, brussels and the g7. at some point he will be asked about brexit. at some point, he will have to weigh in on europe. let's get back to norman lamont and steven saywell. we want to talk about how we would navigate brexit issues. steven, when you look at currency markets, a lot will be dependent on what is said in humor and on the eu summit today. what do we know about what the president wants? at some point he did say that a breakup would be bad but he would back on that a few days before the french election. steven: the key point here is what the markets are looking at prior to donald trump coming in, whether we would have some kind of trade sanctions or stress between china.

remember, prior to coming in, he was accusing europe and germany of manipulating currency. the key point here is that the market has seen him step back now, they are less concerned about those factors. but they are still worried about how he will respond if they get the expansion through and the fed has to hike rates. that boosts the dollar. what is then his response to the stronger dollar? does he try to talk back down? despite the fed policy rate during the dollar higher? francine: the u.k. has threatened to quit these talks. is this rhetoric at home because we're seeing an election? d made about the $100 billion? francine: right.

doesn't make sense to say any deal is better than no deal. there must be a bottom line. if the negotiations break down, you have to be prepared to walk away. there has to be a fallback position. i am in favor of the deal. but you have to have a backstop. you have to be prepared to walk away. if your negotiation has charisma -- has credibility. after the meeting in riyadh this weekend, wiring to the corporate ceos in israel doing business? francine: you could argue that the relationship between the saudi's and the u.s. is more attached at the hip. saudi arabia has a vision of 2030 with a need to diversify.

years, as far as i can remember, it is about how much money they have coming from oil. now that the price of oil is difficult to stabilize and get back up, it is in the saudi interest to have a president that invests in the country. it is about a mutually beneficial relationship. difficult to muster businessman to come to israel. all right, let me go back to norman lamont. when we talk about this relationship, what will happen in the middle east, 5-10 years from now. got your going to ask me about brexit. francine: we like to surprise you. what i would like to see

-- and let me emphasize i'm not saying we should take things just on trust and in not saying we shouldn't watch iran like hawks but i do believe this is the country that has the potential to change and it is changing. it is true the president has only limited power compared to the supreme leader but the balance of the power is affected by the election. country that is trying to move into a postrevolutionary phase. that we willpe is these try to see it we can improve relationships with them. one way to do that is to encourage trade and investment. and there were people who thought president rouhani might lose the election because sanctions have not been lifted the iraniansnd feel they have been doublecrossed because the united states has retained taking sanctions and thinking sections have an extra reach and the european banking system will not

finance trade with iran which is like the ordinary people and iran feel they have not had any benefit from the deal. that was norman lamont and we will be back with steven saywell, a global fx strategist. coming up, we talk more about dollar dynamics and we're also seeing the president of the theed states together with president of israel, walking away from air force one with the pageantry of a state visit. this is bloomberg. ♪

in tel aviv, president of united states and the president of israel meet. the president will travel to jerusalem for a day of ceremony. a 36 hour visit to israel. this is that the airport. francine lacqua is in london and with us is steven saywell. he to see of politics here. this is going into the markets at all? i don't think so.

i think a little bit has on the oil price. but if you look at currency markets and focusing on the euro-dollar, one point point two, it is a bit surprising that we are at these levels but i wouldn't say that it is middle east politics that is driving us. the oil price, particularly has really had an impact on the euro-dollar. tom: that is one of the themes in saudi arabia, to say the least. player are you on the dollar right now? it has been an uncommonly quiet market. we do see curve flattening. on a regular tv yield stasis or a capital flow stasis, what is your call on the dollar? steven: i will put my hand appear and say we did not expect euro-dollar to be appear. we didn't expect the dollar to be so weak when you look at what is priced it at the front of the curve.

