francine: the president will give a primetime speech later today. will the white house look any different? no inflation days. central bankers go to the annual summit in jackson hole. merkel's message. the german chancellor takes messages live on gilts right now. this is "bloomberg surveillance" and im'francine lacqua in london. we did have quite the weekend. thursday and friday were some of

the busiest days we have had in a while. extending declines at the end of the week, said to be dominated by the central bankers. we are seeing persistent, low inflation. the dollar-yen and gold are train let's get straight to the bloomberg first word news. reporter: off the coast of singapore, 10 sailors have been injured and search and rescue efforts are underway after the uss john mccain collided with a cargo ship. significant damage to the hull triggered this. south korea begin their military drills today, actions that could lead

to war. this follows weeks of heightened tensions, including kim jong guam.hreat to attack the u.s., mexico and canada have ended the first run of talks on the north american trade agreement, saying commitment to wrapping up the negotiations with a far-reaching deal. the next out of talks is scheduled for the start of next month in mexico. a then moved to canada later in september and back to the u.s. in october. additional rounds are being planned for the remainder of the year. qatar is telling its banks to lave internationa capital. to raise the central bank is holding regular meetings with monitor. they are encouraging banks to bu

, resulting in a further depreciation of foreign-owned entities. talks resume in a big pivot discussion towards the trade deal. willsa may's government publish five new position papers this week. yesterday they declared they were stepping up pressure on the block to shift the terms of the association away from the t alks. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm nejra cehic. this is bloomberg. francine: we are getting less take shares of, i believe, beginning to gather some steam. and believe that is the interviewer. we should see the chancellor there, there she is, starting with her first or second question. we will monitor that is a lot of breaking news headlines will

probably be crossing the bloomberg terminal. president donald trump will make a primetime speech about what asia later southeast as he looks to get his presidency back on track. the directs all department of steve bannon and a week of upheaval over his response to white nationalist violence. for more, let's bring in jodi schneider. will be the focus of donald trump's speedch, and what is his strategy in delivering it? reporter: he is going to talk about afghanistan and a southeast asia, but more important is the strategy. he is trying to get back conta n track during a 17 day working vacation, at which point many things happened. response to the charlottesville incident, which furyd a lot of

his record, his approval ratings are at record lows. he really wants to reset the conversation by talking about the military and foreign affairs and trying to be more statesmanlike. -- thatl really rule will be the goal here. can we expect to hear on afghanistan? >> it will be interesting. the speech is apparently written and they are still looking at which themes they want to hit. we do know that steve, his fire that just left, really was against more, increasing the levels in afghanistan and other advisors met up with cabinet members and put the defense secretary and secretary of state at risk, who want to see a continuing practice at trips.

it will probably be a task, the cabinethow members were able to convince him. for him, it almost just as important to settle. he will be at fort myer and it settling. we are trying to look more like a statesman, rather than the impetuous reactor. francine: thank you, jimmy schneider, talking to us from asia. nowing is now -- joining us is luca paolini. j the gamesoings that we saw -- thanks for joining us here. my is it not taking home. we see a reversal today.

equity you look at the market, what has been a key feature of the last few days is a reassessment in terms of, i think, the global economy, but in a sense what life can do. are being more cautious, but we also see from the last few months that every time you are kind there is a correction that is almost found out. some threats are probably changing in the global economy and especially in the us.s. francine: what did you make of the week in u.s. politics? >> there were a lot of departures, key tenants, of the pressure of the economic white house. flavor asctionist flav

this is, when do you actually see a more interventionist, white house, regarding industrial policy? away's are, we have the strategy for the first six to nine months. these troops trigger a change in behavior. francine: what is priced in at the moment? if the president today favored on message -- he has a primetime address -- if he focuses and does not go off piece, distracts rally? oven. it a bacon of the >> nobody.

i think a few months ago everybody was pricing this in. now it has been really priced out. any kind of indication that the administration will have a difficult time will be revelation for the market. what is quite interesting about that is will the department see steve bannon lead to a more multilateral cross yed approach from the same area. thus far, it has been a confrontational stance. it has been going well for tax reform, health care reform, some of the recalibration of trading relationships. with steve bannon not there, will there be a sensitive? reporter: i imagine you need to

look at stress points, or points where you then make an education whether or not tax form will go through. with a reward disturbances over the next couple weeks? >> there is the potential for a government shutdown later in the year. what will fall out of that turbulence over capitol hill. he will either bring the republicans together or split not see the midterm to time.ahead of think, in terms of equities, we are supporting our earnings. i think the key feature has been strong unemployment in the u.s. risk premium.

and i software asian, think it is too political. it is there difficult to assess. it will still be inflation and a special earnings. those earnings were going to tell us if you could join me. francine: simon and luca, both stay with us. stay with "surveillance." as mario draghi's head to pressure from the public as the nation prepares for this election. car she says that the industry are not just to blame for the scandal. this is bloomberg.

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francine: this is "bloomberg surveillance" and i'm francine lacqua in london. reporter: total rated purchase the oil and gas unit of ap miller. the french company will assume $2.5 billion of net debt. the transaction is another part of the find of the pace and deals in the energy sector. though shares rose on that news and we will be speaking to the coe at 10:00 a.m. u.k. time.

sempra energy has agreed to purchase control of texas power distributor oncor electric delivery for $9.45 billion. the deal for energy future holdings, which owns 80% of at $8.8is valued billion, including death. the company also said it could lift returns further as top miners reward investors with higher payouts amid a revival. the frontrunner to become the next ceo of uber. according to technology websites , citing identified sources of knowledge of the situation, a majority of the ride hailing company's board is coalescing. they also said a vote is likely to happen within the next couple

weeks. will be interested in purchasing fiat chrysler's jeep division. jeep and wantsuy to begin negotiations with fiat chrysler. that is the bloomberg business flash. thank you. angela merkel is facing questions on refugee crises and google emissions scandal's at a televised event in berlin. stopn schulz begins 40 tour to catch up with the frontrunner. joining us now from berlin is alan crawford. what a great time to have you on the program. he wrote a chance on her chancellorship. what development were there over the weekend? reporter: as you said, these issues of the refugee crisis and the diesel scandal. loose,'t shake these

but there was a town hall yesterday evening and she was repeatedly asked about these two issues. she was expressing anger over the diesel crisis. know -- at least she is asked what more she could and should be doing. at the same time, the leader of the bavarian sister party, he was saying we can't indulge ni any kind of rich hunt. d.ese two issues are relate these three issues were ones that came up during the weekend. francine: any poll movement? reporter: none really. it is all just small movements, 1% or 2%. merkel is still about 15 points

socialf martin schulz's democrats, but at this point, there is no obvious coalition. own about 47% total, which you can just squeeze a collision, but it will not be very comfortable. we are looking at some form of relatively unusual coalition, potentially out the likes of ore, or a repeat of the grand coalition of the two parties. francine: how could that change the dynamic, if anything? >> since he pointed it out, he is embarking on his campaign rallies red across the country. merkel started a month ago. it is hard to see whether these actually change the voter outlook. the polls. it is more visible at the grassroots level.

writeery reluctant to anybody off. he has an opportunity to at least call back some of that momentum this week. francine: alan crawford there anin berlin. us, the chief economist at panmure gordon. on telling me, jordan, he is different. what if something happens between now and september 24? >> seems unlikely, but we have said that in the last 18 months. at the german economy, it is still performing very strongly. unemployment is ill falling. -- an of women is -- unemployment is still falling.

