>> saving the worst for last of it president trump rounds off his survey with a trip to the g7 summit with a discord over free trade and climate change. oil producers extends high cuts for nine months. cruise holds its biggest loss in three weeks, but russia reaffirms its ability to do more. >> we can increase the amounts of cost or decrease a mets of cost, it all depends on the market situation. slips.ling a poll shows the conservative party lead narrowing after the manchester attack with less than two weeks to go until the general election.

>> welcome to bloomberg daybreak: europe. our flagship show i'm all anna edwards. >> a very good morning to you. i'm live from the anna. the status quo is simply not enough. that was the verdict of the market here in the last 24 hours. it dropped from 5%, but we are at a pivotal moment at the opec non-opec relationship. is fundamentally disappointed, there wasn't enough discussion about an exit strategy in april of next year and compliance. can they all stay compliant as they go into the bumper season? forget, frack attack. that's the risk to the price of one. >> you wonder when opec needs a

lesson when you look at what's happened in the last 24 hours. let's talk about what's happened in the asia equity market and other asset classes. the pacific drilling down just a 10th of a percent of we are seeing witnessed coming through in some energy-related companies. commodity currency is always -- also on the back burner. we have this really fascinating polling coming out. , since theken manchester attack, showing only a five percentage point lead for the conservative party in the latest polls. about a 21king percentage point lead just a few months ago at the time the election was called. of course, remember that manchester and tax -- attack to bear in mind. let's roll on and show you what's happened or what is set

to happen, perhaps, a pretty flat open, a little bit of downsized. global stocks on their best week. around what trump was doing in ination to the fbi, at least the moment. six weeks in games in the equity marketing. the sea and white showed some interesting news around it. it was headed for its strongest week against the dollar, lots of speculation about the pboc intervening in the market to bring that number back to where they want it. we also have this interesting story on the bloomberg and we will get more details later about how the pboc wants to change the way they want to get the you want to match the dollar. >> anna, thank you. in the u.s., the justice department has vowed to challenge an appeals court ruled that slammed a travel ban

against six muslim relations. they say it drips with intolerance. donald trump is on track for his first supreme court showdown. investigators are reportedly focusing on a series of meetings held by jared kushner as part of their probe into russian meddling in the 2016 election and related matters. according to the washington post, people familiar with the election, president trump's son-in-law and influential white house adviser is being investigated because of his supposedly involvement with the russian meddling. he has not been accused of any wrongdoing. itna plans to change the way calculates its daily reference rate against the dollar. according to people familiar with the matter, it will tech

elite cyclical adjustments factors that might impact the swing. a are tweaking and testing their model and will start to provide quotes using the new formula soon. the conservative party lead had narrowed after the manchester attack. the yousef poll showed them narrowed to five percentage thets, investors also sold currency after the first quarter gdp needs an estimate. oil has held its biggest lost in three weeks as opec moves more supply cuts. claimedde and crude had $51 a barrel this week and they said more would be done to drain the oil glut. alexander novak told bloomberg that producers have mobile -- have more polls if needed. is it conforming to

levels, but it takes a close look at the market and of course what is happening there. then they are can be an external rate meeting of the recommendation or conference to adjust actions. >> japan's court consumer inflation gauge has risen for a fourth month in april, the longest run since 2015. .3%.mer prices increased it's still far below targets and weak pressures .2 limited gains ahead. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. >> the oil price really coming into market sentiment here.

you got a stronger yen that is coming in the hong kong markets. looking at the time markets, if it 17 year highs. no stopping the costly another record high there. -- energyachers producers largely improved. cut, thead a ratings most in four months. more bad news for the commodity trader, which has fallen 31% so far this week after it cut its rating once again on the stock. nintendo at a seven-year high, this is our morgan stanley raised its forecast for switch sales. japan's cpi is reflected in this area 7942, you are seeing an upside that cpi is excluding

fresh fruit with a rise of 3.1% on april year year, but still upload this green line, which is the target of 2%. a lot of work for kuroda to do. back to you anna. >> thank you very much. trumps. president donald i nato leaders in brussels yesterday, telling them to pay their fair share on countering terrorist threats. >> 2% is the bare minimum for realonting today's very and very vicious threats. if nato countries made their full and complete contributions, then nato would be even stronger than it is today. trump said that 23 of the 28

members were not paying what they were supposed to be paying. the president is in sicily for the start of the g7, making his debut along with three other world leaders. theresa may, and unwelcome across, and our own matt miller is there and he has a cabin alongside. talking the last 24 hours. he arrived, produced a bill, tell us about the language. president trump yesterday in brussels having those needing meetings.- nato it's a different response and reception he received in brussels that he did receive in saudi arabia and israel, which was much more coming. specifically with one interaction that has gone viral and has been analyzed is the handshake with president mccrone, where it appeared that

