francine: more russian revelations. the dollar drops as the investigation into trump s links with moscow is centerline in. officialsesident says will reassess stimulus. er's message to britain as talks end with heated divisions. this is "bloomberg surveillance ." program, later on the we will be speaking to the former u.k. chancellor and outspoken pro-european, ken clarke. that is in our weekly brexit

special show. if you have any questions, just run the tv function on your bloomberg terminal and click where it says ask the guest. in the meantime, this is what your markets are doing. stocks seemed to care some of the recent gains. the dollar sitting around and 11-month low as investors try to assess investigation into the u.s. president and whether that will stall his agenda. it is a perfect day to speak to stephen gallo. australian dollar plunging the most since may. the other one we wanted to show you was the kiwi. look at pound because of brexit talks. euro-dollar, 111645. let's get to the bloomberg first word news. taylor: u.s. special counsel investigating possible ties between trump's election

campaign in russia is sent to be looking into the president's business transactions. they say the fbi investigators and others are examining russian purchases of apartment in trump buildings as well as other deals. greece has been approved for a new conditional bailout from the imf. the organization says it approved in principle a new loan worth as much as $1.8 billion. this is contingent on eurozone countries providing debt relief for greece. british exporters are unprepared for leaving the european union according to a use of survey provides bank. almost half had yet to review their strategies. despite the e.u. being a trading partner for 85% of exporters. negotiator hasf told britain to come back with more clarity at the next round

of brexit meetings. that came after four days of talks and after he brushed off the brexit secretary's suggestion that flexibility was needed on both sides. a bag containing traces of moon dust has sold for $1.8 million. it was used by neil armstrong on the first manned mission to the moon. just $995 to a lawyer from illinois. today is the 40th anniversary of armstrong taking his first steps on the lunar surface. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. mario draghi says europe is not there yet on inflation and a substantial degree of accommodation is needed. those dovish tones didn't stop the euro from soaring to a near two-year high as he said

officials will reassess stimulus in the autumn. the australian dollar has slumped the most since may after the rva governor dampened expectations for policy tightening. he said an increase in policy rates doesn't automatically mean australia needs to follow. stephen gallo, one of the currency experts we like to speak to, is with us. what did we learn from mario draghi, and what did you learn of how the market reacts to what he says? stephen: the market reaction is right fundamentally. the direction is right, i should say. is a little bit of concern. i don't think the air liquide summer conditions are going to help reverse the move. in fact, these conditions will probably push the move further. the fx market likes to trade

inflection point. that is where the big profitability is. he likes one way bets. it likes easy street. like water always flows to the lowest level. that is where we are. mario draghi is going to try to slow down. i think it is having an impact. if you look at rates, they are not driving this euro move. francine: are currency markets nervous? are they concerned about too much hawkishness? stephen: i think the fx market -- that is where you have to look at the $. i think the fx market is currently concern that the will not be able to carry with it projections. if there is any nervousness, it is surrounding them. francine: what is your call on

euro-dollar? are there data points you are looking for? stephen: so much data points. 1.18,k we can get to 1.19, in pretty good order. those are given conditions i think you have to stop and start to reassess the messaging from the ecb and what is going on in swap rate differentials. one year out, we are at 1.22. is partially any tv story. francine: what is your take on the aussie dollar? stephen: i would be looking for opportunities, especially as we enter august. i would be looking at opportunities to buy aussie here. base metals have been moving in the right direction over the last few months. you have the story for the u.s. dollar. the australian economy is generally ok.

there are some risks but it is generally ok. i don't expect it to spark capital flight from china. francine: the last time you were on, we were talking about euro-yen. stephen: i think the yen is one area where you are still likely to see divergence in policy. for the most part, the world has risen up to me the fed, if you follow me. the yen and the bank of japan are the laggards. is one avenue where you can see the dollar firm of a little bit. i don't think we get asked 115. francine: what about canadian dollar? stephen: it is a little expensive here on the short-term fair value basis. spikes above 1.27 would be a

cell to me. morning the data this from canada before you go rushing into a position. francine: thanks so much. stephen gallo stays with us. plenty coming up. but other takes a dive as trump'ss weigh troubles. sterling takes a slide following the latest round of brexit negotiations. is the u.k. government to compromise on a key issue? this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. taylor: vodafone topped

estimates with its first-quarter revenue growth. organic service revenue rose by 2.2%. the ceo says the company saw a good start to the year in europe, where commercial momentum remains robust, while growth accelerated across africa and the asia-pacific. exxon mobil says it is challenging a $2 million fine for egregious violations of sanctions against russian. it says the oil company broke sanctions by signing deals with the head of rosneft. the violations are said to have occurred in may 2014 when now secretary of state rex tillerson was ceo. microsoft's turnaround plan got back on track. profit in the fiscal fourth quarter exceeded analyst estimates and adjusted sales rose 9%. that is your bloomberg business

flash. francine: thank you so much. nth dollar is at an 11-mo low. the special counsel investigating possible ties to russia is said to be looking into the president's business transactions. that is according to a person to know your with the probe. they say investigators are examining russian purchases of in trump buildings buildings. let's get more from kathleen hunter. still with us, stephen gallo. kathleen, thank you for joining us. the latest is not only an investigation into trump's businesses, but is there a threat he could possibly try and fire mr. mueller? kathleen: absolutely. there was a report last night, talking about how the president has gotten white house officials

to look into potential conflicts of interest on the part of mueller or other investigators working with mother to investigate him. they are looking to discredit the special prosecutor. it is not outside the realm of possibility that we could see trump try to remove some top justice department officials to get someone willing to fire mueller. francine: can he do that? kathleen: what he would have to do is, only the acting attorney general, which in this case is the deputy attorney general, campfire mueller. he would have to fire the deputy attorney general until he got someone willing to fire mueller. francine: are there parallels with 1973? kathleen: people are drawing parallels to 1973, when richard nixon basically did not, got rid of justice department officials to derail the watergate probe.

we know how that ended for nixon. francine: what are the gop doing? kathleen: we had a very telling quote in our story today. we quoted bob corker, a republican senator. he was asked about the possibility of trump getting rid of mueller and he said it was so far out of bounds that it couldn't possibly be a serious discussion at the white house. those are pretty strong words coming from a republican. a democrat went so far as to say he thought it was not politically survivable. that is a real possibility. midterms are around the corner. congressional midterms in the united states are coming up. republican members of congress are defending their seat and majorities. if trump did something that was so out of bounds as to get rid of the special prosecutor, that is going to the heart for

republicans to defend. francine: first of all, does this hurt his base support or do they not care? kathleen: i haven't seen really good bowling on that. there's a question in my mind. there's a group of people that support trump and will support trump no matter what. he said it himself, he could shoot someone and no one would care. there's a group of people for whom that is true. what i'm interested in is figuring out how big that group is. i think it might be smaller than some of us suspect. people that may be voted for trump because they had to choose between trump and clinton, now it is a question of, do they like trump? i think the question of how big trump's this is is an interesting one. francine: i want to talk about dollar again, but once again, is this a distraction from the reform the president has promised? kathleen: absolutely.

in terms of the narrative and the momentum, all this talk of russia is taking away from the president getting his message across. one of the most important tools the president has is the bully pulpit, where is able to drive the agenda by virtue of being president. that is not proving true for this president. the conversation has been focused on russia. eroding histely support on capitol hill. he's going to have to get republicans to back him on these issues. to the degree they are losing confidence in him, which it seems they are, he's not going to get their loyalty. francine: how much does dollar trade on political machinations and how much on fed? stephen: the risk on what is going on is net dollar weaker. even if we get to a point where

the debate on the debt ceiling doesn't lead to an increase in the debt ceiling, or by september 30, there's not enough money to keep the government-funded, initially what the market will do is further price out the fed. additionally, given there's going to be so much difficulty getting true corporate tax reform done, the most likely outcome of a reduction in the corporate tax rate and some individual income tax rates would be net negative from the dollar. especially because there won't be enough support to find ways to fund those cuts. francine: thank you so much, kathleen hunter, and stephen gallo. up next, is theresa may about to give ground on a key issue?