you can track that quite nicely with where martin schulz was able to connect as german households become more comfortable with their finances. statems unlikely at this of the cycle. francine: do you agree, or do you have to hedge somehow? all the honest, almost major parties have the same kind of money fest. the on the result that could shock markets. we cannot say it is impossible. any other result is pretty much irrelevant. the german economy is doing well and the german market is influenced by the global economy. francine: do german. looking expensive. -- do germans look expensive here? >> no, they are extremely

correlated with economic momentum, accelerating or not. the dax is down. demand, call for the we think we are not going to get a consideration and we are meeting new requirements. >> what is interesting on the campaign trail, i picked up on some of the themes thus far that have been quite domestic. matt miller mentioned it. the key element for the market, key, willrly for the be the degree to which he wanted to talk about europe and egypt and the things that are on the macroeconomic gent and things that center around policy. what degree does it she tried to play that theme into domestic politics? she's been very quiet and i

onspect that is purpose. international investors, looking what he does bring to bat will be a key indicator moving forward. francine: we have the net dollar positions. ecb enters a the crucial part of the battle. mario draghi six this week if with the main event in jackson hole, wyoming. three years ago, he laid the groundwork for the bond buying program. what will he get this time around? there seems to be almost a one way movement, the dollar was going down and the movement was going up. the ecb said, we need to start worrying. comments those, about concern.

i think it is overbought. i actually think we will see some entrenchment. there has been a lot of momentum on stuff that -- the tapering of constant easing, which has not yet been added. the very quiet i think in jackson hole around the huge policy trajectory into 2018 with the qe program. francine: i'm also looking at the u.s. bund two year spread. you have the euro-dollar in white. here is the divergent trend accelerating. continue? sothe main reason europe is strong is because six months ago, most people were expecting the u.s. economy to outperform. now the situation is the opposite.

now, we have only one hike for the next 12 months. you said that. you look at them. i think they will get out of bounds, but still out of bounds for the rest of the euro. your positioning is also great. do you worry about italy? this is the one thing investors are worried about, something ugly happening after march or april of next year? how does the ecb deal with this? >> we are worried, yes, but not for the next three months. we not panicking about the italian force. italy yes, is an issue. it is a country where the companies have the strongest

base, but it is too early to worry about it. francine: do you worry about it? >> i worry about the nonperforming loan book. been the case.o it continues to be a drag on italian economic performance. but the lead indicators in europe have been trending upwards. that will spill over into the italian area and therefore, the margins should really move the ability of the populace to garnish economic discontent. francine: let me show you a chart we do not show very often. it is a nice set up for jackson hole. i have the swiss-yen. do you like that cross? bank in jackson hole has a very difficult task in hand. let's talk about the key

protagonistss. janet yellen risks being a little bit of a sideshow amongst debates over who takes over, if she's done with her term. could bring us a surprise. nobody is expecting him to talk about future policy. and luca simon french paolini. both stay with us we are talking a jackson hole mind. thank you,. cohen could be -- thank you, gary cohn could be the next two had the fed. ♪ ♪

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change the way you wifi. xfinity. the future of awesome. surveillance" and i'm francine lacqua in london. reporter: u.s. president donald trump will make a prime time speech later about afghanistan

and south asia. that comes as he looks to get his presidency back on track after the departure of chief strategist even been -- chief strategist steve bennett. the president has returned to washington after his 17 day working vacation, spent largely at his golf resort in new jersey. he will speak at 2:00 a.m. u.k. time. sailors arepore ,10 missing and five have been injured. search and rescue efforts are underway as the uss john mccain collided with the machinery ship. there was significant damage to the hull, which resulted in a flooding of compartments. if the second crash -- that is the second crash involving american naval ship in asia in two months. this follows weeks of heightened tensions, including kim jong u

n's threat to attack guam. president trump warned of fire and fury. kim said he would watch washington's actors before deciding to attack. britain has returned to a provocative posture with the pivotan union in a bid to discussion towards a trade deal. theresa may has five new position papers this weekend that is after declaring yesterday it is stepping up pressure on the block to shift the negotiations away from the terms . global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm nejra cehic. s kickne: the central bank off this year. there is a possible replacement this year of janet yellen. is emerging as a clear front runner for the nomination to succeed yellen. yellen would be

secnd term. how do you look at this? first of all, is it too soon to talk about who could replace janet yellen? >> we are only five to six months away. i don't think it is too soon. we are already looking up what 18.d policy might be in 20 like we said before the break, just one rate hike put in. can anybody who comes within gary cohn the more dovish? i'll think it is so much the dovishness or hawkishness. gary cohn, you think of a very dovish.

the announcement will come as a surprise. , think from our point of view i think the fed, whoever will be the chair will be driven by data. in that sense, i think we have a big impact on the markets, but we don't know when it is going to be, so it is difficult to assess. reporter: i hate to disagree, isk ise r there. you look at some of the people on that list, look more to and theyn that list, have a more mechanical approach. they might will choose financial stability or other factors within the economic infrastructure with which to guide rates.

that is the risk for the market. francine: but is it more or less confusing than what we had before. five weeks ago the fed was saying two rate hike this year and last time the fed met, they realized themselves for the market. has been bullish because they were exciting strong growth. when you look at the u.s., 2%, not 3%. nothing has actually changed. what has changed, inflation continues to fall, even if growth accelerates. this is a problem we all have. matt: that brings us to the title of this symposium. francine: and yet. matt: and yet. growth, not 3% or 4%. they are trying to discuss the

structural issues that are holding back. francine: they argued that the data we looked at is broken. you need a completely new set of things. francine: you have got a series of issues the central banks are comfortable talking about, how you define that structural reform and effectively model which are the most effective. the other titles are the symposium and how it could look. all of our models are broken. in a scenario where you have monetary policy, tightly markets, inflation is nowhere to be seen. none of the central bank models actually predict that as an outcome. as what we do here, we predict the outcome. it is difficult to say the fed is not data dependent. i am not so sure that the fed

can continue. francine: luca, when you look at the breakdown of the balance sheet for the fed -- securities, what kind ofls - market would be affected the most? reporter: i think probably the nbs will be most affected. it is not just the federal reserve, but about the economy. we don't know the details exactly. i think the most important point for us, when you look at the global central banks, these here toe printing $2 million $3 million. thisuantity for us makes situation difficult. francine: my is inflation so tricky? -- why is inflation so tricky. >> how long have you got? francine: 20 seconds.

[laughter] >> people in these markets are overpaid. that monopolies who held prices higher are being contested across everything will industry, keeping developed market inflation under pressure and just enabling exceptional monetary conditions, not to generate the conditions i least expected. folk stay with us. stay with "surveillance." plenty coming up, including britain's brexit situation. a break with the demotic standoff with saudi arabia. this is bloomberg. ♪ francine: this is "bloomberg

surveillance" and i'm francine lacqua in london. let's check on the markets. total agreed to purchase the oil and gas unit of ap miller. $4.5 million is the pace. another sign of seeing the pace of deals in the energy sector successfully. they received a contribution of almost $5 billion in total shares. the company will receive 2.5 million dollars of sales.s it is interested in purchasing the cheap division. china's chief automotive maker plans to sell pricier vehicles,

whether negotiations have begun between the automakers. the great wall has been try to push of the market in china with a new brand becoming the top seller. the chief prize, the chief executive telling analysts last month that they are looking to separate part of the businesses as part of a strategic plan unveiled for 2018. money managers, pushing their net debt bullish sets on gold. wages have surged more than sixfold over the last five weeks. ,utures are up by 12% this year $1306 on the ounce. the rally will continue.

bloomberg expressing bullish sentiment, theory for economic growth and north korea tension and the terror attack in barcelona last week. yields on the german ten-year bunds have retreated from the 18 month high, back below 0.5%. there's the white line, the euro -dollar. misaho and standard bank, francine, extending more support to your area bonds, while the ecb is still expected to announce as early as september the plan to scale back asset purchases. market speculation is growing a strong euro, which means slower stimulus tapering than previously estimated. francine: thank you so much. we are still unclear whether it is packed enough. britain and the european union are at odds over houston brexit

talks.and pivot to theresa may's government will publish five new position papers this week. yesterday they declare they are stepping up pressure at the bl ock. joining us now is the london bureau chief. emma, always great to speak to you. how much do we know about the papers that will talk about? >> we have got five and the third coming out will talk about trade. this is already in the market at the time of brexit. he most interesting one will be on what will replace the ecj. it is a dispute resolution. the u.k. said it wants a close relationship with the eu. what it does not want to be under the jurisdiction of the european court of justice.