however, mentioning oil prices, we do have a secret weapon here in our quantitative models which tell us what is driving things theyhe two factors that are signaling at the moment that has pushed the dollar down or up is the relative yield flatness in the u.s.. threeld have expected months 10 years to be much steeper in the u.s. but they are not, relative to europe. and second, relative equity performance. hasmacron victory in france led european equities to do well. perspective, it is those two factors that have kept a relativeweek with yield flatness and equity performance. however, we don't think this will be sustained. market is tooe slow to price in the fed and we think 10 year yields are too low. the dollarhis is

debts. you can see the long position following to the lowest since august. what needs to change? steven: this is a small part of the market. and our broader theme is consistent with this. what really needs to changes for the market to acknowledge with the fed is saying. we think the market needs to price in more fed tightening. and 2018, they are only pricing in half. but particularly the long end. we need to see higher 10 year yield and that is what the curve steepness, that is where that comes in. so if those two factors have been, we think that is likely to drive the market. the dollar will rally. francine: this is some of the support level. it is currently at 2250. steven: we think it goes above 3% this year. we think this is too low.

we did see a big rise on the donald trump euphoria in november but we have come off since then. we think the next move is up. tom: steven saywell, thank you so much. greatly appreciated. you are looking at live images from tel aviv. now they'reump is at the prime minister of israel. i'm sorry about that. enough titles out there. the president will never to jerusalem soon. stay with us. this is bloomberg. ♪

tom: it is monday and new and in tel aviv as president netanyahu

speaks. trump meets with benjamin netanyahu in tel aviv. to jerusalemtend and the western wall. here is the president. >> it is wonderful to be here in israel. rivlin,t rivlin, mrs. prime minister netanyahu, mrs. much.ahu, thank you so i deeply grateful for your invitation. and i am very, very honored to be with you. sees --irst over trip my first overseas trip as president, i have come to this sacred and ancient land to reaffirm the unbreakable bond between the united states and the state of israel. [applause] in this land so rich in

history, israel has one of the world's great civilizations. a strong, resilient, determined and prosperous nation. nation forged in the commitment that we will never allow the horrors and atrocities of the last century to be repeated. now, we must work together to build the future where the nations of the region are at peace. and all of our children can grow and grow up strong and roof up free from terrorism and violence. during my travels in the recent days, i have found new reasons for hope. i have just concluded a visit to saudi arabia where, yesterday, i met with king solomon and with the leaders from across the muslim and arab world.

that visit, we reached historic agreements to pursue greater and greater cooperation in the fight terrorism and its evil ideology. my future travels will take me to visit pope francis at the andcan and then to the nato european allies. we have before us a rare securityty to bring and stability and peace to this region and to its people. defeating terrorism and creating a future of harmony, prosperity and peace. but we can only get there working together. there is no other way. mr. president, mr. prime minister, i look forward to working closely with both of you during my stay. we love israel.

we respect israel. and i send your people the warmest greetings from your of theand ally, all people in the united states of america. we are with you. thank you and god bless you. thank you. [applause] that was the president of the united states with a short comment at the tel aviv airport. so different than what we saw in riyadh. francine: very different. i think these are also improvised comments. benjaminar from netanyahu before that and he did confirm it was a direct flight. it is the first direct flight from saudi arabia to jerusalem in decades. tone striking a very sober and showing that he may be able to get this right. he gave a lot of love in his own

words to saudi arabia and he also wants to do the same to israel. tom: good morning on bloomberg television and bloomberg radio. we now go to jerusalem, 36 miles kevin cirilli, every president would like to be 1978-1979 president carter with egypt. here is something every president seeks. what chance does trump have of an israeli-palestinian agreement? kevin: right now, it is unknown. but the administration officials i'm speaking with point out that the political optics, the geopolitical optics of trump's first international trip, particularly his decision to go to riyadh, saudi arabia, the heart of the arab world, followed now by a visit to israel -- he then we'll head to jerusalem this afternoon to meet

followedident rivlin by a tour of the old city behind me. and then, the vatican city where he will be meeting with the pope. clearly, this is a president who is transitioning from his divisive rhetoric on the campaign trail. for aaybe will ask confession from the pope over giving away is really secrets to the russians. i don't know. how will that be addressed on this visit? kevin: a great question. i'm told that israeli counterparts have reassured u.s. counterparts that they are willing to look past that, so to speak. they do believe that trump, while he has had a divisive rhetoric, what they like is with the saudi's like, the opposition to the iran deal. so that is what prime minister