we will have the latest. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." i'm francine lacqua in london. it has been another tough week for the pound. the e.u.'s chief negotiator, michel barnier, told the u.k. to come back with more clarity. "the guardian" reporting that britain is willing to accept a

transitional deal for up to four years after leaving the bloc. that would mark a shift in tone from prime minister theresa may, who made taking control of immigration a redline issue. stephen gallo is still with us. the politics versus economics question. does the pound trade on the back of negotiation, words from michel barnier and secretary davis, or on the figures and boe? stephen: the only way i think the pound trades off brexit negotiations is if there is a rapid move to get a deal in place. markets will move to christ in the softest of brexit. we think there's some upside in sterling, but not much. we think the deal that will come from that situation is worse than the situation the u.k. has now. the best possible situation for the u.k. would have been an orderly hard brexit with a

transitional deal. that would not be this. francine: an orderly brexit, what does that mean for interest rate hikes and boe? stephen: the real thing you have to look for is the boe for the time being. i don't think the boe will hike in august. but as long as the gdp report this month is not a disaster for the u.k., my preference would be to put long risk on sterling into that decision. the boe may take the opportunity to provide a little support under the pound. euro-sterling, as long as we're at these levels in the gdp report isn't a disaster, i would be looking to put risk on the long side of the pound. francine: do you do euro-dollar or euro-pound? pound-dollar or euro-pound? stephen: i would be more

interested in doing this from a euro-sterling perspective. on the one hand you have political risks from a snap election, how labour is doing in the polls, those are going to materialize. the rate revealed of eight in september. party conferences in october. that will largely offset the impact of a weaker dollar. there's not a lot of move on either side. euro-sterling is the one where you want to look for opportunities. francine: what do you make of the hawkish comments from governor carney? unclear whether it was some kind whether theion, first time he'd spoken, he was misunderstood, so he wanted to make sure the markets repriced. stephen: i have decided that it is completely worthless to try to figure out what their

strategy is. the net impact of what they are doing is confusing the market so he doesn't get caught up excessively in one direction or another. francine: what i'm trying to get out, is there a danger that markets basically have blinkers on, that markets think this is not going to happen, a hike, and that central bank policymakers in the fed, in the boe, need to make sure they guide the market? stephen: the analyst in me says no hike. if i had to put on, given the preconditions i gave you, if i had to put on a trade and we are at these levels, it would be long gdp versus euro. francine: why the communication from the boe? it is like watching a soap opera. don't worry about why they are

doing it. just know that they are doing it. the outcome is up in the air. how do you trade that outcome? perspective, if the economy grew 0.3% plus, you want to get long pound. francine: like a soap opera. stephen, thank you. stephen gallo. up next, our weekly brexit show. we will be speaking to former u.k. chancellor and outspoken pro-european ken clarke. i'm looking forward to this interview. this is bloomberg. ♪

francine: welcome to our weekly brexit show. i'm francine lacqua. let's get a roundup of all the big brexit news. here's taylor riggs. taylor: the e.u.'s chief

negotiator, michel barnier, told britain to come back with more clarity. he brushed off the u.k. brexit secretary's suggestion that flexibility was needed on both sides. two sets of data summarized on the upside this week. june inflation slowed to 2.6% in a break from the steep upward spike. retail sales rose by a better than expected 0.6%. france's finance minister said the u.k. must commit to the repayment of funds it owes to the european union. bruno told national assembly's economic committee, we want our money back. cryanhe bank ceo john said the lender is preparing for a hard brexit. earlier this week, morgan stanley was said to have settled on the city for its european trading on.

global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: we are just getting some breaking news. getting a little bit of data out of the u.k. i don't know whether that is having an impact on the pound. getting public finances for the month of june, public-sector net borrowing. public-sector net borrowing a little higher than expected, 6.3 billion instead of 4.2 billion. you can see the pound staying put at 1.2995. my guest is one of the big beast of british politics. as well as serving four years as chancellor, he was home secretary. now, after 47 years in parliament, he holds the title of father of the house. he was the only conservative to vote against the brexit bill to

trigger article 50. ken clarke, welcome to the program. elections leadership last year, you described theresa may as a bloody difficult woman. is this a good thing or a bad thing? ken: the exact quote, when i got myself caught by a camera, was, she's a bloody difficult woman but i've always got on with her and you and i worked for margaret thatcher for got sick. the comparisons to margaret thatcher aren't helpful. she's all right. she's taken on a combination of problems on a scale which no prime minister has done for generations and she's going to need to be very tough. but is it hard because she's negotiating with the e.u. or because she doesn't have the full support of her party? ken: the party is hopelessly

split. it has no collective agreement on what it wishes to do as it leaves the european union. so she takes over a total confused situation where there is no roadmap and even her colleagues don't all agree with each other. it is a long, hard road before we have a negotiated strategy. francine: there was also the election. come overzy historical situation. the election didn't exactly go to plan. what does it mean for our premiership? how does she get the legitimacy back and what should be airplane? ken: she should send her colleagues away with their buckets and spain's and get them to calm down, then settle down and start producing a serious,

grown-up, detailed strategy for negotiations. opinion, you will only get it through the house of commons. there's hardly anybody in the house of commons who wants another election. jeremy corbyn might because he thinks he's about to become prime minister, but he's not. francine: you don't think -- ken: this parliament has a duty to look out for the national interest and start settling down. it will take several years of negotiating a new relationship. francine: you don't think jeremy corbyn is the next prime minister? ken: he had a great success because he's a nice chap and he performed well. people were entertained by him at the election. his young, idealistic followers are very pro-european. they don't realize that jeremy a a hard-line eurosceptic,

lifelong opponent of this capitalist plot as he sees it. i think a lot of people voted for him because they felt comfortable he couldn't be prime minister. i like jeremy. he's a man of the hour. but most of the labour party don't agree with him on europe or most other things. is,e a cross party approach bet ins to me, the best the national interest. francine: in the house of commons, is it difficult to speak up if you are pro-europe? they are all very nervous. what they are nervous about his voting against the party. francine: and voting against the referendum. to thisy all signed up idiotic referendum, yes, so they get bullied. the people on the leave side, the eurosceptics, have no --

they expected to lose, just as the remainders expected to win. now, they are so triumphant, and the right-wing press so terrified, they are called senators, enemies of the people. nobody talked about what we're talking about now. nobody listening to the debate in the referendum new what the difference was between the single market -- francine: do you think there will be a second referendum? ken: i hope not. a lot of remainers want a second referendum. francine: what do you want? ken: i want parliamentary democracy to be restored. it died with a whimper before this recent election. leave,t we're going to which is the political settled thing.

i now want parliament to hold the government to account for a grown-up policy on what our political and economic relationship is going to be. i want to minimize the damage to our standing in the world and minimize the damage to our trade and investment. francine: but there's no turning back from brexit. you don't think there's any way of turning back brexit? ken: sadly, i came to the conclusion that there wasn't. people have been absolutely rendered terrified of challenging the outcome. "theare all terrified of daily mail" and "the telegraph" and so on. they all signed up because they thought remain was going to win. francine: are there any areas of the repeal bill you would like to see amended? ken: i think the repeal bill is a suitable vehicle for amendments that will clarify

that we won't put any new barriers between us and the european union. reasonard of no sensible why we should leave the customs union with a single market and i don't understand the hangup about the european court of justice. brexit happened for a confusing range of reasons, mainly angry protests. varyingngry protests of kinds. the surprising surge was in the north and white working-class vote. they had not benefited from the apparent prosperity of the last 30, 45 years. they feared that immigrants and foreigners were going to take their jobs and so on. that has nothing to do with whether you stay in the jurisdiction of the european court of justice. francine: a lot of people have come on the show saying there has been confusion. thethink there's a chance

u.k. stays in the customs union? ken: i will argue for that. because of the timing of the election, and now we've got this hot weather, very confusing, all very surprising, this has been the mad season in politics, usually called the silly season. nobody knows what is going to happen next. if you ask me what the political position will be in september when we come back, i don't know. nobody knows. but i hope by then we will begin serious debate on the repeal bill, which will be the first of many pieces of legislation which will provide a vehicle for amendments and for parliament to say what is it view on the big issues. francine: is there someone you think should stand up and talk, like you have, about the merit

of the european union? and who would that person be? ken: there's no immediate vehicle to talk about the advantages to our standing in the world. francine: it could be a person. ken: the right-wing newspapers -- if you think back to the referendum, there was no reporting anywhere that anybody made extolling the advantages of being in the european union. they thought they were mollifying eurosceptics. they made a eurosceptic case saying, it is very bad, but we negotiated some changes, so it is all right now. about thee a speech benefits of being in the european union, deafening silence as far as public reporting was concerned. francine: that continues to be the case. ken clarke, thank you very much. the former british chancellor of the exchequer stays with us.

if there is one person that can unify the country, how he would negotiate. we will talk game theory, how he would negotiate with michel barnier. this is bloomberg. ♪

francine: welcome back to our weekly brexit show. i'm francine lacqua. let's check on your markets. here's nejra cehic. nejra: we saw equities turned lower in the u.s. session yesterday afternoon as that robert mueller might be looking beyond russia. we saw asia lower, european stocks look lower on the week, pretty much unchanged on the stoxx 600 right now, but edging to a negative by.

