francine: theresa may laid out her agenda as she tries to piece together support. the program will be heavy on brexit, light on domestic controversy. saudi shakeup. in a surprise move, the king makes his son next in line. oil tumbles into a bear market and the uber ceo quits. travis kalanick resigns as the head of the world's largest art of. good morning. this is "bloomberg surveillance ." i'm francine lacqua in london. first, to your markets.

be as markets are giving us a lot, a lot of news, just in themselves. there is a lot overall. oil is still sliding. global stocks are retreating and you can see that clearly in europe with the stoxx 600 down 0.7%. the yen strengthening. we see a risk off mode with crude oil tumbling into a risk off mood. that will persist. we also want to look at the shanghai equities, and the chinese domestic stocks. i will show you that shortly and then the pound, of course, it is the clean's speech -- it is the queen's speech today. let's construed to the bloomberg first word news. reporter: saudi arabia's deputy crown prince mohammed bin salman al saud has replaced his son as heir to the throne. the shocking announcement son'sidates the soking's

power. algian shoulders have shot suspected assailant from brussels. had allin station wit tarins haulted. the interior affairs ministry confirms that military staff had intervened to "neutralize an individual." chinese stocks will be added to the msci indexes. while announcement is a landmark step in the nation's integration with the global system come it will have an affect on the amounts of foreign money flowing into china's stock market. domestic shares will comprise 0.7% of the msci's global emerging markets gauge. the inclusion begins in two steps, the first in may and the second in august. karen handel has defeated a

well-funded opponent in a special election for a house seat in georgia. the result is a setback for democrats who hope donald trump's low approval ratings would help them win congressional ratings. the seed has been held by a -- has beence 1979 held by a republican since 1979. south africa must protect the independence of its central bank and must evaluate the recommendations to alter its mandate. that is according to the country's finance minister, malusi gigaba, speaking exclusively with bloomberg. >> the independence of the south african reserve, we must not seek any nature that will undermine the independence. whatever decision we arrive at must not end it undermine the independence.

global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm sebastian salek. this is bloomberg. francine: theresa may will today published a program for her minority government that is expected to be heavy on brexit, but light on domestic under receive. the plans will be met out in parliament by the queen, unusually, this year's queen speech will cover a two year program. anna is in westchester. what are we likely to hear about brexit? anna: we are going to hear about brexit. it will depend on how much detail we get, or at least the level of interest of investors will depend on how much detail we get from the conservative party. we will probably get something on the great repeal bill, the piece of legislation needed to be brought forward in the commons to translate that eu law into u.k. law. we will also hear perhaps come a little bit of a clue as to where

the d.u.p. talks are going. we heard from philip hammond yesterday about the length of the transition period he wants and the existing relationship he wants to see before we get to some post-brexit trade relationship with the rest of the eu. there is still a lot of uncertainty around the brexit agenda. we are likely to hear a little bit less on the domestic front than we would have done if the conservative party had managed to increase their majority. in terms of the controversial policies around education, social care and pension, perhaps even caps on energy crises, that might be given less time. as you say, the name is misleading. it is not written by the queen, but delivered by the queen. francine: a beautiful u.k. quote. we still have no deal with the d.u.p. of northern ireland. how concerning is that? anna: indeed. the conservative party has a minority government.

they need the 10 members of the d.u.p. who sit in the houses of parliament. they need their support to pass the most controversial legislation. the first test of that will be next week because the queen's speeches delivered today. it is debated for a few days and then voted on wednesday and thursday of next week. that will be the first time if this confidence is being worked on by the tories and the d.u.p.. various media are reporting different things here. sky says the d.u.p. talks are not proceeding. the telegraph says the d.u.p. threatens to move away. he bbc says the d.u.p. wil will be announced by tomorrow. on the bbc this morning, the deputy prime minister did say there is still every possibility of a deal, and that they are regardingout matters more money into northern ireland. how far has the d.u.p. reach gon e? francine: great work in westminster, anna edwards,

joining us throughout the day. during yesterday, geraldine sundstrom, a managing director at pimco, and peter dixon from commerzbank. geraldine, how do you see brexit? there seems to be a line in the market that says he will get a softer brexit or even know brexit. how realistic is that? >> the queen's speech will give us a hint today. yesterday's speech by philip hammond hinted towards a softer brexit. today we will get a little bit more of a hint and of course, there is the majority, and may will have to navigate with a number of people in parliament trying to satisfy all sides. if anything, that might point more towards a softer brexit than not, but at this stage, the queen speech will give us the flavor. francine: peter, what do you see

in the queen's speech. so far, what have you learned? >> basically, we have heard the likelihood is the speech will be oriented on brexit, which is slightly ironic because the election campaign focused on domestic issues and brexit was in on the back burner. i think my problem with the legislative program, which the government has likely set out, is to a large extent, it could talk what it likes. it will be important to determine what the eu granted. wants,set out what it but it will not necessarily deliver unless the eu is willing to cooperate. francine: at the same time, how the president is it that we don't have a deal yet with the d.u.p.? and if they want a softer border with northern ireland, does that mean there will be a softer border with the rest of the u.k.? >> it would appear so.

the logical solution to that problem would be for the u.k. to remain within the customs union, but i very much doubt that is what we will here today. you know, basically, the government is in a serious pickle. the very fact that we are talking about not having a majority government going into the queen's speech is unprecedented within the last 40 years. again, a lot of what we hear today may not be acted upon as we go through the period. francine: where do you see this playing out? the pound, or gilts? i have a chart tracking the u.s. 10 year, compared to the gilt yield? >> i suspect first it will be the pound. the gilt will be much more affected by the speech by mark carney yesterday. if they look through it, or if they decide to take action. so far, it looks like mark carney is holding the majority of the npc and is willing to

look through fx. ehe pound now is typically th people's punch around given the news, and on the weaker side given the uncertainty and given the fact that this d.u.p. has not been struck yet, though it would be in all the parties' interest to decide on the deal by next week. francine: peter, there is so much uncertainty out there. if you had three questions you could get answered right away, what would they be? >> it is brexit. as you said, because what happens to negotiators will determine what happens to the bound. the question is, what sort of brexit do you want? francine: does that not depend on whether theresa may stays in power or not? >> i am assuming she will hang on -- that is a working assumption -- that she will stay in place until march 2019.

what sort of brexit do you want? thestrongly we defend interest of british citizens will be question number two, because that will have a big impact on financial markets. and i guess number three would be, where -- what sort of relationships do you really want with the eu? ,an we build a bridge to the eu which we have appeared to have failed to do? francine: i mean, this could take years to answer these questions. i mean, brexit we hope sooner, but politically, it is messy. >> yes, first of all, the survival of theresa may is hanging, and we have the parties congress. then we will learn more about that. then, the german election also needs to happen to have some serious talks. everything seems to be pushed.

now everybody wants the best deal, but this very night. francine: we will be back with geraldine sundstrom and peter dixon. let's get straight to the bloomberg business flash. reporter: travis kalanick has resigned after a series of controversies that rocked the world's largest article step he said he was -- largest start up. he wished to avoid another conflict. the company has been dogged by drama this year, amid allegations of sexual harassment. aiming toaid it is reach a final agreement at a shareholder meeting on june the 28th. they want to close the deal by march to make up for losses within the nuclear operations. china'ss chairman said

consumption will be the engine of development for the next 30 years. jack added his company is not trying to compete with amazon in the u.s. >> amazon is a great company. they did a fantastic job in america and the world, but they are an e-commerce company and we are not. we help others to become e-commerce. we believe every company can be. reporter: that is the bloomberg business flash. francine: now, you may think the reflation trade is dead, but perhaps it traveled across the bill isaac. currency investors are coming to terms that the greenback's best days are behind it. more and more, traders are counting on the euro twto take the dollar's place. let's get more with geraldine sundstrom and peter dixon. thank you for sticking around.

