anna: good morning. i'm anna edwards. matt: and i matt miller. this is "bloomberg daybreak: europe," and this is today's top stories. anna: sweeps to victory. he was a fourth term as tensions escalate. we are live in moscow. matt: change in china. gang is named the first pboc governor and 15 years, what does this mean for the world's second-largest economy? anna: and our excuses, the billionaire prince tells us he is ready to move on from the corruption crackdown. unfortunately, i was part of

that group, but forcibly and i am out of it right now. ♪ anna: good morning, everybody. it is monday morning. mats, let's talk about what has been going on in the asian equities. looking a little bigger this morning. lots to look forward to. the g20 meeting taking place in buenos aires. finance ministers will be defending there. how worried will they be about higher interest rates in the united states? all of that is crucial. is theasian section story bloomberg has been

running. we talked about more developments with apple, which is taking the edge off of some share prices for screen manufacturers. another stories to be aware of is the political drama that continues to build in japan. now testing strength in japanese equities in the same way it is testing the weeak te storyn -- the weak yen story. suggestions are that national support for shinzo abe has been weakening. up byllar index, we are 0.1%. a lot to focus in on with u.s. assets later in the week. week, weddle of this will hear from powell, his first rate decision. that could be the easy part. the more difficult part would be about the guidance.

goldman sachs saying we will get the median forecast switching from 3% to 4% for 2018. matt: and someone from thatssance macro put out jerome powell had testified in front of congress that we could be seeing nehru around three and a half percent -- 3.5%. that is the level at which unemployment does not affect inflation. andcan go to the bloomberg plugged in whatever variables like. if i put the real neutral rate we0% input nehru at 3.5%, can see the taylor role points at 0.67%,e should be rather than the 1.5% for the fed is now. that could be a slightly dovish side. let's get the bloomberg first word news. for that, we go to juliette saly. juliette: in russia, vladimir putin has cruised to victory in

the presidential election. the kremlin's longest serving later since stalin had almost 77% of the vote with 99% of the ballots counted. it extends his 18 year rule amid a confrontation with the west over the poisoning of a russian spy and his daughter in britain. the u.k. brexit negotiators want to secure a promise from the european union at a key summit this week to reassure businesses that they will get the grace. they just -- the great period they desperately want. the chief brexit negotiator and his british counterpart are preparing to hold talks in a press conference in brussels today. it is a sign the two sides are trying to reach an agreement on a status quo for decision -- transition phase. china has named yi gang as china's -- head of china's central bank. he has deep international links

trying to clean up the financial sector. at the same time, president xi -- top's top epidemic is now in aadvisor new role. enact main mission is to stable monetary policies, and at the same time push for financial reform. maintaining the overall financial sector of stability. juliette: saudi arabia's prince, one of the richest men in the world has said he is moving powered following his release. he made the comments in an exclusive interview with bloomberg. >> i am far anticorruption in place in saudi arabia. unfortunately, i was part of that group. but fortunately, i am out of it right now. i am not the person who is going to come and say i forgive but

don't forget. i forgive and i forget at the same time also. juliette: you can see our interview with him in full tomorrow. in the u.s., donald trump has made his most direct attack to date on the justice department's investigation into russian election-meddling being led by special counsel robert mueller. a showdown may be growing. the president tweeted, why does the mueller team have democrats and no republicans? muelle isr oust excited to ignite a political firestorm in washington. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. stories on there bloomberg at top . here in asia, in a was alluding to the scandal that ingles prime minister abe, with two polls showing that his popularity is at record lows. through andpushed

sent japanese equity markets lower. the nikkei down by 0.9%. you can see some equity coming through in the hong kong and china markets. we have seen a lot of these tech players coming under pressure because the apple story broke in the early hours of asian trade, the news that apple will make its own display screens. let's take a look at how that is impacting some stocks. down by 0.9%sung on that news, so affecting the south korean market. also on friday, we had the news that li ka-shing is retiring. we did see one of his companies off by 0.9%, and we are continuing to track developments in noble group in singapore, falling to 1999 was falling -- falling to 1999 lows.

they are trying to garner votes ahead of this restructure. matt: thank you very much. juliette saly in singapore. in the wake of president trump's tariffs, u.s. treasury secretary steve mnuchin could face a cool reception at the g20 meeting in bueno aires. michael mckee reports. michael: there is no question the u.s. is on the spot. the steel and aluminum tariffs are very unpopular with other members of the community. we have obtained a copy of the draft communique, and it warns that a country turning inwards is the biggest threat to global growth. in an exclusive interview, the treasury's undersecretary tells me the u.s. is only responding to provocation from china. a at points in its recent history has joined international institutions, they

were allowing market pricing within their own economy. but in recent years, that has stalled or reversed. that is a concern for the world because it means the world cannot grow as fast as it should. michael: one of secretary mnuchin's jobs is to drum up competition with china. the administration would like support from allies, a goal made more difficult by the steel tariffs and a fear that trump is on the verge of starting a global trade war. monday morning, the ministers begin with a discussion of risks to the global economic outlook. the u.s. may be on that list. michael mckee, bloomberg, bueno aires. anna: let's look ahead to this week. the g20, the fed rate decision. let's talk about markets. good morning to you, bob. when do you start to factor in, or all you already, a material

increased in protectionism in your model for growth will close, trade, all the assets -- for grow --global growth, trade, all the assets? bob: i think we will see nervousness about the possibility of increased trade tariffs. my view is there will be a lot of talk, but probably not much action. there will be a lot of pressure from america on china, but will that actually translate to hard tariffs on chinese exports? i suspect not. anna: that is interesting, because that has been the working assumption. but you are still able to speak to that. bob: i think so, yes. let's not forget, the tariffs mainly impact europe, japan, and south korea. , steel metals exports exports particularly, to the states are very small indeed. a novelriffs, there is a lot of noise, but the impact on china so far is very minor. will the tariffs be extended to other sectors?

