♪ >> voters punish mainstream parties. what will it take to form a government? we are live in rome. china sets its gdp target at 6.5%. no exemptions. theresa may expresses her concert to president trump over controversial tariffs, but his administration is not budging. good morning, and welcome to "bloomberg surveillance."

top names speaking to in business, finance, and politics. a good day to you. we are getting pmi data crossing the bloomberg. the economy in the euro zone may have lost more momentum than is initially estimated in february. composite pmi slipping to 57.1 from 58.8 in january. below the flash estimate of 57.5. the index services activity also revised lower. reports show germany grew the least in three months. france also cooling. spain bucking the trend among major economies with the best pmi reading and eight months. italy held elections over the

weekend, composite pmi also a 10.5d, i'll be it from year high. let's have a look at what is happening to equities. it is all about the italian election results. european stocks are rising for the first day in five. italian stocks are falling. they have given up their gains for the year. italy is the least expensive among its peers. european stocks bucking their four-day losing streak. he comes off the back of the biggest weekly drop. -- it comes off the back of the biggest weekly drop. their euro is now rising against the dollar. it has been choppy. we had a move upwards after the german social democratic party voted to join angela merkel's next government. contemplating what is going to happen in italy. 10-year yield is rising today, rising the most

since february 19 to the highest since february 23. imax crude is up .9% today. biggest crudea's field sparking speculation supply will tighten and help reduce a global glut. but that the bloomberg first were news. nejra: the trump administration is showing no sign of watering down its plan to impose tariffs. despite opposition from u.s. allies and republican lawmakers. the president's trade advisers fanned out across television news shows to defend the move, saying it was necessary to ensure that -- ensure the survival of domestic industries. the annual report admitted last year's --

angela merkel is expected to comment publicly today on the shoulder -- on the social democratic party's vote to join her for another election. it comes as donald trump's and other contributes demand a response. will dominate global oil markets for years to come, pacifying 80% of global demand growth through 2020 as the shale boom keeps opec under pressure. rivals,opec surging brazil and canada, will need little place for the cartel to expand, even after production curbs expire. the uk's prime minister seems to have secured a temporary proof

-- temporary retrieve. -- temporary reprieve. yesterday, she reiterated her stance that britain will not -- accept it, weto would have to abide by the rules that were set elsewhere. given the importance of financial stability and ensuring, we can't just take the same rules without any payment. the shape of water has won best picture at the oscars. frances mcdormand one for hearst -- for her lead role. gary oldman was voted best actor. a sense of change was palpable at the ceremony, where winners

made impassioned arguments for gender equality and diversity. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm near a change. this is bloomberg. -- i'm near a change. this is bloomberg. francine: let's kick it off with sunday's election. voters punish mainstream parties for years of economic decline, rising taxes, and a wave of immigration, casting doubt on the country's future clinical direction. -- future political direction. let's get a view on this election and what it means. joining us from london is our guest. thank you for joining us. on, was the vote immigration or lack of political reform? in 2017..5% gdp growth

that was the best year since 2010. >> that was a growth nobody felt. the election was about unemployment. if you look at where it did whereit is in the places unemployment was a dire problem. a very poor political by the pd. francine: what is it mean for the future of the pd? of matteoe future renzi? know.ng: i don't it is up to him. he has already done damage in

that sense. dpd is basically going to be insignificant term nor -- in significant turmoil. the question for the next leader, whether they will keep this sense of approach or whether they will go to the left . as for the pd joining the five-star movement, the party has less than 20% of the vote. mark: market reaction. italy stocks down. other european stocks are rising. euro is treading water. investors taking it in calm. peter: i think that was always going to be the case. used to uncertainty and elections generally. it is something we have gotten used to.

particularly in regard to italy, the already new is going to be an indeterminate outcome. what will happen now, what will determine the pattern for europe in regards to the italian government's will be what kind of government comes out of this. we haveare thinking other things to worry about, trump, trade, tariffs. thursday, well let's get to the question you bring up. what sort of government? are we looking at -- what sort of government are we looking at? wolfgang: it is difficult to say. the political landscape has been completely transformed. the numbers are very bold. it is difficult to see how you can create a coalition there. the center-right has the biggest parliamentary bloc. that could be the starting.

it could take weeks, if not months. a positive outcome is not a given. peter, is there any coalition that was -- that has rattled the markets? the five-star movement feels unlikely, but some people in rome are saying i'm if you want power, maybe this is something the five-star movement would visit. have: the idea that you the league and five-star together would be something that rattles the markets, but it is not so much the formation of the coalition itself, which would really hurt markets. what would the coalition actually do? what kind of policies with the put forward? if we get a radical, anti-immigration, higher taxes policy, that would stop -- would start to consume markets. we have seen what happens when

populism starts to get out of control. the last thing the eu needs. now it is getting back on its feet. it would be further instability coming from italy, which has been one of the problem children for some time. mark: let's turn to trade. president trump sticking to his plan with tariffs on steel and aluminum. opposition has come from all corners of the world. to see ifare looking he will flinch, and if not, will -- if not, what will this mean for the future of global trade. the administration has said there will be no country specific exemptions. often, trump's bark is worse than his bite. -- will thetors measures that come through actually be the ones that were outlined? wolfgang: it is difficult to say.

as you just mentioned, the twitter is one thing. the reality is another. certainly, it is a bad start. it is not a particularly good one. it is a bit like the italian story. this story will be with us for some time. we are not going to get clarity anytime soon. we might hear noise every now again -- every now and again. the worst-case scenario is a trade war. we have seen already the chinese taking a stance. if it goes the way he outlined on twitter, there is a risk of trade war. is italy the biggest possible boozer in a trade work? -- in a trade war?

--is italy the biggest loser in a trade war? wolfgang: i don't think italy has much of a say in a potential trade war, especially an environment where the government is going to be a patched up deal, potentially involving the five-star movement, which is untested at a national level. thes a concern, because growth story was positive for italy. mark: a comment earlier from a bank said it is all about the itsand how quick it removes

policy evening. is that fair when it comes to the euro production? peter: i think it is. what will determine the course of markets generally in the euro being amongst that grouping is what the ecb does. it still has its foot on the accelerator. the economy doing pretty well at the moment. for easing back about a little bit. i don't think we will see signs of this week, but the german contingent has been pushing for a slightly less aggressive monetary easing. got -- nowthey have that they got got their government together, you might hear more noise out of berlin. mark: gentlemen, thank you. exclusivelyspeak about the future of italian business after the election.

this is bloomberg. ♪

♪ economic, finance, politics. this is "bloomberg surveillance ." the italian election has sent europe swinging. voters punish the parties. the country faces a cmh, as there is no clear winning party or alliance. what does it mean for italian businesses? welcome michele norsa. much for giving us

a little bit of your time. what does the election tell us? it seems to be a clear antiestablishment vote. what does it mean for businesses? it is probably be worst result we could get at this time. there was quite a confidence in the financial world until last .eek this is really an image .ventually -- an image of italy it shows two different italy's. this is a problem for the future. not only today, but if we

extract a second vote, hopefully not, it could even create the most complicated situation. the advantage is that italy has been mostly governed by coalition government. italy has been good in creating balance. francine: the feeling on the market is the vote is messing with politics. what does it mean for big multinational companies? will they continue to grow abroad? will there be more anger here? difficultt might be to explain what is going on and what will be going on.

you would really need a strong majority to change something. on the other side, italy has opportunity, like tourism. it is an incredible attraction for the asians and chinese. chinese companies are buying in italy now. not be big investment from the americans, but from asia, there is incredible interest in buying factories in business. new players are coming. francine: this is despite politics.