let me bring you over to my compression chart, which shows treasury yield's spreads narrowed since the recession that began in 2007. what does this tell you about what bond investors are expecting the world to look like in two years? >> basically, it tells me that the bond market does not believe the fed, the interest rates will rise at a modest pace. i think it tells you there are increasing concerns, for perhaps, rising expectations, that this pick up inflation will not occur. we saw comments about that earlier this week. i think it is a steady as she goes kind of recovery. i don't think investors have a strong view about the economy per se. they don't expect a recession, but don't expect much of a pick up either. i think we are looking from direction from somewhere. francine: again, equities are

doing one thing and bonds are doing the other. what does this tell you about the state of investors? >> i think one more thing we could add is the trump plan an d tax cuts and fiscal stimulus don't seem to be their either and gold prices are dampening expectations. the bond market sees that side. on equities, we had a pretty strong season in the first quarter and i think this was not entirely expected. markets have caught up with that. now next is becoming a little bit more complicated. we will need a new catalyst to push further. are we going to enter a new tech cycle with the iphone 8? as they fed keep hiking say and disregard the fact that inflation is not there and that there are some signs the economy is plateauing, or even slowing

down somewhat? what will happen in china? there are so many open questions at the moment that it is a wait and see attitude. and as far as the diversified portfolio duration, it looks attractive, even at this level. it is not a screaming buy, but by waiting, risk on-risk off at those levels, it still remains a safe asset. francine: geraldine, you were just talking about china. chinese stocks are about to be added to the msci's benchmark. this punctuates an external period in which china enters the mainstream of finance, while maintaining a semblance of control over its markets. peter, does that make a difference on how you view china at all? we have seen a little of an increase within chinese shares, but not much. >> it does not change my view much.

chairman mao -- francine: he is not quoted much on the show. >> there is a lot more to come. i think it is an indication that china is becoming integrated into the global-financial system. in overtime, more shares will be added to that in next. who knows? in five to 10 years, we could be talking about more international investments in china. francine: geraldine? >> that will take some time. right now it is just 3/4 of 1% of the index, it is very little. it is not much when you compare it to the daily turnover of the stock market, but in five to 10 years, it will be 40% of the msci, or something like that. also, a large part of the global msci index. probably a sigh of relief from , finally, they

will be passive and active inflow that will help this capital outflow we see relentlessly month after month. though the size is probably in the order of 10 billion to 15 billion, over a longer period, we are talking about several hundreds of billions, which will offset the outflows. that will help with the greater stability of the renminbi. francine: thank you, peter dixon and geraldine sundstrom. up next, uber's ceo quits. travis kalanick resigns. we talk about the future of the world's largest arstart up. ♪ francine: you are watching

"bloomberg surveillance" and i'm francine lacqua. uber's ceo has quit. travis kalanick's resignation caps the series of controversies. app has faced a series of scandals, including sexual harassment and the use of software to purchase regulators. matt, great to have you here. first of all, who pushed him out? matt: well, as "the new york times" reported, there was a letter from five uber investors led by benchmark capital, a very respected venture firm in

california, saying, look, travis, it is time to go. travis kalanick was already taking a leave of absence from his role at uber. this makes official something which a lot of people expected would happen eventually. francine: would it have happened differently if it was a public company? >> that is interesting. uber is the largest venture backed startup, worth something like $70 billion at last count. were it a public company come it would have more scrutiny and these scandals would have had a significant effect on it share price, might have had a different board structure. this could have happened earlier. in any case, even venture investors have only so much patience. francine: will this hurt uber? >> the company is still growing. lyft does not operate outside the u.s., which is where all the growth for uber is. clearly, they have a dominant market position. it is practically a verb, like

xerox, at this point. it is an enormously powerful company. whether it will have the same rate of growth without the charismatic founder remains to be seen. francine: matt, thank you so much. we are back with peter dixon and geraldine sundstrom. peter when you look at the tech space, there is something about the culture. is there something -- what is the translation across the industry? is it just within the valuation, or can be one of culture? >> there are a number of issues here. from my perspective, uber has jumped into the space and created a new market. it is not following any business model we have seen from other industries. i mean, what tends to happen in the tech space, the company is, they do well, and sometimes they do well. if they survive, they do well. we have the big five tech companies in the u.s. sitting on

huge piles of cash. they are being criticized for not using that cash for better purposes and uber is not at that kind of level. it is at a different level in terms of what is happening right now. francine: geraldine, what is your take on tech valuation? >> i think when i look at the gap valuation of the growth of the market versus tech, tech has profoundly changed the amount of free cash flow that these companies are generating, at least the larger part of them. and the earnings growth in the sector, i would say validate to a great extent the level of valuations, within the context of the broad market being on the richer side of things. i think also when i look at earnings expectations, they are not widely optimistic. so, if anything, for this market

to continue growing up, tech is one of the catalysts to look forward to and one that is the most likely to happen when you see commodity prices, certainly this area is not very boy ayount -- then you look at the sector and the curves have flattened. then you look at the consumer side of things and it is a bit steady as shee goes. francine: geraldine sundstrom and peter dixon, thank you. up next, robert kaplan says 10 year yields suggest expectations were sluggish economic growth. we talk fed next. this is bloomberg. ♪

francine: you are watching bloomberg surveillance, i am francine lacqua in london. we are expecting a little bit of news from public finance in the

u.k. and as soon as we get them we will bring them to you. let's get straight to the bloomberg first word news. crown prince mohammad bin salman has replaced his cousin as heir to the throne. he relieves his cousin from the posts and the shock announcement consolidates the king's son's power. rival toe, a one-time emmanuel macron has been forced out of office. weighttice who threw his behind the macron campaign after mulling his own bid, has quit. european affairs minister is also leaving while two other ministers resigned yesterday. belgian soldiers have shot the suspected surveillance -- the station was

evacuated shortly after 8:30 and passengers were evacuated amid the sound of a detonation and gunshots. military staff intervened to "neutralize an individual." chinese stocks are to be added to msci indexes. but willandmark step initially have a fall effect on the amount of foreign money flowing into china's stock market. domestic shares will comprise 10 -- 7/10 of a percent. the first is next may, the second in august. in the u.s. republican karen handel has defeated her opponent for a seat in georgia. the democrats hoped donald trumps low routing -- donald went allow aatings deaf or current -- would allow a

democrat in office. south africa must protect the independence of its central bank and must evaluate what effect -- to its mandate will have on the institution, according to the finance minister. he is speaking exclusively with bloomberg. >> i also support fully the independent of the south african reserve bank and i think we must not take any measures that are going to undermine that independent, so whatever decision we arrive at must not undermine the independence of the south african government. sebastian: 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. a week after the federal reserve's interest rate hike, the dallas fed president has been laying out his timeline for shrinking the balance sheet. >> it is my own view that we

should begin the process, i.e. begin the rolloff sometime later this year. , it is goingtation to be appropriate to begin sometime before the end of 2017. francine: for more on the federal reserve let's bring that geraldine sundstrom. what will it take for the market to finally believe the fed? geraldine: i suppose we would need a little bit more inflation and probably a little bit more sign that trump is going to be successful on his fiscal stimulus agenda. i think at the moment none of this is on the horizon. we see oil prices having a tough time and inflation has been surprising to the downside for three months in a row. market thinks the the december hike is 50/50 and we feel this way as well. francine: what does it tell us

about the labor market? janet yellen is convinced and certain of her committee say it is not true, that a strong labor market will automatically feed inflation. what if it doesn't? geraldine: this is unprecedented and there is lots of debate about whether the phillips curve will start to bite or not. inflation is not really taking hold and it would probably take a lot more fiscal stimulus to get inflation going, but for now inflation is probably in the range, the deflation risk has been diverted but high inflation does not seem to be on the agenda. or,odity prices, oil, iron have not been going up. francine: we will talk a little bit more about oil shortly but when you look at your portfolio and make investment decisions, how much do you look at the fed? is it 70% of what you factor in?

geraldine: the fed is very important and i was been because the u.s. economy is that important. the level of u.s. interest rates has had effect on how emerging markets react. too much of a hike is not good for this stage of the market so it is a big driver. francine: we also had another story that we are expecting the dollar to increase significantly and you said maybe it is the lack of tax reform and concrete infrastructure spending while the euro powered ahead. geraldine: the dollar should be strengthened by the fact that the fed seems to be resolved to hike interest rates even though there is very little inflation. on the other hand, the euro has things going for it but as draghi showed us they remain extremely dovish and the interest rates are here to stay for a long time so the euro is

not that attractive. francine: we also spoke to the u.s. treasury secretary steve mnuchin yesterday. he said the u.s. government only intends to introduce ultralong bonds if there is an audience for regular issuance of the debt. >> it is something we are very seriously considering. i think it is a tool that the government should strongly consider and we are reaching out through the borrowing committee and investors to see what the demand is. what we don't want to see is create a program that is a completely one-off program. we want to see if it would be part of our borrowing capabilities. francine: with that make sense, ultralong bonds for the u.s.? would you be a buyer? geraldine: i don't have an answer, it all depends on the price but looking at the yield and the way the curve is flattening if i were in the u.s. treasury i would want to issue a longer bond. francine: geraldine sundstrom stays with us.

prices down 20% from the february peak, we will bring you that story. this is bloomberg. ♪

francine: you are watching bloomberg surveillance, i am francine lacqua in london. oil extending its decline after tumbling into a bear market for the first time in 10 months yesterday. it is about u.s. supply, libyan output and u.s. supply including the frack log. we get crude data out of the u.s. so we will see how this plays into all of this.