there was discussion about intellectual property rights, where it is actually very difficult to impose tariffs on intellectual property rights. talk,tral cases, a lot of a lot of noise, and a lot of nervousness. nedt translates into heighte market volatility. a goods this maybe negotiating tactic from donald trump? he asked angela merkel if she could lower some of the tariffs that germany charged on u.s. goods, which are very high. much higher than u.s. tariffs on german goods, when they met in washington last year. she said, i cannot talk about that. now she is sending an envoy to washington to discuss that. it looks like people are starting to talk about lowering the barriers that they have to u.s. goods, which are in almost every case, higher than the u.s. has on their goods. bob: i think just to quantify

it, the average eu tariffs on u.s. goods is 3%. the average u.s. tariff on eu goods is 2.4%. you are absolutely right in the saying eu tariffs are higher than u.s. tariffs. if angela merkel turns around and says, i can't do anything about it comes it is down to brussels, the answer is, of course you can do something about it because germany can strongly influence decisions made in brussels. i think what we are seeing is a lot of negotiation, a lot of noise, as i said. i think the net result, will intellectual property be successful on the eu to reduce tariffs on u.s. goods? whether that in turn been improves the -- then in turn improves trade is another matter. where the president is coming from are those significant trade

deficits between america and china, and america and the eu. in germany, the current accounts surpluses 8% of german gdp. smaller, surplus is but the chinese trade surplus with america shows very little sign of going down. one extraordinary statistic last month was up 44% year on year in chinese exports. that is not sustainable, but it highlights how the chinese export engine is still very much intact. think thatder if you you could see the germans, because they are concerned about price dumping as well, and the americans and others get on board to push the chinese to move their tariffs down further? they have been cutting their tariffs and they do, according to wto rules, but they are still high and pay their workers far less. labor conditions are far more

liberal in china than anywhere else in the world. bob: i think that is certainly true, but to put it in context, if you look at chinese labor unit costs, they are higher than they were three or four years ago. that is compared to the states or europe. china has that labor cost advantage. it is still very competitive. one point to mention is what is happening on the currency markets. it is quite interesting that we have seen, since last november, december, that gap upward movement in the chinese numbers. 660 ising back to the very low, but we have seen it close to 630 on the currency. anna: we are pointing out that there may be work to do in reducing tariffs and that is what the transatlantic trade conversation is supposed to be about. the merkel

administration sending out someone else instead. we have this week, we will hear from jerome powell. he will give his first decision essentially. but a few things have happened since the last time we had a big conversation about this in december, and that was the tax bill in the united states. and of course, we now have more clarity on the trade policy from the trump administration. not full clarity, but a bit more. how does that factor in? bob: my view is this year, we will have three increases in the fund rate. i think there is a good chance we may end up with four increases. if we have four increases relative to an inflation rate between 2% and 2.5%, we will have a slow creep up in inflation in the states toward 2.5% year on year by the third quarter of this year.

that is still a fairly benign monetary policy. i don't think we should be too worried about monetary policy being tightened. that would also be consistent with growth close to 3%. the important point to make is that is unprecedented that we have a significant easing in political policy at a time when monetary policy is only slowly moving away from a very easy stance. anna: thank you very much. bob parker stays with us here on "bloomberg markets: european open -- on "bloomberg daybreak: europe." centralis the first new chief in the tank. matt: and later, putin cruises to a new six-year term in the kremlin. what does this mean for russia's relationship with the west? "bloomberg daybreak: europe --this is bloomberg. ♪ matt: good morning.

this is "daybreak: europe." that is 720 -- 7:20. you can see asian stocks are represented by the asia-pacific index down just slightly. let's get a bloomberg business flash with juliette saly. anna: looks like we are having a

bit of an audio problem with juliette saly over there in singapore. but one of the things she might have been telling you about is there is a new appointment at the pboc. let's get to that because yi gang has been named as the new head of the pboc. by choosing the deputy to replace the incumbent, zhou xiaochuan, it signals the country is seeking continuity. say about the direction of monetary policy and all of the other policies they are in charge of? into yi gang as he left the session, and he reiterated what you just said. when he was asked what his focus would be in terms of priority, he said financial sector stability. he said further moves to open and reform the financial markets here in china, and he said

prudent monetary policy. those are the three key areas for him. this is a man who spent 10 years as deputy governor under the wings of zhou xiaochuan, who was the governor for 15 years. they worked through these .there were those moves that yi gang has made with zhou xiaochuan. there were some challenges, of course. theas at the helm when surprise evaluation happened in 2015. but nonetheless, he is a man who investors know and is a safe pair of hands. he speaks english, educated in the u.s., and is well known amongst policymakers in the u.s. and or broadly in the west. matt: what are the challenges -- there are obviously a lot of challenges for anybody running a central bank these days, but what are yi gang's key