i don't know how you see a government forming. charge,g on who was in will it make people less willing to invest in italy? michele: it depends. i think you have to stay in the place, and the mind, probably german company will feel less comfortable investing a really -- investing in italy. americans might be careful. the biggest investor now are the asians. they are not concerned by politics. the japanese, chinese, singapore , large financial funds, sovereign funds are investing significantly.

they will keep seeing italy as a great potential. francine: did you see reforms being made and do you think these will take a backseat? michele: i'm not very come -- very confident on the possibility to see reforms in the short term. parliamente a [indiscernible] in all parties you don't see economy at the center.

francine: do you see fresh elections? italians always try to avoid those. the result has never been dramatically different from what it was before. agreement.reach an i think this is the last resource. [indiscernible]

it will be very complicated to have a new voting law and regulation. it might be impossible. were headedu ferragamo for many years. i don't know whether you got a call or not. tariffs hurt expansion. will they hurt italian companies? michele: if we look at the luxury system, it has always been based on exports. china is the biggest counterpart. , but i thinkern the restrictions, it might be .ore in the mechanical industry in the area of luxury, there is

not much in the united states. at the end, i think the price is not such a strict factor. people buy things which are unique and enterprising. if there is a strong opposition and it is creating more barriers, probably italy will turn more to asia. francine: could you see some of was meante money that to be in the united states, could you see it coming in europe because they feel antagonized be what the u.s. is doing? michele: yes. i have seen movement in the chinese investments. now, you have companies which goingally focusing on

around italy, looking for tourism possibilities. where the area chinese will keep guessing. francine: thank you so much for joining us on bloomberg today. former chief executive of ferragamo. coming up, we speak with a chairman. we will look at your markets. there has been a little bit of volatility on the euro. not that much. we continue our room coverage. this is bloomberg. ♪

♪ i'm francine lacqua in rome covering the italian elections. mark, we are getting breaking

data out of the u.k.. mark: we are awaiting services pmi data. these are projections for the composition 53.6 is projected. the earlier figure was a 53.5. it is an amalgamation between these services and manufacturing. services activity growing more than expected in february supporting economic growth, keeping alive the prospect of a rating increase in the upcoming months. 54.5, wellmped to above the 53.3 reading forecasted by economists in a survey. new business ticked up for a seventh month best second month. markets manufacturing index for february declined. construction performed better

and it shows a steady pace of economic expansion is being maintained. it estimates growth at .4% this quarter, matching the rates of the final three months of two any 17. 2017.es at -- of it has been a messy italian election with no clear winner. morning suggests the five-star movement and league could reach a majority in one of the houses if they join forces. scaroni --as paolo is paolo scaroni. why are people voting in such big numbers anti-establishment parties? paolo:

one has been immigration. there are 600,000 illegal italy ins of moved to the last four years. -- an economic which has been the worst in the european union which is been why the five-star movement got so many votes. francine: there appears to be a north-south divide. what does it mean for the economy going forward? north is totally on the right, south is on the five-star movement and the separation between these two parts of the country has been as so large as it's been today. it is difficult to judge today. francine: if you look at the numbers, italy is on the path to

recovery. gdp is growing, unemployment is going down. while happen depending on who will govern? party death -- think stability is so important in the short-term for economic performance of the country. seen spain and germany. uncertainty is the biggest enemy of the economy and the financial solution,t we find a i don't think the economy will

suffer. francine: do you think we won't get a government by the summer? because how'd do you compose a majority is not easy. i don't believe of the possibility of the five-star movement making a government with the lead. there is another scenario which sees the center-right trying to find vote somewhere else to get a majority and that sounds more reasonable. francine: germany has incredible economic expansion. can they afford to be a -- without a government for four months heard -- four months. >> at the end of the day, our economy is performing well

thanks to exports and nothing to do with what the italian government will decide. francine: i read the platforms again this morning. what everygure out party promised from an economic point of view. i am none the wiser. it was not a plan on growth that either party was actually proposing. what does that mean for investors? if you want to see the glass half-full, which i tend to do naturally, i am quite happy that nobody gets a majority to dismantle what has been done in the last two or three years because some of the parties were proposing to dismantle our reform, our law on labor. this would be a drag on the economy.

a parliament which is not capable of forming a majority would not be capable of dismantling the good things from the last two or three years. at the end of the day, this is not too bad news for the economy. francine: but don't you need reforms to push through? are the banks now fixed? paolo: they are in much better shape than they were one year ago and this will continue to happen in any case. the two big reforms are behind us. what is important is not to dismantle them. francine: talk to me about the relationships between the italians and the euro. they've never propose in the past six months to get out of the euro. paolo: in the last 12 months, they understood that italians don't want to get out and therefore they change their position. nobody is really proposing to get out. francine: if the economy gets

worse, could be -- could the italians turn? paolo: that is possible, but i don't see how does why the italian economy would get worse in the next 12 months at least. the economy is moving now at a pace which makes me confident we will see growth. francine: what's the worst case scenario for a businessman or the markets? using confident italy will find a solution. what if the meeting test -- becoming primer minister is a situation i consider very low. francine: so you don't see them coming back and saying we did

have a coalition or something like that. paolo: they have been saying a few times they are what they are and if another party accepted that program, then they will accept that. so not really a coalition, but it kind of movement towards them , rather than alliance with anybody. the -- of theo be five-star movement? the center-right is so close with the majority. with 40%, they would get the majority in the parliament. i don't see would be -- the hypothesis is many people -- that many people are afraid of is the league join forces with five-star. i consider this.

is it received about the italian population as being rigged by the establishment? the italians consider it very difficult to vote with these laws. it's a complex way of voting. it is difficult to vote. francine: you have so many parties, some of the proportion of votes. if you're a smaller party, that vote goes to a different party. what would you change? is there something that would be a quick fix that in times of uncertainty would make everyone more confident? electoral, ims of

toieve we should go back where if you win the election, you rule. in terms of the economy, i believe the most important movement i'm behind. the important thing is to not destroy the confidence of the people. francine: if you don't have a government that can govern. a government that can push things through, it are the dangers that in two years of proves a very clear majority win to a party considered extreme? as far as the northern angue, which we consider extreme party and some respect.

the immigration is been devastating for this country. i'm talking about illegal immigration britain -- immigration. they cannot be anybody landing in sicily. this has been something which has to be corrected if we do not want extremists to gain more seats. as far as the five-star movement , we are coping with the problem that the public has been dealing since the -- we have another time to try to -- this issue. do you think the days

of berlusconi are done in politics? paolo: it makes me very prudent. an italian politics, people stay forever so i think in one way or renzi was going to play a part. plenty coming up throughout the day right here on bloomberg tv. we have to look at what the markets are doing and reacting. china's push will go straight to china and will speak to stephen engle.

this is bloomberg. ♪

mark: let's get the bloomberg first word news. italy's anti-establishment group surged in yesterday's election to punish the mainstream parties for economic decline and it wave of immigration. the euro skeptic five-star movement in the european league were among the leaders to forsake hung parliament.