macron gripped very tightly his hand. then the president was moving quite forcefully through the crowd of nato leaders. link would aside, the policy yesterday was also quite interesting because speaking at a memorial unveiling ceremony type of event for 9/11 as well as the berlin wall in brussels, president trump actually called on 23 of the 28 nato nations to increase the amount of money that they are paying to be a part of the alliance and he says that will help to better defeat terrorism. president trump walking that line of nationalistic rhetoric that got him to the white house, but also trying to reset rhetoric somewhat here in europe to win over and improve upon his reputation. technically, the reputation in europe very much night and day from what we saw in the middle east. i would anticipate that to

continue here at the g7 meetings. >> what position can we expect trump to take at the g7? we've heard a lot about this meeting that trump does not agree with the rest of the g7 on. >> it's a great question. i think it all comes down to the tight rope of globalism versus nationalism and how president trump looks to walk that line. on issues such as the paris accord, issues such as global economic regulatory regime, particularly the latter, we've seen him take a more global is the type of policy. in terms of counterterrorism, that's where this president feels he can work more with the g7 counterparts and he will meet later this morning with japan prime minister abe and he will attend a luncheon with g7 leaders. later tonight, he will go to the orchestra with first lady of

melania trump, who has accompanied him for all of this first international trip. you just say that. that's the backdrop. we are on roadmap. what a to the european leaders expect to get from this g7? there are three world leaders coming to this stage and they all want to be revered for their first g7. what do they hope to achieve? >> four of the seven are new leaders. four of the last seven are gone now. all they wanted to achieve, everything in italy, which is now running the g7 presidency, had planned was to push aside the manchester attacks. the focus was mainly on terrorism. not just from the angle that donald trump brings from the u.s. in the fight against isis, but from the standpoint of the europeans, which is the fight

against local terrorist attacks they had. to fightey join terrorism if the u.k. and the u.s. are having this bilateral spat about sharing intelligence? and if the u.s. and everyone else is having a spat about finances? said 2%, find, maybe they can do that by 2024, which is a long way away. even then, she feels all the cost she spends on protections in her country come up maybe on a domestic police force, should be counted in that 2% number. from veryoming different angles here and it'll be interesting to see if they come across with any kind of agreement on terrorism fighting. >> thank you very much for both joining us from the g7 meetings. we've got all the news angles for the cover. we will be back later in the program with more coverage.

stewart, fascinating to see the conversation yesterday about nato and the amount of spending on defense. this has clearly been a hot topic issue on the presidential campaign and it continues to be so for president trump. clearly wants to spend more and the u.s. seems to be planning to spend more on defense. tracksthis thing that u.s. spending of gdp. this is backwards looking of course, but we know the president intends to spend more on his budget, but we don't know much more about the budget or fiscal plans, do we? >> no we don't. there has to be more defense and military spending in general, and trumpet is trying to ensure everybody pays their fair share. are right, the fiscal plan that trump has for the u.s. is still not very clear we has some details come up that it's still more about aspiration than actual things he can deliver.

and there are many aspects of the budget being put forward that simple he won't get past in the house. this will be an interesting process and he sort of places his opening statement in front of the house. there is lots more to go and there will be a fiscal stimulus, but it won't be as large as he stated he will like, but it will be positive and help the u.s.. very good morning to you from vienna. when i look at this gathering, there's a lovely story written about the g7, and its multilateralism. this is the antithesis of what trump wants to deal with. who does the u.s. and europe do theness with? you can see second-biggest export market is the united states of america. there is a lot of play on trade as well, isn't there? >> absolutely. one of the things is that there were fears that a trump presidency was going to be very

isolationist, very just looking at the u.s.. and actually, he's become, not the best not exactly a global statesman, but he's recognize that it's not just about u.s. interests, but global interest. and trade is very important part of that. a good thing, given what we worried about before. >> it takes place at the foot of mount etna, at a meeting that perhaps won't be too volcanic. thank you. stay with us and we will be speaking with eurasia group president ian plummer at 11:00 u.k. time. here are some highlights for your day ahead, national campaigning resumes today in the general election after a pause in the terror attacks.

at 1:30 u.k. time, we get u.s. gdp data. .oming up next on the program >> we've got a packed one. why? we getlump, the analysis right here on daybreak. this is bloomberg. ♪

>> will come back everybody. 6:20 in europe. non-opec countries are cheering on this deal. prices,efforts to lift crude is trading sharply lower as the market is less wondering of how the cartel plans to exit this strategy. taking us into what some of the major oil players have been saying about the deal. >> we've considered various 12narios from its 10 nine to and we even considered options

and aller cut that withs are solid a nine-month extension, it's the optimum. atthe factions can be aimed raising or reducing the amount of cost depending on the market situation. depoliticize the oil market and to do everything as necessary to stabilize the market. >> the voices of the great and opec andand the non-opec deal, i caught up with last night, our guest is the chief oil analyst. good to see.