netanyahu is seeing in this administration. me a sense of what the president wants to achieve in the middle east? he wants to make deals. he sees himself as a dealmaker. does he think he can actually broker a peace deal in the middle east? kevin: he has called this the has set hisl, he son-in-law, jerod kushner, advisor to trump, will be instrumental in helping to broker that deal. there is a lot of skepticism here incal politicians israel about the president's ability to do this. there is also deep skepticism back domestically in the united states about his ability to do this. but this is the first effort on behalf of the administration to begin correcting course. resetting the relations and questions that dogged him early on in the first one hundred days of the administration because of the divisive rhetoric during the campaign trail.

he is hoping to have the full himt of politicians behind and also of the business community leaders. we did see that in saudi arabia over the weekend but there is no question. this, domesticng politics back home are clearly having the potential to overshadow much of his visit. francine: when we were in saudi arabia over the weekend, and felt clear that they were trying to keep dealmaking trump on message. the press has limited access to him. there were just a few events. canceled one late last night in react. do you have a feeling it will be the same throughout his whole foreign trip? so that the focus remains on the state visit and there will be no questions on russia? kevin: i'm told that stephen haven and reince priebus already returned back to the united states so they have

departed and you are right, there was limited access over the weekend. have the exclusive interview with jamie dimon and i spoke with wilbur ross, who said -- i asked him point play, i said, is what happening back home with the investigations going to impact the first international trip and he said no. he said he couldn't have imagined a better business day for the united it or saudi a lot of journalists here from the white house traveling press corps are pressing and looking for answers about the ongoing investigations. we should note that james comey after the to testify memorial day holiday this week and before the united states senate. so: kevin cirilli, thank you much on foreign and domestic politics. greg valliere has been an us on domestico politics. good morning to you. let me start with the budget.

i want to get this out of the way. it has widely presumed the trump budget assumes a 3% economic growth. does that border on irresponsibility? it defies credulity, i don't think there's any chance we can get 2% growth because we are running out of workers. deepkes assumptions on spending cuts and interest rates, things that are impossible to attain. tom: i'm not quite sure the sequence yet but i believe reince priebus and stephen bannon have exited and are on their way back to washington. why are they attending the land of greg valliere? want to give they support to the budget director who has heavy lifting to do. everyone ishat going to criticize this visit to the middle east as a photo op but it is a really good photo op . for the next few days, trump

does stop the bleeding on the budget and russia. francine: how will he be greeted -- good morning, first of all. how will he be greeted in washington when he comes home? hunch that this could boost his approval numbers, a little bit. stop thethink it does bleeding. we are not talking about russia this morning. the budget will be controversial but talking to benjamin netanyahu will be the lead story world. francine: the first leg of the trip was saudi arabia where we were this weekend. then he is in jerusalem and israel. then he goes to the vatican and room and then to nato and the g7 . there does he need to be more careful to stay on message and on script? greg: nato and brussels. i think he is going to talk

about having nato allies talk about spending more on defense. another point i would make about trip,having a successful this is a grueling schedule for someone who is about to turn 71 in june. if he can pull this off without any major gaffe, admittedly, a low bar to clear, but if he does pull this off, i think it makes the russian story diminish a bit as a problem for him. tom: an open question for this monday. what are you watching and what are you looking for on capitol hill? greg: the reaction from republicans to the budget. we know what the democrats will save the let's see how the republicans, some of the moderates, how do they react? i have a hunch they will not like the proposal. tom: greg valliere, thank you so much. bloomberg radio and television, we will continue

this coverage of the president's trip in tel aviv. kevin cirilli is in jerusalem. stay with us. ising up, on the budget, it a good time to speak to grover norquist about the many challenges of $1.7 trillion. this is bloomberg. ♪