weeks of force trading woman needed before a new government. the trump administration is showing scant signs of watering -- walking down its tariffs on steel and aluminum imports despite opposition. the traded visors fanned out across television news shows to defend the move saying it was necessary to ensure the survival of domestic steel and aluminum industries and would be pushed into effect soon. angela merkel is expected to comment publicly on the social democratic party to join her for a new coalition. her official nomination is by the german president. it comes as donald trump's threat of tariffs on european cars, and emmanuel macron's calls all demand a german response. the u.s. will dominate global oil markets for years to come comes as find 80% of global

demand growth in 2020 is the shale bloom -- shale boom keeps opec under pressure. it also says opec's surging rivals will leave little space for the cartel to expand even after its production curve expires this year. the u.k. prime minister seems to security temporary reprieve from the implied in -- in fighting that is talk her premiership. she reiterated her stance that britain will not seek -- after the country leaves the block. we would have to abide to abide by the rules being set elsewhere in given the importance of financial stability of ensuring the city of london, we can't take the same rules without any say in them. "the shape of water" won best

picture at the oscars. frances mcdormand one for her lead role as a mother seeking justice for her murdered daughter in "three billboards" while gary oldman was voted his desk was voted for best pick -- best actor. a sense of change was palpable at the ceremony where winners made impassioned arguments for gender equality and diversity. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. it just china said growth goal of 6.5%. for more, our chief north asia, desk our chief north asian correspondent joins us. takeaways?e key a number of key takeaways.

iny will cut excess capacity steel, they will increase the budget deficit defense budget by 8.1% to $175 billion. still well shy of the u.s., but an increase more than the 7% plus we saw a year ago. the main headline was that growth target. the chinese government, having covering these for many years and they like to lower the bar and then exceed expectations. doesn't they're doing this year. they are targeting about 6.5% growth. what they took out from last year, that the same target. with ago was burbage that said they would tolerate a little bit of the upside. they are trying to take of the risk. they are targeting a lower fiscal deficit as percentage of gdp down to 2.6%.

it was 2.9% expected, 3% the last couple of years. they are giving money supply targets the same as last year. that means they are really taking stimulus out of the economy. they are hopefully going to get data out of the system and therefore lower the risk profile for 2018. mark: what is to come from the mpc over the next weeks? we will get a lot more details of the possible joining of the financial regulators and new positions as well. we have learned today the new governor will be named on march 19. -- is the longest-serving major central bank governor in the world. he's been in the job 15 years. he is well past the mandatory retirement age, so new blood is as this is a very

interesting year because of what asian thing is trying to do -- jinping is trying to do. mark: we will check it on the markets, we watching -- as it plunges. this is bloomberg. ♪

♪ what it weakened it has been politically for the eurozone. weekend it has been for the eurozone politically. other markets weathering what could be called this political storm in a little he with will hung parliament. it was the least expensive market among its peers. the euro is weathering the italian election results against the dollar. it is up by about a 20th of 1%.

's socialmany democratic party voted to join angela merkel's government. now the attention very much turns to italy, initial results suggesting hung parliament. and the establishment groups surging, voters punishing the mainstream parties for rising taxes and it wave of immigration. this is the euro against the dollar. slipped since closing at a three-year high of 1.2510. the biggest focus for the euro this year is whether the ecb can unwind qe. the ecb meets on thursday.

this is the spread between the italian and german ten-year, highest level since january the 17th. earlier we saw the spread widened by 11 basis points, what was the highest since march of last year at the french election that widened to 2.13% which was the highest in three years want to finish of the big corporate story. group,eed to buy xl seeking to capture a bigger slice of u.s. property and casualty market as premiums rise ever last year cost natural disasters. surveillance continues with francine lacqua and tom keene in new york. this bloomberg. ♪

♪ francine: gridlock in italy.

into the establishment groups surge in the election as voters punish mainstream parties. managing expectation, china sets its gdp target around 6.5% for another year as cut down theresas to grope after may express a deep concern to president trump over tariffs. this is "bloomberg surveillance." tom, we have look at a lot of european politics. a punch or what type of government will emerge. there is a little bit of movement on euro. tom: you see how long it took germany to get a government together. how long is it going to take to get a coalition?

days, weeks, months? francine: it was going to be weeks even if we had a majority party. so just to get a government it would have taken at least till the 23rd of march. at the moment, we don't know what a coalition but look like. you don't have a clear majority. we will see what at that. let's get straight to bloomberg first word news. italy have signaled .hey had enough in the establishment groups surge in national elections. projections so suggest the five-star movement and anti-migrant league could form a coalition in one house of parliament. south korea sent two high-level

envoys to pyongyang to have north korea open up talks with the u.s. seoul celebrate washington up the trip. no sign the trump administration water down proposed tariffs on steel and aluminum import. peter navarro says no countries will be excluded from this, although there could be exemptions for individual cases. u.s. allies is the u.k. and canada are complaining, so our republican lawmakers. china stepping up its push to curb financial risk. congress,ional people annual report said the government would cut the deficit target for the percent in 2012. china city growth goal around 6.5% but admitted -- omitted last year's move for a stop to pick up possible.

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. tom: let me do a data check. it's a fairly quiet tape with some nuances. futures with some way to them. the euro churning which is interesting. oil finally getting a lift today. the vix backing up. we had a big recovery friday afternoon to get us back to 24 ,500. dollar-yen 105.56. it was stronger one hour ago. i'm looking at the spread between german and italian bond yields. go ahead, tom. tom: let me to the bloomberg to get us started on the italian coverage of well.

chart is the real gdp per capita of italy, which is a malaise that borders on japan. real gdp pert capita going back to 1999, that is extraordinary chart going nowhere for 18 or 19 years. italy's election results is in a surge from anti-establishment groups did no clue winning party or alliance. out degrees found algabrese co-founder. what is the boat tell us about -- vote tell us about what voters worked on? i think the result mimics the

brexit and trump modes. -- votes. as usual, the key question is what the change will be and that's the key question and we will see in the weeks and months. leslie years of seeing gdp growing by 4%. clearly more can be done. only time will tell. talk me through scenarios, i'm hearing everything from the five-star movement possible coalition. i've heard five-star with democratico. is everything up in the air right now. yearerything is of the

till tomorrow when there is a final count because even the election will have some parliament seats counted on latest night. desolate tonight. wiki usually italy's parliamentary republic great it is up to the -- it is a hung parliament right seeand so i think you will lots of meetings back and forth to try to find a coalition, or what is called a government that will have enough votes for a small mandate. it's unlikely

debt -- francine: -- tom: will the two , when they get into the chamber of deputies, will their behavior change? >> they have no choice. they have to change because so far they been saying we are better than you, you guys are not up to the job. now their main party and in charge, so now the ball is with them immediately. we will see consumer confidence data. we will see the numbers.

they have no choice. they need to change. let's try to avoid the vulgar expression. i look at germany where the was that someone call far right. is your study of the results so far that far right change in italy -- tinge in italy? italy has -- was the pressure point for immigration from africa for economic reasons. italy has been hit by the crisis

in libya, north africa and basically the devastation of the north african continent with so many people with no hope, they tried to cross in order to get a better life. than 600,000 more and aboutmigrants 600,000 have been legalized 10 or 15 years ago. the fact of what more than 1.2 million. gdp on a is been flat for 20 this, if you add to massive immigration, you get a trump or brexit affect. tom: so much going on over the

weekend on american tariffs as well. we go to china in a moment. usill to have davide with and other guests on the italian election. the article on foreign policy was the best single article on italy. ♪

♪ get the bloomberg business flash. wants to getr axa a bigger share of the cash market.

insurers have become targets of purchase after disasters last year. -- siemensl go over will -- it is part of a broad overhaul by the ceo. pay $20 million even while running of a record loss of $5 billion. needsian commodity trader their agreement to go ahead with a restructuring plan that would oppose -- impose heavy losses. francine lacqua in rome, i'm tom keene in new york. we have been looking at the political economics of italy and

wrapped around it are the markets in europe, the markets in the united states and all of a sudden we have these exogenous shocks, whether it's the italian election or tariffs. do markets withstand those exogenous shocks or do you have to filter them into your market analysis? : the real question is we they have theere proper impact on fundamentals. , trumpake an example terrace. if they only apply to 0.25% of thing, it is big a. if it were to be expanded, it would be extremely negative. live in the european election. brexit was clearly negative or markets.