sure in terms of the industry groups. a strong euro potentially weighing on exporters. draghi saidio policymakers had paid some attention to the strong currency, not enough attention judging by the reaction we've seen. 1116, hitting an almost two-year high in yesterday's session. 1.1643 is where we are. some calling for 1.20 by year-end. is this an ironclad trade or could we see it turned lower? way of that impetus either could come from the $. my guest on bloomberg radio said it was the bond markets that acted like the adults in the room after mario draghi's press conference. we did see a tightening in those for reference spreads. the bond markets absorbing the

overall dovish message. the spread tightening to the lowest since 2015. we saw that btp spread tighten the most since january as well. manageario draghi didn't to talk down the euro, the rba deputy governor has managed to do that. dropping the most since may. 0.7904.at . francine: thank you so much. with us today is pro-european conservative ken clarke, who is now father of the house. that is the title given to the most senior member with the longest continuous service. thank you for sticking around. give me a sense of what you need to do to get more people to speak up against brexit, if they

believe it is the wrong thing. ken: speaking out about what soft brexit, to use the awful cliche, what the best relationship is going to be to minimize the damage, and start trying to encourage the government to get into a more serious negotiating position. francine: what does the government want? ken: they don't know. they are hopelessly divided. they've spent the last few months having a british debate, deciding whether we all agree what we're going to tell the other 27 countries where going to have, and ignoring the realities of the negotiation. there's a chance over the summer for the people who have to carry out these negotiations to work out a more serious position, and when parliament resumes, a chance to have a debate which is

more sensibly concentrating on what we can do to preserve the best political relationship we can, to look after our interest -- but also, which how to minimize the damage to our economy, preferably by having no new barriers. francine: who do you think has the best vision for brexit in the government? ken: [indiscernible] cabinet is from the extremes on both sides. there are people in the cabinet whose views on europe are identical to my own. there are people in the cabinet, i will name liam fox, who is very hard line eurosceptic, holds the same views as people like john redwood. parties are very broad coalitions.

the prime minister is pro-european but not as fervently as i am, is to get the ones who deliver the policy to reach some sensible agreement. francine: the prime minister is pro-european? ken: she gave a very good speech during the referendum campaign, setting out the economic case for remaining in europe and the security case for remaining in europe, and to her credit, she upset cameron and osborne by refusing to put in any of the rubbish they were giving, all this scare stuff about how it is going to cost us all 4500 pounds and other rubbish. she had a slight -- she wouldn't put that in her speech. nobody reported a word because no serious speeches were reported. francine: that is not always the case. ken: she would be pro-european

but she takes a less cavalier view than i do of the referendum. she does feel bound by that. she feels it is her duty to deliver brexit. but if she can gather a political body of opinion to support what i would call a sensible brexit, then i think the prime minister will be all right. francine: where would that come from and what needs to happen? ken: what needs to happen is a sensible discussion within the range of cabinet colleagues, all of whom have taken some notice of the expert advice they've been getting from officials. improved contact with business, which she is rapidly developing -- i think she has realized that this complete refusal to listen to the anguished voice of every representative of british business is a mistake. take this on board and listen to the diplomats, to the people who know the european union. come together with a package

which might be acceptable to sensible leaders of 27 nation states with different politics of their own. francine: could a new prime minister reverse the process? ken: boris is on either side. i don't think boris is a eurosceptic. he gave a strange description. he was trying to work out what would get him more votes in the conservative leadership election. with due respect to boris, i wouldn't put him in the lead of anything serious like this. but that is up to her. i'm not going to start nominating my colleagues. david davis is trying to make a serious job of it, although he old profoundly different views to me, of the european union. but it does require the development of a serious negotiating policy.

at the moment, we are causing confusion on the continent. some are giving up on us. they can't understand what on earth the british want. francine: does cable change any of this? ken: cable is as pro-european as i am. the liberals are a little firm's love of their own because they are the most solidly pro-european party in the house of commons. my party was very pro-european until two years ago. francine: part of the party. ken: we also had this rebellious group. francine: backbenchers. ken: the majority of conservative mp's are pro-european, still are in their private views. francine: why was there a need to have a referendum? ken: there was no need to have a referendum. i told david at the time, i was very angry he called a

referendum. he thought it would shut up these headbangers on the back benches. he announced it years ahead. he thought he would just help him win the next election. he found to his amazement he was still prime minister. he had to hold a referendum. it never lost his mind he was going to lose it. francine: do you believe the european court of justice should oversee the right of the you nationals in this country? ken: there's nothing wrong with having a european court of justice. we won some very important cases there. we went to the european court of justice and challenged the european central bank and got the passport right for the city of london. it has a british judge on it. she's an outstandingly good judge. she's one of the more influential there. francine: you're saying yes.

if you are going to have a trade agreement or treaty of any kind, you have to have some means of arbitrating disputes. only hartline nationalists say that british courts decide all the disputes. it is ridiculous. you wouldn't get an agreement with new zealand on that basis. newight have to invent a one because of all the things that have been said about the european court of justice. i don't see what is wrong with the european court of justice. something like it is a reasonable way of sorting out future disputes. francine: how fast do you believe there can be a trade agreement between the u.s. and the u.k.? ken: it will take ages. as a ministers without portfolio. the tee tip, on the ill-fated agreement to get

an agreement with the obama administration. very difficult. there are people on both sides of the atlantic who are not instinctively free trade. it is regulatory arrangements that are difficult. it is going to be a long, hard negotiation. getting anything past trump and congress in the present situation, which is of the slightest value to the united kingdom, will take years. it is no good that right-wing media in britain is taking the latest tweet from donald trump that fabulous deals -- he knows we've got a large trade surplus with america. he will only be the first problem if you start trying to negotiate a deal. francine: gave you were in a question for you. they ask, you signed a letter last week saying the u.k. government could face a judicial review if it doesn't do a

thorough investigation of the fix bid to buy sky. do you think the deal should go through? ken: i don't. the possibility is raised in that letter of reviewing the decision. i think it would lead to talk of great a concentration -- too great a concentration of british media. theink it is too soon for international scandals of news international and james murdoch was heavily criticized. i think he's the ceo now of 20th century fox. francine: the murdochs would say that when investment is lagging, this would be a sign the u.k. is not open for business. quite a good bit.

the idea of this has anything to do with brexit slight nonsense in my opinion. you have difficulty over a controversial bid. it can sometimes hold up your investment intentions. i think in the public interest, in a country where political debate has already been debased over the last 20 years, i personally would hope the murdoch family are not allowed to extend their control even further. francine: ken clarke, great pleasure to have you in the studio. that was the former chancellor of the exchequer and current father of the house of commons. tom keene will be joining me out of new york. we will be talking to rupert harrison. this is bloomberg. ♪

♪ >> more russian revelations, the dollar drops to an 11 month low.

draghi goes dovish. officials will be assessing -- the message to britain as brexit talks in brussels end with division. good morning. this is "bloomberg surveillance." tom keene is in new york. happy friday. it is a busy day. we're looking at dollar and the rba in australia. tom: look anna clark fascinating was about where the nation goes. it started yesterday morning around 10:00 a.m. with a story from greg farrell. there is no other talk in the nation but this financial 'snkage into president trump financials. jonathan: -- francine: we will focus a lot on

that. let's get to first word news. taylor: we are starting with washington. multiple reports that some of president trumps lawyers are trying to undercut special investigator robert mueller. according to the washington post, lawyers are building the case that he has conflicts of interest. the new york times says he is trying to get some of their team fired. colorado, mike pompeo said the russians want a warm water naval port. kingpin ofecome the the middle east. the imf has agreed to another bailout for greece. they say they have approved in principle a new loan for as much as $1.8 billion contingent on

eurozone countries providing debt relief. accept. will reportedly the free movement of eu citizens up to four years after the brexit agreement. prime minister theresa may has made regaining control over immigration policy a redline of her brexit approach. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. i guess you can link this into the politics. some talk of equities driving higher with the curve flattening and yields lower through the day. should be a big euro. i will let francine to the foreign-exchange this morning. the s&p 500 is splashing through two records. the foreign-exchange showing strong euro.

why is that? francine: this is partly because of what we heard from mario draghi. it seems the foreign-exchange markets did not really listen to him, or they did listen but they are thinking of future stimulus withdrawal which is probably moving most of the currencies including euro. we are looking at the australian dollar. it is plunging the most since may after a dovish speech. we're looking at the new zealand dollar. that level reflecting a strong economy, and the pound, and negotiations continue. tom: some real movement in the market on what is supposed to be a lazy friday. it is not. one chart to explain the ascension of president trump. the election of president obama and roughly the election of president trump.