lynchf america merrill saying that technical show that wti risks trending into the 30's. g #btv. we saw the impact of that drop on oil in equities yesterday in the u.s. session, in asia overnight, and also in europe. stocksxx 600 oil and gas closing at the lowest since november 2016 yesterday. financials are the worst performers today. down more than 1%. energy stocks are off 5/10 of 1% and it is pretty much read across the board. the overall benchmark down 7/10 of 1% for a second day. what is also down is sterling, below 1.26. handleg below that 1.26 for the first time since april 18 when theresa may called the

snap election. sterling dropping to a two-month low after dovish comments by mark connie. the 10-year gilts yield continues to fall. why are we seeing further declines in sterling? some are arguing there is not much reason to be bullish and we have political uncertainty, theresa may going ahead with the queen's speech on the political front. i want to talk about treasuries, we have heard from a number of's debt of fed speakers -- of fed speakers, a little bit of hawkishness means the dollar has been bid for the past couple of days and we are seeing a weaker sterling against the dollar. the front end has been underperforming so with this curve you are seeing it at the flattest since december 2007. the backup in yields on the front end, even with lower inflation expectations and we have yet to hear from some of

the adults. we will -- doves. francine: crude oil has led into the bear market with prices down 20% from their february peak. deputy crowns prince is to replace his cousin as heir to the throne. the shakeup consolidates the 31-year-old leader's power into the world's biggest oil exporter. let's get the latest with our -- amrita sen. there is quite a lot going on with oil. what exactly is going on. there is a lot of supply out there despite opec cutting production. amrita: thank you for having me. i think the critical thing is the nigerian and livery and -- libyan production recovery has put the opec cut on a back foot because all of us expected them

to come back to some extent, we definitely did not expect them to come back and sustain production at these kinds of levels. does not mean the political situation has changed very much. production could go down again but right now they are producing a lot more than expected, and the rest of opec has not done anything to compensate. that has been at the crux of the recent decline in prices. we are still expecting big stock growth in the summer even with these kinds of production levels from nigeria and libya but i do not think sentiment is paying any attention to forward-looking balances right now. it is all about, this is kind of building stock bars in crude and the u.s. francine: on the u.s., we understand american drillers have added rigs do feels for 22 weeks, the longest run in 32 years. time -- do youf

expect the length of time to increase each year? amrita: i think rigged counts will start tapering -- rig counts will start tapering. i know there is a lot of obsession but we do not really think rig counts are guide to production, and that they are drilling a lot less. even if counts were to start falling that does not mean production will not grow so i understand the obsession with it , but i do not believe that as a guide to production. some of the numbers coming out of the u.s. for march and april are showing that production, while it has been growing, has missed expectations partly because costs are going up. why would you complete work if oil is at $42? wherek there's an element the market could be positively surprised in the sense that u.s. production might underperform

relative to expectations, not actual numbers. some people have very lofty expectations. francine: we have a chart that is basically saying technicals are suggesting wti could trade to $30. what is your take? amrita: absolutely agree with that. us is like a falling knife, would not catch it. some people say this is the worst have seen in 20 and 30 years and fundamentals do not matter. francine: there is technical support at 40 and something in .he next one is that 37.20 how does that translate into your world of investment? away from oil, is it an emerging markets story? geraldine: emerging markets are very sensitive, at least a chunk of them and we had seen a fairly strong rally especially in some of the commodity exporters currencies which also happened to be high-yielding. if this were to continue there would be a little bit of doubt

on a continuation of this rally, and if the fed at the same time is also hiking interest rates than the interest rate differential narrows, people will ask more and more questions about the solidity of the emerging-market rally. francine: is there anything you would get away from? do you focus on the ones that underwent structural reform or assume they are an asset class? geraldine: diversification is always a good thing. oil exporters may also be one way to do with that. francine: is there anything that opec and russia can do to reverse sentiment? it is part of the worst sentiment that you have seen in a long time. amrita: it is not a difficult thing to turn around. to market needs deeper cuts compensate for the libyan and nigerian production and that is all he need to do. it is hard when they want everyone in the group to turn up and say, yes, we will do deeper down,hen prices have gone

that the core gcc members or opec members to undertake a deeper cut the market will turn quickly, especially since short positions are quite high. francine: is there appetite for them to do that? there is always an element, if they cudmore and are cheap -- cut more and are cheap, there is that issue. opec has been considering deeper cuts for some time even at the opec meeting so i definitely would not rule it out. with the new succession with comment about solman energy -- mohammad bin salman heir to the throne, if anything he will need higher prices and not lower prices. francine: amrita sen, thank you so much. thank you for staying with us for the hour, gerald instance trump. -- geraldine such term.

the south african aren't -- african finance ministers says they need to protect their central bank. this is bloomberg. ♪

francine: you are watching bloomberg surveillance, i am francine lacqua in london. here is sebastian sally. sebastian: the uber ceo has resigned, casting a series of controversies. tosaid he was ceding investors wishes. dramaave been dogged with from allegations of sexual harassment. -- as the preferred bidders for its memory chip. close theiming to transaction by march. the sale will bring much needed company. the japanese alibaba's chairman has said china's consumption will be the ella -- energy of development in

the coming years but is not trying to compete with amazon. >> amazon is a great company. they did a fantastic job in america and the world but they are an e-commerce company. we are not an e-commerce company. we help others to become e-commerce. we believe every company can be amazon. sebastian: that is the bloomberg business flash. tom: south africa's finance minister says they need to protect the independence of their financial bank. malusi gigaba also said he needed to study regulations to focus less on inflation and more on financial needs. mr. gigaba: the report was released while i was traveling abroad. i am still studying the report to understand the full extent of the remedial action being purported, the context in which

it arises, and therefore what the intended purpose of the constitutional amendment. they seems to be a conundrum. the context in which it arises is not quite clear to me. the pitfalls of the amendment is also not quite clear given the issues that were being investigated. thirdly, the procedure of affecting this remedial action leaves some gaps because the reserve bank is the national treasure and the proposal is being made to put further committees of justice and not to the minister of finance, which means we need to resolve those issues now. having said that, i need to understand all of this and make a determination on what the best way to move forward. the constitutional court in south africa, the remedial

action is binding unless reviewed by a court of law, which means that if we must review this we need to go to court and seek a review. nejra: regardless of the context , the central bank has called this unlawful. what it betanding unlawful to change the constitution? mr. gigaba: to change the lawful -- constitution with not be unlawful but accommodation is being made would be unlawful given that these are two independent institutions. south africa prides itself and its strong institutions, many of which are independent including the public protector, of the african reserve bank. we take confidence in the fact that our courts are known to be independent and to take rational

decisions, and therefore they will provide us with a proper way to receive the request for a review by the south african reserve bank. we will then have the court here this issue and making the necessary determination. thea: will you support reserve bank and opposing the public protectors suggestion? mr. gigaba: that must follow me completing the report. i need to understand it in its full extent and once i have done that, i will make a determination whether i am joining the south african reserve bank. what i want to emphasize is with respect to public protectors and independence and the right to recommendation, but i support fully the independence of the south african reserve bank and we must not take any measures that would undermine that independence.

whatever decision we arrive at must not undermine the independence of the south african reserve bank. tom: that was -- francine: that was nejra cehic with the south african finance minister malusi gigaba. tom keene and i will be talking to andrew sentance about brexit. i know tom is extremely excited about the queen's speech. today,the big story global stocks retreating, the yen is retreating. supply -- we are looking at shanghai after it got included in the msci index. this is bloomberg. ♪

francine: the queen's speech. domestic politics are expected

to take a backseat. from one crown to another. saudi arabia's mohammed bin salman al saud replaces his cousin as heir to the throne. and kalanick out. uber's ceo resigned during the controversy. this is "bloomberg surveillance ." i'm francine lacqua in london and tom keene is in new york. it will be a is the day. markets and at the there is clear risk reversal, and of course, we look at brexit and the queen's speech. tom: we have the saudi news behind the oil news. the queen's speech, it's extraordinarily original, this day for the united kingdom. francine: it is original because it is a dressed down queen's speech. we know she will arrive in parliament by car, not in a horse-drawn carriage.

it is not only about the news. it is very monarchical. now let's get straight to the bloomberg first word news with taylor riggs. reporter: there has been a palace shakeup in saudi arabia. prince mohammed bin salman al saud has replaced his cousin as heir to the throne. he already controlled saudi arabia's defense, oil, and economic policies. it is a step back for democratics. republican karen handel has won the special election for a house seat in georgia. she captured on the 53% of the and raised for less money in her opponent in the most expensive house race and u.s. history. belgian of 30's have no idea of the i.d. of the terrorist attack or.