at the same time come markets is believing there will be some kind of soft brexit our agreement. we don't think they'll be the case. alternately today, the italian election, changes happened. we have a new leadership on the block in the markets will see what they do. between rhetoric of how to get in power in the actual action coming there is been a big difference. it's a big markets will await for the first action of italian government. in all this, the backdrop is putting --ks keep on a month. all these shocks are being the market action because there is $100 billion of new money each month. tom: i know francine will talk about xl. doing tosee of those

get us ready for an active discussion. ? make sure --one is as long as you can because interest rates won't stay much longer. lock in your cheap debt. secondly is look at your mix of earnings and capital, where they are allocated. given the strength of the u.s. economy, think how you can get a better footprint in the states. not many people can play that game. it is very costly and requires a lot of --. the u.s. over the next three to five years appears to be one of the safest bets. how you look at the brexit and the european

issue at a time where we see france is one of the strongest economies, germany keeps on marching ahead and we make sure we have the proper mix in europe and the arrangement for brexit. talk to me about axa. what does it tell you? does it tell you they think is the right time to enter the u.s. market or does it tell you summing else? axa is about to ipo its so it iseration, shifting away from life in active management in two pnc and specialty. swapping assets which are valued to 10 times and buying a

mix of business, so when you had the multiple, you can see share show they arely saying you are selling the 10 times earnings to buy 15 times earnings at a premium and that is the result. axa's story has been steady and an overall return to shareholders. right now you are seeing a swap and mix of assets with the ones that have been required book the one with sold out. francine: does it make sense strategically? strategically probably does because the business over the

won't generate value. so they are selling a right time. they can ipo it, eventually to a higher price. perspective the pnc , they needed a stronger presence in the u.s. and decision to go in pnc over the medium-term is a safer bet. short-term, you're the disappointment of the difference in premium paid between what you sell and buy. thanks so much. matteo'silan where albania is holding a news conference. we will try to listen in. he was saying it was extraordinary victory. whether he is ready to form a coalition or not is one of the main questions. we will is not bring any

breaking news. this bloomberg. ♪

♪ extraordinary weekend in italy, in the united states and worldwide. i'm tom keene new york with francine lacqua in rome. we have an important guests coming up including a conversation with the u.s. ambassador to italy. , if we can expand the

conversation to the biggest problem child in eu banking, which is deutsche bank. is it major banks will clear the markets into better. do you see any sign the deutsche bank and the other banks to have a better 2018? >> if you lloyds, the bank --, we are doing much better. equity are way above cost of capital already benefiting does the ecb starts normalize rates. as a result, there is a high likelihood that 2018 in 19 earnings will be higher. deutsche bank's a different position. because itenalty box

and i thinkmanaged now the task is upon john cryan to pick up the mess. when you have 15 to 20 years of theanagement, to clear up -- it takes longer. i don't deutsche bank will post better numbers. -- cine: >> it doesn't it does not. morale makes tension higher.

a visa be as happy that will a will share price. when the shareholder perspective, white. think for the update. this bloomberg. ♪

. .

francine: good morning, everyone. this is "bloomberg surveillance ." francine lacqua in rome and tom in new york.

speaking in milan, and center-right coalition is in position to do italy. he will work with the center-right, and he says he is not available for the coalition. let's get back to davide serra from algebris. is it a berlusconi-led coalition, or is he talking about something else? the right coalition. francine: can you hear me? you,e: yes, i can hear francine caret within the center-right coalition, there is an agreement that the party that gets the most in parliament would be able to express the premier leadership, so berlusconi said his own candidate is salvini. votes thanhas more

its de facto leader for the center-right coalition. it has more seats in the upper house and in the lower house, so i think the president of the republic will have to start with the party that has the most seats, or the coalition, sorry. question is, they do not have enough seats to form a majority government, so they need to form some type of coalition appeared that is what alvini was referring to. tom: very good. davide serra, thank you so much. gyrations in china, in beijing is our wonderful stephen engle joining us this morning. has been an extraordinary week last week, extraordinary weekend, and by all reports, it will be an extraordinary trade week in washington.

they react, and when you hear reports of retaliation by the chinese, is there immediate energy to that in beijing right now? absolutely there is, because of course, this is a country and a government that will deleveraging economy that grew beyond expectations last year at 6.9% here they set a new target at about 6.5%, and even to copy wordage that they used last year. they do not want to do that. it is no longer the days of growth at all cost. so the trade tension is an external factor that they were not necessarily factoring in. donald trump is truly going to launch an all-out trade war, at least in steel and other products this week on the that will be another headwind at a time when the chinese government here is already trying to put the brakes on this economy a bit. the steve engle, you are at

forbidden city, which i know you're covering in 1420 when they were laying the last brick, and when i look at the for benin city, i think it speaks to president xi. try toesident xi anticipate how to react to trump?nt who is around him to help him, or within the for benin city, within the communist party, who him one exactly is advising trade with trump? he has his key economic advisor, leo hall, who was just in the united states. he has some very good lieutenants. topi jinping and the leaders are trying to push through this very last-minute change to the chinese constitution to allow him to stay on potentially as president term limit,current 2-2

he is no longer number one among seven equals, he is number one. all-powerful body of seven equal men no longer -- he is number one. that is the big question now, with all the party officials in town and beijing, from 3000 from all across china, they want promotions, but they see now a new emperor in the making. tom: stephen engle, you have spent decades in china. you have faced some real adversity in your reporting. let me ask you a question, and i really do not want to get you in trouble this morning -- you see a lot of harley davidson's in china? after harley davidson, what does it really mean for hong kong, shanghai, beijing, and the rest? [laughs] yeah, i mean, it is a

tribute one as far as what china could do to retaliate. it could be in soybean, it could be in a harley davidson. yes i have seen a lot of ends, i have ridden harley davidson's through the countryside. it is not that big of an export, of course, from the united states and milwaukee, but it could be some seriously interesting times for the next couple of years if this protectionist sentiment, from the white house turns into an all-out trade war. tom: stephen engle, stay safe. wonderful to have you with us of course in beijing. he has done great work for us over the years. michael mckee in denver to take on the denver broncos. he was in toronto gazing at the montreal canadiens. mike, there is not much ice hockey in mexico as the

nafta talks move south. no, tom, there is not. it is quite a difference from montréal, quite warm, except for the negotiations. it is a weird parallel universe. you have the president's men defending the steel tariffs, and wilbur ross, another veiled nafta threat. another chapter in the 30 chapters they have to finish. progress slowed, but definitely progress. u.s. trade representative robert lighthizer arrived yesterday. they will assess the state of the negotiations, but by all indications, they have made enough progress to go on. we will know later this afternoon. tom: michael, what is the response to wilbur ross holding up a can of, i think it was campbell's tomato soup. how does the mexican government

response to something so silly? michael: [laughs] well, i do not know if they respond to that part of it, because, as you say, it is a little bit silly, but canada and mexico are two of the biggest suppliers of steel imported into the united states. they have lobbied hard to be left off the president's list when he signs the document later this week or the following week. if they are not, they have promised sanctions, and that could bring these negotiations to an end if the administration reacts badly. oner navarro said yesterday tv "no exceptions," so there is definitely a cog over these talks. francine: hi, michael. we're talking about china retaliating. is there any chance that mexico could retaliate, or are they too small and too open an economy? michael: no, mexico can retaliate here to they cannot do it on a large-scale, but they can target things. this is where harley davidson's could come in.