this is wage growth and benefits in 2006. here is the trend post crisis. we have barely got it going. tepid wage growth. it is the agony in the united states. francine: it certainly is. this is what i have done. i don't do this very often. i'm looking at etf's and gold. on the one hand, you have the s&p 500 the top line is in blue. holdings in etf white. this shows the faith in the middle is being put to the test as we have fresh records in equities. gold goes back to inflation. it is also a bet when there is a risk off mood. tom: interesting. francine: something we are looking at. bets on the flow of money out of

bonds and into stocks have misfire this year as low yields have kept the global debt party going. there are some signs that markets maybe on because of the post crisis -- maybe on the cusp of a post crisis shift. you will be like 105, and we will still say you are chief of staff. you look at politics in a different way compared to everyone else. what is going on in the markets? they are focusing on central banks. >> the big news yesterday was mario draghi. we were all focused on this 1.15 level. he has come in in the past and talk it down. the fact that he deliberately chose not to do that gave permission for the market to choose new highs. this is probably the biggest

amber light on the horizon. we are on the cusp of a could be a very big policy error from the ecb. they have no choice. i cannot personally see any way they can get over the clinical barriers of expanding the universe of assets they can buy unless things get worse. core inflation is very low. it is likely to roll over another 20 or 30 basis points. that is going to be the wrong policy mix. i think we will see financial conditions too tight in the end. that will bring about an end to this strong growth. francine: as soon as we start creating quality jobs, inflation will pick up. >> he has turned that into a long-term article of faith. everything he says has been consistent with someone who

knows that ideally there should be more stimulus sustained for longer in the eurozone. the worst possible outcome for him would be good knowledge openly the lack of firepower he has. foras to prepare the ground tapering even though he does not see this is fundamentally justified by the inflation fundamentals. tom: it was a week of forward guidance. i think we will get a week of forward guidance next week with chair yellen up to the wednesday fed meeting. they are all waiting for inflation. does blackrock see it out there? >> when it comes to the u.s., we probably do have that faith. the data is not helping. we have a very tight labor market. we are at a point where you would start to see that wage growth coming through and affect core inflation. i would agree with the fed

framework that this is temporary. i think they have a few months. no one is expecting any actual rights until december at the earliest. i think the balance sheet run off is kind of baked in. we have a lot of monthly prints between now and the december decision. tom: is a euro strength or dollar weakness? which is it? >> it is both. you have got this policy divergence point out in opposite directions, which is mario draghi giving permission to currency markets to push the euro higher and test the limits of his tolerance. the dollar is certainly hedged by these inflation expectations on monetary policy. i will look for further strengthen the dollar later this year because i think the fed policy is under price.

of it needs is a couple inflation prints with a monthly figure of 0.2 or 0.3. i think the market can change quickly. that would be a good example for getting back into an inflationary yen trade or japanese equities target of the year. tom: very good. i'm looking forward to a brexit update with mr. harrison and francine. i have lost track of that story to be honest. kevin cirilli will be on set with us after that important bloomberg story yesterday. the technical construction of the market you are not in. you are in cash. i am in cash. christopher perrone is enjoying this bull market. this is bloomberg. ♪

♪ to the let's get business flash. the turnaround plan for microsoft is back on track. first quarter estimates beat. they are trying to reshape microsoft into cloud computing powerhouse. ebay has underscored the problems it has emerging from the shadow amazon.com. they posted slow growth in the fiscal third quarter. they don't promise much improvement. ebay has been trying to make it easier for shoppers to navigate their one billion listings. tom: thank you so much. it has been an extraordinary 24 hours. political debate in washington and the fiery, important article

yesterday,eg ferro bringing in the financials of into the molart investigation. everything changed with that article. we are caring that story forward today to the ramifications if the president were to attempt to fire the special counsel. rupert harrison of blackrock is in london. joining us from across the ocean is kathleen hunter. been asked ordinary 24 hours. it is clear that the president cannot fire the special counsel. watching the special counsel be worried? >> the president cannot directly fire the special counsel, but the person who could is the attorney general or the acting attorney general in this case, rosenstein, the deputy attorney

general because sessions recused himself. the president could fire rosenstein and make it a condition for someone that would replace him would be willing to fire mueller. that is how it would play out. it is unusual and something i think a lot of folks are hoping trump does not do. reporting inr washington, are we going to see more changing of the bodies within the administration? we saw a few yesterday. there is a report of a new head of communications. things like that. are we going to see bodies move over the weekend? >> i would not be surprised if we did. i think having the kind of announcement or formal announcement of the communications director is something that has been open since may. that is an important role, particularly now as the

administration is trying to get its message heard. that is something i would not be surprised if we saw additional bodies moving around and folks trying to get into place to help the white house more effectively manage this white house story. francine: a lot of the u.s. prices making parallels to what happened under richard nixon under the saturday night massacre when he forced out to top officials looking into watergate. if president trump were to do something that could draw more parallels, is that politically survivable? >> i have given up making frictions of what mr. trump will do and whether he will survive. he seems to be ripping up all the rules. the question is can we imagine out of this wreckage and debris of this ongoing scandal the shadow of any action on tax reform emerging going forward, is congress going to decide to forget the white house and still

deliver in time for the midterms even if it is not all singing and dancing tax reform. francine: will we? >> i think they still have to do something. it is an absolute necessity for political survival. expectations are so low there has to be some room for outsize surprises. there is also the possibility of the white house lashing out in other policy areas to attract attention. could we get more on trade retaliation from china? are we going to get a breakdown of what has been a fairly smooth nafta process? francine: the you think they are too distracted with the russian probe? we have testimonies next week and also health care. >> i think it is going to be hard for the white house to accomplish anything when it comes to taxes. september will be the time to watch because that is when the white house will put forward the

beginnings of their own proposal. i think the white house would certainly want to have people focused on the tax reform question. as you point out, next week we have donald trump jr. and paul manafort going to the hill, and jared kushner will be there testifying on monday. it is going to be difficult for them to figure out how to change the narrative and get people to focus on what they want them focused on even with this rushing is tripping out everyday -- russian news tripping out every day. i think congress will continue to try working on this. i don't think there will be a lot of -- it may be really difficult to do. i don't see a lot of scenarios under which there is going to be lot of of unity -- be a unity on capitol hill among

republicans. francine: thank you. coming up later this hour, we are speaking with the lululemon ceo, that is at 10:30 a.m. in london. i promise that would do a little bit of yoga moves. this is bloomberg. ♪

♪ francine: "bloomberg surveillance." investors have been closely watching central-bank language in the last few days.

this trillion dollar slumping the most since -- the australian dollar slumping the most. has gottenressing some attention. beot of the rallies may linked to the weakness in dol lar. let's get to rupert harrison. your biggest concern in terms of policy is that the ecb rushes into something, that there is not enough underlying strength. what about the u.s.? >> it is possible, but it is very unlikely. janet yellen is unlikely to force through a series of rate hikes if the evidence on inflation does not come through. she is still fundamentally dovish. we have seen a regime change away from this very month by

month data dependent approach we saw last year. we are more into a forecast based monetary policy, a little more familiar in terms of long-term monetary policy. they are navigating by their model. they think inflation will come. the phillips curve is still alive. we will start raising slowly. francine: the phillips curve seems dead. >> we have looked at a lot of this and a lot of detail. if you go back to previous cycles, you need to account for the fact that this cycle is very slow and long. it is normally only at this point that you start to get that inflation pressure coming through from wages. it always comes later than you think. at this point people have gotten so tired waiting, they think maybe this time is different. i don't think the fundamental economics have changed. you still see this upward drift in many of the wage indexes.

that should end up in core inflation eventually. tom: to take it back to the united kingdom and governor carney, only back to clemens at least united kingdom? growthback to lousy wage that overcomes all monetary orthodoxy? >> i think the u.k. has this specific circumstance where due to brexit uncertainty it is going to be very difficult for which the man's to start accelerating -- demands to start accelerating. tom: the wages are not there. >> there is uncertainty. if you look at the u.k. macro generally expectations are pessimistic. the labor market is continuing to grow. firms that areee facing uncertainty in the next year agreeing to big increases in wages. i will be surprised by that.

i think the core of the bank of england would be surprised by that. i think they are unlikely to surprise us in either direction. i think there is not much scope for loosening. i would be equally surprised by any sign of a rate hike soon. rate normalization in europe or the united kingdom before the end of the year? the end of the year is a bit away but not that far away. >> i don't think so. i think the big issue in europe is going to be the fact that mario draghi says he has not created working groups on the end of qe means october rather than september. i think they have to say something in october. the big judgment will be not on race but how do they -- on race but how do they -- on rates but how do they wind down.

they have to do something. asset scarcity is going to be a real problem for them in six months or nine months. francine: thank you very much. we will be back with rupert harrison of blackrock. later tonight we have exclusive conversations. it is interesting because we spoke a little bit about shareholder activism. we spoke about the need for long-term measures. he was controversial when he met with president putin a couple of years ago. he was part of the delegation. that is later. this is bloomberg. ♪

♪ to our global audience and across america, it is a most interesting washington, d.c. coming up, kevin cirilli is

onset in new york. we have a team in washington. we have all the different ramifications going on with the present and the special -- president and special counsel. washington wakes up to a most interesting friday. now with your first word news, taylor riggs. taylor: in washington, there are reports that white house lawyers are trying to discredit the special counsel's investigation into the trump campaign and russia. they are reportedly looking into the special counsel are and his staff -- special counsel and his staff over donations to democratics. chance they will come up with anything more aggressive. oil is in a bear market, and inventories are still high

despite a deal between major oil producers to cut production. magnitude 6.5with killed at least two people. more than 120 others were injured. cia warns that russia and iran both friend u.s. interests what they pursued in syria.roles mike pompeo says the russians want a warm water naval port there. in syria. he says iran wants to try to become the kingpin of the middle east. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. the chief negotiator for the eu said to come back more clarity for the next round of discussions.