late-night? >> indeed. >> was the fact that we didn't get anything extra or did anything go on that we perhaps should have been aware of? >> a little bit of both, but perhaps we didn't get any extra. even a few weeks ago, the market was contemplating if we were getting a six-month deal. then russia and saudi arabia it came out six-month ahead and announced a nine-month deal. the markets that there must be something extra at the meeting and we got nine months. >> we were both in the news conference afterwards. what struck me and you said it, if we listen to the language in regards to export, and this is your drumbeat, isn't it? cut all you want. give us the interpretation of him on the exports. >> i think it will recovered next week anyways, but the crux of what happened was opec saying

we haven't done enough on exports and we have to cut exports. we are already cutting exports with the u.s., it hasn't shown up in the numbers yet, but it's trending lower and we are going to cut exports substantially. i did some numbers afterwards, and i think they can be below $1 million in the summer, compared to $1.3 million in q1. me losean't just give things like the market is going to recover. are they going to recover 5% or 55 bucks? where am i going on did. i was a 55 >> what i think is going to happen, stock prices will take a little bit of time to recover around 55. i think structure. so what they're aiming for, that is showing up again. there is a lot of inventory around, and hopefully over the

summer come up by the end come up get the core flattening out. >> i take it forward prices die. >> foreign prices up. >> foreign prices up, you are right. the other technical point from novak, who i set down with after the news conference, and the kuwaitis language that they used . data and adherence or complaints seems to be up in the game's estate. >> actually. i think the other thing, he did say that we have expanded and they are going to start focusing on all these data points including exports. i caught up with him at the delegates afterward who confirmed this. that's why they are going to work with exports to get inventory down to the five-year average. love to makeo be a recommendations in case the inventory drawdown isn't happening. what else can be done? i think that is important. >> does that cap the rumor mill of the 24 hours into the after

meeting which is, have a talked about and its extremity? -- exit strategy? there wasn't enough of an exit strategy discussion. was there for you? >> i think there was. this is the first time the iraq minister and bloomberg was there and ask the same question and they answered saying, we are not going to crash the market as soon as the deal is over. we want to get about $5 million that came from iraq. they want to institutionalize this framework. i think for the first time i've heard from delegates and the ministers, they know they cannot go back to producing at 22016 levels. think it's very clear that that this deal could get extended, or the wording will be very clear in saying, we are not going to increase some special production.

-- substantial production. >> i spoke to the uae minister and he said they are relaxed about shell. is it shall its seventh inning or is that splendid isolation of a continual slow? absolutely going without saying. permit, iood as the think he is right in the longer term in the sense that we do have production falling from all parts of the world, demand is still growing strong and we will need shell to balance. but right now, inventory is high and that's what opec meets to compensate somewhat for the growth. >> thank you so much. great to see this morning. , just the shape of the curve. next, we will be finding out more details of what china has been up to. we will discuss their plan to change the fixing method and

what cap that could spell for its currency. there seems to be a plan to reduce volatility. we will get all the details. this is bloomberg. ♪

6:30 a.m. ingone the city of london,; 30 a.m. in the nfl welcome back to daybreak. let's get into these markets. oil is just managing to stabilize it self. good morning. >> good morning. ,ou know all about oil extending its biggest loss in three weeks. 5%, a in almost disappointment that opec didn't go further than what was already priced into the market. we are seeing the impact on asian equity space today. we are looking around $51 a barrel wti's, but 62.

-- 48.62. here you can see that on the topics, it is oil explorers leading the decline. also looking at the u.n. recession, it's heading for its biggest weekly gain in four months. the pboc has been intervening to support the currency and both the yuan and dollar has rallied since the debt downgrade. some speculation that state backed funds have been buying chinese shares. we also heard today that the pboc plans to change the way it changes its daily fixes, perhaps to bring more stability to its currency. there are looking at currency that is not gaining, sterling is the worst performer against the greenback this session. the dollar has been trading sideways all week, but sterling is back with one point 28. the conservative party in the u.k. narrowing its league after

the manchester attack and first-quarter growth is missing estimates. taking a look at the 10 year treasury yield is down about one basis point. it's coming 20 year lows, spurring loss -- wall street to slash costs. they are expecting more fed tightening and we are at its closest to lowest since november since the trump trade is fading. >> thank you very much. yourberg is available on bloomberg at. becomeety, tensions may at the in meetings summit. they could have gone with a volcano picture, it would have added the same sense of drama that precedes this meeting. president trump favors a