challenges going into this term? it certainly will not surprise you to hear one of the key challenges will be ensuring they will cap the debt levels growthnsuring the doesn't fall off a cliff, while looking ahead to further measures to liberalize the pboc. that may not happen in the short-term. they want to ensure that risks are under control before they make any further measures to widen the trading band. but it will come into focus at some point in the short to medium term for yi gang. and there is the question of how they do that without seeing further capital outflows. they may be removed at some point. focus, as was the calibration of pboc policy, given what is happening with the fed and other central banks. certainly challenges. he has to put up with the changes around the regulatory

system. he has to quantify that, because we have seen the bank regulators merge. . the institution has more powers, but the governor potentially has fewer powers and will have to report to the economic brain trust president she -- of president xi. he is likely to take over the portfolio. less room in terms of policy adoption for the new pboc governor, yi gang. he will have to be pray -- reporting to president xi's key advisor. anointed and appointed here in china. matt: thanks very much. tom mackenzie reporting there on this key move for global markets. bob parker from quilvest wealth management is still with us. when i look at the challenges facing china, i feel that debt to gdp is a big one. i have a chart here.

used mellow colors, but it is a harsh picture if you look at it. this is debt to gdp. 260%, china's total debt to its gdp. but it is forecasted to climb about 300%. how is that sustainable? bob: the answer is, it is not sustainable. having said that scum of the growth numbers all look very comfortable, if you look at industrial production holding at 7% growth, inflation is steady at around 2.5%, retail spending close to 10%. as i mentioned earlier on, this exports surge we have seen recently. the pboc and the new governor yi gang needs to be very focused on deleveraging that debt burden. but to put it in context, the

economic data looks good with the long-term moderation. are: i'm guessing we expecting the new pboc governor to carry on the internationalization of the currency. bob: slowly. anna: this chart shows it increasing. bob: there are a number of factors. the first factor is the capital account will be liberalized, and that has to take place to have free capital flows fall further into internationalization. the run the -- it is already in the central banks. that processes intact -- the process is intact. that is over eight period of time, but i think we -- over a period of time, but short-term, they are very concerned that it has moved too far, too fast. anna: thank you very much. bob parker stays with us.

coming up, forgive and forget. we will get the latest from our exclusive interview with bin talal.

anna: this is "bloomberg daybreak europe." iad shortly.n re let's talk to bob barker. got this chart, 7273, which illustrate the point you were making before we came back, which is that, you know, some tough times have been had the saudi economy. with a firmer oil price that that turned around? bob: you mentioned a firmer oil price. my view is that brent will trade for the next two years to three

years around current levels and we have these conflicting factors impacting the oil price. the net result of all of that is the brent continues to trade between 60 and 70. the iea warned of a potential crash. -- crunch in 2020. that is two years down the road. for the next year, we are stuck. if one looks at the fundamental problem, and there are a long list of fundamental problems, but the key issue is the pace of diversifying the economy and the oil and energy sector. that is not something that can be done quickly at all. yes, saudi arabia is coming out of recession. it has been a very difficult to do three years. that was reflected in a high budget deficit. recently, the data is starting to improve, so saudi arabia is

coming out of recession. yes, they are trying to diversify the economy. the deficit is coming down. but the growth outlook, i think, will remain difficult. bob, thank you very much. bob parker stays with us. saudi arabia's prince is one of the richest men in the world and the most famous face caught up in the nation's so-called corruption crackdown. with erikbout this schatzker, his first since being released. >> i have for the anticorruption that took place in saudi arabia. unfortunately, i was out of the group, but fortunately, i am out of it right now, and i am not the person who is going to come and say, you know, i forgive but do not forget. i forgive and forget at the same time also. now. he joins us tell us more about the interview. erik: -- matt: shocking solidarity.

they spent 83 days locked up in the ritz-carlton in the saudi crown. why do i say shocking? it was the saudi crown. .t was the crown prince's son who put their nephew and cousin in the ritz-carlton in the first place. it was in many ways a surprising interview. he has not been seen or heard from since he left the ritz carlson several weeks ago. we discussed everything he would expect us to discuss. he discussed what life was like in the hotel, to be entrapped, imprisoned, by your own cousin and uncle. we talked about the reasons why he was there. was it an arrest, just a detention? we talked about his own personal experiences. we talked about his future as a businessman, as an investor it and the controlling shareholder of kingdom holding and talked holding and what

they might be making. we talked about the future of saudi arabia, his personal relationship with the king, with nbs, and how he might lend his support to the kingdom going forward. nbs, the heir of to the throne in saudi arabia, preparing a trip to the united states. what are we expecting? he has just been in london in an eye-opening -- really an eye-opening marketing even. what are we expecting from nbs's trip to the u.s.? erik: in some respects, he is on a mission to better acquaint himself with the united states to build relationships, not just in washington, but in cities example, andfor los angeles. he is looking for capital, and looking for american expertise. he wants to attract investment

to saudi arabia so there is a transfer of technology. so there is hiring and training. this big plan and bs has put together, is all about the transformation of the saudi economy and saudi society. he recognizes that the saudi's cannot get it done on their own. they need help. it's clear he is interested in building very strong ties with the united states. many people, including prince i princeead -- and the believe he would do a better job of managing u.s.-saudi relations than barack obama and he wants to double down on that, and perhaps, in addition, see what kinds of deals he can do while he is in the united states. he should not leave off the agenda the question of middle eastern peace. jared kushner, the president's son-in-law, and senior advisor -- excuse me. he has been working on that with mohammad bin salman of abu dhabi with the israelis.