>> the trump administration wants to deregulate certain things and boast best think that regulations have been holding back growth. citizens inor all the country. not just jpmorgan. so i am optimistic there will be regulatory reform. it does make sense. the credit friends

understand it makes sense to look at what was done and what can be done better and what could simplify the burden on businesses. francine: that was jamie dimon speaking with me at the saudi-u.s. reform in saudi arabia. we talked about regulation. presence in a big the region in the middle east, they are looking to beef up. he is optimistic on regulation and animal spirits of the u.s. being unlocked, but he was optimistic about the global economy as a whole. growing morean than it has grown in 15 years, his words. and he said, look at the imf, usually they are so gloomy but for once, they have raised their forecast. tom: the number one call will be coming where will economic growth the worldwide and domestically in the u.s.? jamiea huge mystery that

dimon is looking at it through the filter of the financial system. doesn't have that luxury. he is in the trenches of the combat duty in pimco on short-term interest rates. what is the split-level rightness -- the sweat level right now? we see volatility metric. when you look at this, we look at the outcomes that are happening. see geopolitical influences with korea and the middle east. we had resumed last week. we have the situation with the tax reform policy and washington, d.c.. those are all outcomes which could create divergent positions. so while the traditional indicators of things like libor and stress indicators, relatively complacent right now but i'm not saying the summer will be quiet but we are looking forward to it and anticipating it.

the most interesting articles are on the stresses of china. how do short-term paper stresses wander over to california and the rest of the american financials? it comes down to the currency. ago, theok back a year fed was data dependent and they were conditioned dependent and they will continue to be condition dependent. that stems from currency in china, initially. for the summer, it really will be focused on the 19th party congress which happens later this fall in china. expect a lot of excitement in the short-term and expect the markets to be a bit more managed in the past to alleviate those pressures but it doesn't mean that volatility is going to be gone. conditions dependent, giving you are talking about the

people's congress of china, does that mean that conditions will change because they need the stability and they need to keep a strong hand before that and anything can happen after? because markets of the moment seem to be ignoring china. they want to create a glide path into congress. they want to opportunity -- they want to communicate their objective. it takes time and they want to create an aura of stability to get to that point. remember, this is a multiyear and multi-decade platform that they are going to protect. as a result, it will require that there is a certain amount of volatility in the market place right now. will be a quiet few months as far as they are concerned, to maintain stability. and for the global financial markets, it is unlikely at this point in time that he will see china as the initiating factor of teary reading conditions. francine: we're looking at live israel with melania

trump flanked by her husband. ingeopolitics pay big part this? when we talk about the market being condition dependent, could that change with geopolitics? doubt. without a all investment managers are paying attention to the geopolitical spheres of influence. asia and china and north korea the middle east. ultimately, this has a bearing on the pricing of term premiums within the credit markets. of theus, this is one key focus points that we spend a tremendous amount of time focusing on. and it is not just the fed that his condition dependent. it is also the politicians. we can look at the government. and trump. as we look for to his policies evolving in the middle east and around the world. very good, jerome snyder is

with us. from pimco. bring these images up. we will describe the scene and pageantry. this is at the david bakery and airport in tel aviv. a marine outside the helicopter of the president, this seems to be one of his major helicopters and somehow i think he will be helicopter into jerusalem although we do see a car pulling away as well. time will tell on this. as the story unfolds from tel aviv to jerusalem. jerusalem as is in well. francine lacqua is in london and i'm in new york. this is bloomberg. ♪

>> i have not heard of any thetry that is against extension, per se. everybody wants the extension because we have not achieved our objective up for a global inventories. the saudithat was energy minister over the weekend. crude oil is continuing to push higher after saudi arabia said all producers dissipating and output cuts agree on prolong the deal for the first quarter of 2018. let's bring in javier blas. do to notopec have to

just stabilize but go up? : it was interesting with this choice of words. he said every minister he had talked to is in favor doing this but they have not all had this conversation. iraq is in favor of a six-month extension but they need to discuss the nine-month extension on thursday. iran has not specified yet what they will do because we have presidential elections over the weekend with rouhani winning. so first of all, opec needs to -- to move the price even higher, they will need to deliver a bit more. move the they will deal higher but it will take time. francine: i try to ask the saudi energy minister but he wouldn't answer -- does the saudi need to cut more if others don't? this includes the price of oil? yes, and that tells you

what you need to know. staynk that opec needs to with the current production, if not even lower, and to rebound rebalance the budget. so opec will need to sustain these cuts for a long time. tom: thank you, javier blas. euro, a real chump. with a weaker yen. coming up, a conversation with grover norquist, americans for tax reform. we will begin to discuss the budget. the trunk budget has resented to the senate and house. this is bloomberg. ♪