protectionist trade policy that is out of sync with other world leaders, especially angela merkel. passing the white house and rex tillerson said of this meeting trump will decide what to do with the paris a court after he attended the g7. matus? goneybe they should have lascivious. let's talk about the >> story. he just can't shake off the allegations over admissions cheating. the german is also part supplier with gm's codefendant in a lawsuit yesterday. that's the fourth time that the firm has been linked to the scandal. gripping the car industry. it just won't go away. anna? the chinese plans to change the u.n. reference rate adding

an adjustment factor that may blunt the the impact of big mart swings. that's according to people familiar with the matter. for more on china's central bank plans, let's bring in bloomberg and the o'brien. exactly what the pboc is changing here. it's a bit of a technical story, but what are they doing? >> that's right. effectively they are adding an extra element that banks need to be taken into consideration. they can submit to the people's bank of china, which is then a reference rate that's given to the yuan each day. the reference rate can't trade within 2% either side. effectively they introduce this countercyclical adjustment factor. as far as we understand, up to now, what they have had to take into consideration are the close

here in the yuan in beijing and also what the yuan has done against the currency. this as an extra layer to that which will, as far as we understand, allow them to have more control and allow them to take little bit more account of what the dollar and other currencies have done overnight in the non-chinese trading sessions. what is behind this? we've seen the pboc reacting in anticipation with the federal reserve when they move, what does it really mean in terms of this move? is it an act of concern? >> as far as we understand, it is counter cyclical advice is a smoothing measure but basically this is all about you wants stability. matter of the pboc this

year. we may have seen some directions related to the deleveraging drive, but all through that come at the u.n. has been the anchor and that's very important to the authorities here, especially ahead of the party congress later this year, where there will be a major reshuffle of the communist party leadership. this is about tightening their grip on the yuan and making sure they are able to contain it with the balance of they want. let's see, they have a lot of early 30 to do. let's talk about another currency. the pine. it dropped after the conservative party leader narrowed. this is following the manchester attack. it showed that the lead narrowed to 5% since theresa may became prime minister.

the first quarter of economic growth had missed estimates come up but whoever wins this election has been reminded that they face a series hurdle in the brexit negotiation's. in an exclusive interview with germany's deputy finance minister, he told us that britain must meet its obligations when it comes to the cost of leaving the european union. >> what i find important is that we have on both sides people come over to compromise and harder the euphoric is in the campaign, the less room there is for compromise. this exitonder about fee, how this obligation that we have made together in the your opinion union of 28 member states have made, the question is how much britain will pay for when they leave. >> what would you call it? >> it gives the wrong

impression. we should fulfill these. obligations. mr. bunny is the point person for the eu commission. london?ou listen to in we have a whole series of ministers that are addressing the issue of brexit. that may have the prime minister, as well, directing the issue. there are differences in the language that each of them uses and the objectives are different. do you get a clear understanding of who you are talking to? actually, the negotiations haven't started yet, they will start after the election here in the u.k. and i am quite sure there will be someone nominated in the new cabinet that will be in charge. >> do you have any idea who that might be? >> that's not my job to do. that's the prime minister's job to decide that. what is important in every negotiation is that there are two persons in charge, one on both side.

one that can make deals and compromise on something. for that, they both need mandates. we know how mandates of the european union. there will be something similar on the british side, too. >> you are listening to everybody, boris johnson, the prime minister. >> we are listening to the british government, on the whole. that's the same within the german government. even within the european union, if you listen to different people, there are different approaches, i would say, but still what is crucial is that we have a common mandate and we finally found one on the european union side in the past to weeks, when it comes negotiations, and i think we will see the same on the british side that makes it easier. ,ut i don't have any worries bloomberg.

>> an interesting conversation from a german perspective. let's talk about the u.k. and then the euro. we have a senior economist joining us here in london. stewart, let's talk about what's happening in the u.k.. we started this sequence talking about european politics. we have the latest polling information that shows the conservatives only 5% ahead of labor. this is the latest polling. this is the poll tracker, show it doesn't show that contraction, but it shows some lessening of the support for the tories in that poll ahead of the election. how much does it matter to you that the size of theresa may's majority in terms of where the uk's story goes next? >> you have to put this in context. can any other circumstance, a 5% lead be something to cheer about.

it's all about momentum, where it came from. she startedely that with, it's a reflection of a number of factors, one of which is earned goals from the conservative party. also corbyn, despite well-known shortcomings or worries, shows that he has run a tight campaign so far. this can all change, but it's still a significantly. they will be getting worried if it narrows further, we might really have a contest on our hands, but it was to be a tory victory with an increased majority. they have a fighting chance still. took place right after the manchester attack in the wake of the social care policy confusion, which before the manchester attack, was something that dominated the conversation as of late. we also added into the mix the u.k. economy. gdp by keyof u.k.