i have no doubt that it's going the top of the agenda, high on the list when mohammad bin salman sits down tomorrow. matt: erik schatzker in riyadh with a fascinating interview. cannot wait to see more of that exclusive interview with the prince for the first time since he was released from that ritz-carlton prison -- imprisonment in the ritz-carlton. it will be really amazing to hear what that was like. let's get back to bob parker, and bob, i wonder what you would think -- on the one hand, it looks like nbs is using strong-arm tactics for political gain in saudi arabia. he is doing the work that is necessary, a lot of people would say, to transform the economy so that it is not always going to be reliant on oil. where do you see his chances?

obviously, the wealth they have had could make some all week in the long-term, and he is trying to sort of get them back into shape for the global economy. bob: two-putted in literally one sentence, he is doing today what a lot of us who know saudi arabia very well -- i had been visiting saudi arabia. he is doing what a lot of us have argued should have been done over the last decade. all of the plans -- the saudi plans for 2030, you know, that is necessary. forthe future development the economy. if he does not succeed, i think they have got a problem. anna: thank you very much, bob parker. staying with us on the program. let's check out the market action this morning. nejra cehic has an update for us.

nejra: good morning. we are seeing a mixed session if we look at the equities in asia on the regional spread here on gains in china. we heard about leadership changes, particularly around the pboc and finance minister. japan has been largely underperforming some of the tech stocks on the topix underperforming following news flow from apple. the msci asia-pacific index is down .4%. if we switch and have a look at what is happening in the fx space, the yen is outperforming against the dollar at g10 currencies. let's have a look at the next chart. you are seeing the yen around the 105 handle if you look at dollar-yen. according to the latest cftc data, speculators have turned bullish on the yen for the first time since last spring. some of the political woes feeding into this a little bit. but speculators have rarely been long on the yen since president trump's win. that is the turnaround we have seen with causing people to question whether we will push

past the one in five handle and see the yen at 100. also looking at cftc data, what we have seen is speculators turning bearish on the aussie dollar for the first time since january. if you look towards the end of the chart, you can see some of the gains we have seen this month in the aussie dollar have pretty much been wiped out. it is among some of the worst performing g10 currencies for 2018 and it has also dropped below the 100 day moving average along with iron ore. iron ore prices seem to be signaling the bearish signals for this currency. we trade at 7692, the worst performing g10 currencies against the dollar in this session. looking ahead to how u.s. stocks might open, futures point a little lower. interesting to have a look at how you might play the u.s. equity market. if you take a look at the yield curve, and here, we are looking at the tens, it's forming a double bottom looking at the yellow line. that bugs the question of whether we are going to see some steepening, and up to this point, along with the yield

curve flattening, growth stocks outperform value on the s&p 500. the white line is the growth index over the value index. the question is if we see the tens steepen, will that value outperform? anna: nejra cehic on the markets. that's talk about with going on in another economy that has been reliant on oil prices. vladimir putin has a landslide victory. the win extensive 18-year rule. reporter, ino our moscow for us. good morning. what is first on his agenda for this term? how much reform expectation do we really have here? morning, anna. first thing on his agenda is this confrontation with the west. he did his most detailed comments last night about the attempted murder of the man and

his daughter. vladamir putin saying that it is a complete nonsense to imagine russians would do this before a presidential election, before the world cup. it is almost fantasy land, unthinkable. we finally heard from the man himself on this over the weekend. we did have the russians retaliating. throwing out 23 british diplomats from moscow and closing the doors on the british consulate in st. petersburg. putin's campaign manager thinking britain saying -- thanking britain, saying it is boosting voter turnout. what happens domestically is they care about. they care about living standards, about their pensions, and not about foreign policy. the senior fellow at the london school of economics says the confrontation can ultimately work against putin. this last term, he will be judged on whether he can get living standards up and what happens domestically. are: i wonder if they

patterning down for moore sanctions, more rich edition from the u.k. -- retribution from the u.k. theresa may says she will look into what she can do next to isolate russia from the global financial system further. annmarie: that's right. last week, she said she is looking into ways to find alternatives for russian gas. last month alone, europe consumed a record amount of natural gas from europe. as the demand goes up, production goes down from the giants in the u k and the netherlands. russia has this leverage in the energy market and that can speak politicians. i spoke to alexander novak in an exclusive interview over the weekend. about this diplomatic dispute with the u.k., asking him if he is worried it will hurt business. take a listen. gas ist of all, russian