they will not target harleys, but they will pick a product, probably in agriculture. about 10 years ago, the u.s. was not living up to the provision of now -- of nafta talks, so they targeted u.s. agriculture, and they did a lot of damage. the u.s. eventually gave in. i would expect that to be the case, and that canada would do the same thing, targeted sanctions against specific parts of the economy in order to make the u.s. feel some pain as well. francine: thanks so much, bloomberg's michael mckee in mexico. we will be back with leslie vinjamuri of chatham house and david sarah -- davide serra of algebris. actually, let's go to the now. leslie, when you look at tariffs and the trump administration, putting america first, are we definitely toward a more anti-globalization, more protectionist world, and what does that mean for world growth? leslie: it certainly looks that way, doesn't it?

we have been waiting for this since the campaign trail, and we did not release see it in a way that we thought we might during 2017, but now here we are -- america under president trump at the forefront of, apparently, thinking about taking down the global trade infrastructure that has worked so hard over so many decades to build up. it is quite worrying. i think with this president you never know. we are told is going to happen. we were told there will not be exceptions for europe, canada, mexico, for anybody -- for south korea -- but i would not put any money on that, because as we know, we did not expect the announcement to come out when it did. tom: leslie, you and i were glued to the oscars last that, going back and forth across the atlantic. let me bring up the president's tweet. he was not watching the oscars last night. he cannot believe "wonder woman" did not get a nomination.

"we are on the losing side of almost all trade deals. our friends and enemies have taken advantage of the u.s. for many years. our steel and aluminum industries are dead. sorry, it's time for a change. make america great again." have you ever seen tariffs rebuild a smaller debt industry? leslie: nobody thinks that is what will happen in this case. as we all know, technological change in production is a large part of what is driving the jobs down. even if more manufacturing takes place, more production takes place in the united states, some jobs are not going to come back. the more worrying thing is the president right now, again, is using the twitter feed and using his policy with such, potentially, grave internationally policy implications. it does not look like it will do any good for america or for the rest of the world or for america's allies, which is critical right now. tom: you mentioned technology,

leslie. david lynch i thought had a fabulous article on ashtabula, ohio, in the northern part of ohio on the great lakes.it is out of the court in lightfoot song from years ago. -- gordon lightfoot song from years ago. the heart of the article is technological change. how do the free traders with the president explained technological progress to the president of the united states? leslie: i suspect the president of the united states knows this, but it is not at the top of his priority list, right? unlike many things that the president has attempted to do, this actually is a commitment that he has had for a very long time, taking a much more protectionist, much more aggressive stance on trade. it is almost surprising that it did not happen in twice 17, yet we are surprised that this is what we're seeing now -- in 2017, yet we are surprised that

this is what we are seeing now. explaining technological change is difficult to the key constituency -- his base -- and here is where government really matters. coming up with some sort of thoughtful plan for responding to some really very real needs that people who are unemployed, challenges that they face. but terrorists is not the answer rrifs are not the solution. -- tariffs are not the solution. francine: you start with tariff s, you go quite hard, then you pull back on the tariffs or lower the tariffs. leslie: it is a nice thought -- he starts high, he comes down low, but look at what we have seen over the weekend or europe is pushing back saying they can play stupid, and we can also, we can be stupid, and setting out a

list of american products that would be a subject, potentially, riffs. canada having a negative reaction. the risk is extremely high. not to engage in a strategy that america has had for so long, which is to come together with a partners,er of bilaterally, multi-, and relate to talk and negotiate. it really has not succeeded, but it is the best possible alternative, and to abandon that commitment to a multilateral framework to negotiating is a genuine problem. it is very full hearty and risks very negative and a spiral when riffsmes to ta and a potential for a trade war. francine: davide, we are talking about retaliation on the chinese part, but is it actually u.s. financials that could lose, because the chinese say we are not opening up our capital

markets as much as we were, or we are not opening up the financial sector as much as we could have? davide: well, there are three things to say. first, the number one beneficiary of the globalization over the last 40 years has been the united states. they have one of the highest gdp's per capita. the problem of redistribution is 100% a u.s. issue. they have their own policy in place where the 1% cap getting richer and they basically left behind of own people, so nothing to do with partners. it is a u.s. issue. third, what the rest of the world can do, to be honest, is, despite tax cuts and the economy growing, the u.s. will have to trillion, that needs to be acquired this year for people who are not long-term u.s. dollar holders. i can easily see the true regulation from japanese and dampse to death u.s. -- to

u.s. treasury and weaken the dollar. the majority will be consumed, because they only export services in dollars and import goods. baset will hurt the trump and it will probably set the fed whichore hiking pattern, will cool the economy and will hurt the trump base even more. the headline coming across right now, we will rip up the script, this is a morning where we have -- i know i have got it wrong, is it northern league,the southern lake emm davide, is the league still convinced that the euro is a bad currency? is that the heart of this that it is above the euro, but where it should be or that italy should leave the euro? confirm70% of italians

that for them the euro is key, which is why both the northern league and the movement also well, we kept the couple of years with the euro, but we drop it now, because they knew they never would have won the election on the. now that they are on power, they can say it was not a great idea. we want to be able to spend more money and basically hand more cash. the only problem is italy is already at about 2.5%, 2.7% deficit. the debt is very high, so they do not have any less ability whatsoever and more public money and get a kickback to voters. so now, you know, they proposed the solutions, they are in charge, and what voters certainly do not want. contribution that, will, even to call a referendum on the. at.

francine: yes, but constitutions get changed. i know they do not get changed in a day, davide, but when you look at the concerning top, we also saw steve bannon show up to support league, can the politics luga, cansomething -- the politics turn into something that is a question on the euro? davide: never say never appeared in the probability is not zero, but remember, we had for 20 bunga bunga. see as actually need to the economy, jobs, with the industries are doing, and in italy over the last 12 years has been badly hit. over the last four, coming back very strongly. exports are now fifth in the world, so we are exporting more than france. export is now 6% to 7%. what i am interested in is very

strong and they are really competing, no matter what, with europe. then there is the part of the country left behind -- that is the south. that is like the trump base. and for them, there is no level of europe that will ever be competitive, because you need education and a significant boost of productivity. the euro is not going to make them richer. if anything, it will make them poor. conundrumuck in the where there's only hard work that will take the country forward. and no euro folks will not make them any better. leslie have got vinjamuri as well from chatham house. more headlines coming out of italy. the more mr. juncker interferes with the votes, the more we win. is convincedvini that the euro is poised to come to an end.

this is a scene we have seen many times over the coming days as the parties of italy jockey toward some form of new government. stay with us. speaking of government, germany with a coalition. the conversation with the deputy finance minister. this is bloomberg. ♪

taylor: this is "bloomberg surveillance."i am taylor riggs. there is a new roll block, takeover ofe qualcomm. the committee on joint investment in the u.s. has ordered qualcomm to delay investor meetings for 30 days. shareholders were set to vote tomorrow on six nominees to its board. broadcom plans to move its headquarters from singapore to the u.s. this spring. once that happens, the takeover would not be a deal covered by the committee. the international energy agency critics the u.s. will dominate global o oral markets for years to come. oil market for years to

come. the reason -- the growth in shale oil production. by $6g the gender pay gap trillion. that is the conclusion by a study at pricewaterhousecoopers. the study says the gain would come from more women working, entrepreneurship, and women moving into higher-paying jobs. that is your bloomberg business flash. tom: as taylor riggs knows, everything is about margins. francine lacqua in rome, tom keene in new york. we are thrilled to have davide serra of algebris in london. just moments ago, bloomberg first word released a small article. bring it up if you would, jason and anthony. weekly view at "bloomberg surveillance" -- bridgewater and ray dalio raise their sure bets, and deutsche bank, which we talked about earlier, daimler, and what i find fascinating here, davide, is the number of major companies that mr. dalio

and bridgewater do not believe in. onant you to comment shorting surgically versus making a global macro short of europe. those are really two different things, aren't they? davide: um, yes and no, and the reason is because bridgewater key strategies, so basically they structurally are long bonds and short equities. now, at a time where it is obvious that interest rates are on a path of going up, it is not clear whether this strategy will hold, and i think they are using futures to be dangerous -- because that is what everybody does. given their side, moving 160 billion assets, leveraged two to three times, that means they have a rich capital 40 $500 billion, they -- $40 billion to $50 billion, they have machine trading that has lost an impact.