it is totally a boon for the pro-brexit members of the government. they believed over the weekend that david davis was looking at the older model. the court tends to follow his hearings. some countries have access to the single market who are not eu workers. that will be the most interesting at the table this week. francine: what do we know about trade? when could we start trade talks? >> it is interesting. in june the u.k. had accepted the topic. have beenthe exit sort of could then on to the future relationship. e thought britain had agreed to that. david argues the very thorny issue of northern ireland will be easier to sort out a few do it over the relationship.

once you know what that border will look like, what the custom scenario will look like, it will be easier to sell. barney has been very clear that he decides the sequencing and that until the ecb decides otherwise, they have made much progress. >> the cabinet seems to be little more, i don't know if it is ready, but combative. >> the fact that there are some position papers coming out will address one of the big challenges. if you have not stated your case ahead of the first iterations of .egotiations, when we come back looking to replicate a lot of the existing infrastructure. symbolic are some

words, actually, in the u.k. discourse. ecj, free movement for workers, the customs union. the u.k. wants to get out, but replicate, probably under a different name. because you lose your sovereignty. beingne: if the pound is replicated? >> if you look at the position of investors, it is very obvious. the risk, that is what i see, it would probably give three to five months to the uk. we probably feel that the positions of the u.k. and the u .s. are a little the close. over the next three months, investment will probably wait and the economy will be under pressure, but then i think inflation will become important and the pound can actually rebound.

i think the next three months will be under pressure. francine: they start talks on the 29th, but most of the negotiations are back in october? >> the week of the negotiations august.n the eu really wants to get the government sorted before the eu leaders will say that enough progress has been made. october is important because that is the next time the eu leaders all meat and together 27,l decide, actually, eu they decide if enough progress has been made. there are headlines that the u.k. government does not want, there'll be no talk about trade until 2018. the clock is ticking. francine: what happens to the pound before then? does it move on every certainty, or does it look to mark carney for guidance? >> if it is looking at mark

carney, he will continue with monetary policy as is. but i do think he will get support from a hot money flowing into the u.k. ideai think i flow is the of replicating the existing architecture and being a country with very similar arrangements. i think the u.k. will get some bid on the back of that. francine: thank you. still with us, luca paolini. up next, the saudi king and crown prince. this is bloomberg. ♪

francine: this is "bloomberg surveillance" and i'm francine lacqua in london. here's nejra cehic. reporter: total has agreed to purchase ap miller. the french company will consume $2.5 billion of net debt. the transaction is expected to

close during the first quarter of next year and is a sign that the pace of deals and the energy sector is accelerating after a long downturn. chairs was the most this year on that news. i will be speaking to the ceo at 10:00 a.m. u.k. time. this tops the bid last month by warren buffett. the deal for energy future holdings, which owns 80% of encore, is valued at $18.8 billion, including debt. fortescue metals has jumped in sydney trade after the world's fourth against iron ore anerator has triggered price rival. m, according to the technology website, citing

unidentified sources with knowledge of the situation, a majority of the company is coalescing around him now. a vote of directors is likely to happen with the next couple weeks. china's is interested in purchasing the jeep division. in business and will continue to monitor the situation. morgan stanley estimates jeep could be worth about 20.6 billion euros, giving it a higher bac market value been thn fiat chrysler. some media outlets close to the last portrayed this meeting as a diplomatic effort, but the qatari government says the shake was on a personal level. two discusses developments further, we are joined from abu

dhabi. first of all, congratulations on a great story. who is he and why is he being thrust into the limelight? >> this was a surprise move, watching this, they have not talked about a regime change. many off guard. this man was suddenly meeting with the king of saudi arabia and the prime friends and a lot is being put under his command. from theo one officials in these countries have talked openly about regime change is. and he has not talk about it himself either. isn't certainly meant to maybe put pressure on the government which had refused to capitulate so far to the demands by his neighbors. we are now getting into the third month. francine: is this an adopted

policy, or just a pressure tool? will it work? yete don't know that because they have not communicated that yet. though the press is talking about is quite a bit, hinting at it. me -- wasstss tell analysts tell me they are trying .o influence the central bank is telling the bank to go out and seek their own liquidity. that is why foreign reserves are dropping and the country had to spend a lot more money than it anticipated. obviously, if they have to move a lot of the supplies through other, through sea and through

the air, instead of the very cheap entrance to the border of saudi arabia. francine: thank you so much for the update. a great story again and we will see you shortly on "surveillance. this is what you should be watching this week. donald trump is scheduled to hold a rally in arizona tomorrow, his first visit to that state since his election. the next day whole foods holds a special shareholder meeting to vote on the proposed $13.7 billion takeover by amazon. on thursday the kansas city fed posts the annual jackson hole economic symposium. this is bloomberg. i will be joined by david gura next. ♪

francine: trump presets. the president expected to get

desk give a prime time -- expected to give a primetime speech today. bankers had to their annual summit in jackson hole. the $7 billion acquisition for totale. merck's ceo joins us to discuss the deal. this is "bloomberg surveillance." david gura is in for tom keene this morning. i know we have a lot of politics to talk about, but i think the markets are focused on jackson hole. david: absolutely. mario draghi speaking there. and on wednesday in switzerland. francine: let's get to the bloomberg first word news. in ar: for the second time matter of months, a u.s. warship has been involved in a collision in asia.

10 american sailors are missing and five were injured when the uss john mccain collided with an oil tanker near singapore. search and rescue efforts are underway. june, seven american sailors were killed in a collision between a u.s. destroyer and a cargo ship off the coast of japan. president trump makes a primetime speech tonight on america's longest war. the president and his advisers have been working on a revised u.s. policy in afghanistan, where americans have been fighting almost 16 years. is he prepared to commit more u.s. troops? wantse secretary mattis more americans sent to train afghan special forces. over in spain, police have launched a massive manhunt for the man suspected of being the driver in the barcelona terror attack. they have set up checkpoints across the catalonian region.

they say he is the final member of the islamist extremist cell still at large. may'sminister theresa government says it is stepping up the pressure on the eu to shift negotiations away from the terms of the separation. the u.k. wants the talks to pivot towards a discussion of a post-brexit trade deal. .lobal news 24 hours per day this is bloomberg. david: let's do a quick check of the data on this monday morning as we speed toward jackson hole at the end of the week. tod continuing that march 1300. here's a look at wtifr, as well. an -- here's a look at wti, as well. fran? francine: the week will be dominated by bankers at jackson

hole. david: let's take a quick check of my bloomberg right now. having a little fun this morning. we are expecting a total solar eclipse across large portions of the u.s. totalityt the past of -- path of totality across the united states. if you have your bloomberg vehicle -- with you in your recreational vehicle at jackson hole. francine: that stresses me out. don't look at it. no one look at it. david: don't look at the chart. francine: the chart is ok. [laughter] francine: this is the picture, a little bit more boring compared to david. this is net dollar positions. basically what it just showed us. this is the long u.s. dollar. this is short u.s. dollar in red. shorting the dollar is the most

crowded trade in foreign exchange. dollar still holding ground after rising from a four-month of following the dismissal steve bannon from the white house. mnuchin has pushed back against calls from his colleagues to leave the administration. president trump looking to get his presidency back on track. joining us to discuss is the redefine manager. how can the trump administration reset and refocus? >> they simply can't. there was a long history of american presidents and leaders in other countries using foreign wars to shore up domestic popularity and this has worked in the past, but i think the

trump presidency is so far down the rabbit hole that this will not work this time, no matter what he announces in afghanistan, no matter whether it has the backing of generals, no matter whether that makes actual sense on the ground or not. the trump residency is to all intents and purposes over in terms of any serious legislative accomplishments. francine: all right, let's get james into the conversation. james, that seems a little bit harsh. is there anyway the president can get back on track? , not focusing on tax health care, but maybe tax and infrastructure? to investorsed across america. they say that the two people who against mr. trump, mr. mccain and mr. rubio, have been

noisy. his supporters will be saying this is another example of trump 's challenge to the swamp that is capitol hill and he will have to grapple with it at some point. i definitely don't think he is down and out. i meet a lot of people who think he will get a second term. this is not over by a long way. david: let me ask you a bit about the market reaction to the news that steve bannon left the white house, that happened on friday afternoon. there is a line in "the new york times" in which they write that thatn's exit will clarify trump has always been his own chief strategist. how does that change the policy priorities for the white house? mr. trumphink that remains focused largely on the agenda he has always had. i think mr. mnuchin is key in economicmr. trump's