sectors, but it also makes the point that we are seeing a number in terms of gdp coming down and missing expectations a little bit. is this a worry for you? >> it is. the growth is less than 1% worry rate this is a big and we have seen consisting growth to. experts -- exports not intervening to it. the u.k. economy would rebound toward exports and imports institutions. q1 numbers say it hasn't happened. slightly better news is that investments have held up slightly better than expected in terms of brexit security not having too much effort an adverse affect. it's probably more to come. we all know inflation has risen. it slightly to the

european conversation because for whatever dissipation there might be in the u.k., there's a spread between the u.k. and mainland european economy. this is perhaps what has ecbldened everybody, the and politicians. france is just under double-digit on employment, but do you get a sense that we are going to have a latitude on fiscal policies and european growth? init's nice for one to talk an upbeat manner. it hasn't always been the case. often been the other way around. theave to acknowledge latest numbers in europe have been in courage. the sentiment in these indicators are stronger than that. there's a gap between sentiment and survey data and the hard numbers themselves. but the eurozone appears to be growing 2% overall, there are winners and losers in individual countries, but overall it's quite encouraging.

the indicators would suggest it's like to continue. it's understandable that the ecb is considering its exit options from this policy stimulus. >> a got here it the illustrating the bmi outlook and what this is doing to the stock market. blueis the stoxx 600 in taking a tick up really in conjunction with this writer outlook for pmi. the distance between the survey data and the atd data and that's summit the ecb. have you interpret latest commentary from the ecb? some have said it's trying to manage expectations around june and make sure people are not expected to much of a tone change. >> that's right. managing expectations is important. what you deliver and what markets think you are going to deliver. economic circumstances, it's understandable that the ecb is considering exit from this position. in needs to manage markets in

order to make sure there are no shops deliver. we have seen temper tantrums before. they want to do it in a gradual way. so far, they are doing that. june is another opportunity for them to finesse their link with. i think markets are prepared for that. given economic circumstances, it's the right thing to do. >> think you very much. -- thank you very much. if you are a bloomberg customer, you can watch the show using tv . you can also follow along with the charts and the functions. if you are interested in eating the income not go to tv and find a starts and click right through on to those. you can also use the button at the bottom of the screen to ask the guest a question. >> i got a surprise for you. we are going to do a facebook like. blast on the roof. coming up on the show, the u.s. job market is hot.

the question is, the inflation is not the fed's dilemma as they couple -- contemplate a rate hike next month. this is bloomberg. ♪

a.m..s just on 7:50 you're looking at a beautiful shot here at the g7. members and leaders are joining there for new leaders of the world. on performance at the g7. in italy. let's get across. i'm ready. good morning. >> general motors fell after it was sued for allegedly putting devices to beat admissions test. -- emissions tests. they claimed the maker installed devices into models of gdc

trucks from 2011 to 2016. they are the first -- fifth carmakers accused of cheating. gm claims they are baseless. fitch is flagging down the company's ability to adjust to hundred billion dollars over the next 12 months. to renew as in talks borrowing system that expires next month. but they expect the bank to demand less favorable terms and some may walk away. to has been ordered to pay $47 million the state and city of new york after the judges said it turned a blind eye to shipments of untaxed cigarettes from american indian reservations that undermine antismoking efforts. ups failed to comply to a 2005

deal by continuing to service contraband cigarette services. >> think you very much. let's talk about what is happening in the united states. the sm oc is close to where it needs to be on policy rates. speaking to reporters in tokyo, bernard added that she must see startst balance sheet sinking. he warned that local inflation is a cause for concern. >> the price level has begun to diverge from the past and we are almost 5% below the previously established pack. for those of you that know this, this is not as bad as what has happened in japan. i will show you that picture. it's worry some nevertheless. >> stuart robertson is still with us. concerns their expressed about inflation.

this is inflation expectations as measured by breakevens -- breaking down in the united states. this is 2017 here on this side of the chart, number 5900 and just shows the inflation expectation coming down. have we were treated to much in the u.s. or do you think our expectations should be lower? much,have retreated too but core inflation has been rising gently in the u.s.. giftede inflation has up, but the last couple numbers have seen a bit of retracement rid i don't think it's a trend particularly or anything to worry about, but it's something markets have taken note of, particularly when seen in conjunction of a disappointing growth number in the u.s. in the first quarter. just having a little bit of positive for breath, i think underlying inflation is still reasonably up the interstate. the fmo see themselves have sort of dismissed the importance of