supplied to european consumers based on market conditions at a competitive price. that is why, should the statements become reality regarding alternative sources for gas instead of russia, that will damage, first and foremost, the consumers, because that will not be beneficial to them. gas, i believe, is the most competitive in terms of price. it is a reliable source, and in the case of cold temperatures, we could step up the volume of supply. that is what russia is committed to complying with contractual obligations that are already there. >> prime minister may saying she will cut off lng and natural gas from russia. you are not worried at all that the u.k. consumers will get behind prime minister? country, every commercial operator, and every company is free to choose any supply at once, but let me stress once again that we are committed to continue our supply for the most competitive conditions, price, and should any country opt for another

supplier, i don't think conditions will be that preferential and beneficial or them. >> we don't know what the u.k. plans are next. we know that when u.s. sanctions hit, exxon was forced to leave their plans in the arctic and the black sea. that was a blow for russia. could potentially see that happen with bp and shell. we will look out for what the prime minister has to say this week. anna: thank you very much. fascinating story on the bloomberg. also talking about how angela merkel is looking to lng to cut germany's dependence on russian gas. new coalition creating its strategy to build up import terminals. they give a much. joining us from russia as we digest the widely expected victory of vladimir putin. no surprise who won the election. the reform agenda. what kind of expectations do you have? we talked about deborah supplying the saudi economy. many people talked about the

same thing with russia. is that on the agenda? do you sense that is a priority? bob: it has to be a priority. you talk about sanctions on russia. if one looks back on the last three years, the russian economy went to quite a steep recession. that was not because of sanctions. it was because of the decline in the oil price. the russian economy is highly correlated with the oil price still, very aware of that. what we will see in him a you final -- see in the final six years of putin's presidency is probably increased efforts to diversify the economy into -- whether it is the technology sector, whether it is the consumer sector, etc., health care, for example. there will be efforts to diversify. whether they are successful or not, we will see. technologylked about in moscow, but that was a long time ago. bob: you raise a very good point. that -- if i remember correctly, they were trying to create a

russian version of silicon valley. it has not been a success. even the russians would agree on that. anna: i have another chart. 6706. this is the yield investors demand for russian bonds. this is a long-term chart. this is long-term. and of course, reflecting lower interest rates globally, i suppose. does that make sense to you? makes a lot of sense. in contrast to china, we were talking about chinese debt. russia has a very large sovereign wealth fund and current account surplus. it is, if i remember correctly, close to 3% of gdp. the macroeconomic fundamentals look very solid, so the credit rating, actually, i think is not under any sort of pressure whatsoever. also, i think you have had -- it's fair to say, good leadership at the central bank of russia.

inflation, which was a major problem going back six or seven years, now well under control. as a result, foreign investors and domestic investors, i think, are very comfortable with a credit rating of holding russian debt. anna: thank you very much. bob parker, investment committee member. thank you for joining us. good to have you on the program. coming up, tough times ahead. commercesh chamber of season extended period stockpiled growth despite raising its growth outlook. we speak to the group's head of economics, next. matt: and u.s. treasury secretary steve mnuchin faces a cool reception at today's g20 meeting. will he be able to fend u.s. digital interests? this is bloomberg. ♪

matt: welcome back to bloomberg

daybreak. i am matt miller in berlin. one hour 10 minutes to go until the start of cash trading. 40 minutes to go until the european market open. let's get the bloomberg business flash. juliette saly. apple is designing and producing its own device displays for the first time, using a secret manufacturing facility near it california headquarters to make small numbers of the screen for testing purposes. according to people familiar with the situation, the technology giant is making a significant investment in the development of next generation micro led screens. an apple spokeswoman declined to comment. u.s. and european government officials demanding answers from facebook after reports that cambridge analytical, the data from that helped donald trump when the u.s. presidency, retained information on tens of millions of facebook users without their consent. they spoke has already testified about how its platform was used by russian propaganda.

the company never put zuckerberg himself in the spotlight. the pressure may forfeit the shadow -- may foreshadow tougher regulations. that is your bloomberg business flash. anna: thank you very much. juliette saly in singapore. u.k. growth keeping economic activity subdued as they prepare to leave the e.u.. that is a porting to the british chambers of commerce. that should -- that is according to the british chambers of commerce. ,oining us now here in london the head of economics at the bcc. good morning to you. this is fascinating from a journalistic perspective. picture,nt a positive talking about upgrading growth forecast. talking about what you think has been missed and what the priorities should be and our falling down the rankings of the g7. are you trying to say something positive or negative about the

u.k. today? >> it is a bit of both. see the squeeze easing little over the next year or so. and upwardttlements pressures increasing a little bit. the u.k. economy is going to be locked into a low growth path for the first year will future, one of their weakest economies in the g7. the key concern is the wider global economy will be pretty strong. anna: one of the other points you make in your notes is the impact the pound has had. weaker pound. you thought it would drive up exports. there has been some talk of that. yet,ve not left the e.u. so there is access to those markets. this chart on the bloomberg showed that trade in the red and the path of the pound. you do not think we have seen as much of a positive impact on that trade from the weakness in the pound which incidentally is strengthening broadly. you don't think we have seen as much upside as you would expect to? suren: on the one hand, you have

seen exports form quite strongly. the wider global economy has helped as well. we are all seeing imports growing at strong rates and we are not seeing any of from consumer businesses. what that means is that it has not really improved that much. growth will be quite limited. matt: is it not going to pick up tremendously? boris johnson was on andrew mars program on the bbc over the weekend, and he said -- i will read the direct quote. there will be an implementation period, but after we come out, we will have a gigantic free trade with all sorts of both arms. is that really possible, and if so, shouldn't everybody leave the e.u.? suren: one of the key issues when it comes to trade abroad is some of those practical