agenda remaining on track. i think the western media has spent a lot of time saying that mr. trump's policies are absurd and if one lifts the lid, there are nuggets of real insight that he deserves credit for. i'm not an apologist, but i do believe we should have some sense of balance. francine: do you agree with that, sony? sony: i'm not sure what insights those could be, but what is very clear is seven months into his presidency, there is not a single legislative achievement. madeof the changes he has have been made through executive orders that he criticized president obama for, which will not -- which are not sustainable . executive orders can only be temporary. hashe meantime, what happened is there has been irreparable damage done to the government apparatus of the, to its reputation, to its

relationships to its allies, both military, as well as commercial, and it is hard to see how this can be good for the u.s. economy in the long-term. the markets, as has happened in the past, have been extremely shortsighted, focusing on narrow things such as tax cuts and with the kind of combative stance, with the total, absolute lack of support from the democratic side and a gradual, steady, but surely erosion of support from the republicans, it is hard to see how he will pass any tax reform. any part ofnot see this government being able to make moves that are actually good for businesses in the long-term. otherregulation and the dismantling of some of the regulatory apparatus might give a short-term boost, but in the

long-term, far more economic andge has been done political risk is higher than it has been historically in the u.s. in a long long time. 350 classmates from the ale class -- he a a class that steve mnuchin should resign from the cabinet.- president's steve mnuchin responded. how reassured argue by the men and women who surround the president at this point? sony: to begin with, what is very clear is that there is a steady exit of many of the key people that president trump started with. no matter who he has surrounded himself with today, it is simply not clear that they will be around for a long time.

the second, in terms of the actual people surrounding him, it has essentially boiled down to generals, which is an expanding part of his troop, as well as x goldman sachs people. they may be competent in their own right. it is not clear that everybody is, but the biggest problem with this president has always been and remains himself. no matter if you bring in an ex -marine general kelly to put , butpline in the west wing he simply cannot stop president trump from self-damaging himself the timeline. the outright lies that came over the past few days have seriously, genuinely, and i think permanently undermined his ability to pass any economic reform. francine: james, if i bring you

over to my short dollar, a lot of people would agree to sony, a lot of people would disagree, but away from the personality, what does it mean for market? how do they position themselves apart from expectations for tax reform? james: the biggest near-term challenges the debt ceiling. mr. trump has 6-8 weeks to get an agreement on raising the debt ceiling. that that will deliver $600 billion of issuance in the fourth quarter to correct the arithmetic of the treasury since they have been drawing out the money that they have had. that is one of the things that will be worrying the dollar at the moment. i would say that the only resolution of the debt ceiling for the u.s. government so they can continue to run is really important to help the dollar. francine: thank you so much, james. thank you so much, sony. james stays with us. coming up, we speak with the maersk ceo after they sold off a

big chunk of their business to total. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." semper energy has won the bid for encore. encore was also being pursued by berkshire hathaway. the biggest suv maker in china is interested in buying fiat chrysler's jeep division. it is not known whether the two companies have begun

negotiations. it is another sign that m&a activity is picking up in the energy sector. total has agreed to buy the maersk oil and gas unit. the price, a little more than $4.9 billion in stock. total will also assume $2 billion in debt. your bloomberg business flash. david, francine. you have more on maersk. francine: we certainly do have more on maersk. the share price hit highest levels as a result of the deal. we are very pleased to welcome on the phone from copenhagen, the maersk ceo. thank you so much for joining us on "surveillance." your share price is up 4%. were you a great negotiator or have markets turned? [laughter] >> our share price has been rising for a wild. i think it is driven very much by better prospects in the

container shipping and transportation businesses. i think this deal has been well received by the market. francine: did you have any other rival lower bids that you rejected? soren: we looked at the various andons, anything from ipo also other possibilities for selling the business to other parties and came to the conclusion that the offer from total was clearly the most attractive from a value point of view, certainly also to the commitment total is making to develop the business in denmark and elsewhere. david: what should we draw from this about the energy sector now? the appetite for dealmaking based on the deal you announced today? soren: well, there has been lots in thegy assets for sale north sea in particular.

not so many transactions, but they are starting to come. in denmark, this is the second transaction this year. earliercompany sold this year. more is happening, clearly. david: of us understand the path forward. you have set this two-year deadline for maersk and the other units you intend to offload. should we expect that to happen on a case-by-case basis going forward? soren: you are absolutely right, david. we announced we would focus on our container shipping business. the first transaction we did was we announced the acquisition of a german container carrier on december 1 last year. now, this maersk oil divestment. then we have three more energy

businesses left to find solutions for and we are working hard on doing that and we will communicate something as soon as we have the next transaction. francine: sir, what does finding a solution look like? is it selling it off for a stock listing? at each ofre looking these businesses individually. we don't think there is a case for combining them and then selling them off or divesting them as one. so, i think we will probably see different solutions for each of the three remaining businesses. francine: talk to me about what you will do with the proceeds. to dore any space acquisitions in your transport business, maybe in ports? onen: we still have to close the just over $4 billion acquisition we announced the first of december. i don't see us doing any other significant acquisitions in the foreseeable future once we

integrate that company and make sure we can deliver on the business case. so, as part of the announcement today on the sale of maersk oil saying that wee expect to return a material part of the value of the total shares become almost $5 billion, to our shareholders through 2018-2019 timeframe. david: sir, thank you so much for the time this morning. that is the maersk ceo joining us by phone. we will be back in a moment with james bevan. later, a conversation with the former ceo of general motors at 8:30 a.m. in new york. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm francine lacqua. david gura in for tom keene in new york. we want to focus on jackson hole, wyoming as the world's top central bankers meet later this week. a lot of the talk will be on stronger global economy. that positivity will be tempered by growing unease that inflation remains inexplicably low. let's get back to james bevan. i imagine a lot of folks will be in inflation. talk will be on

who succeeds janet yellen? james: the speech is on stability. in the june fomc, stability was mentioned four times. the july meeting came up eight times. it is definitely the word of the moment. a lot of people were worried that this meant the fed would be trying to drive down equity valuations to create more stability. however, when one reads the minutes of the meeting released last week, it is very clear that, in practice, the fed are not worried about equity valuations. they are more worried about the possibility of bond deals. we will observe no preparedness to pull back and tighten early. they will continue to be supporters of markets. david: how much continuity do

you expect there to continue to be from portugal and this meeting later this week in jackson hole? conversation the to be a continuation of what we heard in portugal? james: yes, a general migration. i completely shared the view that there will be a lot of talk position. yellen's i think it will be a humdinger of a speech from her. francine: what do we think gary cohn will do? james: we know that he is a man of immense intellect and great capability, but in terms of leadership of the fed, it will be another pair of safe hands. he is not a maverick or difficult challenge. francine: what about the markets? james: i would say that mr. trump wants a weak dollar.

how do you get the sort of growth that he would like? growthalso talked about being of 5%. mr. mnuchin has been talking about it being up at least 3%. i think the u.s. economy is slated to achieve around 2%. the 2% of on inflation, i think that is the environment he will inherit. francine: thank you so much. toes bevan stays with us read up later, a conversation with the prime minister of ireland. that is at 3:00 p.m. in new york. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." i am francine lacqua in london. david gura is in new york. >> there is breaking news from france.

french media reports at least one vehicle in france rammed into a bus stop in the city of marseille. no word on if it is a terrorist attack. the search is underway for 10 american sailors missing after their destroyer glided with an oil tanker near singapore. five other americans were injured in a crash with the uss john mccain. june, seven american sailors were killed between a collision between the u.s. destroyer and cargo ship off the coast of japan. it is a warning from south korea's president as his country begins the latest round of wargames with the u.s. during last year's exercises, north korea launched a missile from a submarine. it is the first round of talks on the north american free-trade

agreement, they have ended. the u.s., mexico, and canada say they are looking forward to wrapping up talks with a wide-ranging deal. 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 u.k. wrapped up the brexit rhetoric this weekend on a more oppositional town a week before negotiations are set to resume. theresa may's government indicated it will pressure the eu to build a new trade deal. this comes as the exit department plans to release additional brexit papers this expecting to break out the most contentious issues, including the european court of justice. -- james bevan.