almost half have yet to review strategies. we spoke with the former home secretary ken clarke, the only conservative to vote against the brexit bill. up politics, give for a week or two, settle down and only start producing -- serioustart producing a strategy of negotiations. you will only get it through the house of commons you take a cross party approach. what do we know about what will happen in september? will we have a regrouping of government parties with a more actionable plan after recess? >> i think we will. i think the surprise has been this vacuum of our. we have the prime minister

absent debate. that she will come back in september and try to lay down the law. she is still be prime minister. he still has authority. he still has authority. the scope for doing that is because the key players are the prime minister, philip hammond, and the brexit secretary. the three of them do not history that much about the way -- disagree that much about the way the state to be done. -- the way that this needs to be done. i think everyone is transitioning to a more sensible years with to three probably some continuing role for the ecj and trade deals. there will probably be some continuity. softene: will the ueu

their stance? >> i think we will get that because it is in everyone's interest to avoid a hard stop. the question is when do we get clarity. viewthe the u.k. point of you want a lot of clarity because you want to stop contingency lands from financial -- plans from financial investors being triggered. from the european union point of view, why would they concede that? they liked the idea that some of this activity is coming to paris and frankfurt. i think there will be tension around when we get clarity. from the u.k. side, they should be quieting. tom: to take the father of the house back to another time and

enemy john major said an of john major is an enemy of mine. on this friday, does prime minister may have the same support from her party? what are the lessons from the conservative party in england as we roll into august? >> ken clarke is a great man that has been left behind by his party or has left his party behind. there are no significant pro-europeans left in the conservative party even though many of the remainders in the parliament have accepted brexit is going to happen. the prime minister's position is much more precarious than john majors because she is there essentially by mutual convenience. no one wants to see a leadership election anytime soon. there is a mutual terror of a general election, which would be

a risk. she will death might survive until autumn, but the flashpoint will be october. she could be there two or three years, but it will be a fragile situation. all it would take would be the political ambitions of someone like david davis. if he thinks his chances are slipping away, he could trigger a leadership election before it is too late. this will be hangover theresa may for a long time. tom: explain the middle and the united kingdom. we have a waking america right now, a worldwide audience, and i think they understand the collapse of the middle in the united states. ken clarke is to be a labor guy from the midlands. where is the middle and the united kingdom, and do they have a voice? >> i think that middle is still there. i think brexit has been extremely divisive. it is in a sense political kryptonite.

anyone who touches it gets sucked into you cannot get other people to agree with you all the time. if we get to the other side of negotiations, if we have a transition in place, simply decisions -- most of the decisions have been taken, then i think you'll find the center of gravity of the conservative party is closer to the david cameron point of view. concerned about the environment, social justice, that is still on domestic policy for the heart of the conservative party is. there is an open question about the labour party. they have really been captured by an extreme left faction. we have the leader of the liberal democrats, and i could be the catalyst they have been -- that could be the catalyst they have been lacking. francine: he is a popular figure. swinsononce in -- joe

is probably going to take them into the election. he is a good campaigner. i think you will start to see a lot more discussion around the creation of new centrist forces. francine: he is pro-european. does he's way the labour party from jeremy corbyn? >> absolutely not. nothing is going to change his mind about anything. there is a lot of discussion about what should moderate labor mp's do -- labour going forward. do they just a quiet? do they align themselves with the liberal democrats and centrist figure? francine: thank you so much.

tried to access inside for analysis -- subscribe to access inside for analysis and other benefits. we have news on some of these majors. i read that article on the front cover. with thewe speak lululemon ceo. athletics. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." .om keene in new york aspirations to hit the sales target of $4 billion by 2020.

this comes under uncertainty with international trade in the sector. and product traffic design and animation. -- innovation. we are delighted to have the ceo of lululemon with us. rupert.th us is ou withcited to have y us. what is your number one concern? you wanted it this valuation mark. >> we are very much in control of our destiny today. we created this market in 1998. we continue to leak this market a uniquenique -- in

position of function and fashion. really at the intersection of athleticism and mindfulness. we know that more and more people want to lead an active, mindful lifestyle. they really want to design a light they love -- a life they love. that is what we do. francine: the industry has grown. it has really shifted in the last five or six years to people want a more healthy lifestyle, you also have increased competition. you have adidas and nike. who is your biggest competitor? >> on the one hand, you have the athletic brands. on the other hand you have fashion brands. i would argue that we are unique in our positioning because we marry function and fashion very well. we also have a blurred a model.

-- a vertical model. that allows us to put tremendous innovation in the products. athletic brands mostly have a wholesale business. that is a different structure. fashion brands don't work with the athletes the way we do, working at a young level around the world. that puts us in a unique position because you see people being more intentional with their purchase decisions. i think we are the best in the world at the human connection with the product. when you go into our store, you see that energy and the vertical model that makes us a very profitable and successful retailer. tom: the stock has gone nowhere in six years. how are you going to jumpstart the stock? you are bringing $.20 down to the margin. jump startjumpstar

shareholder return? >> when i started, there was no digital strategy, no international strategy. the brand had been growing exponentially and investment was lagging behind growth. >tom: agree. >> in 2016 we are returning to earnings growth. on our 2020 plan, we're going to get to $4 billion in revenue and $1 billion in earnings. we have a rich white wine of innovation. we are at an inflection point with our international strategy. our men's business that we see as a $1 billion category by 2020 is growing rapidly. i have never been more excited than for this time in 2017 when i see all of our key growth initiatives being international,

digital, mens all starting to pay off in a powerful way. tom: you did it with tom's. i was at an event last night and i noticed all the kids are wearing adidas. everything they do seems to work right now. what is the best practice pixie dust you can take from the deepest miracle in the last three years? really drivenis by originals and staying true to who you are. at tom's it was being true to the one-for-one model. at lululemon, which has an incredible origin as a brand, it is staying true to function and fashion and always solving a problem for the athletes. when we do that, we always succeed. we have just launched our most expensive bra after two years of research at $98, and it has become best-selling. when we deliver value to our guests through function, we see

effortless loyalty from our guests. francine: what about amazon? nike recently announced a direct relationship with amazon. do you think you can do the same? >> i think they were already on amazon. i'm not sure that we would rather have control of that distribution. we are not there. every time we transact on products, we control that experience. we are in the unique experience where we sit at the high-end of the market, and we are driven by innovation. our guests really value the experience we create for them. we are fairly insulated from that distribution channel for now. francine: what does that mean? isure,ou look at athle what does that mean for how far the industry can grow?

>> the interesting question is what you were just talking about. at blackrock, we think a lot about the future for retail and disruptors like amazon. for the high-level brainstem and they continue to inflict themselves -- brands, can they continue to inflate themselves? how do you maintain that customer relationship when you have the scale of change we see? >> we have a fairly light retail footprint. we'll have about 400 stores. we have prime locations. oursocations in china starting at $600 per square foot. at $600 pering square foot. we focus some much on our people, personal development, the most amazing people. our productsll of

in rfid. we have incredible channels. we have really relevant assortments and can provide the entire assortment through digital. i think we have really unique experiences people value. you see that through loyalty around the world. francine: thank you so much. we will talk more about these disruptors and maybe if we have talking time earnings. that was lululemon. we will be back. we will be talking about trade globally. this is bloomberg. this is what you do. you can look at some of the cool about we were talking with rupert and laurent. you can also ask questions to the guests. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." buy british payment processing firm. the price $3.8 billion.

consumers are increasingly switching to online purchases and electronic payments. a battle between two of president trump prominent cabinet officials. the alleged violation happened while secretary of state rex tillerson was exxon's ceo. the complaint names steve mnuchin as the lead defender. a big payday for whistleblowers involving jpmorgan. reward. $61 million jpmorgan did not tell wealthy clients that they were steered into an investment that would be most profitable for the bank. that is your business flash. tom: thank you so much. i am seeing lots of the business media without charts on the stock market. charts on the stock market. this is a laog chart.

all you need to know is that slope matters. this is in the 1990's versus what we have seen in the huge bull market. this is a bi behavioral chart. we see the acceleration of the 1990's to the peak, inflation-adjusted, where are up there in a very different manner 2009 and the lehman lows. francine: without a doubt, my favorite quadratic log chart. tom: there you go. francine: if we have not lost anyone. this goes back to valuations in tech stocks. are they overvalued? >> this is a totally different situation. we still like technology and a lot of these companies. they are growing earnings.