♪ tom with francine and london and new york. we are focusing a lot on the middle east, the region of the week. over the weekend iranians poured

into the street to celebrate the reelection of their president. on sunday, donald trump called on the world to isolate iran. nothing could better highly the challenge the iranian cleric faces in his second term. let's get to tehran. yousef, what do the streets feel like? what should the priority for president rouhani in his second term be? >> ultimately, with the celebrations put aside and the sharp rhetoric we heard from president donald trump and the u.s.-saudion the alliance, rouhani will have a way out several options. he has been the one trying to

encourage more active engagement with the west, and now with this latest batch of sanctions coming through late last week and this shift in rhetoric, a lot sharper than what we saw, that means he has his work cut out for him. francine: how will he navigate the relationship between saudi arabia and the u.s. going forward? has he talked about that? >> not yet. his foreign minister has responded to some of the rhetoric coming out of riyadh. they say it is all due to the big trade deal that was signed. they say it makes sense for the u.s. government to have this tone toward iran. rouhani will be leaning towards his other partners. we have heard from heat analysts that it will be about the other major powers in this conversation. this is also about europe, china, russia. these are countries that don't necessarily want to try the same

line as the united states. francine: we also picked up a morning must-read. this is what the bloomberg columnist says is needed in iran. let's look at that. reelectedanians have a fake reformer in a fake election. westerners vastly overestimate what an iranian president can do. this is the belief of eli lake. real power in the country resides with the unelected supreme leader. is he a moderate like the west thanks? -- thinks? >> there is an element to that story. from ourlways said coverage on the ground and what we have been hearing is that you are looking at two candidates who offered very different platforms, one very liberal and the other conservative in

comparison, but within the confines of the iranian republic, he is still accountable to the supreme leader. the ability to move forward from here, if you look at rouhani's track record, he has been able to deliver on engagement with the u.s. regardless of where the supreme leader stands. francine: thank you so much. n.usef in tehra. taylor: president trump is in israel for the second leg of his foreign tour. he spoke briefly about the prospect of these between israel and the palestinians. president trump: we have before us a rare opportunity to bring security and stability and peace to this region and its people, defeating terrorism and creating

a future of harmony, prosperity, and peace. house ishe white playing down expectations for significant progress on this trip. wants look angela merkel the british decision to begin section, not the role. they say this is a move that will affect future generations. taken tosteps must be ensure other eu members do not leave. the ceo of ford is out. mark fields is being replaced. the new ceo will be jim hackett, a turnaround specialist. 2014,feels took over in the traditional car business has struggled. investors have questioned the strategy. we will be live shortly with more on this. 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. it is going to be interesting to ford.o keith not on us.er norquist with he has been called among other things the most influential conservative in washington. you are a conservative. is the president a conservative? grover: if you look at his policy on taxes, which is , it isc, rate reduction as progrowth as ronald reagan's. if you look at deregulation, he has gone faster and done more. 14 regulations from obama have been not only undone but permanently undone. you cannot put them back without

a vote of congress. the budget he is putting forward is bringing spending down. that is pretty ronald reagan. tom: we will go with that. add due top can you the growth affects of taxes? your opponents can say we have nothing, there is no plan, no theory, no economic foundation. statistically, how much gdp can you add on even progrowth policy? grover: you can look to history. we heard the same voices during the four years of the carter administration. there were limits to growth. we took spending above 4% a year for six years after the reagan tax cuts to the fact. i think going from less than 2%, the average under obama, to 4% is not only doable but expected. tom: within the budget and the

uproar over the weekend, i have seen numbers as they guess $1.7 trillion taken out. the theory is that will be taken over by growth. nut to try tog a solve? grover: if you grow at 4% a year instead of 2%, the government ends up netting $5 trillion through economic growth. if we had grown at reagan rates rather than obama rates, today there would be 13 million more americans at work. that is a lot of tax revenue from jobs created. tom: part of your charm out of harvard in western massachusetts is you realized it is about votes. when you grow up in the commonwealth of massachusetts, you learn that. does the president have the votes of moderate senators? grover: here is what the president is doing that is quite wise.