thanks for joining us. what do we know about these position papers? how significant are they? >> first of all, thank goodness. we are at last getting position statements from the british government. this comes with domestic recognition that we have been nowhere on strategy. i think it should be welcomed by the european union as well. at least we have a position. what is interesting on the ecj position is that this is not crazy. it is quite lucid and attempting to articulate various options. the issue is the red line that the british government has with the ecj because the point of brexit is that parliament is sovereign. the british parliament has to be sovereign. role that is given a is similar to now, dictating more directly to members, that

would breach the brexit idea. the ecj enforces mutual recognition that has been established since 1988 that goods produced in one member states can be sold in all member states. if we lose that, that creates problems for british trade. francine: if there is an agreement on ecj, does that mean brexit negotiations will be tamer and safeguard business interests in this country? business interests have been harmed by the free-trade agreement they've got. i don't think there is any problem getting a free trade agreement with your. -- europe. what we lose from the ecj point of view is mutual recognition, which is legally enforceable. is anhe british navy

independent chairman, judges from both sides, calling for a different sort of court. no free-trade agreement has mutual recognition legally enforceable. they will have to have something like a canada plus arrangement to get the closest possible deal with europe. that will be the subject of enormous debate. business will have uncertainty, and business decisions already need to be made. that is why the u.k. government is rightly trying to speed this up. businesses are already leaving because they think uncertainty is damaging. >> how confident are you that these position papers are the positions of all the principles? unanimityen a lack of already. how ironclad are these? >> the point of strategy is people can get behind it. if you don't have strategy,

there is nothing to get behind. what we now have is policy being decided by people in parliament who, in the absence of policy, are speaking in a vacuum. now you have a position paper people can rally around. that is a huge advance, i think. i think what the british government is trying to achieve s-a-vis thee -- vi free-trade agreement is elusive. it has already been achieved with free-trade agreements elsewhere. this will enable us to get the greatest possible penetration into the single market. david: let me ask how the market is interpreting these five position papers and the timeline and deadlines and degree to which they are being hewn to.

>> the timeline is immensely testing. it always was. people are somewhat bemused that after the gong had been sounded, there was markedly little action. it is important that we get these statements as a proper basis for debate to move forward. a lot of people feel we will not get through the two-year period that is the maximum after all. it isnot the time period, the maximum. we have much to go for. francine: what does this mean for the pound? >> the pound obviously continues to be vulnerable. i don't think we should argue the euro is out of the woods. one way to think about the instability that pervades euro-land is we have the interest central banks lending process administering through

the european central bank where germany's lending continues on an upward trend, and spain continues to expand trying on the issue. the instability in europe is by no means over. francine: do you see parity? i think there is a chance we get parity. i don't think it is by any means a one-way ticket. we have yet to see how italian politics will play out. tot will be deeply important the currency trading community. i don't think chancellor merkel's election is going to be that important. people have said that was the next hurdle to overcome. david: let me ask you about the price significant progress. is there agreement about what that is? >> let me repeat the line that

remains true. nothing is agreed unless everything is agreed. we see the british government trying to recover a position that is already conceded between parallel and sequential discussions. , i think this process could take a long time. i think we are a good five years away from a full agreement. that is just in goods. i think services will take longer. i think, behind the scenes people are talking about transitional arrangements that we could agree a certain period that would allow us to negotiate longer. we have already had the chancellor of the exchequer from one side of the cabinet and liam fox from the other side of the saying that transition period has to be short.

then there is a two or three year gap of what people will generally think it could take. we have not made any progress really. uncertainty continues. that can only hurt britain. david: james bevan and phillip blond will stay with us. coming up on radio, a conversation with grover norquist. a.m. wall 8:30 street time. this is bloomberg. ♪

♪ this is "bloomberg surveillance." i am francine lacqua in london. david gura in new york. germany handed out a big blow to the car industry and an online

interview. this is a live interview where they were taking questions in germany. merkel's main opponent takes to the campaign trail today to try to close a gap in the polls. ond and james bevan with us. let's look at what the chancellor can do. it seems like it is a done deal that she is chancellor. she is so popular. you don't really know what kind of focus there will be. >> if you look at both germany and austria, they have all had the same policies regardless of coalitions or not. in the german-speaking world, they benefit enormously from the current status quote. merkel has defended adroitly the

current status quo as well as letting in a million refugees which testifies to her potency and centrality. the interesting thing is that the german election probably won't deliver any surprise. we should always caveat that in these times. do we have a europe that is equal to the problems it faces? macron that came in with almost a european hyperdrive model. he has seen a precipitous fall in popularity since the french elections. it seems europe itself, although performing well individually, has not become people to any no has nots that equal -- become equal to any of the problems it faces. leaders lead when they face problems. at the moment we have a steady as she goes european leadership, but nobody negotiating for the

more medium and long-term risks that are there. francine: do you agree with that? do we need to make sure the individual countries are strong something thatve is stronger cross borders? >> i worry that europe is a house of cards. the european central bank, in providing the wherewithal for spanish consumers to spend money to support french credit to keep think theying, i will do anything they can to keep this alive and will not move to tighten early. iss negative interest rates ultimately extremely corrosive. it is very difficult for banks to make money in the current climate and insurance companies and pension companies. david: when you look at the

german campaign, the news out of france for labor reforms from emmanuel macron, what is the status of the populist way we saw in 2017? >> the political world heaved a great sigh of relief when macron was elected. they said was in was over. i don't think this is true. the basis of populism is still there. half of american households cannot afford to buy a new car. the economics of globalization no longer works or hasn't worked for quite some time for the european working-class and increasingly will not work for the european middle-class. everything that produced populism is still present. macron himself is a populist figure of the center.

tamedk nobody has the populist dragon. i agree with james when he speaks of europe as a house of cards. europe it is clear that will go along with the dominant models. you have a secessionist movement in poland. you have similar political moves going along in hungary. i think populism will come back reinforce because we have a little failure to tackle these endemic issues and have not discussed anything else. i think populism will come again. david: let me ask you about trade. the members of the transpacific partnership meeting in sydney yesterday. did we declare the end of multilateralism too early? >> i think the future is bilateral iism.

i think multilateralism will try to create a new world order. global,re going really the biggest mistake made by trump in america is abandoning the transpacific partnership. power in the world is about flow of capital. china is trying to recapitulate that position. i think china is gradually winning. the world roles have been written by the west, and i think to everybody's advantage. increasingly, world roles will be written by trade blocks based around powerful figures. i think the end of multilateralism is with us. i think we will have less and less global enforcement of rules. that is why we are entering a dangerous climate, both economically and politically and militarily. francine: thank you. phillip blond of respublica and

james bevan will stay with us. if you have any market questions. it can be currencies, it can be more obscure, we would love to hear from you and answer any questions on tv . you can ask your obscure question next. this is bloomberg. ♪

♪ francine: -- >> this is "bloomberg surveillance." investors are pulling back from the biggest dog fun. street -- declined 13% from their peak last december. double line says it is not concerned about outflows or the performance of the fund. another sign that libya is making a comeback in the global oil market. for the first time in five years, shell has loaded crude from a port in libya. libya has been hurt by years of civil war and political divisions. the country is part of opec but

is exempt from the cartels production cuts. electric chairman is said to be different runner to be the new ceo at uber. directors of the ride hailing company may vote in two weeks. that is your bloomberg business flash. francine: thank you so much. we must talk about -- of curbing goal trading on dark pools. to force most equity trading back into public stock markets. instead, they say this is more likely to lead to better alternative training, saying the alternative brings a little more light into dark spaces. james bevan is still with us.

you look at the research note, how banks will try to price this, what is the unintended consequence that your most worried about? >> the unintended consequence will be the coverage of smaller companies will diminish because in the old days there was what is best described as cross subsidization. this gives fund managers and opportunity to see what is going on. -- iis not going to be worry the quality of that research will dissipate. francine: you are saying it was an opportunity to make it fairer for the people that consume all of these things. how is it for financial stations? >> it is a significant challenge.