they have business models that are extremely well founded in an environment where the macro environment seems to have this continuation of this steady but unspectacular growth to have these firms delivering earnings growth. that is what investors are looking for. this is probably a long boom. i think it is justified. tom: i think the math yesterday says we are at 26% concentration in 2001 with five stocks. now it is only 2%. is the nasdaq -- now it is over 42%. is the nasdaq over concentrated? >> when you get concentration like that, that is a risk. when you look at individual companies, these are not bubble valuations. some of these companies, you could argue there is opportunity they still have to explain. i think it comes back to the

fundamentals of this growth story remaining intact. unless you see a big change in the macro environment or growth rollover or a value rally with a pick up in growth to higher levels, this is still the place to be. tom: what a great summary. thank you for the summary on british politics. we appreciate it today. verrone picking himself across the floor over my nasdaq chart. this is bloomberg. ♪

♪a will the president fire the special counsel? wait, the president cannot fire

the special counsel. this friday morning, the andiosity" about pardoning various sundry. can you be pardoned before you are found guilty? confused? i am. kevin cirilli will bring clarity this morning. the dollar is weakened and yields are lower as the market considers the politics of the next fed meeting. chair yellen does not care about mr. mueller. legacy -- good morning, everyone. this is "bloomberg surveillance ." we are live from our world headquarters in new york. francine lacqua is in an amazing washington. francine: it is an amazing washington and washington is having an impact on the euro. this rally we are seeing in the euro which could continue. it's mainly about what mario draghi said yesterday.

i would say it's also about confusion over washington. bring yound to up-to-date on washington, our first word news, here is taylor riggs. taylor: there are multiple reports that some of president trump's lawyers are trying to undercut robert mueller who is investigating ties between the trump campaign and russia. the lawyers are building the conflictsmueller has of interest and the new york times is looking for reasons to get mueller fired or have someone in his team reprised -- recused. russia and iran both threaten u.s. interest while they pursue terms in syria. mike pompeo said the russia were a -- want a warm water naval port there. ended two years of speculation and agree to another bailout for greece. worthpproved a new loan

as much as $1.8 billion. that is contingent on eurozone countries providing greece with debt relief. the u.k. reportedly will except to the free market -- free movement of the e.u. for up to four years after brexit. that would be a shift in tone for prime minister theresa may. she has made regaining control over immigration policy a redline of her brexit approach. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: here is all you need to know about the data through the week. the curve is flattening with a vengeance. i will let francine to the euro. oil elevated. stunning vix, 9.48. i cannot even fathom an 8 handle on the vix, and you see it in the currency market. weaker dollar, 94. francine: looking at the

australian dollar, that is itnificant because of it -- comes from the deputy central bank governor. the euro is continuing its advanced and headed to the stronger level against the dollar in two years as there are bets in the market the ecb will start tapering its stimulus program. it is also a dollar story because the dollar is under pressure from u.s. political development. that is definitely the one thing i am watching out for today. tom: it has been an extraordinary washington week for marty shanker, our government, our economics, and our political team. there is no other way to describe it. kevin cirilli has done everything from push-ups from -- with the senior senator from iowa to actually reporting on what people are doing in the halls. and moreitry reporting. he happens to be in new york this morning and we are better for that. will mr. trump listen to the new round of lawyers, the lawyer

friend from manhattan is out the door and the guy with the mustache is in, etc., etc.. is he actually going to listen to his counsel? kevin: i think the question becomes it that, -- is the council telling him what congress wants them to do, to stop making all of this a theatrical development. it really has engulfed all of washington. you are seeing reaction with the dollar and when you are having these hearings about to begin next week with jared kushner to testify behind closed doors and then still no word yet whether paul manafort or donald trump junior have been -- they have been invited to testify, no one knows if they will. tom: who has mr. mueller's back? sessions, he is recused. the deputy attorney general, the others, the leaders, etc. do they have the special counsel?

kevin: senate republicans are particular. i cannot tell you how many times i have gone to these lawmakers looking for a reaction to what we have seen, particularly with donald trump jr.'s emails and they have said essentially hands up in the air surrendering for mr. mueller. that is where they are trying to put these answers to. tom: let's put the emotion to it. that compare and contrast with ted kennedy and .ohn mccain john mccain carries a lot of weight into the weekend. kevin: he is the maverick and someone who is incredibly well respected. vowing -- theis latest statement from his office is that he is vowing to return. and he should. tom: absolutely. francine: who do i turn to? who does the global audience a turn -- the latest to -- turn to to understand?

we are talking about firing and there are people involved. who should the president was into to get back on track? kevin: if your looking from a global perspective, you have to look at where the policy is headed. i can tell you just even yesterday speaking with the budget committee chairman diane black, she has been laying the groundwork in the house of representatives to set the stage for tax reform as well as dodd-frank. i was speaking with the top house financial services committee chairman and he, of course, telling me that you could have a sense of some deregulatory banking relief coupled with tax reform by the end of the year despite all these developments. republicans in the house and the senate very much are optimistic that even without health care they will be able to get policy substance by the end of the year. francine: will that get the republicans back onside? kevin: they have to because they don't have a policy win. i was speaking with a policy official on my way to you -- to

new york and they are talking a shakeup. anthony is under consideration to join the communications office. o'brien withtim anderson cooper last night driving the financial side of the -- anderson was going to have you on, but he is afraid to do push-ups. o'brien of bloomberg view cares deeply that mr. mueller, by deciding to follow the money, could and -- could unravel some of the author of "the art of the carefully-- has orchestrated as mr. mueller certainly knows by now, trump's business history doesn't merely have a closet full of skeletons, it has warehouses full of them." who knows where those skeletons are? .evin: deutsche bank they had been pressed for business transactions. tom: this is critical. deutsche bank is a large

corporate entity that must respond to those queries. kevin: and there have been no subpoenas or reports of subpoenas purred there was a report yesterday that contact was made from the investigators to the bank. is not london, frankfurt, you can look at midtown manhattan at the deutsche bank transactions as a real estate lender and when they get the parchment from esther mueller, they have to respond, right? kevin: yes. and at note is that -- is paul manafort's debt with russia. francine: there were reports -- we tried to get in contact with deutsche bank and they declined to comment. according to the u.k. newspaper, teamche bank and mueller's have established in contact. kevin: and coupled with the dollar reacting to the bloomberg story about the scope of the investigation

expanding. in addition to that, the significant debt of paul manafort -- his financial obligations to russian influences and ukrainian influences. all of this now becoming about money and a money chain and a money pattern. follow the money. cirilli, thank you. i'm trying to think what is the equivalent of the trump hotel bar in new york. there isn't one. there is no reporting. you get amazing reporting from the trump hotel bar. kevin cirilli, thank you so much. up later on bloomberg television and bloomberg radio, look for dr. mohamed el-erian in the 9:00 hour. really looking forward to that as always. this is bloomberg. ♪

♪ taylor: this is bloomberg -- this is "bloomberg surveillance ." the turnaround planned in microsoft is back on fact. ceo is trying to reshape microsoft as a cloud computing powerhouse. ebay has underscore the problems emerging from the shadow of amazon.com. the online seller posted slow growth in the fiscal third quarter. the forecast does not promise much improvement. ebay has been trying to make it easier for shoppers to navigate the one billion listings. that is your bloomberg business flash. taylor, thank you so much. i was just making up a new chart to throw up here and that is what you do with christopher

perrone -- christopher perrone -- christopher verone. it is not about making money, and about not losing money the way you do not lose money is to stay on trend and respect trends. chris, great to have you here. how did you find the courage to be -- cannot be in cash and to be in the market? chris: you have been rewarded for staying with this for the last seven or eight years. until this market proves us wrong, i think you have to give it the benefit of the doubt and you pull up like the microsoft andt or the amazon chart people want to fight these things the whole way up. that is the mistake. the trick is sticking with the trend. tom: first the long-term. bring up this chart. mentions microsoft.

hideaway not get into the ballmer trap? -- how do why not get into the ballmer trap> ? chris: this was 12 years of auditory on this stock. nobody made any money for a decade. we see that in a lot of stock that has those big blowup tops and the big declines and then .ory -- purgatory tactically, can it come in here? absolutely, but we want to be a buyer weakness. duck.ell in august and this is a great chart from verro ne. chris: it is always about august and september. the takeaway is when you are in an uptrend, seasonal weakness tends to be far less pronounced

in september and august. the s&p.5 is good on if we get pulled back, we want to be a buyer even with seasonal backdrop. tom: you will see that on media coming up from bloomberg. francine: chris, look, you say don't fight the trend. what if the trend was only supported by a central bank or partly supported? 80% supported by central bank action, that trend percent -- at some point will be pulled away. chris: when we got about stocks, you are discounting the future and when we look at the central bank, which has been raising ands are almost 18 months the trend persists, if anything the market has broadened over that period of time. i don't miss is fairly by the idea that the last 12 months or so of this advance had been central-bank dependent with the central bank has already been pulling back from their combination. if you look at this move, what has been impressive to us is the number of stocks still participating in this advanced.