the tax policy is being organized by the senate, the house them and the white house working together. it is not what we used to do 40 years ago when they would each do something separately, and the present would yell at them at the end. they are negotiating this ahead of time. the same thing is happening with health care reform. watch for those to take longer than you would think to appear, but pass more rapidly because it is being negotiated. what they failed to do is drag everyone into the room on health care reform on pre-negotiation. we had a bunch of people who showed up late and wanted to do a negotiation that was completed. we are not going to let somebody sit outside the room. we are going to drag them in and make them sit at the table and make grown-up decisions. francine: we seem to understand that the chief of staff of the president and his chief

strategist steve bannon will not be following the rest of the trip, because they are flying back home to focus on budget and other issues. is that significant? grover: i think it is wise. one needs to chew gum and walk at the same time. the president is taking a big series of foreign policy steps that i think are fairly impressive. at the same time, the republican ability to win in 2018, the ability to get reelected, that is driven by how much economic growth and jobs he can create. that does not happen from talking to foreigners. that happens from talking to congress. tom: we know what grover norquist was going to say. less sure ofle what mr. schneider from intel is going to say. this is freshman economics weapons. the you get growth out of taxes?

whether our audience agrees or disagrees with grover norquist, do you get growth out of tax cuts? >> what is more important is it may not be 4% or below 2%, it is going to be a compromise. the important take away is when you think about d.c. functioning in the new era of trump, it is going to be initially a soundbite, and that it is going to be a consensus growing ahead of time. you are going to get a middle ground in the high to or low three. we have to think about those response functions. taylor: stay with us. this is jerusalem. we have moved 36 miles by helicopter. no motorcade. landing injures them. we will have coverage of this all day on bloomberg radio and

bloomberg television. we have a team of reporters not only monitoring this second stage of this trip but also monitoring what is going on back in washington. the reports that mr. previous and mr. bannon are going back to washington. the comey testimony down the road, not something anyone is talking about right now in israel. here is jerusalem, very different from tel aviv. the symbolism there of where the u.s. embassy should be is the back story. they might as well be centuries apart. spiritually, there are big statements that go along with that. this goes along with trying to appeal to all different types of non-consensus views and try to find a bridge to bring these ideas together. that is what this trip is all

about. we will see how this evolves in the next day or so. people trying to make sure that the focus stays on the foreign policy. ultimately, as a portfolio manager, as market makers look at something for the market, you have to monitor. francine: i just want to show you what the data board is telling us. oil advancing for a fourth day. opec is gathering in vienna. there seems to be more english and that action has will be extended into next year. -- there seems to be more consensus that production cuts will be extended into next year. vix 12.35. the this is bloomberg. we will be back.

♪

♪ taylor: this is "bloomberg surveillance." let's get to the is this flash. mark fields as run out of time at ford. he is being replaced, ceo for less than three years. the new chief will be jim hackett. he is a turnaround specialist who has led the movement for self driving cars and ridesharing. under fields shares have fallen more than 30%. your bloomberg business flash. tom: thank you so much. it is a great honor to bring you he not been on the ford motor

company. he makes it clear that mr. fields is out. 20 years ago he wrote the definitive story on the death of the american car. forlarge a failure is this ford? fields did like mark not turn out to be the right horse to ride. they are changing courses quickly over to jim hackett who had been waiting up this new mobility effort. tom: ford is the one company that did not go bankrupt. they take great pride in that. what is the linkage here between one and mr.f ford allen? when turned them around

companies were going bankrupt. at the time gas was four dollars a gallon. they were big on small cars and fuel-efficient engines. here we are now with low gas prices and suvs are selling. they are out of sync with the market. taylor: -- tom: when i noticed in 24 months, combined $24 billion of free cash flow at ford motors. is this what they want, a new distributes cash to shareholders? >> i think they would like to be more like general motors. they have a strong dividend and do distribute cash to shareholders. they need a lineup that is more like gm, which has stronger suvs and a compact pickup truck. these are things that are coming, but they are running behind. tom: they are running behind.