i think they decided to take a european bet. if that will pay off or not, time will tell. surely the european economy in 2018 will keep on doing well as it did in 2017. davide, what but needs to happen for ray dalio to get it right? is it a policy mistake, something along with politics, what could derail this recovery? francine: -- davide: i think what could derail the economy basically is a trade war, first of all. let's assume trump tomorrow decides to put tariffs around the world and a trade war starts, europe is an export-driven economy, led by germany, and that clearly will have an impact. paul global markets will sell of, not just europe. the u.s. will probably have more downsides given more international investors owning u.s. dollars and u.s. stocks.

secondly, i think it could be, let's say, rather than merkel and macron going further in a positive europe, let's say they were to get stuck. and third, you have disappointment out of italy, brexit, something as the fringe of europe that would do go -- were to go badly wrong. none of them is the best case, but time will tell. tom: davide, thank you so much, he is without the rest on his italy -- with algebris on his italy. we continue to discuss italy next. this is bloomberg. ♪ mom, dad, can we talk?

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trading partners 08 trump administration tariffs. first responders will retaliate. in italy, the populists do better than good. good morning, everyone. this is bloomberg surveillance. francine, dual lingo. liga just spoke. is this what we will see in the coming days as everybody massages the message? francine: yes. i think we will see every party coming out, saying i will be

able to form a government. i expect to see. that has the president in a ceremonial role. leaders of to invite the main party to see if they can form a government. two takeaways from the press conference in milan. he talked about the euro. they have always been a party that has been eurosceptic. euro adherence was no law bess was no a part of the campaign. he did say something about an ad lion's -- an alliance with the centerleft. have a will conversation with the ambassador . here's taylor riggs. italy, the leader of

the eurosceptic party league says the center-right coalition is in a position to rule the is almoste alliance certain to fall short of an absolute majority. has declared a right to govern. there's no sign the trump administration will water down the proposed tariffs on steel and aluminum imports. no countries will be excluded, although there could be exemptions for individual cases. u.s. allies. , like the u.k. and canada, are complaining, as well as lawmakers. benjamin netanyahu meets with president trump at the white house today. that will give him a chance to divert attention from an impending corruption investigation.

the oscar for best picture goes water," thee of story of a mute woman who falls in love with a captive fish creature. named best actor for his or trail of winston chill chill -- winston churchill. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. ♪ tom: a quick data check before we go through. spreads churn, the euro with a little bit of flat. the vix coming up through 20. thered corrected, 19.98 it is, now i am correct. 20. the yen is not near you and strength of 105.20 or 105 point

five. this is really important and speaks volumes. this is really inflation-adjusted per-person per capita growth in italy. the slope of success, the slope of further success. and for 18 years, it has been japan-like. there is no one better to speak to this morning on his italy and with his unique and original view on american capitalism, luigi, thank you so much. italy has seen the tumult of this election. what should italians hopeful -- hope for the next 90 days? how muchection showed of talents are outraged and they expressed it in different forms. most of the center south voted

for the [indiscernible] both sides of the country expressed a vote a protest. the worst thing that could happen is that nothing changes. i fear that this will be the outcome of this election anyway. there is an attempt to form a center-right government. this will be inevitably a wiki government. it does not have a majority parliament. it would be a weak outcome in my view. tom: a capitalism for the people. what is the capitalism for italians that they need? >> first of all, they need lower taxes to be able to grow more. they need more efficient firms. they need more efficient government. and they need a system to be in europe without being destroyed by your.

this vote we have seen is quite negative of europe. tom: what you have done of the years is not just combined first-rate academics with a and passion, folks, this is just one girt of the emotion of lui zingales. " as italians are rearranging the deck chairs." you know what that allusion is to. this outcome is not just the result of bad luck, but the lack of a meritocracy. italy risks being the frog. how do they get away from those beautifully emotional phrases. how did they get the urgency to a meritocracy? >> this vote is an urgency to's

change a system. i would like to interpret it as [indiscernible] especially the five-star movement has tried to push for more meritocracy the system. hopefully, this will have an impact. tom: are you worried about and alt-right, a far right, a modern fascism right? with steve bannon over there say how much he likes the stridency of democracy, you know the pre-mussolini fascism of italy with george cirelli and others. is that a new democracy without a tinge of that past? >> i think there is definitely that risk. from abroad, it is difficult to interpret to the movement. it does not fall into a natural left and right thing. while the five-star movement is a populist movement, i don't think it is a white -- a right

wing movement. i don't think this is necessarily italy moving to the far right. tom: but the bottom line is, the northern leg -- it is trying to reposition itself, much like metal le pen, to boehner the southern leg. now,dline coming out right mr. renzi decides to resign. i'm not sure about that. but that shows central collapse in italy. can the northern leg govern without a: -- without a coalition? >> i think they can. they have berlusconi on their side. berlusconi cared most about his business. this will be the worst possible government because there will not be major change. it will be a much more right-wing government. i'm not so sure what the capabilities are of soul vini

running the country. francine: thanks so much. get tomorrow the top story. renzit heard about matteo 's resignation. this is what we heard in the last 19 hours. there's no clear winning party. there's no clear winning alliance. we have the u.s. ambassador to italy. previously, he cofounded private equity. it is a great pleasure. italy.rtant day for you arrived in october of last year. how much time did you try to figure out italian politics? they have a life of their own. >> i determine before i came here that we would never figured

out. so i didn't turn a lot of time trying to figure out italian politics. was that the will of the italian people would be served at the end because they would go to the polls. francine: what does it mean for the recovery of this country? >> for the recovery of this country? one of the ministers here in italy told me when i arrived and is going through my meetings that, much like the united states, which was on a recovery, things sometimes don't go well and then they do. but by large, the united states and italy, they keep moving up. so i presume that will continue. francine: do you expect to get president trump on the phone later? if he says, ambassador, what is going in italy, break me? >> the calls with the president are much briefer than that. . [laughter] francine: what would you tell them about what happened yesterday? >> i don't think he would be surprised. --s a contingent duration

continuation of what has happened around europe. the outcome here to a large extent is that there is a president in office who will likely have a strong say in the outcome, or at least a strong input into the outcome. --is a highly respective respected, thoughtful presents. that will be meaningful in the outcome. francine: steve bannon waiting on the italian elections. what does that say about the right, the italian right and its closeness to the american right? >> steve probably has the advantage of being more telling than i am. i couldn't really tell you exactly what his input is, but it is always significant. francine: how many questions are you expecting from american businessman wanted to invest in this country in the next days or weeks? >> i recently came from florence , where we had a usa select conference.