questions. it is not just access to markets and free trade agreements, but skills, the big issue domestically. and trade abroad as well. all of these sort of things play into the overall position. around free trade agreements and weaker sterling, but a wider position businesses have to look at when they look at trade abroad. matt: however, trade agreements are important. what kind of trade agreements do you expect? if the e.u. want to allow the u.k. to have such a sweet deal, have their cake and eat it, too. what everybody else want to follow suit? isn't it in the e.u.'s best interest not to allow that kind of deal with the u.k.? suren: we will leave politics. means they can continue to

create jobs, create a business, one is maintaining existing access to key markets. are seeing that strongly over the past year and that continues going forward. u.k. businesses grow. anna: how important is it we get a transition deal this week? suren: extremely important. anna: would next week be too late? this week or bust? suren: as soon as possible. we need a transition period that mirrors existing trading positions to get expansion. matt: thank you very much for joining us. , from the british chamber of commerce. up next, u.s. treasury secretary steven mnuchin faces a cool reception at today's g20 meeting following trump's tariffs on

metals, but will he be able to save the interests of u.s. digital companies? this is bloomberg. ♪

matt: good morning from berlin. this is "bloomberg daybreak europe." i am matt miller. anna: i am anna edwards in the city of london. matt: putin sweeps to victory. the russian president winds a fourth term. we are in moscow. anna: change in china. the first new pboc governor in 15 years. what does this mean for the world's second-largest economy? the billionaire prince tells bloomberg is ready to move on from saudi arabia's so-called corruption crackdown. unfortunately, i was out of

that group, but fortunately, i am out of it right now. matt: we are looking at futures here in europe after a negative trade in asia overnight. and obviously, kicking off the week, that are down across the board. we are seeing .25% drop on for the futures and .4% drop on dax futures. rosneft earnings results and we will bring those to you as soon as we can. stock stories including hermiston. emerson of course making a bid for other small assets and

looking to fend off a bid from we arerd of hammerson -- getting headlines on the and will continue to follow these stocks at the open because they could be some of the biggest movers. anna: absolutely. just to underline what we are hearing at the moment. saying in a statement on hammerson, they are confirming they made a proposal to hammerson, confirming the proposal of -- it is nonadversarial. the possible offer to buy hammerson at a value of 615 pence per share. the shares closed at 437 pence per share on friday. continue to watch hammerson in the u.k. market. let's get to the overnight moves over in the broader asia session, then, matt. interesting to look at the don't drop in asian equities, down by .5%. a number of things playing in here. interesting things to look ahead

to. full force at the fomc. a great bloomberg story that is running around. more development in-house on their screen technology. that's taking the edge off some of the technology players. around .5%. another factor is the political drama in japan. seems to be sticking to the japanese cabinet. bit more yenle strength coming through. once again, this is because of that japanese political story. we see the polls over the weekend suggesting prime minister's abe -- prime minister abe's cabinet is less nationalist than it was. the dollar spot a fraction of a percent as we head towards jerome powell's first real press event around the fomc. increasing interest rates could be the easy decision for the fomc this week. what kind of guidance and medium

productions what we -- median projections will we get for 2018, matt? matt: girls are also seeing more headlines that i will bring to you right now. st inis planning to li london. this is a transition maker famous for its truck transitions, legendary muscle car transmissions from the glory days of the most they can camaro . a london listing after its combination with the gkn driveline business. gkn have been in the news a lot lately. they will now plan a london listing. a look at the bond futures trade here as we see equities futures trading down. bund futures

unchanged. u.s. bond futures down as the risel yields, obviously, as a result. the u.s. 10 year yield at 2.8518. not a big move. also, another reason you don't exactly get a picture of direction from these numbers. you have got to wait for the open up trade, although it is indicated lower. bloomberg first word news. we go to juliette saly in singapore. juliette: in russia, vladimir putin has cruised to victory in the presidential election. the kremlin's longest serving stalin hade joseph 77% of the vote. it extends putin's 18 year rule amid an escalating confrontation with the west over the poisoning of a former russian spy and his daughter in britain. s want toit negotiator

reassure businesses they will get the grace period they desperately want. according to people familiar with the matter, the e.u.'s chief brexit negotiator, michel barnier, and david davis are preparing to hold talks and the press conference in brussels today. it is a sign the two sides are on track to reach an agreement on a status quo transition phase that will last until the end of 2020. a person to run at central bank. links to theional forefront of efforts to clean up the nation's financial sector and modernize monetary policy. at the same time, president xi jinping's top economic advisor named as a premier. inwill take the lead policymaking in support. aleed,arabia's prince al-w one of the richest in the world. forwardaid he is moving

following his release. he made the comments in an exclusive interview with erik schatzker. i am for the anticorruption that took place in saudi arabia. unfortunately, i was out of that group, before to, i am out of it right now, and i am not the irson who will come and say forgive but don't forget. i forgive and i forget at the same time. juliette: you can see our exclusive interview with the friends in full tomorrow. russia has said it is committed to seeing this through to completion. prolonging output cuts into 2019. alexander no back made the comments in an exclusive interview with anne marie horton. we believe that at a certain point, the market will reach its