attacked 34rrorists people at the brussels airport in a subway station. as you mentioned, in the u.k., theresa may makes their first attempt to engage with the new political landscape of the country and is coming out with a legislative agenda that is next acted to be heavy on brexit and light on anything controversial. queen elizabeth ii will read of the plans to lawmakers later this morning. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm taylor riggs. this is bloomberg. tom: thank you. equities, bonds, currencies, commodities. we are focused on sterling and flattening,h curve we are carefully watching to see if we break down to new flatness in the yield curve in the u.s. 43.46, without question weaker and extremely fragile. the chart is elegant and south. 1.26ling was below a

handle. the bloomberg commodity index, it is about 68% oil. the answer is commodities general. francine: this is what i'm looking at. we have a very similar data check. the yuan is a component of everything else. we see global stocks retreating, crude oil retreating. it is a little bit of a risk off mood. the other thing i wanted to show you was the pound because of the 1.2618.speech, tom: we will use the bloomberg today to give you detailed on the charts. let's show this chart, $100 a barrel of the are and i have these ugly moving averages highlighted because they show the trend. tour commodities team say we are in a bear market in oil.

is extraordinary and it is really well contained. we have a number of guests that have begun to talk about a handle of $39 on oil. the trend is your friend and the trend on oil is south. francine: we have the same chart, actually. tom: good. francine: it is basically looking at these technical levels on wti. we took a report from bank of america merrill lynch, saying the trend is going towards $30. we mentioned a couple technical supports. we have target practice of 49.65, and2 37.2 sen, and shemrita said sentiment is negative when it comes to oil. theresa may will publish a program for her minority government, and that is expected to be heavy on brexit an dlight

on domestic on diversity. the plans will be met out in parliament by the queen, but unusually, this speech will cover a two year program and will be stripped of some of its pedigree. anna edwards is close to westminster. first of all, what exactly will we hear from brexit? anna: in terms of brexit, good morning, the great repeal bill. remember that? that is the way we turn eu laws into u.k. laws. we will load out here a little bit about that, whether it is still called bad, of course. we will be looking for any clues just as to how hard or soft the brexit will be. this speech and, despite its name, is written by the government and delivered by the queen. how much detail will they give us on brexit? away ars could go wher

little disappointed. philip hammond yesterday to something that would look softer with a longer transition. tom: help me here as the ugly american. the guy with the rod goes over and they slammed the door shut at the house of commons and i guess they open the door again and come out. when prime minister may walks from the house of commons over to the house of lords, who is behind her? does anybody have the back of the prime minister this morning? anna: literally, the house of commons is behind her. in a metaphorical sense, it is a good question. she is managing to command the loyalty of her party at the moment. the many members of the more side doexiteering not like what she is doing perhaps, or do not think she has the leadership in place now, but they do not want to trigger a leadership election, if that results in other general election. at the moment, everybody is sitting tied. the conservative party's backing

her. we do understand the labour party will put forward an alternative queen's speech. after today, we have a few days of debate and next week they all vote in the house of commons. francine: thank you, anna edwards. now, let's get to our guests. first, andrew sentance and former bank of england policy committee members here. we're also joined by morris kraemer. andrew, what are you expecting to learn from brexit today? >> i'm not sure we will learn much at all. this great repeal bill is a misnomer. it will not repeal anything of any substance. all these substances from europe will be translated into u.k. lot . there has been some discussion about other bills, like immigration, trade, customs union, etc. the position on those depends on

the negotiations. it is difficult for the government to commit themselves. i think they will be a lot of interest in what is not in the queen's's speech. commitments made in the election that the government has backed away from, and also, what is the influence of the d.u.p.? they are favoring, in a sense, m ore open brexit. soft border with the republic of ireland. they will be interesting to see if that has any influence on the tone and content of this queen's speech? francine: what is your key take away from what we have learned over the last two weeks. a lot of it will be played at within the politics of the d.u.p. but does the tone matter in what kind of brexit we get?? >> the tone always matters and it will matter in the degree of confidence that is exuded

through those statements coming from the queen's speech today. it is remarkable in its own right that since the election there has not been an agreement with the d.u.p. yet. this hampers the specificity that the queen speech can contain about which kind of brexit. as was brightly said, the d.u.p. and the other northern irish outfits will be very interested in the frictionless trade with the republic of ireland. this probably means adhering to the customs union with the eu. if that were to happen, that of course, would create some friction with some of the more, the more fundamentalist brexiteers. they want the u.k. to be free to negotiate trade deals with countries within the customs union. that is actually not possible. so, this friction i think will only come to the floor once we get the specificities. and i have my doubts that we will learn them today, partly

because the negotiations with the d.u.p. have not concluded yet. tom: andrew, and i believe, and this is different within the senate and house within the united states, where they have a lot of budget power. the house of commons handles the budget and the house of lords does not. will they handle the budget this time around? does austerity still rain within the united kingdom? -- still reign within the night of kingdom? >> we will not have a budget until the autumn. there might be some hints about some of the things the government put in its manifesto that it's pulling away from, for example changes to social care, it will be interesting to see what they say on issues like industrial strategy and housing. my view is austerity has service purpose. we got our deficit down to 2.5% of gdp, which is pretty good coming from 10% of gdp.

i think this government should focus more on the economic fundamentals, trying to restructure public spending, and also restructure the tax system. tom: very good, andrew sentance with us. and moritz kraemer with us from standard & poor's as well. coming up, the circumstances in the queen's speech. and coming up, alan ruskin talking about pop and circumstance on a weaker poun d-sterling. this is bloomberg. ♪ reporter: this is "bloomberg

surveillance" and i'm taylor riggs. has's ceo travis kalanick resigned, the cofounder of the world's largest technology startup.

he says he is giving into investor wishes that he step aside. uber has been rocked by a series of scandals, including allegations of sexual harassment. we have more on this, shortly. toshiba has picked the preferred bidder in the battle for its memory chip unit. it is led by japanese investors. they have indicated they are willing to pay $19 billion. toshiba is trying to raise money to make up for losses within the nuclear business. and u.s. treasury secretary steve mnuchin said the government would issue ultralong bonds only if there is a market for them on a regular basis. he spoke to bloomberg television. >> it is something we are very seriously considering. i do think it is a tool the government should strongly consider. and we are reaching out through the borrowing committee and investors to see what the demand is. what we do not want to do is create a program that is a completely one off program. we want to see if it would be important for our bartering capabilities. reporter: he has formed a

working group to study 50 and 100 year debt. that is your bloomberg business flash. francine: thank you, taylor. saudi arabia's deputy crown prince mohammed bin salman al saud as are placed his cousin as the crown prince. to help us make sense of this move, let's bring in tracy alloway in dubai, the managing editor for cross asset markets. tracy, how much of a surprise was this? if you look at the deputy crown prince until yesterday, he was in charge of vision 2030. he was someone going to bring saudi arabia into a new era. >> he was highly influential amongst the ruling leaders, and in the government. i think the surprising thing here has got to be the timing. everyone knew this 31-year-old deputy crown prince had envision. we saw him launches envision in

various ways, spearheading the investing0, in technology stocks, according the younger segment of the saudi population, building up the base. a lot of people appreciated those efforts. the reverse side of that is a lot of people thought or think he is a little bit too aggressive and power-hungry, that he was moving things too fast. now they are waking up this morning and seeing all those rumors about him building up power are turning out, apparently, to be true. tom: that is a wonderful analysis of intentions between an older conservative family and a younger al saud family. both have to deal with $43 oil. what is the tip point for the family on oil? $50, or do is a daresay they need $60 a barrel? >> the breakeven is interesting.

i have seen research suggesting it is higher than last year. the interesting thing is how this will play into king salman 's plans to wean the country off oil. on the one hand, higher prices can helped that project along by garnering support and by giving the government more funds to enact additional stimulus measures. today we saw the government saying it was going to roll back some of the cuts on government official's salaries and bonuses. but on the other hand, lower oil prices can spur some of these efforts to diversify the economy and that has been the pitch a lot of saudi rulers have been giving the population. francine: tracy alloway, thank you. at saudihen you look arabia, this must be one of your main concerns, the ratings for this country, because it has so

much going on. >> the announcement itself is not such a major surprise. the timing is always unknown. this is happening behind closed doors. the formally deputy crown prince, he has been accumulating increasing influence in power for some time. so, we were going down that road. i think that was largely anticipated. it is also a change in the generation. because we now we have a succession -- because now we have a succession of kings. and the period of governing was actually rather short. so, he might have an avenue of someone implementing a long term reform program, which is what saudi arabia needs. francine: our editor in chief and his team spent five to six hours speaking to the former deputy crown prince. if he gets 40% to 50% of what he wants to achieve done by 2030, would that be a success? >> the program is ambitious.