for those of you on bloomberg radio, london, the red circle is where mark fields took over in 2013. down we go. it has got to be about use of cash. does ford motors have the use of cash to support the stop while mr. hackett terms the ship around? >> they have a solid balance sheet. this was not like it was in 2008 and 2009. they need to make the right steps on products today while figuring out tomorrow. at the moment, analysts feel their approach to the driverless feature is a little scattershot. they need to have a more consistent plan for turning around ford. they have not communicated that very well. tom: thank you very much. look for coverage throughout the week on the ford motor company. francine: we are looking at live

pictures of theresa may campaigning in wales. for our radio listeners, she is at a podium with a logo behind her. says, our plan for a stronger britain and prosperous future. it is clear she is trying to portray herself as the strong and stable option when we go to vote here in the u.k. on june 8. the pound is falling below 1.30. predicting a narrower than expected win on these elections. everything at the moment is domestic rhetoric. find out in al couple weeks when negotiations start. this is bloomberg. ♪ >> the concerns of ordinary working people everywhere. ♪

♪ tom: there it is. the single biggest chart right now. it is way below the trump election.

the blue circle to the left. flatter curve. what does this flat yield curve mean for the president? >> higher rates, higher rates to come. what is interesting right now is the lackadaisical expectations of rates moving higher. tom: we should be clear, if we flatten the yield curve, it can go up as well. >> we would call that a bearish flattening. you have to look at that pivot point, which would be the two-year yield. ultimately, for the president he wants to mitigate that risk by maintaining a sense of stable interest rate expectations, and ultimately the market believes that at this moment. ultimately we will see a series of hikes coming from the fed over the next two years. you could additionally see more flattening. the white house is looking at

this, although not minute to minute, but as an indicator of potential tightening in the economy. francine: jerome, what is your favorite buy? i don't know if you're looking at something in the market that others are missing. jerome: it is interest rates. one of the things that the market is complacent about is the expectation of interest rates increasing over the foreseeable future. even as we look forward to june in the next year, investors are overlooking the fact that interest rates can increase and buy that increase in income coming forth. it is valuable at this point. tom: jerome snyder of pimco with us. the first lady getting out of the air force helicopter in jerusalem. it appears to be a motorcade in jerusalem as they begin a day of, not pageantry and sightseeing, that the means it,

it, but thedemeans journey to the western wall. francine: it is something we need to keep an eye on. when you look at these pictures, and we have covered geopolitics closely from the start of the hour, is there anything the president should not say or could say that would move the markets? jerome: he is going to try not to offend anybody or alienate anybody. anything that leads to that will create additional volatility. it is unlikely. given the rhetoric we have seen of him being not necessarily surrounded by the press for, it will probably continue for this trip. this is a volatility will probably be limited at this point. tom: jerome snyder will continue with us on bloomberg radio. the president continues with his

trip. this is his second visit after riyadh. i thought foreign-exchange would be boring. it is not. 1.10, 1.11,nds out 1.12. stronger euro. yen as it moves. kevin cirilli is in jerusalem. he will join you. ♪ the yield curve flatter would be the major news item today. worldwide, this is bloomberg. ♪

♪ jonathan: president trump touches down in israel after a

successful visit to saudi arabia. ministry tellsy bloomberg that opec is ready to sign off on another round of output cuts. ford is dropping its ceo and promoting their head of self driving cars. mark fields is out. jim hackett is in. good morning. welcome to "bloomberg daybreak." i'm jonathan ferro. this monday morning, futures stable. marginally positive looking at the doubt and -- the dow and s&p 500. triesllor angela merkel to explain why there is a trading surplus in europe, and saying the euro is too weak. you cannot make sense of the sometimes.