if you were to say what is the clearing price for institutions, it is probably around four basis points of the economy. tarrif wasional 15 basis points. some of that was research and some of it was because of the market was not competitive. francine: we have a question from a viewer. let's bring it out. says, do a long dated business cycles give an illusion of stability? >> they certainly do. phenomenon. to we have seen people taking more risk in pursuit of extra return and companies repositioning the ir balance sheet.

both of which are going to come towards us if we have a significant shift up in yields. francine: what does that mean for the new normal? >> i think the new normal will work through. as the debt overhang dissipates, we will have rising bond yields. bond in anyyear economy means you are betting we will never see growth again. i think that is inappropriate. i think we will see growth. i think we will have a better functioning economy. materialhave three problems, globalization with capacity, demographics, and real challenges in terms of the pursuits of capitalism and the fair treatment of people. whatine: away from that, does this mean for distortions in the market? >> i think it is practical. it means you will see

legislation and regulation coming in to deal with market problems. the people who have made excess profits because they have been able to do so will find regulators in government recognizing that you are finished if you don't sort it. those problems will begin to disappear. david: appreciate the time. james bevan. be talking with nathan sheets, the chief economist and former undersecretary for economic affairs. that is coming up on bloomberg. this is bloomberg. ♪

got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here.

find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. ♪ francine: trump recess. the president is said to give a

primetime speech in the white house. central bankers head to their annual summit in jackson hole. will they be distracted by personality? the german election heats up. -- hermerkel is in family of the immigration crisis. looking at politics on the outskirts, but mainly fairly focusing on jackson hole. david: yes, because of the eclipse and because of the policy summit there. all eyes and ears will be focused on that speech. francine: we are looking at currencies. as get straight to first word news. >> for the second time in a matter of months, a u.s. warship has been involved in a collision

in asia. 10 american sailors are missing and five are injured when the uss john mccain collided with an oil tanker near singapore. it has now docked with significant damage to its hull. in june, seven american sailors were killed off the coast of japan in a collision. in spain, police have launched a massive manhunt for the man suspected of being the driver in the barcelona terrorist attack. they have set up a under checkpoints across the barcelona region. he is the final member of the islamic extremist cell still at large. prime minister theresa may's government says it is stepping up the pressure on the eu to ship negotiations away from the terms of the separation. to u.k. wants to pivot discussions on a post-brexit

trade deal. 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. david: thanks. let's check on the data on this monday morning as we get to that meeting in jackson hole. wti at 48.48 a barrel. we have that news about maersk oil being spun off to total. -- 1.1llar at one po 738. francine: we are seeing a little risk off mood. the focus is shifting to central banks. gold, dollar, and yen all gaining. david: there was that move to change the configuration of the board. that push.ected

let's take a quick look at the bloomberg. we look at curvatures, slopes, and all of that. we are looking at the total solar eclipse, the move of totality across the u.s. it is making its way across the u.s. check it out. as we moved to jackson hole in terms of the economic symposium, i have a simple chart. we are picking up the fed balance sheet write-down and when unwinding it would break down to certain asset classes. president trump makes a primetime speech tonight on america's longest war. he has been working on revised policy in afghanistan where americans have been fighting almost 16 years. james mattis wants to train more soldiers in afghanistan. the president has had an eventful two weeks on vacation.

what indications do we have of what the president might say tonight? >> that was a vacation? good morning. this is the president's first primetime address. he will be speaking about 9:00 p.m. eastern from fort myer, just across the potomac river in virginia. he will be giving a decision on a military strategy. the context cannot be understated, this comes at a time when his approval rating is hovering in the mid-30's, and this follows a very controversial week last week and several weeks of investigation into russia meddling. it will be fascinating to see what type of town the president strikes tonight when he speaks to the nation. the architect behind much of his tone for the inauguration speech and that joint address to congress several months ago, steve bannon is now out of the white house. david: let me ask you that.

the editor of the new yorker writes this week, last friday in the wake of charlottesville, president trump pushed steve bannon out. the culture of this white house was and remains trump's. how much of the white house culture remains in your estimation shaped or governed by steve bannon? >> i agree with this morning must-read. i think like any company or business, it is top-down. the ceo of this company is trump. steve bannon was rocking to represent a certain fraction of the conservative movement. reince priebus was brought into represent the opposite faction of the movement. the sources i spoke with gathered that the president arrived at position that reince priebus and steve bannon served to the best of their ability,

but it was time to move on. that said, and then there was one. vice president mike pence is the only remaining original senior staff official at this white house. francine: how does the president refocus today? he is giving a big policy speech. what kind of tone does he need to strike? >> this is military. the american people, not the base, not his supporters, not the 34% of republicans who are without question with him, but the rest of the country is looking for a president who is going to be speaking as a competent commander-in-chief. there are several questions that have emerged in the last several days from his own party, including from tim scott from south carolina and bob corker of

tennessee who have raised significant questions about the moral makeup of this commander-in-chief. the president needs to silence all criticism tonight when he speaks for the first time in his first primetime address to the nation. we have not seen him use this tool at all. we have seen him much more comfortable on twitter. david: that is not :00 p.m. eastern time -- 9:00 p.m. eastern time. with us is nathan sheets. there is the political message. there is the economic messaging as well. are you getting a coherent sense of what that is from this white house? how much of that is shaped by treasury versus the white house? >> it is a very dynamic relationship. i think it changes a lot from administration to administration. in the trump world, it seems

that there is, on the economic side, a fair amount of consistency between gary cohn on the one hand and steve mnuchin on the other. i think both of them are very much in the camp of wanting some continuity with the kinds of economic policies on trade and global interactions that we have seen in previous decades from previous administrations. there is this alternative populist voice, and i think steve bannon was the loudest in that camp, taking a different view. david: the current treasury secretary is giving a speech today. when you look at tax or form in particular, that will be a centerpiece of his speech today. what you make of the proposals out there? how much coherence do you see behind a plan going forward? >> i think clearly if we are going to get tax reform, we will have to get through funding the

government and the debt ceiling without too much disruption. from there, it is a question of whether the republicans in congress can reach agreement on a proposal. my instinct is some modest form of tax cut as opposed to tax reform we might see. it will not be substantial. it will be far smaller than what is talked about at present. francine: it is francine from london. what kind of tools are you looking for to see whether tax reform will be pushed through? is it the tone of the president? mentioned,say, as i the first condition that will determine the prospects are what happens with funding the government and the debt ceiling. if that ends up being very disruptive, i don't see how we are going to get to the point

where we can reach agreement on taxes. just within the republican party whether there is agreement. francine: let me rephrase that, how do you see the inflection points on whether we will have agreement on the debt ceiling? ofthe first point is the end september, do they fund the government? if they do, the probability of seeing the debt ceiling dealt with successfully is higher. think it will be as we see in previous years, princeton ship. my feeling is there will be an agreement, but how disruptive getting there will be is yet to be seen. david: stephen sheets. coming up later today on television and radio, we will bring you live coverage of

president trump's address on afghanistan. look for that at 9:00 p.m.. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." let's get to the business flash. sempra energy has won the battle for oncor electric. they have agreed to by the texas utility for $9.5 billion. byor was also being pursued berkshire hathaway. the biggest suv maker in china

is interested by fiat chrysler's jeep division. makes jeeps ine: china with a local partner. another sign that m&a activity in the energy sector is picking up. france's total has agreed to buy maersk. assume $2.5lso billion in debt. that is your bloomberg business flash. david: thank you. white house economic adviser gary cohn is emerging as the clear front runner to succeed janet yellen. that is according to a national association of business survey. ends this year. nathan sheets, the subject of this year's kansas city fed

symposium in jackson hole is fostering a dynamic global economy. is janet yellen's definition of that the same as mario draghi's? >> i think that is a place where there is a fair amount of agreement across the major central banks. a dynamic local economy is one that -- global economy is one that is rendering strong and sustained economic growth driven by stable capital flows in global trade, and on the other hand one where inflation is subdued but near target. we have seen in both cases, in the europe and u.s., we are following a little short on the inflation objective. david: what will you be listening for this week? there is an academic quality to the discourse in jackson hole. we are being teased that the speech janet yellen is giving is

on financial stability, a broad brush. what are you looking to hear this week? >> one broadpoint about jackson hole is that what really goes on their of substance is outside the official meeting room. the tone they are giving, how worried are they about this inflation issue? it is surprising given where the global economy is that we are seeing inflation as soft as it is. how worried are they? i think that would be the major question. secondly, some of these issues that janet yellen no doubt will be focused on that in this world where rates are low and have been low for a while and will likely remain so, are they worried about pending financial imbalances as a result of that? francine: what would you answer to that inflation question?