it is all about diversification of the economy, but there have been many other programs about diversification of the economy, not only in saudi arabia. what it has come to is very little. it is very difficult to do that, especially when you have a situation where you have a very dynamic demographic profile. this population is growing very rapidly and in need to create the jobs in the public sector is no longer in a position to observe these people coming into the labor market in the private sector is not ready yet. you have to modernize the economy, while maintaining social stability and preventing social discontent to bubble up. it is a huge challenge. i think the power that he gets now as crown prince will help them to implement this reform. us, anditz kraemer with he continues within this hour. if you are in the u.s., this might be the interview of the day. we do this on bloomberg radio in the 9:00 hour.

with oil dissenting, nobody knows the flow of oil in the nation like mr. schork. this is bloomberg. ♪ francine: this is "bloomberg

surveillance" with francine and tom from london and new york. travis kalanick has resigned after a series of controversies

that have shined a spotlight on the world's biggest technology startup. there were series of allegations, including sexual harassment. joining us now to discuss is bloomberg's technology reporter. adam, this comes at a time when there was pressure basically from people from not only from within the company, from outside. he was pushed out. >> this company has had a string of controversies, one after the other. they seem to be getting worse, the most recent involving allegations around a rape of a passenger in india. and so, members of the board of directors, according to "the new york times" sent a letter to travis kalanick, demanding him to resign. he, after earlier saying he was going to take a leave of absence, has now shifted and said he would step aside from the company. tom: did they make any money? the reports i have seen, and

they are all sketchy, i guess is the right word. does this thing make any money? >> it is far from profitable, no. they lost, let me look at my notes. they lost about $710 million in one quarter, but the revenue is increasing dramatically. it is about $3.4 billion in the quarter. it is a colossal business. the challenges have been they have a lot of costs -- it is how they turn it into something profitable. that is something the next ceo will have to tackle. francine: what does this mean for uber going forward? will this hurt them? >> it is hard to say. they continue to grow, even as the controversies swirl. if you ask people on the street whether they have stop using uber because of the controversies, largely the answer is no. but you do feel it creep into areas. with companies like lyft,

particularly in the bay area, companies have been able to take advantage of it in some ways. tom: adam, get a haircut. you might be the next ceo. coming up, this is an important conversation. the chairman of standard chartered bank. it has been a most interesting story. a conversation at the 7:00 hour. from london and new york, this day of the queen's speech, th is is bloomberg. ♪ .

tom: a most unique queen's speech this year. in the early morning, the searching of these sellers back

to 1605. remarkable how they still do the ceremony back to the plot of 1605. i would assume it is already been done. francine: i am sure it is. she is speaking in about an hour. the queen will arrive in parliament in a car instead of a four stroke average and no royal procession -- a report drawn -drawnge -- a horse carriage and no royal procession. there are planning issues caused by the election and were personal pleasure what -- rehea rsals clashing. tom: our first word news, here's taylor riggs. coper: a pump is trying to with the donald trump low popularity rating. -- republicans try to cope with the donald trump's low

popularity rating. karen holmdel beat john all soft -- jon ossoff. son-in-law is returning to israel. jared kushner will speak to benjamin netanyahu. both leaders say they're eager to revive talks. ground onjust broke the first weston will bank in years. settlement inbank years. european affairs ministers are the latest to resign. of the frenchrs party that is caught up in investigation. two other cabinet members quit. in south africa, the finance ministers said the independence of the central bank may be protected. at reserve bank

focus less on inflation -- the said the -- ombudsman reserve bank should focus less on inflation. >> we must not take any measures that will undermine independence. it must not undermine independence. relevant the rolling national -- taylor: the ruling national african group said it is unlawful. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor rigss. this is bloomberg. francine:'theresa mays -- theresa may's legislative agenda is support -- is supposed to be heavy on brexit talks. yesterday, more than 50 lawmakers from the opposition parties signed a letter calling for britain to stay in the eu as

a single market. biggest negotiators said there will be no problems. joining us is andrew sentence and moritz kraemer. moritz, when you look at the u.k., what does all of this main for brexit negotiations? do you just look or try to preempt and say we get a softer brexit? moritz kraemer: i think time is of the essence, it has been one year since the referendum and 12 a little bit more than one year to negotiate all of the referendum and we have a little bit more than one year to negotiate all of the different parts to get anywhere near the finishing line. if we have another election, let's say, it would slow down the negotiation process arguably and make it harder to find an

agreement. is not a instability good for the process and that is safe to say. francine: what does it mean for the rating of the company -- country? if we see inflation rise, does it mean investments are under threat? >> they are at risk in any case. from.k. has most benefited forward investment and much of the investment came from the u.k., and my understanding, the u.k. was part of the largest common market and that would no longer be the case. came from the eu partners. the external financing whatever the case will be will be at risk going forward and it might require the adjustment of the pound going forward. tom: andrew sentence, is a weaker sterling a was reduction for the delete of the united kingdom? brexit back and forth. i am bored by it.

a is a weaker sterling problem for the wealthier of united kingdom? andrew sentence: everybody is made poor in the sense that we had a positive wage growth and now we have negative real wage growth. the main reason for that is a decline in the value of the pound. i am not a believer in the view of a weak pound helps of the economy. in a mature, just realized economy like the u.k., is more helpful. -- in a mature economy like the u.k., a stronger pound is more helpful. point,e with a critical the house of commons will troop over later for the queen's speech, are we at a critical point here or is it away a year

out with sterling at 119 or lower? andrew sentence: i would be surprised to see pound weaken to 119 to the dollar. sterling is a pretty friendless current see. we need the bank of england -- the governor of the bank of the bank of england is now willing to support it. they are in a weak position and the brexit negotiations are not supporting it. i think we should expect w -- to to by the either weaken or stay at the current level. we will push this out on social media later. cpi inflation versus real wage growth. the concern is wage growth is going down and inflation is going up.

how squeezed will the consumer be? >> quite a when you consider we are at a high level of employment. driven byredominantly private consumption and you can see on the chart because the difference is wages are growing much faster and it is going in reverse. they u.k. economy is expanding last year is about to be pulled what investment probably in a pattern and it creates downside risk for the u.k. economy. andrew bank help me with a new britain, nostalgia of going to the empire of whenever they ended and i will let you decide, can there be a new britain, a new trade relationship for the united kingdom? andrew sentence: i think we need to be cautious of thinking we newforge very quick trade, trade agreements with the rest

of the world. around 50% of our trade is with the rest of europe, the nearest neighbor. a lot of supply chains and services sector is integrated. we have to maintain, the first fundamental, maintain a close working relationship with the market. future wepoint of the strike new trade agreements with other countries, but we are not a strong position to do it because we are a relatively small country that is dominated by the united states, china and the european union. we slip back outside of the eu into the second division. it does not mean we cannot achieve anything but we must be realistic. francine: we have not talked about germany. how much will they suffer? moritz kraemer: everybody will lose out in the brexit followthrough. the u.k. clearly has much more

to lose in terms of broad context, the u.k. exports around 13%, 14% to europe. the germans export 3% of his own gdp. it is not trivial. most of what the germans exports are good, cars. it would be and the wto and there is a hard brexit which is what most of the you came export services, legal and so on -- what most of the eu export is services, legal and so on. francine: moritz kraemer and andrew sentence stay with us. coming up later on bloomberg television and radio, we will have a great conversation with the portugal finance minister on the radio at 8:30 a.m. we speak to a chairman and we will talk to him about the push

into the emerging markets. this is bloomberg. ♪

is "bloomberg surveillance." we need to go to china. the composite closed higher. the move was initially greeted with a lukewarm reception as they were largely price in and they declined to upgrade argentina. at's get to andrew sentence, senior economic adviser and also with us is moritz kraemer, from s&p.