we had 17 states representatives 26. representing our exports from the united states to italy increase last year under direct investment. questions do many you get from the italian side on what president trump is doing and possible protectionist measures like tariffs? >> this is a relatively new development. we have quite a meaningful deficit that we run with countries. we have a big one with italy. we have an $18 billion deficit. to put it in better terms, italy has enjoyed a significant surplus for a long period of time. the tax center for have minimal effect? but i don't think it will change

the rapid growth we have in our imports and exports. francine: we cover have an equity day in and day out. how important is it to the role of the ambassador? .> that is a pressing question the role of private equity is not that dissimilar because you are basically faced with evaluating decisions, the pros and the cons of making a move. the same thing is done here every day. and it will be done again today and tomorrow. certainties than differences. is this a cycle? >> i don't know how to fully explain it. but there is a name all around europe.

as they do in the united states. sometimes, after long period's of time, some change is good. we think we will have to wait to measure it. but i am optimistic. >> what is the number one question you get from the u.s. companies wanted to do this. do they need better labor laws? do they need a more flexible working force? they have made some positive changes in bringing business to italy. diminishedhas to be to bring in more business. and i think moves in that direction will be positive. the global economy is on an upward curve. italy is enjoying that, too.

reason to believe that that work will continue. i think whoever is in government will want to try make sure that continues. we are just getting breaking news. newsard from the italian agency, saying that matteo renzi has resigned. a spokesperson says that it has happened. do you expect much more investment coming from the middle of u.s.? >> what i find fascinating is the amount of fake news that appears on a regular basis. i think it remains to be seen.

francine: it is difficult to pinpoint some ties. at think our president was one of the first of point out that there is a lot of fake news out there. i think what happens is really good reporters who are very careful, like you, will diminish the impact and different ways to approach it. we will just have to move it was side. >> -- that's the first time i have taken that is a personal accolade. fake news is pay a

more discernible now. people are more and more aware of the facts they check the sources. some ofd a lot about the reforms needed, about the economy. three best any >> immigration is a significant italy., very much so to i think it has been handled both effectively and with great .umanity but italy is sort of a beacon to the world at the moment. we had former chief executive saying the chinese are looking to buy a lot of assets do you see appetite from jan u.s. country? >> we have seen fairly

significant activity take place? italy is a very track to place? it has extremely intelligent people who will make it attractive for other countries and other people to come in and .issipate i think he will have to continue to be discerning about who they sell to those in that out is? the government will continue to govern. it's another beauty of the way italy is set up constitutionally? anything rashing to happen. ? think you so much. '0 tom: thank you so much.

ambassador eisenberg for years i goldman sachs. right now, we need to go to washington in amos interesting washington we could break kelly, our kevin cirilli i am not going to miss words. inas of wormer, aided a desk how can youlower help our audience cut to the chase on this? how is the president's health. ? yesterday hethem has the control of the administration. to answer your question .irectly, at least

they have been laughing off these reports. they see these as outside folks who general kelly has splinted his arm. tom: it seems like a movie harmony. krugman is selling us diverting demand equals the 3% to gdp to domestic steel, aluminum products. would be easy for you is our friends in real estate would become very happy as would anybody who is highly leveraged. professor krugman anticipates peter interest rates

navarro is the one who is saying, to hell with retaliation how alone is mr. navarro this his policy proposal right now is in thing that is some would sayo the market is dead because of these trade talks. if the president double's down on this and whether or not there are car valves at the end of the day, we will have to wait and see. he will have to double down on this. this is not something that he

backs away from. tom: thank you for that. with us in this morning, the ambassador of the united states. look at your wonderful book, a capitalism for the people, in it is a chapter on good and back taxes. is more,k my reaction if not all, tags are bad. tariff?justify trump's hardly so. a room were to justify on how to do it, i would talk reduction of aluminum and steel, especially the high-quality so on and so forth.

tom: is still from the good people at the university of chicago, you studied more microeconomics. that's the way it goes. what is the game theory of retaliation who can deny that these different nations, including canada, are. i have not seen a compelling argument? arguelly, you want to with your introducing targets because some other people have done it in that way if you can argue that this is a away'n, then you can get i'm not heard president trump makes the case. this is a campaign promise' ][first of all, we have seen

run on campaign promises. the question is was he trying to deceive. . nice tothat it would be at least argue anymore convincing way and, as i said, i have not heard waste at night experiment in. francine: what does it mean for currencies'does protectionism also mean a week-dollar currency '. am i going to far isi still hope that this maybe an isolated event and it is not enfold. unfold, we have to

look at will happen to the college will take place before the economy. two o tom: there seem to be dynamics that paul krugman mentioned. the responsiveness and dynamics between the trade economy and the culture of an economy which you have written on. what should be the response of free trade republicans? the response is, number one, explain why this will cost more american jobs quotehey benefit perry george w. bush apportioned still when he was president and this is a bad precedent. that dog did not walk out very well. that can be the most convincing case. of course, in the moment of

clear tension with partners, particularly in canada, the ?iggest exporter i don't understand what is the logic of the president, honestly. the tariffs this week scheduled on germany and no doubt the all actions will be german, finance minister. .e is someone taking this is bloomberg. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries.

today,

♪

♪ bloomberg surveillance. churning markets is morning. a sort of a mess as we tried to figure out the news out of

italy, out of the united kingdom. let's get a morning briefing. here is taylor riggs. the pressure to enact act gun-control legislation isn't going away. lindsey graham says the president has an obligation to do something on gun-control and school safety. the white house is backpedaling on the president's remarks last week, endorsing background checks ending -- and limiting. is the first time since a poor call made it to 1975. the carl vincent arrived in japan today. they are trying to fix the yeah trying to figure out the cell. in germany, the last barrier has been lifted for a first charm -- fourth term with angela mercker.

merkel can expect to be re-inaugurated by the middle of -- . in the u.k., prime minister thissa ray has a police afternoon and down there as they -- peace may not last long if the eu rejects mays proposal. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. 1 i am taylor riggs. this is bloomberg. taylor: thank you so much. no clear winning party. have italy's european affairs minister. partners with pg&e. how ugly are they?

very ugly. the chosen chose and timing gratian? they got more than 50%. they think -- i think that is a bad estimate for italy. respect decisions doesn't prevent us from having our own ideas and to come and demand. which is bad for italy and europe. >> doesn't he have to resign or regroup and refocus and give the italian the belt -- the proper -- one year. after one year of uncertain theership, split between leader of the pack in the primaries to her, to put in possibilitiesthe

of the sea. who's fault is this? you say you have put in the reforms. employment is a little bit down. why are italians not happy' because it wasn't enough. the crisis hit so hard this country in 2013 and 2014 that neither of these very positive figures will help in time of grow and jobs created? is not so much the reality of everybody. they often defied on the deception. francine: could you have done better in making every italian theore a part of a recovery person on the street doesn't necessarily see what is moving.

it takes time to regroup positive the news for the household and for the daily life. we knew there was this risk. the main reasons for our defeat goes back to the constitutional framer and the master put it in. i don't think that is a disposition. i think this is the beginning of a father -- a farther weakening of plaut -- power. instead of going after the election, this has proven to be a mistake. will italy's see this about as less credible? >> we risk that the european train takes off.

with a grand coalition in berlin and the obvious political leadership with emmanuel macron. it is clear that there is a possible majority. the two winners, which are the extreme right coalition. both are anti-european. it is difficult for italy at this moment with this unclear majority to play the italian role in europe. francine: it was not on the platforms to get out of the euro. >> yes. the problem is they did not speak about this in the campaign. francine: francine:? why walk away from it? >> we will see. i hope for italy and for europe that they will prove reasonable.