balancing point, and there are different assessment as to the timing of that. as soon as the ultimate goal is achieved, which is a balancing of the market, we will consider gradual withdrawal or exit from steel. juliette: powered by more than 27 men and analysts in more than hundred 20 countries, -- 120 countries. it does look like a little bit of a mixed picture. you need to pay attention to this .9% fall on the nikkei because that has dragged regional stocks into the red for a second session. the msci asia-pacific index off by .5%. the yen rising on the political scandal, but continued in japan, weighing on japanese stocks. india in the red but we saw support coming through in the , and chinese large-cap stocks, and australia, let higher by the banks today. certainly a big fall coming through in tech players today. that apple might make its own display screens.

that is weighing on the overall kospi. as they are cooperating with the u.s. investigation into faulty airbags that caused four deaths. in the philippines, a big jump coming through in a casino player. this is a license listed in hong kong about a potential casino to be built. we are hearing noise that the philippine president, dutere, wants to shut down the island to build that casino for a year. that would cause have it. 2 million visitors a year. anna: juliette saly in singapore. another few red headlines crossing the bloomberg. fascinating story developing over at barclays. this is one we will be watching closely. they owned 5.2%. they will continue to engage with cherbourg as they take

5.16% as capital. edward j bramson, the ceo and principal at sherbourne and company incorporated, described as an activist investor. this is the day after we get the voting in the russian election. a number course seeing coming through. fourth-quarter net income, 1% above the estimate, so not beating by an enormous margin are at fourth quarter net profit, 100 billion rubles against an estimate of just under that, so we get the update from rosneft this morning. matt. matt: in the wake of president trump's tariffs, steve mnuchin atld face a cool reception the g20 meeting. michael mckee reports. michael: there is no question the u.s. is on the spot here. president trump's tariffs are unpopular with other members of the g20. the mnuchin arrive -- steven

mnuchin arrived to a chilly reception. of the obtained a copy draft communique, which warms a country turning inward is the biggest threat to global growth. in an exclusive interview, david malpass tells me the u.s. is only responding to provocation from china. in itsa, at points recent history, has moved towards markets, joined international institutions, and they were allowing market pricing within their own economy, but in recent years, that has stalled or reversed. concern for the world because it means the world cannot grow as fast as it should. michael: when a secretary mnuchin's jobs will be to gin up pressure on china. they will have intellectual piracy. like support from allies, a goal made more difficult by the steel tariffs, and a fear that trump is on the urge of -- verge of starting a

trade war. the u.s. may be on that list. michael mckee, bloomberg, buenos aires. anna: much to look ahead to this weekend, whether it is the g20 meeting or the fed decision. stephen joins us this morning. happy monday. let's talk about your concerns about trade or lack of concerns around trade. where do you start to think about material significant increase in protectionism and what that means for your investment? >> it's good to see that steve has still got a job. this is a long story. it's not going to play out overnight. i am not looking for a great deal to happen at the g20. we are in a new phase. that means globalization has reached its zenith, and we are retreating from it, not just in the u.s., but brexit as well. over a period of time, that acts

as a drag on trade growth. once you look at fireworks in the individual meetings -- the bloomberge on this morning talking about how trade data, a lot of administrations gave very agitated around trade data and trade deficits, but actually saying a lot of the problem is the data does not reflect the import and export 70 manufactured product. the trade pictures are too simplistic and the world economy is much more complex than that. michael: i think we found that in the aftermath of brexit. the forecast of the so-called experts is the immediate financial crisis, and did not happen. that is the classic. we are taught. if we are looking at fireworks, what has happened in china overnight is much more interesting, and that is a change at the top of the central bank. if familiar story for u.s. commentators, and i think, bearing in mind, next year, both ecb and bank of england will have big changes at the top. there really questioning

whole basis of the way that monetary policies have been run for a long period of time, certainly since the financial crisis. the personalities of those bankers has been handpicked to manage admittedly extreme economic situations, but manage them with a soft monetary policy. mr. powell will speak this week and we will hear if he follows through from his slightly blunter style we saw when he spoke to congress a few weeks ago, and perhaps a message which is that he seems to be more comfortable with normalizing interest rate policy. we don't know too much about the new man in china, and we have got to do a bit of work on that one, but it gives me a sense that one of the big been thisngs has assumption that there was a fed put their that a central bank somewhere or other would be kind and give to the rescue an avalanche in liquidity. if that is not the case, then we are in a very different world. matt: so what do you expect than

from the fed? are you saying jerome powell is willing to push on regardless of the kind of signals that the market gives the fed? because typically, the markets are is a temper tantrum and then janet yellen or ben bernanke would have to rethink how they were talking about what they were doing. michael: i am thinking exactly that, and if gary carlow got the top job, for instance, i think we would all be thinking that here is a traitor, he has got markets in his blood, and he would have been much more sensitive to gyrations in after prices. jerome powell is an industrialist, private equity guy, a proper republican in his thinking, and i think we are a little bit fumbling in the dark here. maybe we will all be surprised by what he says this week. i think that he is in style and action moving to a sense that we need to normalize interest rate policy and get the discount rate