if you look at the msci and the including of china and it is the for,h time they applied does it make that much of a difference? :" it is atence forward-looking review. china will undertake the u.s. as the world's biggest economy in the next 10 to 15 years in the stock market will develop on the back of that. it is becoming a more oriented the economy and the government has significant improvements. it is important to recognize that and a whole variety of issues, i am not totally surprised by this movement, i think it will be fairly small. francine: is it a game changer? no, it is one: steppingstone on a long path. china needs to do more things before it becomes a real global player in economy and opening

the capital flows in and out of the country and success last year to be included in the imf. righteps are going in the way but not really a game changer. china does not need funding from abroad, they have a savings surplus. it would be more critical for countries like argentina which depend on foreign investment. turbulencecould be in terms of economic growth. what does standard and poor suggest will be the economic growth for china? 6% or 7% or could it be weaker? >> it could be weaker. in the near term, what the government says it will be. partly because there is still sort of enough ability to generate the growth rates through, if necessary, stimulus through a credit market. we have an important congress

coming up later this year and we do expect the government will reveal is hand of how they want to generate the solve the landing of the current growth rate which and the longer term is not sustained. situation werea the workforce is beginning to shrink. the old model of breaking surplus from the countryside to the city, that has run its course so something else needs to replace it. tom: a correction. -- surveillance correction mliv love. wants to tradena with. -- a surveillance correction and a my flub. new relationship with britain and china. what does britain needed to do? >> first of all, we need to complete sort of an exit from the eu if that is the direction

we are going in. we cannot independently negotiate with countries like china until we are clear about our status outside of the eu and have registered that with the world trade organization. i think it is void to be very hard for the u.k. to get substantial comprehensive trading with china. i think china is more interested in trade relationship both inside of its regions with other asian economies and the other big economic superpowers, which you would call the united states and also the european union as a collective bloc. it is not quite correct that the back of the queue. we are going to have something to offer to the chinese and i think they will probably feel that could do a lot of their investment and business with the eu without having a comprehensive trading agreement. i think the notion, earlier i

said, the trade agreements are going to be easy to negotiate around the world is a bit misleading. francine: quickly and argentina, if they do not get included in the next couple of years, how bad will the disappointment the? will -- be? will we have a sharp decline? >> i don't think so. what is important is the government can continue to sell the debt internationally as they have been doing extremely successfully. the 100 year bond of argentina, how many times have they defaulted over the past 100 years? the future will look different from the past. francine: both stay with us. andrew sentance and moritz kraemer. you can ask them questions. go to tv if you are a bloomberg customer, and we sincerely hope you are.

you can pull up some of our charts that tom will push and ask the question by clicking. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. the ceo of uber is stepping down. travis kalanick was of the chairman of the world's largest technology startup. there are deep problems within the male-dominated culture. is expecting profits rise and the current fiscal year there reflects the potential payoff from investment it has made to handle e-commerce deliveries. fedex expect employees to gain. that is your bloomberg business flash. tom: thank you so much. the pageantry of the queen's speech will be a different queen's speech. we have been looking at the images including the archbishop of canterbury, mr. wealthy. there is not a u.s. ambassador to the court of st. james.

this is a sensitive issue in washington. america will be represented by lewis lukins, the interim. quite a topic for those worldwide and mr. trump has been tardy in a having his ambassadors appointed. what is interesting to me about this is the idea of it is so different from the united states. there is a delicious tension in the past history between the house of commons and house of lords, isn't it? francine: it is so different from any other country and friends because -- france because our republic. you see the queen will not wear her imperial state crown and we know unless we go to fresh elections and have a new government will be the queen's speech for two years. they have done this to negotiate freely brexit and concentrate on other things. let's get to andrew sentance and moritz kraemer.

, away from the house of lords, you can see the attention tom was talking about what the difference between the u.k. and the rest of europe. are we underestimating little risk? i'm thinking of france where you have three are for senators fourning -- three or senators resigning under macron? : i am quitence optimistic about europe and the couldne because france embark on some kind of reform program under macron a. there will be hiccups but he is under a strong position. is the ultimate politician, he is from a new party. it is like the french have said we have had enough with the old party and want a new regime and it is like brexit and election of trump but in the opposite

direction that will probably support the french economy. it is the second-most important in the eurozone behind germany and that should be positive. :" i think it has a real opportunity and it has changed and what is important is the relationship between france and germany and will likely be strengthened. it has been dormant, the countries have been the engine in the past. i see new life into this new relationship. we probably, for now, the worst hope of risk of political instability. how stable is a that? -- is that? if we have a recession and we always will have one. it will happen again. there is a feel-good effect because the economy is doing good and people are saying maybe i have my grievances but i am doing better.

if it goes in to, you might have a resurgence of the parties. goes in reverse, you might have a resurgence of the parties. tom: it seems like weeks ago we were talking about double-digit unemployment and now a stronger europe? which is it? arejobs are being formed -- jobs being formed? they are. the level of unemployment is very, very high. -- >> they are. countries like france and italy enhancingngage in going forward to create jobs which is probably required of the long-term to require social peace and stability. tom: thank you so much. moritz kraemer with standard and wer and mr. andrew sentance,

greatly appreciate your attendance and perspective today. coming up, a most intriguing our of the pomp and circumstance. francine lacqua will be dressed up, no, we're not doing that. we will have the house of commons and house of lords greeted for the queen's speech. it is the most different queen's speech and will be subdued without a horse and carriage and with a car and the queen and less regalia. alan ruskin joining us. stay with us. from london and new york, this is bloomberg. ♪

♪ tom: the queen leaving buckingham palace and she will say my lords, please be seated

and will open parliament. have't the prime minister an agreement with conservatives up i went to form a minority government -- does the prime minister have an agreement with conservatives of ireland to form a minority government? pound a week in spring, the king make changes and they -- the pound is weaker. -- and saudi arabia, the king makes changes. good morning. this is "bloomberg surveillance" live from new york. in london, francine lacqua. news of the prints. francine: this is u.k. media. the prince. the husband of queen elizabeth and he is had medical issues. he is 96 and appeared in good

health when he was in ascot only yesterday. tom: a wonderful set of guests to help us with all going on especially in the united kingdom. your morning briefing with the taylor riggs. taylor: a palace shake-up and saudi arabia. the son of the king, mohammed bin salman, has replaces cousin at the air of the throne. it consolidates the prints's power -- he replaces his cosmic -- he replaces cause -- he heirced his cousin as the of the throne. -- it consolidates of the prince 's power. karen handel beat jon ossoff. she brees less money than the most expensive house race. brussels has no idea of the identity of a person who set off a bomb.

the incident is considered a terrorist attack. the country has been at its second highest threat level since last year when an attack killed 34 people at the airport. makes u.k., theresa may her first attempt to engage with a new political landscape. she is coming out with a legislative agenda that is expected heavy on brexit and light on anything controversial. queen elizabeth will make a speech. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor rigss. this is bloomberg. tom: let's get to what. a lot going on. -- let's get to it. the curve is flattening through 80 basis points. you are beginning to see some analysis of the migration towards the road, a flat yield.

nowhere near that yet. up.ve brent crude 45.85 on the global oil price. i will let you talk about sterling this morning. francine: sterling is extending his decline. oil is tumbling because of the bear market. i am looking at wti. now, let's talk more on the u.k. and the u.k. prime minister, theresa may, will produce a logistical agenda for her party. the plans will be read out implement by the queen but unusually, this year's queen's speech will cover a two-year program as stripped of some of the pageantry. anna edwards is close to westminster. what are we expecting or what are people hoping to hear about brexit?

anna: it comes down to how much granularity we got in the speech. it is written by the governor and delivered by the queen as set out an agenda for two years because there is such a loving legislation they need to cover with leaving the european union. it could be on the legal matters, the great repeal bill will take eu law and put it in u.k. law and we will hear more. if we got and indications of how hard or soft the brexit will be at philip hammond things it seems softer for the logo transition. that is a debate here. -- for the longer transition. they say they may have to pare back manifesto ideals. tom: the northern ireland coalition with prime minister may, i guess we get an agreement

this afternoon, how close are they in agreement or is is acrimonious? might get a few clues and the speech if there is been any agreement of what they could find common ground. you would not expect they will put things in the queen's speech that their partners what not back them on. they are sent to maintain the government to stay in power. we have not seen any details and various members of the media saying that the talks are not proceeding as expected and the mp -- and some saying we should get a deal tomorrow. we heard from the deputy minister and said there's still every possibility of a deal. areaid the conversation about much more than money for north and i will it and not a show me the money conversation. it has not been a show me the money conversation.

tom: a different queen's speech, much more subdued, less regalia and riding in an automobile rather than the tradition of the horse and carriage. alan ruskin from deutsche bank usually attends in a horse and in london and he joins us with perspective. let's go to a chart. if we can do this. i wanted to try to get it, there it is. see, here iser to prime minister cameron and sterling and brexit at 146 and down we go there have been two different calls and you are at 120-ish first is gloom of 110 earlier. why have you adjusted to a stronger, nevertheless weaker sterling? : most of the adjustment about the dollar. we knew it would fall below

parity and now we revised on it euro-dollar and a pretty much follows it. not as much as a sterling fall as a dollar fall. tom: it is important. we focus on 1:1. it could be different. the current account dynamic of the queen's england, goods and services and money coming in. if you get 120 sterling, everybody buys real estate in london? alan ruskin: they do. it is remarkable how the current position is failed to respond to a weaker pound. you have got these two different withs, long-term value potentially fdi and as you mentioned, things like real estate inflows. time, the same caseloads need to improve, if you do not, it suggests that sterling is not a undervalued.