we have new highs for russell 2000, new highs for a lot of the sectors. that is still a very broad advance at this stage. francine: what of the trend was distortion? chris: it will may be, but aren't all trends distortions of who the marginal player in that cycle is? for example, we could argue that in the 90's, the distortion was the hedge funds. in the 1980's, we could argue it thethe mutual fund or in 1970's, the trust companies. it just happens to be the central bank this time around. francine: what would be a reason not to play? what would have to happen for you to say stop following the trend? chris: i think this chart would have to be narrowing significantly first. we don't see evidence of that. the big their market tops are a most always born with participation getting smaller and smaller and smaller. that is not the case yet. tom: zero hedge did a great job this week on what low-volume and

low volatility means. the idea here is it is complacency, or is it paralysis. which is it? chris: i think it is neither. volatility or looking at the vix is simply a reflection of what is happening, not will happen. tom: what about volumes? chris: volumes have been declining for the better part of 15 years and so much volume has moved off market. we don't really know where it is taking place. what's important about volatility is it only describes low volatility as exclusively a feature of bull markets. tom: the theory he just posited is exceptionally important. we don't have time to go into it this morning. let me tell you, this idea of anti-,e vix means, ex, before, or post and after is the heart of the theater. we have a killer single best

chart in the next hour. francine: coming up, we are back of strategicrrone research and a little bit later on bloomberg tv, we have a conversation with the siemens ceo joe kaiser and we will talk about active investors and shareholders and how to keep them onside. that is tonight and throughout the weekend. this is bloomberg. ♪

♪ is bloombergs

surveillance with tom and francine from london and new york. this is what we need to look out for in europe, it seems to be a different story at credit suisse, along with other european banks. the equities unit is under pressure after shedding a third of its market share since 2015. revenue from stock trading has fallen prior to the six quarters. peron is the head of tech the head ofrone is technical analysis. credit suisse is trying to exit with europe's assets. what will he find out on the equities unit next friday y? >> judging by what we have seen, equities have performed flattish

year over year. i don't think we will be expecting anything majorly positive from the results coming up. one of the things people will be looking forward to is just to see signs of stability. the equities trading unit has based on twoessure things. one, little bit of underperformance, that unit really struggled a year ago and secondly because of sizing, so they have shrunk trading quite dramatically. francine: what is it mean for european earnings overall? this week we had goldman sachs, mario draghi and previous week, jpmorgan. compare the two kind of regions in terms of banking industry? the investment banking side, there are some overlaps. one of the things we should look out for is weakness in treating and also the underwriting side and advisory side it seemed to be a slightly better quarter so

we should see pick up on that front. in terms of the kind of retail banking outlook or commercial banking outlook, there seems to be some more positive signs emerging in europe, so we will andfully get commentary improvement from european banks. tom: is the anglo american religion of use of cash been discovered by the continental banks? arjun: i think it is still too early to say. tom: agreed. arjun: the banks are generally in a better position to lend. if you look at credit suisse and deutsche bank, they recently raised capsule. it is all focus now is on the outlook lending. we are starting to see pickup in eurozone economic activity and i think that is going to be a key focus of results. cryan, i morning mr. hope you are listening. the idea of -- banks that go up and banks that don't. christopher verrone, how do i

get on the jpmorgan path and avoid the bank of america, citigroup half? chris: among the names we just mentioned, the jpmorgan chart is the most impressive. it's the only one that has shown it can make new highs. last fall it broke a big 15 year base. has been-- this stock in here a long time and we think it is the leader in the sector. tom: the fundamental guesstimate out of friday afternoon, chris verrone, is do i want to buy how do youeader or find that a value in a bank of america? think about the group as a whole. a lot of these stocks are still up meaningfully from where they are 12 months ago -- where they were 12 months ago. all the have done is pause in

the context of up trend think this is just a pause. near 24, jpmca near 90. citigroup acting well all despite rates having come from 260 down to 225. in that environment, i have been impressed with how the banks in the u.s. and europe have held up here. francine: thank you so much arjun bowry in london and we will be back with chris verrone. coming up next week, we focus on the european banking earnings season. i will be speaking to the credit suisse ceo to see what he has to say about various units next friday. this is bloomberg. ♪

whoooo. i enjoy the fresher things in life. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices from over 200 booking sites... ...to find you the lowest price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices. tom: it is not the general electric of 10 years ago. out with earnings, one of the great joys is they actually issue earnings in english. let me turn over to the bloomberg and give it a look.

the number global wall street always wants to know is organic revenue growth. that is the interior revenue growth and it is a nominal gdp number up 4% is what i see in the headline number. they would like -- they make a big splash, about almost $8 billion in use of cash to shareholders. jeffpoignant right now is commenting here in one of the final quarters. he is talking about the ceo transition looking forward to that going well. we will speak with nicholas hammond on general electric here in a bit, looking forward to --nicholas -- make haman. taylor: there are reports white house lawyers are trying to discount special counsel robert mueller's investigation into the trump campaign and russia. according to the new york times, they are looking into the background of mueller and his half for conflicts of interest. the information could he be used

-- could be used to build a case against mueller. the plan by opec and russia to clear the global oil glut has not worked as they hoped. there is little chance they will aggressiveh a more stance. oil is in the bear market and inventory is high despite a deal between major oil producers to cut production. a magnitude -- an earthquake rocked an island overnight killing at least two people. more than 120 were injured. the head of the cia warns russia and iran both threaten u.s. interest while they pursue roles in syria. mike pompeo said the russians .ant a warm water naval port he said iran wants to create a quarter through syria and iraq while trying to become the kingpin of the middle east. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries.

tom: thank you so much. reading into the weekend, you can start with no one better --n post-american world writing a brutal essay on what we witnessed over 180-some days. "understood as people want to hear and articulated must of it. when it came time to deliver, it turned out he had no serious idea or policies or even the desire to search for them. he is a standard issue big business republican, albeit an incompetent one wrapped in populist clothing." scathing. some of the tone in washington. joining us, the gentleman that has driven coverage on politics, marty schenker, our senior editor for economics. chris verrone with us as well. marty, congratulations on the last 24 hours of bloomberg news.

what was distinctive about the reporting yesterday? marty: just the level of specificity on what the mueller investigation is focusing on. everybody generally knew that he was looking at donald trump's affairs, but nobody knew quite specifically what he was looking at. tom: to drill into this, i talked with mr. farrell on cnn and the idea of how -- folds into where mr. mueller is going. this is not the secondary. this is a big deal. marty: it is a big deal. one of the interesting things is to find out when the intersection of dismissal and the investigation into these matters intersect. we haven't been able to establish that connection, but that is something we are looking at. tom: what you have done with decade -- for decades with your work here is link politics into what banking is doing. kevin cirilli is adamant that

the distinctive feature of mr. trump's past is his relationship with deutsche bank. by definition, they have to cooperate with mr. mueller, don't they? marty: there have been demands from congress for documentation on the $3 million in loans. tom: how can they say no to that? their they can, but at peril. within deutsche bank there is reporting they are preparing for the day when mueller asks for those documents. francine: marty, why do we think president trump may fire robert mueller? hety: we don't know whether is thinking about it, but everything we know about donald upset, hehen he is tends to do things that many think are not in his best interest. certainly, our reporting shows that if he were to fire investigator mueller, it would basically destroy whatever senior management there is at

the justice department. he would have to fire every single person until he found someone willing to do it. a lot of people thought firing jim comey was a really bad idea and he did it anyway. it is possible it is being discussed. it may be just emotional outbursts. it is questionable whether he is really serious and now he is shaking up his legal team. we will see if his whole stance changes. francine: it is possible, but this makes us think about 1973 and what happened during kind of the watergate investigation. how will the republican party react if the president fires robert mueller? a verythat is actually interesting question. everybody keeps looking for market impact from the trump controversy and it is questionable whether even firing mueller will have a long-term and then his base support he has among republicans

in congress. they do have an agenda, they do have a reelection coming up, and they have stood by this president despite all of these investigations and his outbursts. withmarty, mike allen general mcmaster, this is a guy i think we can say in uniform in the white house, the reporting is becoming a fractious relationship. when do the resignations?start have you been surprised we haven't seen bodies moving in or out like the legal team? marty: i think it is something i have thought aboutmarty:. at what point does it just get too much? i think these senior members of his cabinet think they are doing something that is patriotic, that is serving their country as they service president. .- serve this president at a certain point you would think it is too much. we don't have any indication anybody is planning to quit, but

it is a contentious environment in the white house. tom: marty schenker, congratulations on a post -- on a great week of political coverage. -- driving forward the financial story of the president's past and present life. business week, two covers again, very important than a great tech cover about what to do. you just heard rupert harrison and chris verrone talk about tech leadership and the strength of that leadership. this will give you wonderful background reading over the weekend and that a politico story off of marty schenker's team. this is the idea of media. felix gillette with a killer article on sinclair and the oddities of the organization and their support for president trump. from london, from new york, this is bloomberg. ♪