do we need to look at another set of numbers? >> i think the answer is yes. i think central banks need to be looking at both price stability and financial stability vigorously. i think the last financial crisis really highlighted inflation was well contained in 2007, that there were significant financial imbalances. in terms of why inflation is so low, i think it is a tricky question. it is ultimately about inflation expectations. we have gone through a period of very low inflation. expectations are well anchored, which is in some senses a good thing. francine: how do you change it? this is something the boj has tried to work on. >> 10 years ago, 20 years ago,

we would have said raising inflation is an easy thing for central banks. over the last decade, have discovered it is pretty tough. centrally, it may pose banks with a very challenging question. are they prepared to allow their economies to run a little hot? that is a way you will raise inflation over time. there is a risk to just how rapidly you wanted to. david: i mentioned a survey of economists that says gary cohn is likely to be named the next chairman of the fed. what difference does it make or could it make if you have a phd economist running the fed versus someone who does not have that background? >> on the one hand, i think people like janet yellen and then bernanke -- ben bernanke theg exceptional nuance to

issue. on the other hand, you have central bank governors with a different background. some might say it is a better position to negotiate with congress. in this day and age, the skills that are demanded of the ir are sol fed cha broad that having central bank governors and chairs from various backgrounds is probably a good thing. francine: thank you so much. nathan sheets of pgim. coming up, a conversation with the prime minister of ireland. that is at 3:00 p.m. in new york, 8:00 in london. i know they will ask about the flights of brexit fleeing bankers. this is bloomberg. ♪

♪ this is "bloomberg surveillance." i am francine lacqua in london. to the middle east now for an in-depth look at qatar. they have met with saudi royals in a surprise move. some portray this as a triumphant diplomatic effort. the qatari government says the sheik was on a personal trip. all, who isfirst of

this sheik and why was he thrust into the limelight like this? very little-known man. he is a businessman. he is married to a saudi woman. he has spent much of his time between london and saudi arabia. he is not a political this event. -- dissident. he belongs to a branch of the inal power that was removed 1992. he is a descendent of the founder of qatar. perhaps that is why he is being promoted. >> is it just a pressure tool? what are the chances of this working? >> this is the question. so far, most analysts would call this a pressure to a because the sheikh does not have a support

base in qatar. there is very little challenge to -- so far. some analysts wonder if there is a change in policy, but we have not seen indications of that yet. the government has not said they want regime change in qatar. there is a possibility of changing the course of policy in qatar. accept theirar to demands. so far qatar is resisting. mediation by the americans has not resulted in much so far. david: what is the status of the other mediations going on? has there been any progress? >> not that we know of. it seems there is a still -- stalemate now. wasysts were saying there

some possibility of americans getting the saudi's to make concessions, but this seems like it has now been thrown out of rack. -- of whack. david: we will be back in just a moment with nathan sheets, the chief economist at pgim. coming up on "bloomberg surveillance" later this morning, we will have a conversation with grover norquist your conversation about tax reform continues in washington. that is at 8:30 in new york. this is bloomberg. ♪

♪ david: "bloomberg surveillance" on a monday. let's get to the bloomberg first word news with taylor riggs. taylor: the search is underway for 10 american sailors missing

after their destroyer collided with an oil tanker near singapore. five other americans were injured in the crash involving the uss john s mccain. docked in singapore with what is called significant damage to its hull. american sailors were killed in june between -- in a collision between a cargo ship off the coast of japan. a warning from moon jae-in as his country begins the latest round of wargames with the u.s. north korea should not use the drills as an excuse for any further -- the first round of talks on a new north american free trade agreement has ended. the u.s., canada, and mexico also they are committed to wrapping up negotiations quickly. president trump blames nafta for hurting manufacturing and sending factory jobs to mexico.

adviseruse economic gary cohn has emerged as a front runner to replace janet yellen. say he willmists get the nomination. only 17% say president trump will ask yellen to stay on for a second term. 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. david: thank you so much. steve mnuchin has pushed back against calls from his yield classmate to yale quit. we are joined by jon lieber, let me start with the tweet the president sent out over the white house. you didn't see this coming and a

lot of other people didn't see this coming. will this change the configuration of the white house or will it have a dramatic effect on policy? john: i don't see much impact on policy -- jon: i don't see much impact on policy. you've got stephen miller pushing immigration and gary cohn in charge of tax. bannon didn't have much of a policy portfolio and spends a lot of his time speaking to reporters and trying to push trump into a more populist and nationalist direction. he wasn't working on any policy strategies and he wasn't a particularly effective political coordinator. david: what have we learned about john kelly over the last few weeks? -- as department of how has he changed things at the white house? jon: i think the most important

contribution he is making is trying to put in place a process. from all accounts, there wasn't much process at the beginning of the white house and you had a lot of different staffers that had walk in access to the president and could talk to him at any time on any issue and that creates a chaotic environment where you do not know who is telling the president what and there is no coordinated strategy for getting all the facts in front of the president before he makes a decision. what is -- what kelly is bringing in is a more careful process where all staff contacts go through him and he can keep track of who is hearing what, when, and make sure the president is hearing all the views before he makes a decision. this is important in a place like the white house. francine: how much popularity has the president lost since charlottesville? can we measure it? jon: we can. gallup polling numbers show he declined a few points although

it feels like there's a hard-core base support that keeps the president somewhere in the mid 30's in terms of his polling. what is more aged thing is the support he lost amongst republicans. -- what is more interesting is the support he lost amongst republicans. he was in the high 80's and today he is somewhere in the high 70's to low 80's. he is definitely losing support even amongst hard-core supporters. republicans -- well over three quarters of them, still think he is doing a great job as president. --ncine: he is giving a good big speech this evening. what kind of tone does he need to strike to make sure republicans get on his side to get the debt ceiling through and to push through tax reform? jon: i think the critical asset the president has in his favor is the policies he is pushing are supported by the vast majority of republicans in congress did if he does and up -- end up -- keeping troop

levels in afghanistan high, if you look at tax reform, if you look at building a border wall and cracking down on border security, all of these things are overwhelmingly popular with republican members of congress. it's more his style and tone that they object to. he likes that style and tone and he will keep doing it despite any efforts to rein him in or change what he is doing or change his tone. i think what he needs to do tonight, he is going to make a speech about afghanistan. we don't know if you will touch on other issues and that he needs to pivot to keep the focus on first, increasing the debt limit and keeping the funding -- government-funded, and try to rally republicans around a deficit tax cut, which will be the cornerstone piece of his legislative agenda. david: a big rally in arizona tomorrow night as well. with us.eets is

there was this extraordinary episode over the weekend a number of secretary mnuchin's classmates from yale urging him to step down. therote "i don't believe allegations against the president are accurate and i believe having highly talented men and women surrounding the president in his administration should be reassuring to him." , how insulated you are from the political noise when you are in the treasury department footsteps away from the white house. >> i very much agree with the point that for the good of the republic, it's important for the president to be advised by reasonable, capable, balanced people and i think secretary mnuchin has distinguished himself in the administration over the first six months and i think it is certainly in the interest of the administration for him to continue. in terms of how much you feel the political heat inside the

isasury, i think the answer significantly. you are literally right across the street from the white house and interacting constantly, intensively with congress and the realities of not only the economy, but the political economy are always before your eyes. to serveen you elect in public office, to be the administration official as you were, how much are you thinking about the agenda at large? how concerned are you with domestic or foreign policy issues outside of the treasury department? are you accountable to what the administration is doing? nathan: i would say there is a dynamic tension. we were very focused on what is the work of the treasury and, in my case, what is the work of the treasury on the international side. that was always in the context initiativeder policy