francine: what needs to happen? alan ruskin: well, [laughter] you would say it can happen either because of good things that the exports really respond, manufacturing sector, stocks respond to a weak pound and you see the improvements of competitiveness show up. or alternatively, you can have bad things happen as the economy slows down significantly. imports are more expensive anyway and you say mostly from the import side. we are not seeing what of a either side, in fact. francine: what does it mean when we are 20 minutes away from the queen's speech and we're listening to traders and they do not know what to look at to know what kind of brexit they get. what to do look at to figure out for a pound? do you listen to the queen's speech? now, thee uncertain future of this country than six

years ago? alan ruskin: yes, never seen this level of political uncertainty at least for my career. these are extraordinary times to be talking about. i think the queen's speech a market toy is not move her. we know the legislative agenda and we move forward. this time, we look at all sorts of clues, hard brexit or soft brexit area -- brexit. i am not sure the government knows exactly where this is all going to end up as such. it feels like the government has hammond on one side and the pm leaning in a different direction. question which a would make me rude and the house of lords right now. is it janet yellen is central banker to the u.k., dynamics within the united kingdom really dependent on 1, 2, 3, 4 rate

hikes in the u.s.? alan ruskin: i would not go that far. significant wields power in his remarkable how closely into the u.k. economy is it ishe u.s. economy, much higher then you would expect for the in of instance, you have a disconnect. -- then you would expect. in this instance, you have a disconnect. frenzy bank thank you so much. -- francine: thank you so much, alan ruskin, stays with us. at queen's speech expected 6:30 a.m. and 11:30 a.m. in london. this is bloomberg. ♪

taylor: this is bloomberg surveillance. let's get the business flash. treasury secretary steve mnuchin costs the strong dollar a sign a consumer confidence. he spoke to bloomberg tv. focus where the dollar is in the short-term, certain negative aspects of a strong dollar as it relates to our exports. i'm in the other hand, a strong dollar is a vote of confidence .n the u.s. economy similar to what is happening with the stock market. taylor: mnuchin says the administration has not decided replace or it will real point federal reserve chair janet yellen. -- ceo has resigned. the chairman.

he said he is given dental investors' wishes he step aside. withhas been rocked allegations and we'll have more on this shortly. this is your business flash. that awould suggest guest told us that some of this have to do with financials and not just the operator about the officers at uber but the ability to make money where the major private investors including fidelity have said enough. francine: you wonder if it was a public company, if it would've happened before. it is the element of money but if you are a public is somebody stepped in sooner and say this is not the image we want to portray. i would suppose that is the case. tom: there you have it. the news in georgia with a kevin cirilli, our correspondent. it is a red state. east of atlanta, the democrats

are not supposed to win and they didn't, did they? kevin: they didn't print karen handel, the republican, in the seat of tom price and the home of newt gingrich winning against jon ossoff. democrats wanted this to be a bellwether and they spent of lot of money and they lost. tom: what does it mean to carry forward? what the democrats did and taken over to other districts and other states in 2018? kevin: that is what republicans want to say, it is a referendum of president trump and the republicans won. the democrats still need to rebuild and make it a referendum. this could then the momentum that they needed heading into the midterm and it isn't and they are raising a ton of money much tryingly very to recalibrate this morning as they gear up for the midterms.

they will talk a lot about health care. francine: talk about the middle east. donald trump son-in-law, jared kushner, is flying over to push this peace process. kevin: jared kushner heading to israel to have these peace talks to continue. he has been the point person. he is somebody who has deep ties to the region. and also someone receiving foricism and the beltway spreading himself to thin. his supporters say he is really emerging as the goal to strategist of sorts within the white house. -- go to strategist of sorts within the white house. tom: thank you. with alan ruskin and we have been talking about foreign-exchange. bring up the chart, if you would. this is the dollar. the dollar dynamics involved. is it time to offer 2014 leak in

the u.s. dollar? 2014 leak in the u.s. dollar? alan ruskin: i would hope so. we are kind of going to know where, unfortunately. volatility is very subdued. your mostly on the dollar front looking at sequencing of the fed. will they move with the balance sheet or rates next? iny move with rates next september, the dollar will go up. if it looks like a balance sheets, good luck. rate dynamics versus flow dynamics. francine: i like that. i have a good chart. it basically looks at the u.s. 10 year yield versus the u.k. counterpart. between they spread u.s. and u.k. for our regular listeners, we will push it out on social media.

what does it tell you about the appetite for logan duration? and the story of two different -- the appetite for long-term duration? alan ruskin: you see mostly throughout the world -- of the developed world, the bond market, not the j gp because they are anchored by the boj, other developed bond markets are following the u.s. treasury and yields are falling. there are global factors driving this and not the least the falling oil price. on the uk's side, a unique exchange ratee has led to some pickup in inflation. some people feel one way or another the gold bell market will pick up -- gild markets will pick up. tom: that will be interesting. the newsmaking of 110 sterling a

number of months ago. we will continue with mr. alan ruskin and oliver chen will join us. an important conversation on amazon. in the 7:00 hour, stay with us. the queen's speech, this is bloomberg. ♪

tom: an important day for the united kingdom and a different day, the queen's speech. it is a subdued speech without up on the circumstance of the many years that the queen has given this speech. we will have it for you in a few moments. we digress back to america where we were real about important things like the amazon-whole flu stress action. with us is oliver chen where he covers specialty retail. -- amazon-whole foods. let me bring up the chart. this is charles cantor and his good time with other the other day. whole foods has been on a heck of a drive with a rizzo roll over. this gap is the difference where we could see somebody go after whole foods. could there be another offer? oliver chen: what is happening

is whole foods is an important asset to amazon and there could be. walmart could a look at it as a competitive move. to see.have amazon has transformed retail as far as grocery and so many folks here. 80% of folks shop here. tom: yesterday's announcement that i can buy 14 bowties and have them come out in a box and turnaround to amazon and take the 13 i don't like back, is it a game changer in terms of amazon and linking with women in america? oliver chen: amazon keeps offering new options of convenience. nordstrom has a similar service. amazon services is probably broader with a kind of brands and price points. amazon does a great job testing and reacting. it adds a lot of convenience area the returns are a big issue for all of retail.

tom: how do you respond to the vacancies? in america and worldwide, the vacancies of brick-and-mortar is extraordinary? oliver chen: it is a huge issue. mall traffic has declined anywhere to 25 percent and 11%. there are too many malls. we are going to recycle. anductivity is below 400 two transformed. tom: am i ok with my look today? : the double-breasted with the bow tie. tom: thank you. a very british look just for you. francine: thank you. you look great. very fashionable. some looking at the live pictures of the house of commons, the timing would allow the queen to attend the royal ascot. the picture, if you're listening

, aradio, they are usual pageant that we are so well accustomed to when it comes to the u.k. the queen will undertake a dress downstate for the first time in 40 years. ceremony plans suffered disruptions because of the elections and she will not wear him. and she will not wear her in. state crown -- and she will not crowner imperial state and will wear a heat. -- hat. this is bloomberg. ♪

francine: this is." -- this is "bloomberg

surveillance." we're looking at the house of commons, we are expecting the queen to come and speak on her gender. and it is theresa may making the as she publishes what you want to do with grexit. i don't how much detail we will get that we are expecting a lot on brexit. and may be something of a future of the british government. seeing theesting house of commons to the left and the house of lords to the right. ropeshe queen puts on her , there is real pageantry here in history. the remarkable tension between the common sense aborts and -- commone sense lords and between the

between at the king. knowo -- francine: you that she cannot go into the house of commons. .t is a rule but theresa may's office has announced a series of bills to show that her government is engaging with the concerned so it is nice to see the house is sitting. >> a beautiful synthesis of deutsche bank -- so much more for deutsche bank. and their clients. it is an island nation and i mentioned this with andrew sentance in the last hour -- a nostalgia to return to it british empire. can they do that? >> i think it is wishful thinking. in independent spirits maybe.

see vince charles and see prince we do charles and the queen. francine: let's listen in to the queen delivering her speech. this was written by the government. it is going to be a little bit different than other years. it is addressed down. brexit.address back-check here has to be the sequence of tumor tracks and harm to citizens of the united kingdom over the last number of days. completely different. this has been an exhausting six months. both at the house of commons .aiting all sorts of tradition here with the door open and then the door closed.