♪ getting them all to calm down and give up parties for a week or two and settle down and then call my start producing a serious, grown-up, detailed strategy for negotiations. in my opinion, they will only get it through the house of commons. if you take a more broad cross party approach. francine: that was the former u.k. chancellor and home secretary, ken clarke. he calls himself a maverick and he said it is time for his conservative party to regroup, come back after the summer recess and come up with a plan. this comes two days after -- said the u.k. is a bit muddled in its thinking. let's regroup in september with a plan of what the u.k. actually wants when it comes to brexit. tom: the old guard by ken clarke

and the old guard of rupert harrison was a fascinating back-to-back set of interviews of where the middle ground is in the united kingdom. i don't think i still understand exactly -- is tony blair closer to ken clarke? i really don't know. francine: in terms of ideology and popular, -- popularity, probably not. protecting the rights of the nationals was meant to be the easy part. they kind of agree on that. let's see what happens with the rest of the negotiation's. coming up shortly is "bloomberg daybreak: america's." what you have on the show today? jonathan: coming up as mohamed el erian. we're going to get into the ecb story. a fascinating dynamic where the dovish words of mario draghi yesterday fell on deaf years in the fx market. the euro continues to get bulled up. , their bondsin

carried on rallying. you've got to go back to the financial crisis, the debt crisis of 2012 in europe. it is the risk on, risk off europe story we've got to get into. tom: it's just -- to get you to real yield 12. what are you going to do with lower yields at 12:00 noon today? they are getting a little bit more cautious about what is happening in that space so we will talk about u.s. credit a little bit later. i thank you for the plug, tom keene. tom: jonathan ferro, thank you so much. "real yield" you will see that at 12:00 through that show is very informative. he is informed for decade, nicholas hemanth i would suggest knows more about -- nickolas heymann, we are honored to have him on the phone. mann, when did hey

we see the new ge after the ceo exit? : i think that will show up this fall and i don't think we are talking about changing structurally the company in a major way, but we will work to reset expectations that were probably a bit more aspirational than intended when originally set for 2018 i think we will also have a clear line of sight cashtting this company's flow operating to $20 billion. tom: i look at the press release and it reminds me of ibm. is general electric financial engineering or is there a real meat to the cash flow in the distribution to shareholders? nick: there was a structural return to the industrial roots and in the process, there was a confluence of many things that ultimately drained a lot of

cash, whether it was the simultaneous introduction to new confer --asset -- to to convert to maintenance contracts, sharply higher cash pension contributions, much higher than anticipated to spending over ge digital and the emergence of an excessive reliance this year on h-share of purchase. i think these will all be addressed and sorted out and in the process, there may be adjustments to the portfolio of ge. francine: speaking of adjustments, this month' ge closed a deal to combine with baker hughes. this is, i imagine, to try to broaden their product offerings. are we going to see more deals like that in the future? nick: i think this gives them what they need. ge touched to her three of the north american upstream independent and baker hughes touches mine. two of the next two major root waves, outsourcing of service,

and predictive seismic to increase the output of wells. ge has and now it has access to customers the need that. francine: will they make any acquisitions? nick: i think you are going to see a lot of fallout in terms of consolidation that is going to continue to accelerate. i think halliburton may be a buyer and i would think siemens would be a buyer and baker hughes ge, you can about the four in the club. tom: nick heymann, i am going to bring up a chart from ge. the is going back to ml -- old ceo's tenure. is the nick heymann world undervalued after what you saw the take out of french's mustard this week? we are taking up consumer companies, seven times sales. do we understand the valuation of some of these core companies? nick: right now, i think the

most important thing is 1, to remove the over tank -- overhang of the specter of the reset. there is some folks talking about $1.25 in earnings instead of two dollars. we think it is in the neighborhood of $10 -- 10% or 15%. can see anf you opportunity for $20 billion on how you plug these holes, then in the cash flow, you know beidend can grow and 19 will a second issue. can you grow the company and the dividend at double digits? i think once john is out this fall, i think they will certainly be a lot more interest in the name. right now the interest we get from calls talking to clients is, how much overdone are all the naysayers? the biggest noise and the worst outlook was before the change. that was the eye of the storm. the talk about cutting the

dividend. dividend is never going to be cut, john said that, and there is no reason to put cut just the buyback if nothing else. 20you can go from 12, 14, to mi think you will have a lot of people own the stock and a think you have what -- you will have a very different number in front of the price. tom: this is what "surveillance" is all about. a fundamental analyst like nick heymann and mr. verrone looking at the charts. chris: i agree, i think expectations for ge are extraordinarily low. when i talk to clients, we don't get the sense people are focused on what is changing. it almost reminds me of microsoft in 2012 or 2013 when there is a leadership change starting to take place and people ignored the stock. .6 is ge today perhaps in the short term there is risk to 24, but we think it

starts to put a bottom in this neighborhood. what has been impressive, ge is a large weight in the broader industrial sector. when we take out of ge, we realize how well the broader industrials group is acting. there is still leadership from transports and airlines, anhinery, cap goods, this is impressive group when we take out ge. i stay with the group your. tom: we will continue with chris. nick heymann thank you for coming on with us right after ge earnings. williamann is with blair. if you are on global wall street, you get the pleasant tv tv.resent is valuable because you can go do a look back. whatis a tease forward of we will show you in a moment, single best chart, this is nasdaq 100, bonus round. you can feel francine lacqua's

quadratic log chart. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." i am taylor riggs. cutbacks are on the way. one of the world's largest

agricultural commodity trading companies, archer daniels midland is cutting jobs after a review of the business. an internal memo did not see how many jobs would be lost. they have struggled because of a multi-year slump in commodity prices. there will be a big payday for two whistleblowers in the case involving jpmorgan. they will share a 61 million dollar award. they helped make the case that jpmorgan did not tell wealthy clients it was steering them into investment that would be the most profitable for the bank. that is your bloomberg business flash. tom: francine insisted that we do this as our single best chart. we got a huge splash on this over the last 48 hours and we have the right guy on set for this. for those on radio, i will redo it when i get over to radio with david gura. on the left, a curved or quadratic and on the right, a straight line. this is a different

inflation-adjusted nasdaq 100 in the 1990's. christopher verrone has this tattooed to his brain. this is not 1999. dois: this does not even 1989 justice. 1999.as exponential in the more you overshoot on the upside, often the more you undershoot on the downside. we saw that through 2002 and 2003. when you look at the picture today, these tech stocks are not the only thing working in this market. yes they have been good, but they are not consuming the whole overturns. unlike 1999 where the 10 largest banks were responsible for all of the year's's gains. tom: you remember this and i know jason tranter remembers the silent in 2001 through 2003 when we look at profits and knew it was fiction. the accounting of the companies on the business week cover this week, the accountant is better

today. we actually know what -- is for amazon. chris: exactly and the iron he is the sentiment is worse when you look at the resistance to people to embrace that story. these are stocks trading at valuations a third of where they cases triple the earnings. from that perspective, it may have been a fiction in 1999, it does not look like a fiction. if you are there, stay there. francine: since you are optimistic about equities, what do you worry about? chris: i always worry about credit. that is the one thing that gets us more cautious or pushes us in the direction of being more careful. we saw spreads make new lows. if we are going to get more cautious into the back half of the year, i would imagine we would see a deterioration in the credit market. there is not a ton of evidence for that, but we are watching for it every single day. it always moves our call. francine: do you worry about not

enough players being on the market because of passive investment and if that were to be a reality, would that change your view? chris: i think one of the ironies here is despite over the last year plus, this massive explosion in passive assets, we have actually started to see active managers do a little bit better. the majority are beating the index thus far in 2017. we have seen dispersions widen out and correlations moved lower. i think the irony is this big move to passive probably comes at exactly the wrong time, especially as central banks become less accommodative and there is probably no greater benefactor of central-bank policy over the last 10 years than the active management strategies. next20 seconds come in the 14 hours we are going to see doom and gloom articles. what are they going to get wrong? chris: i think they get wrong that this bull market is not seven or eight years old. lastbull market was reborn

february. we had a very meaningful drawdown across the major indices from mid-2014 to mid 2016 reset the bar last winter. tom: always valuable, christopher verrone, thank you so much. you can send me the love notes and send the hate notes to christopher verrone, those of you that are doom and gloom. very strong euro, we feature that 116.45. we need to say thank you to all particularly kevin cirilli and marty shanker in washington as well. from london, from new york. this is bloomberg. ♪ whoooo.

i enjoy the fresher things in life. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices from over 200 booking sites... ...to find you the lowest price...

...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices.

draghi's dovish words are encouraging traders. the special counsel will expand his russian investigation into transactions involving the president . -- businesses. microsoft is showing its turnaround plan is to act on track. good morning, good morning. daybreak." omberg futures are in change. the euro is still big. we have another point percent. bonds are big over in europe as well. the yield is down 49 basis points. the out performer is what today's bonds. -- portuguese bonds. this level had yesterday