this falling of cpi and the weak q1 gdp numbers. the proof is in the pudding. they are ready to raise another rate rise. >> they want to look through a lot of that first quarter matter. >> i am looking at these comments. actually find the need to take us to normalization. if we think the fed is going to spend more time than the 05, somebody has got it wrong. another't think we need 200 basis points to get to normalization. what is your terminal rate? probably similar to what the fed has at 3%. it will be a while before we get there and when not certain that we need to go as far as that. even if they raise two more this

year, we will see how the economy response. but the fed has continued to suggest that the terminal rate needs to be free. >> one less common before we talk about japan. it struck me as interesting. warning to start tracking the balance sheet from twice of tinkering is that early, do you think? is that what people are expecting? >> it's a political hot potato. there are lots in the republican party feeling nervous about the balance sheet and wanting to see a plan of action even if it doesn't begin until later this year and even if it is a very slow and gradual process. that sayeing comments we know the balance sheet is large and we don't want to give it there forever. we do think conditions want a slow reduction. first of all by reduce investment and ultimately stimulate with sales or laying

assets to mature. that will be a slow process. they are responding to politics as well as economics. japan.s visit to looking at some of the data we have, core consumer inflation rises for the fourth month in april, the longest run of gains since 2015. we have a choice, a, is economics working? be, our wages tightening in japan and should be given more marks for what they have done at the boj? >> it's interesting. we have to be encouraged by these numbers. japan has been a serial disappointed or on inflation in the last couple decades. having had inflation come back a little bit due to sales tax increase, the fall in recent years has been recent -- has been disappointing. think the court is encouraging

and should be welcomed, but japan is not out of that hole yet of where they are worrying about low or even negative inflation. i think stimulus need needs to remain in place but i don't think abenomics has failed yet. >> is chose core cpi rising a little bit. he said the boj policy options are becoming scarce and more explicit cooperation with the government would be appropriate if inflation remains weak. what is the next move in japan? >> there are many who believe monetary policies has reached its limit and now the fiscal authorities have to pick up the baton if you like. i think japan particularly it's relevant. there has to be either an outright fiscal stimulus of some sort or a nature between the authority. >> think you very much, stuart robertson.

joining us tonight and monday. trump may become evident as leaders gather in italy to talk, change. we are live on the ground in sicily. this is bloomberg. ♪

manus: saving the worst for

last. the president leaves full of discord. opec disappoints. oil producers asked -- extend supply for six months. crude holds its biggest loss, but russia reaffirms its ability to do more. >> these factions can aim to reduce cost. it depends on the market situation. and sterling flips. there is less than two weeks to go until the general election.

♪ >> welcome to "bloomberg daybreak: europe." it is our flagship morning show. from the anna, i'm manus cranny. anna edwards and hurts. let's talk on the oil story. it is down this morning. the line from the anna is -- from vienna is this. it is not enough. that is what the market said to saudi arabia and to the non-opec members led by novak, the russian oil minister. you have the nine-month extension, but we want to know more. what is your exit strategy? we are at a pivotal moment in terms of this relationship, the

symbiotic relationship between opec and non-opec is over. it is official. it is a lock. the market is disappointed there was not enough of an exit strategy. anna: let's have a look at where we are on european equity markets. it is a little lackluster. futures not giving us much direction right now. what's have a look at where we are on the european session. this is a picture of the futures. ,t could be a little mixed perhaps a bit of downside at the start of the trading day. let's look at the risk rate. down. energy stocks way commodity currencies also on the back of the australian dollar. it is also in that bracket. important to notice the pound, it continues to lose ground. weaker than a was an hour ago. we find this fascinating new poll out from the times

newspaper. less than two weeks to go until the general election, and this pulling was done in the wake of manchester bomb, in the wake of the social care policy confusion. let's look over to the risk radar and see where it is with the u.s. trading day. not getting a great deal of direction. global stocks on course for their best week since april. six weeks of gains, recovered since last week's selloffs. itsoffshore yuan is on strongest gain. we have this other story on the bloomberg, talking about how people familiar with the situation are telling us that the pboc will change the way it calculates the yuan daily reference rate. let's check in with juliet first. manus: it is amazing how fortified those markets are, in

the face of a tragic week in terms of politics and the message from the anna -- vienna. the equity markets are four to five. how is juliette doing? good morning. juliette: in the u.s., the justice department is appealing a ruling that slammed the travel ban against six muslim majority nations. ban trips with religious intolerance. this puts the president on track for his first supreme court showdown. focusing on aare series of meetings held with jared kushner as part of the russian probe and related matters. according to the washington post, president trump's son in law and an influential white

house adviser is being investigated for interactions with the russians. the post says it has not been told that kushner is a tag -- a of an, or the focus investigation, and he has not been accused of wrongdoing. china plans to change the way it calculates the yuan daily reference weight -- rate against the dollar. it may blunt the impact of big market swings. banks are currently tweaking and testing their models, and will start to use the new formula soon. sterling dropped after a poll showed the conservative party lead had narrowed after the manchester attack. a poll showed the tory lead narrowing. currency also saw the missed estimates. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top .