and there goes the door being closed now with prime minister abmay goes through. the announcement will be made here -- doors open. francine: this year, campaigners are planning a day of rage to protest conditions that they tower fire. the it isn't only terror attacks but also the horrific fire from last week. >> to attend her majesty immediate the in the house. >> get your skates on. [laughter] there is a tradition of one gentleman of the house of labor

i was wondering if you would make the jokes this year with the somberness but he made a joke which shows the spirit of the united kingdom. leadinge minister jeremy corbyn and the others. francine: she has promised to work with humility and result. /this is the first time that the queens's speech will cover two years instead of one and thus we have fresh elections. it is expected to include measures on domestic violence. this is while conservatives are trying to agree to terms to gain support. brexitn focus will be on . and this is why all will be

tuning into the queen's speech for 2017. tom: for everyone who has not been in the house of parliament, it is definitely worth a visit to london, just to see them. a number ofere times but i couldn't go into the house of lords. but i would suggest the house of likesentatives would look -- i don't think the senate would look quite like that. we have lost our signal therefore a little bit. we will try to get it back. while that happens -- there we are. we're going through the comments here. the two bridges across the river thames wrapped around the house of parliament. one painted green and the other painted red for the leather

chairs in parliament. something a learned today, this is the 63rd time that the queen has delivered a speech. she is only failed to deliver when she was pregnant. tom: and prince charles is prince philip has been in frail health at the age of 96 years old. boris johnson stands behind the prime minister. let's go to anna edwards. yes, you are watching what is going on there and listening in in the house of parliament, we're waiting for the queen to deliver the speech but let's remember, this is not a speech written by the queen.

she does deliver the speech with pomp and ceremony but this time, it will be a parish down experience with the clashes taking place. the queen is talked about a somber mood. for clues as to what brexit will look like. the depth of legislation that will make to go through the house of commons -- we have to prepare the way for exit. that is why they're opening up to two years of parliament with the speech. we are looking for clues but we might not get any. francine: let's listen to the queen. queen elizabeth: as the country leaves the european union. my ministers are committed to working with parliament.

to build the widest possible consensus outside the european union. forll will be introduced the community act and will provide certainty for individuals and businesses. this will be complemented by make sure the united kingdom makes a success of brexit. nuclear safeguards, agriculture, fisheries. my government will seek to maintain a special partnership. you can forge a new trading relationships across the globe. new trade and customs will help independent and

trade policy. support will be given to help british businesses exploit to markets around the world. my ministers will strengthen the economy, show support to the creation of jobs and generate tax revenues to enhance in the this heaving taxes low. through a new, modern, industrial strategy. my government will work to attract investment in infrastructure, to support economic growth. legislation will be introduced to ensure the united kingdom becomes a world leader in new industries including electric cars and satellites.

rail.phase of high-speed my government will continue to work to ensure that every child has the opportunity to attend a good school. and that all schools are fairly funded. my ministers will work to ensure people have the skills they need for the high skilled, high wage jobs of the future. including technical education. the national living wage will be increased so that people who are on the lowest pay benefit from as higher paid workers. my ministers will seek to inherit rights and protections for the modern work lace. my government will make further progress to tackle the agenda pay gap. gap. tackle the gender pay with the failure to discriminate gender, sexual

orientation. my government will reform mental health legislation and ensure that mental health is prioritized in the national health service in england. proposals will be brought forward been unfair 10 fees, to promote transparency in the housing market and ensure that more homes are built. my ministers will work to improve social care and will -- will bring forward proposals. include bringing forward measures to help tackle unfair practices in the energy market, to help reduce energy bills.

the priority will be to build a more united country. strengthening the central, economic and cultural bond between england, ireland, scotland and wales. work innment will cooperation with other administrations and will work with all the parties in northern ireland to support the return of government. a new long will ensure that the united kingdom retains its world-class regime, protecting personal data. and the proposal for a new digital charter will be brought forward to ensure that the united kingdom is the safest place to be online. legislation will also be introduced to modernize the reduceystem and to help motor insurance premiums. my government will initiate a full public inquiry into the tower tore at the

ascertain the causes and to ensure that appropriate lessons are learned. to support victims, my government will take measures to introduce an independent public etiquette to grieve with families after a disaster and support them in public inquest. my ministers will continue to invest in our armed forces. meet the nato commitment. spending at least 2% of national income on defense and delivering of the armed forces government . the armed forces covenants my government will work to make sure that the protector is protected. countering for

extremism will be established before the government in stamping out extremist ideology in all of its forms. that it is denied a safe space to spread. in the light of the terrorist attacks in manchester and london, my counterterrorism strategy will be reviewed, to police andthe security services have all of the powers that they need. the custodial services for terrorism related offenses are sufficient to keep the population safe. thatnisters will ensure on the worldngdom stage is enhanced. a security council, committed to spending 0.7% of the national

income on development. my government will continue to drive international efforts that increase global security. and project british values around the world. my government will work to find sustainable political solutions to conflicts across the middle east. continue the united to destroy data in iraq and syria. it will lead efforts to reform the international system to improve the united kingdom's ability to tackle mass migration, and end of modern slavery. my government will continue to support international actions against climate change.

including the implementation of the paris agreement. i look forwardnd to welcoming the can't queen of spain in july. my government will host the ofmonwealth summit in april next year, to support the residents to this end future generations. two this and future generations. estimates for the public services will be laid before you. lords and members of the house of commons, other measures will be laid before you. i pray that the blessing of the almighty god may rest upon your counsel. francine: that was elizabeth the second reading a speech from the

house of lords before judges and high commissioners. she set out the agenda for the coming years. and she talked about new legislation. these eight about mills. she talked about immigration, giving u.k. power over immigration. agriculture to deal with far regulation -- so did you -- so it did give you a glimpse into the complexities. tom: all rising. the house of commons doesn't rise because they have been standing. is 68 years old. francine: let's get to and edwards air force base to her.

as expected, there wasn't a lot of talk on domestic reform in theresaifesto because may would have been concerned that she wouldn't get the proposals through a hung parliament. and edwards: there was no of policies that could have been controversial. i thought a couple of things were fascinating. the first is what was said about trade policy. independent with an trade policy -- that sounds as though you are not in the customs union. you must be sure you can get andort for that policy feedback on that policy in order to get that through parliament. we thought we might not get much insight into brexit but there does seem to be a bit of a show for sticking to the manifesto around the customs union. also, it is fascinating to

hear the queen talk about the commitment by the u.k. to the paris agreement and being looking forward to welcoming the king and queen of spain. fromntion of a visit trump. widely expected. up withood way to keep the news and the data, with anna edwards at the house of lords, come on over here and pick up a chart and move over to a previous story. and you can steal the chart for me. the highlight of your day. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to what we heard from the queen. she just addressed parliament, outlining the government. let's bring in simon kennedy. and still with us is alan ruskin

. what have we learned about brexit? simon: we are learned how week to reason may is in the wake of election. a few weeks ago, she would have thought that the speech would've allowed her a broad rush approach but now she is unable to do that. to -- she held the election was to win the conservative lawmakers to let legislation passed but what she hasn't said is that she has acted what she was caught him before. her originalliked vision but now others have more muscle and don't like her vision. if legislation is challenged along the way, it makes her ability to brexit much harder. tom: simon kennedy is with us. alan ruskin from deutsche bank. we have shown this chart before.

sterling on radio, your classic post-brexit chart. pound here. is this driven by the stuff that simon kennedy is talking about? alan: most recently, it was the carney story. the major, one of issues of this thing is whether the economy continues to wake up. the sterling could be going down. tom: i believe the summary of this is that inflation is higher. you predicted that. are we at a tipping point where it is out of control in the united kingdom? that may increasingly be the question for the policymakers. policys on the monetary

-- mark carney is clear that he doesn't see a reason to raise rates anytime soon. off up to march of 2019. -- clear and present danger that the monetary policy feels according to carney. francine: what is the timetable in the shorter space? starta may might want to -- she will go to brussels. she won't stay for the entire summit but they're planning on toting down a generous plan frame the debate. they've tried to amend it.

she still doesn't have the support of the northern-irish union. tom: simon kennedy, thank you so much. also need to thank alan ruskin from deutsche bank. aboutgura, lots to talk on surveillance this morning. for the queen, queen elizabeth , she lifted sterling, single-handedly. pound this morning. in the united kingdom after a subdued queen speech. stay with us. this is bloomberg. ♪

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>> crude reality. oil falls into a bear market while the world's largest producer puts a new man in line to take over. queen elizabeth's speech presents prime minister theresa may's plans for brexit. whether the pm can find the support she needs to deliver. and fourth time is a charm. chinese domestic shares in the index are important drive to president xi's drive to put china in the center of the world stage. i am particularly grateful to have scarlet fu by my skype -- side. >> and i cannot believe you have not set on -- been on the set point.r until this scarlet: oil is the score would -- story of the day, but let's start with u.s. future. slightly lower here, but bonds are