see what the full decision, the first move by the president of the public will be. i believe it should stop and view the responsibilities and respect the rish -- the wish of the citizens. and also to think about our mistakes and to relaunch our political offer. francine: do you see any circumstance where the party would form a coalition? >> i do not see any possibility. we know what they are. they are incompetent. they are populist spirit and they are not european. and they want to be the party of europe, the party of competence and the party of responsibility. but the front runner is the party with the most votes and they can change.

if you look at the platforms, it what they exactly foster and issues. rely on a movement that is unreliable or say that anything is the opposite of everything. after all, we were the folks, the opponents, the enemy. all the problems in italy and the democratic party. i don't see why we should stop and talk with them. francine: do they not see the dangers ahead? international investors another country said that this is a talent politics? is this time different? >> i do not know what they think. i believe that italy is back on , because it put the deficit under control. they reduce the public debt.

growth is back. for the moment, there isn't any reason to be worried. market reaction is the right one. we don't even know what kind of majority there will be. the issuen is that should be in opposition for any coalition that will come up. francine: thank you so much. thank you so much. zynga wallace -- luigi zinbzdlx. the entire nation was really rocked by this as well. how does italy get the

confidence back? they are not going to the world cup. they have this complete election disarray. where is the leadership and governance to get 30% unemployment back? to get southern italy back and on and on and on? >> i think the failure to qualify for the world cup after two terrible world cup, right away, are indicators of italy. germany has been successful in soccer because they have a program of training people from a young age. tom: the meritocracy of football. >> exactly. that is what is lacking completely in italy and at the highest level of the organization of the federation of soccer it nearly. is corruption part of your calculus of a troubled italy now? or is that secondary to other

major issues? >> absolutely. unfortunate, it is not just the south. one of the most corrupt infrastructure was in venice, the project to save venice from the high tide. more money has been wasted in that project than any other single project in the nation. there was involvement of organized crime. overnight -- organized crime is all of italy, not just in the south. tom: thrilled that he is here today. coming up, an important conversation. you may not know the name. chairman deputy finance minister. he is somewhat on the rise as a coalition for a. -- forum. stay with us. this is bloomberg. ♪

♪ international energy agency predicts the u.s. will dominate oil markets for you succumb. will satisfyu.s. 80% of growth demand through the year 2020. the reason? the growth in shale oil

production. cutting the gender pay gap. reduce growth. that is a steady by pricewaterhousecoopers. the gains would come from more women working, entrepreneurship, and women moving into higher-paying jobs. that is your bloomberg is this flash. francine: thank you so much. germany's social democrats have decided to join angela merkel's next government. in the five months germany has had a political stalemate, amana mack brown called for a closer europe. what's the first move for europe's powerhouse economy? thomas in berlin with a very special guest. you are at the beginning

of the process, the political process in rome. here in germany, we finally have a new government after five months of talks. it is time to get down to business. who better to tells about the road ahead than our very special guest? the deputy finance minister and the designated health minister for the new government and plays a key role in chancellor merkel's christian democratic union. thank you for joining us. when we look onto the world stage, we have president trump threatening trade wars. we have brexit looming in the background. as we see the italian results, the rise of populism. what are the keep priorities -- the key priorities for this government? >> after five months of tried to build a government, we now have certainty that there will be a strong and stable government in germany, which is crucial for europe and the european union. we want to support any initiative that wants to make

europe more secure. it is about securing our borders . it's about the defense union and a very important project for us and europe. you can see our neighborhoods, they are in more crisis than ever, russia, the middle east, north africa. europe needs to answer any strong way we want to support that. and there's still rise and trade issues with other partners. you mentioned the u.s. that needs a common european answer. chad gone the discussion with the u.s. and the president calling it potentially a trade were, what should be the european response and what is germany's role in that? >> first of all, it is talking, talking, talking. and negotiating with arabic and friends. we are friends within the transatlantic partnership. there are issues that need to be

discussed towards china. same cut of issues president trump is bringing up when it comes to steal, for example. that we need to sit down with our american partners and have a deeper look. if this is really the way they feel it and we should go this out, wee no side gets should find a less confrontive solution for that. it is important to have a new government that is able to go to washington and negotiate. chad: you mentioned china. china has been investing heavily in companies in europe and germany. we have the diamond investment by g-v last week. what is the government's thoughts on that. is there a role for the government to play in regulating this in some way? >> definitely, we have already enforced our relation on the european level and the

international level. what we do expect from china is relative. there are some areas where for europeis crucial and for our security. not of course, it is possible to buy these companies. for that, we have definitely a loss. aboutyou were talking digitization, something that is very important to the new government. what steps do you need to take in this new government on the digitization front? >> germany definitely needs to speed up in all areas. we have already started to invest in infrastructure all over the country. it's about the 5g technology. it is about protection laws.

we make it possible for our companies to deal with it as well. our about a government, government does not have too many digital offers. we need to improve that. we are 20 years behind in that area. we really want to speed that up. checkedout the wind hospital. we want to be the most attractive animal hospital in western europe. there is still a lot of work to be done. sorry -- something you spend a lot of time -- do you see the possibility of transactions done in different currencies? by german law, there is regulation for it it is treated like a dollar, if you buy dollars.

regulation, ito always explain to our people, first of all, let us understand it before we regulate it. i think that is the right approach to deal with it. the first stop is not talking about integration and a look at what is going on. we need to see where we still galatianneed for mario p.m. in germany, for example, the platforms that are dealing with cryptocurrencies are super wise. what we really do need is an international approach. that is why france and germany .ook it on their initiative

what is going on there? first of all, find they need. , there has been talk about the french-german relationship. how do you see that playing out so many important decisions that need to be made. we really like to sue is going on in the melancholy's. we definitely want to go on with him. we have the chance to be an engine again. that is about securing the border, which is very important. it is about competitiveness. there is the common base for our country.

i really wanted something to be built up. chad: what do you think of the latest proposals? can they work in terms of what the fuss brexit relationship will look like. first of all, i need to sit down and have a look closer look. as i always wanted to say, i found. there is also working together

on security issues, very crucial for us. a.an stress there is there is always a question about trade. the these three figured out. seeing the new government will be sworn in a couple of that -- of errors. song: we had to breaking stories are now. headlines from a five-star party. .his is the mayo luisi, this is the beginning of a back-and-forth. you say a five stores not really a party.

, he seems to have a handle on the party he was headed over the party. he led the party from 25% in the last election to 33% in this election. that is a major victory. transparent about what kind of government he wants because he have -- has at least the minister before the election. question is who wants to go to partner with him. party is not what i did to leave alone. we wanted to form a coalition. my expectation is that they will not be able to fall -- form a government. a company changes its mind. we have the first tweet up right now. we have large straight deficits have any in nevada.

melissa is right for all of them. tariffs on steel will only -- also, canada. they have not done what needs to be done millions of people at -- conflation, the fact is, whether you support or don't support the president, this is co-flitting all sorts of fletcher and said he. it is pseudo-macroeconomics, is its it's. , it can place a number of

different issues, including the conflation of drugs, w thursday. thank you so much for joining us today. he is the most sooners sees her yen is what i am watching. this is bloomberg. tom: ♪

xo services scores. stability all around as the national people's congress starts its meetings. president trump good trade war gets underway. u.s. allies unite in criticizing tariffs and manufacturers come to terms with what america first could mean for them. welcome to bloomberg daybreak on this monday, march 5. alix steel is done in houston. reachingel tariffs are texas. >> that shrew. it is spare week. the who's who in the oil and natural gas convergence here to talk about oil ministers. steel tariffs are front and center.