the opec fields playing into things in terms of energy producers, as you would expect in asia, led by declines in sydney. it is closing lower by about 0.7%. the nikkei also affected. this rally is refusing to die. it is a record high for south korean stocks. stocks, we have seen a downside for the energy producers. indian oil also falling the most in four months, after a ratings cut. noble group has been dealt another blow with a downgrade, the second in 10 days. nintendo at a seven-year high. stanley after morgan upped its rating. japanese information came in today. you have the white

line. still very low, below the 2% target rate that the bank of japan is looking for. it long way to go in terms of inflation. anna: thank you. the u.s. president addressed nato leaders in brussels yesterday, telling them to pay their fair share on defense to counter the terrorist threat. >> 2% is the bare minimum for confronting today's very real and very vicious threats. made theirntries full and complete contributions, then nato would be even stronger than it is today. that 23 of thes 28 members are not paying what they are supposed to. g7, he is insisting at the

summit, where he is making his debut -- matt miller is on the ground, and has the story for us. kevin, let's start with you. we have seen a great deal of focus on the body language. handshakes and other matters. it has been a busy 24 hours for president trump as he heads into the concluding part of this first international trip. yesterday, speaking in brussels, the president calling on 23 of the 28 nato nations to pay their fair share, saying the lack of funds coming from the nato counterparts is hurting nato's efforts to counterterrorism as a whole. manchesterk to the terrorist attack. a point ofshadow and

contention between the u.k. and the u.s. i spoke with a senior u.s. official who thinks the president believes it will hinder his efforts to get the leaks out of the government. he called on just seven -- on jeff sessions to investigate isorts, saying whoever responsible should be prosecuted. politics aside, there is personal relationships on display. particularly, and a handshake between french president macron and president trump. ,hat moment itself went viral and illustrated the relationship and how president trump is being , withed in europe skepticism, uncertainty. it is a contrast to my reporting on the ground in saudi arabia and israel, where he was greeted much more warmly. this comes ahead of his g7

meeting later this morning. he will set down with the japanese prime minister to have a bilateral meeting before meeting with other g7 leaders. across to matt miller. matt, what are european leaders expecting from this g7? thank you for the correction, there are four new leaders at the g7. good morning. to start with, it is interesting why we are here in sicily. it is a beautiful spot to have such a meeting, but it is also in the mediterranean area where refugees would normally try to make their way over from north africa. italy wanted to focus on this issue of migrants. that will be swept aside to some extent he comes of this focus on terrorism. the same is true with the focus

on the paris accord. everyone is hoping, especially the german and french leaders, that donald trump will choose to stay with the paris accord. however, the secretary of state says they will not make a decision until after the g7. finally, here at the g7, they will be focusing on what is going on as far as the protection of europe, as far as the protection of the world in terms of terrorism. that will be the money -- the main focus. donald trump will have issues, though, when he deals with the u.k., who wants to terminate its relationship as far as intelligence sharing, at least when it comes to the manchester attack. how can they bite terrorism together -- how can they fight terrorism together when they are not sharing intel? the: they are basing conversation around the fight of terrorism. but there are several things that will be off the agenda, or

they will not want to focus on, because they are not on the same page. climate change, the attitude toward russia is the other one. to come to is hoping some agreement as far as russia is concerned. maybe not inviting them back into the g7, to make it the g-8 again. but to have a two track system. one thing that will be left off the agenda -- they will still try to talk about migration, they will push donald trump and the administration on a climate change. less think trade will be -- they usually have a communique ahead of the summit, and they have not finished one. the germans say they may not finish until late tonight. it will not be a surprise if it did not come out until tomorrow morning. that is what has taken the most time. they will likely leave it out so they do not have to deal with

that contentious bone, can sintering -- considering that donald trump has been on the protectionist side of the spectrum. the other six are in favor of free trade, especially since their economies are so important when it comes to export oriented trade. thank you matt and kevin, joining us from sicily. let's hope the volcanic setting remains calm in many senses. joining us here in london, tapan hewittead of avivaon allocation. you watch the news flow and are concerned about the things these world leaders do not agree on. free trade, attitudes toward russia, climate change. g7 talksing that the is that we see it as a very

large talking shop. that does not devalue its importance at a time when isolationist influences are on the ascendant. climatees of security, change, open borders, and trade, these are all vital. even though you could say that advances do not occur at these sorts of summits, they happen behind the scenes, it is still important that these leaders are seen to confer and have that open dialogue. advancesmarkets will be reassut this is still happening. and thereroke down was real discord, that might knock confidence a bit. but that is clearly not the case. m&a --n amoco -- amicable agreement. confidence is running high and seemingly unshakable. good morning to you.