of the administration. they are both very important and, ideally, there is a complementarity between the two. francine: do you worry about other people leaving the white house or advisory roles and is there anything the president can do to stop that from happening? worriedm not super about that. most of the people in the white house today knew what they were getting into and i also think because theyere are loyal to the office of the presidency and because they want to engage in public service. i think no better -- no better -- no matter how badly he gets, it's easier to block that out then you think, especially because responsibilities are so big and a lot of the people we are familiar with with -- on an outsider perspective want to do great -- a great job and get some wins for trump and for the country and that will keep the high profile staffers, except for the ones that are really bus anding like prie

spicer and bannon, that will keep most of them in their jobs for the first field future. sheets will stay with us here in new york. coming up later tonight, we will bring you live coverage of president trump's presidential address on afghanistan. look at that at 9:00 p.m. in new york and 2:00 in london. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." i am taylor riggs. investors are pulling back from in doublet bond fund

line capital according to the wall street journal. assets under management have declined 13% from their peak last september. they say the story is inaccurate and is not concerned about outflows or the performance. $230said inflows are a net million. the general electric chairman is said to be the front runner at the new -- to be new ceo at uber . a directors at the right hailing company may vote within two weeks did he step down as ge's ceo at the start of the month. adp is saying no to bill. directors have rejected nominees for the board put forth by pershing square. he is calling for changes of the company. that is your bloomberg business flash. francine: thank you so much.

angela merkel had big bonuses in the car industry this morning and faced questions on germany's handling of the refugee crisis. martin schulz also takes the campaign trail today and tries to close a gap in the polls with a total starting in bremen. matt miller joins us from berlin. a great to have you on the program, as always. because it seems like it's a done deal for angela merkel, talk to us about the various coalitions she could form after the 24th of september. matt: one of the most interesting things she could do is partner up with the green being thewith the cdu middle right party here, it is an odd combination you wouldn't have imagined five years ago, 10 years ago, 20 years ago. popular greent

party members to this day said there was no way the two of them could sit at the same table. the fact they can now work together is fascinating and because of the green's handling of the diesel scandal, the state where mercedes and porsche's are made, the greens lead that state. they handled it with such pragmatism that it now seems they could be in an alliance with cdu. francine: talk to us about -- angela merkel was talking in a video fielding questions from common people in germany. what is the tactic of her main opponent? matt: it is incredibly tame. seeing this election in germany after what i saw in the u.s. in november, what i saw in the u.k. for brexit or what we saw in france a couple of months ago,

martin schulz, does not really seem aggressively campaigning against angela merkel and she also doesn't seem to have to try very hard to win here. she is ahead with 39% right now of the polled public compared to 24% for the spd. immigration, but everyone is pretty happy with the way she has handled it with the exception of the far right afd and they only have 10%, the spd iscancel in the prominent on the board of the company, volkswagen, because they own 20% stake through their governorship and then aside from that, there aren't really any issues they disagree on that are very big. that's why everyone thinks she has it in the bag and picking a

coalition is the most important part. david: i know she was asked about the diesel coalition -- scandal. how is that playing out through the campaign, that particular scandal? matt: it's got to be a fairly empty statement to anyone that thinks about it because of course her government has been in power for 12 years and it's not like everyone didn't know what was going on with diesel. it was pretty clear how the industry worked. there is one set of results for the lab test and a completely different set of results for what happens in real life and she appointed the transport minister, who a lot of people see as basically being in bed with the automakers. she could say she is angry, but she hasn't done anything about it and it's unlikely she will. david: matt miller joining us from berlin. nathan sheets is still with us and you made many trips back and forth when you were secretary of the treasury for international

affairs. how has germany's role changed economically? nathan: germany is now clearly the leader, economically and politically, in europe. its economy is expanding economic confidence is high, the unemployment rate is low, and merkel has a strong economic record to run on. david: when you look at the relationship between germany and france, a lot was made after the outcome of the election that that relationship would be stronger. have we seen that? nathan: i think if we have seen it, it is really in the embryonic stages. over time, if mccrone -- macron is able to get himself stabilized and stabilize the public approval rating, more of -ledpolar germany-france

europe will be stronger and more effective than germany leading it by itself. i think it is in germany's interest to have a strong france and it is in europe's interest. david: you can watch our tv on the bloomberg. you can see all the functionality on the right-hand side and right beneath, you can ask a question. we will try to read those on air. this is bloomberg. ♪

♪ is "bloomberg surveillance." coming up shortly, it is "bloomberg daybreak: americas." what do have on the program for us? david: i am pleased we will be sharing an important guest for you on bloomberg radio and that is dan ackerman. he came -- dan akerson. he became the ceo of the board a year ago -- a year later. we may ask him about german auto manufacturers and maybe the jeep story. we have a lot to cover with him, as you do on radio.

bestme now for the single chart. we're back with nathan sheets, the chief economist at pgm. agendathe things on the at that summit was industrial overcapacity. world is the line beneath it and the u.s. below it. we heard whisperings china is reckoning with this to a degree it has in the past. when you look at this chart and the conversation about industrial overcapacity in china, are we beginning to see progress if not recognition at least that something needs to be changed? nathan: sadly, when i look at that white line, i see more chinese production moving sideways toward the end of last year. i felt like maybe we were getting traction on this issue, but more recently you see the white line bounced back up. in addition, i think it's also important to bear in mind that the quantity of chinese skill

production is in or miss. -- enormous. it's important the chinese take steps to address the issue. david: there is a 10 day meeting of all the signatories of the transpacific partnership except the u.s. and they are moving forward. when you look at trade policy, ?here do you see things, nathan: the best case scenario is the united states stays active in trade through bilateral agreements. the problem is negotiating dozens of individual trade deals ill -- will be in or missile in -- enormously difficult and resource intensive. that will be a big challenge. my concern is the u.s. may be in a place where we are backing

away and i think that will be bad for u.s. consumers and bad for the u.s. geopolitically. i'm very worried where we are going on trade. francine: should we worry -- can we trust china? this is a simple kind of open-ended question, -- china is just trying to do what the west did 60 so years ago and others are worried that when the people's party is over, something ugly happens whether it is a financial crisis or crackdown or something like that. nathan: i would say, yes, we can trust china. consistent with that, the previous administration did a lot of work on a bilateral investment treaty. it's also important we not be naive, so we got to trust and we've also got to vigorously verify that china is following through on its commitments. i think chinese -- china is influenced by many of the same

political pressures we experience in the united states when you start talking about cutting capacity. i think it is this dynamic ,elationship of negotiating reaching agreements, but also verifying that they are being implemented. that is the way forward with china. francine: how should the u.s. deal with china from now on? within thections trump administration what's the best way to deal with it so you almost get them on the same side to deal with north korea? nathan: i feel very strongly the best way forward with china is engaging as the grizzly at -- vigorously as we possibly can, and iically, politically, think it is perfectly legitimate for this administration to link economic objectives and geopolitical objectives on north korea. bring that full

set of considerations, that full matrix to the table if you are going to get the progress that is necessary. david: nathan, great to see you once again. that is nathan sheets, he will join me and francine on radio in a moment. coming up, a conversation with grover norquist. that begins at 8:30 a.m. in new york, 1:30 p.m. in london. the conversation on tax reform continues in washington, d.c. and home districts of congressman across the country. this is bloomberg. ♪

♪ jonathan: the president of the united states returns to

washington, d.c., the battle between the globalist and the nationalist unresolved. economybout a stronger -- -- tempered by low inflation. the white house economic adviser is emerging as a clear front runner to replace yellen. a warm welcome to "bloomberg daybreak." i am jonathan ferro alongside david westin and alix steel. after two weeks of losses on the s&p 500, some stability. futures go nowhere. action.uted price euro-dollar at 1.1758. yields lower by a mere basis point, 2.19 on the u.s. 10-year. alix: the real action in the markets has to come at the commodity market. nickel up by 2%, copper up i 1% at a three-year high. the