up and higher interest rates are a good thing and bring more investment into the economy, and the whole kind of asset price have share buybacks may enriched a lot of people. people like jerome powell, ironically. they are not necessarily good for the long-term health of the u.s. economy, and that is his job. if you think about it slightly more prosaically, the trade-off between capital and labor, the share of capital that has been taken by gdp, a generational high. it may be, in a rather ironic way, perhaps donald trump's policies, a slightly higher interest rate which will lead to a change in that situation. higher interest rates help pension funds, for instance, and there is a number of issues in the background that make me feel we are moving to a new interest-rate policy. if you look at the actual crude numbers, people little bit too focused on the 10 year treasury

rather then the short end. short ends are the new high on friday. there's two-year treasuries. is my driving point at the moment, matt. matt: certainly, you can imagine a lot of favors, retirees, maybe, support donald trump, and he wants to give him a little bit back. i am looking at the dot plot. not obviously implying donald trump has any immediate or rates.effect in interest i'm looking at the dot plot from the fed, and we can see the market and the fed are aligned as far as 2018 is concerned. right here is the ois futures, looking at two point 25% basically. is that what you expect or maybe even 2.5% by the end of the year? michael: i don't think we will see any great deference to the dot plot. it's more perhaps going into 2019 and bringing in other parts of the world like europe. mario draghi has

managed an amount ofary easement. it is starting to heat up as to who will replace him. i think the market will just begin to transcend beyond the era of draghi. will it be another northern european -- with a very strong mandate to normalize policy? we are at minus levels in europe, -40 basis points, which given that growth has been in excess of 2%, is pretty extraordinary. those are the issues that will start to pressurize markets right across the board. anna: thank you very much. stephen isaacs stays with us. breaking news coming through masa bloomberg this morning. wellof this around a trod m&a stored. melrose proposing to inject up to one billion pounds into the gkn pension scheme. that is one of the headlines

coming through. the other one is around how much support melrose want to get from gkn shareholders on this. melrose says gkn has been cut to 50% plus one share, so melrose do not seem to be giving up on this right now. coming up, apple is said to be designing its own screen. what does that mean for other display makers? we have seen weakness in the asian equity session. we will get to analysis. this is bloomberg. ♪

matt: apple is said to be designing and producing its own device displays for the first time. the technology giant said to be making a significant investment in the development of next generation screen in a move that could hurt suppliers like samsung. we are joined by peter elstrom. peter, why is apple doing this? apple of course has built

its business model on outsourcing virtually all of its manufacturing. you see that famous line, "designed in california, mostactured in china," on of its smartphones. it gets higher profit margins if it does not have to do the messy business of manufacturing. it has been trying to figure out how to make its phone stand out against the competitors out anye if it does not own particular component. recently, we saw them begin to design chips and produced some of their own chips. we are seeing them move into designing and producing these screens. note is a secret facility far from cupertino headquarters in silicon valley, where we have found out they have about 300 engineers who are working on this next generation of screen technology, called micro led. it will compete with oled, the technology samsung and others have been promoting. anna: not so secret facility

anymore, though. thank you, peter. peter elstrom joining us on a story around apple that is having an impact on the equity session. stephen isaacs still with us in london. let's talk about stock specifics. we broke the news of the top of the hour. an activist will get involved with barclays about the 6.5% dividend, the potential for share buybacks. what will they push for? stephen: barclays is like a number of medium-sized european banks that has not got a property strategy yet. i am still trying to retain the universal banking model. at a time when investment bank revenues were affected, we would never be the same again. we got caught up with the whistleblower story. it's arguable he may be at some surge-vulnerable area. -- at some stage vulnerable.

tammy change directions here? has done what ubs successfully, which is to kind of revamp barclays? probably largely downscale. i think investment -- wealth management. that is what is coming. it's inevitable. we had a great chart earlier, 9457, which shows the spread has gotten so flat and needs to change in an upward way little bito get a more vertical. if that is the case, the old value stocks could start to outperform overgrowth stocks. do you see that? stephen: i don't. the 10 year is not really responding to the movement and short-term rates. the market is short of it and

has been so for some time. something like record shorts. my view on that one is they are going to get filled in by the treasury. it is so extraordinary the next few months that even with the market at record shorts, my scenario is to see the whole yield curve move up. obviously, a little bit by the short end, but long end, we will see possibly 2.5 later this year. afraid, thet, i'm yield thought, dividend stocks, continuing under a lot of pressure. anna: thanks for joining us, stephen isaacs, head of the investment committee. a lot to watch at the open. we will keep an eye on hammerson. it is called that higher at the start of trade cured a lot of individual stocks we are watching including barclays and of is, looking ahead to tomorrow on that big interview. matt: absolutely. the interview with prince al-w

full, the first interview since he was released from his ritz-carlton holding chambers. when you are traveling to work, you can tune in to bloomberg radio. do that on your mobile device as i do, or if you are in the london area, on dab digital. this is bloomberg. ♪ mom, dad, can we talk?

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guy: monday morning. good morning. welcome to bloomberg markets. this is the european open. i am guy johnson alongside matt miller. cash trade less than 30 minutes away. the new governor of the pboc. will his influence over at the pboc be limited? s.aying in asia, the yen gain tech stocks slide