just referring back to what anna said, global equities are really pouncing along care. you see rise after rise. people talk about era -- oil in a moment. growth is accelerating. that is the prism through which i am looking at the world in vienna. how do you look at the gap that accelerates europe? interestinghe thing. as of late, the dynamic in the u.s. is still the news flow and the data. it suggests that u.s. flow is in the same place we have been for a few years. but the more positive element is that growth in europe is clearly accelerated, and the growth outside of europe in terms of emergent -- emerging economies is doing reasonably well,

notwithstanding upsets in brazil. the non-us part of the growth equation has looked better over the last year. that is something to hang onto, because you could argue, the expectation of trump without a wouldis that u.s. growth accelerate. that expectation is not being met. but the nice thing is we have got these other growth engines that are doing reasonably well. we should take comfort from that. anna: let me show you this chart, because it taps into this discussion about going for european or u.s. equities right now. this shows net foreign investments in the u.s. equities. foreign investors returning to u.s. stocks as the dollar rallies up. manyhe bigger story is how people have gotten into european stocks. the one thing that drew my attention, you talk about how

investors are skeptical of the european turnaround. where does that come from? >> i think because they have come so far from long-term. the performance is staggering. there are little pickups. these are fleeting. it has been going on for years, decades. you could argue that maybe we are at a point where investors are starting to believe that europe is worth looking at again. i think in terms of the u.s. turn of mind, there still is a lot of skepticism, and it is partly reflecting performance because the u.s. has done so well. anna: thank you. tapan stays with us on set in london. when we come back, we will talk about what is happening in vienna. starting a historic

deal. we will discuss all of that next. this is bloomberg. ♪ manus: it is a 7:20 a.m. in

london, eight: 20 in vienna. opec and non-opec countries are cheering. the historic deal to extend production by nine months, but crude is trading sharply lower. the market is left wondering, how will they exit this strategy? i sat down with alexander novak and asked him if russia can meet its compliance every month for the next nine months. yes, of course. russia and russian companies, which have taken the decision to adjust production levels, takes this obligation very seriously and responsibly.

we believe the value of our --pilation -- corporate cooperation is important. trust between partners is important for us. we value that. trust can be lost in a day. we know that very well, so that is why it is very important for that we stick to commitments and continue building this level of trust. not only do we plan to be conformant ourselves, we urge the other participants to also meet these targets. russiacan i ask you, as being the biggest non-opec member taking the weight, have you had to put more pressure on non-opec members to it on board today? -- to get on board >> as far as extension is

concerned, the talks were fairly fast and successful. the country's saw the benefit and understood the responsibility. what was much more difficult with the talks last year when we were doing this for the first time. consolidated. used: again, the language in the news conference was the ability to do more. he talked about reviewing the situation. would russia support possible extensions if that is what the market needed? if that is what the data says? >> we have created very good an efficient industry for monitoring the situation. we have the joint technical

committee, so the market will meet with the committee, and we will have the conference whenever we need it. they have expanded their mandates, so they are conforming to levels and it takes a close look at the market and what is happening there. it is deemed necessary if there are actions needed, there can be another meeting for recommendations or a ministerial conference to adjust behaviors or actions. and factions can increase the amount of costs or reduce the amount of costs. that was the russian oil minister speaking yesterday to manus. tapan datta is still with us. talkinghe russians are

about how there is more that opec can do. how long are you on oil? you can see the change in the dynamics in the oil industry very clearly sense 2008, 2009. they cannot control that the u.s. is doing. >> going back to elementary economics, the supply curve. demand and supply set the price. the demand curve is not set by opec, if it ever was. opec struggled even in its heyday. the marginal supplier, the big new kid on the block, is u.s. shale, and we know that games are enough that -- that gains are enough that shale is at $50. this does not mean the price is a vulnerable in the short-term, but long-term, the substitution effects away from oil continued to build.

they will probably drive the oil price lower overtime. briefly, last year it was china that robbed the market. as oil have the same propensity if it does not hold %5 $50. i think there is some risk. remember, the demand side has picked up because the global economy is stronger, so demand is stronger. it is a comfort to the oil market. if that does not hold, then sums sort of price -- some sort of price correction would bring volatility to the markets. anna: thank you for your time today. hewitt head of allegation. that is it for us. "bloomberg markets: european open" is next. they will bring you more of the

u.k. politics side of things. this is bloomberg. ♪

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across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. >> good morning. you're watching "bloomberg markets: european open." it is of course friday. i am guy johnson in london. matt miller is in sicily. what are we watching this morning, matt and i? cut leavesas opec's investors wanting more. could a u.s. shale rebound put the agreement under even more strain? -- how the trail with will british businesses deal