center is desolate the u.s. changing of the guard. governormes the first in years. effect.le has theyslide in asia say they will replace samsung. >>is good to have electorate it is nice to be here. >> i have click shoes fill quite literally. >> let's start with the markets. i think everything will depend on wednesday after it we looking

at exit and then a little bit later as well. we will get an interesting take from him. consumera look at the confidence, u.s. consumers find at the moment. as well. >> not very surprising victory for vladimir putin. he was easily reelected to a fourth term as president. with more than half the ballot, he has 75% of the vote. >> present trump is taking aim at. he has made his most direct attack yet in russia meddling in the 2016 election.

says thenal lawyer investigation should be shut down. as you were mentioning, there will be a new governor at the for the first time in 15 years find that policy continuity. and no hard feelings some prince detained for months in a crackdown. >> unfortunately, i was part of, i am out of it right now. i'm not the person who is going to come and say i forgive and

don't forget. i say i forget and forgive. >> we will have more of that interview. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. insomuch curated the markets. what i'm looking at overall. starts down a touch. european stocks starting the week a little bit lower. the dollar gaining and if you look at treasuries, they are pretty much right as well. thanks to god johnson for putting out that story.

chart ofthis is our the day. for thevery simple gdp world. if you look at that, you can see that growth is looking pretty good and what you're seeing in inflation not going where the fed wants it. that is probably my chart of the day. things going on at the moment, but the yen is probably one of them. .his is a fantastic hedge that you had to pay attention to. this is probably more relevant to what is happening in asia.

attention to it. keep an eye on was happening with the yen. >> background this is an at home and abroad. then exclusive interview, u.s. secretary told bloomberg the is only responding to provocation from china. its recentints and moved towards international institutions. they were allowing market within their own economy, but in recent years, that has stalled and reversed. that is a concern with which

means the world cannot grow as fast as it should and china, many of them being nonmarket priorities that are continuing to use data finance for a lot of their activities. outside doing projects china that are nontransparent are simply not reciprocal and the since there is not an ability for other countries. china is able to invest in trade with the united states in a way that american companies can't invest in trade and that interrupt was an imbalance that is of concern to do united states. >> what is the state of the economic relations. and that you end of the dialogue because it wasn't going anywhere. shifted to trying to

have direct dialogue on these concerns. there is a lack of responsibility on both trade in goods and services and in the investment relationship them is for imbalances that need to be discussed, really at the highest levels of the government. secretary monition has been how do we get their policies back on track in a way that would interact with the world market. >> that was the treasury secretary speaking to michael mcgee. as always, great to have the on the program. something ugly happen that would impact gt is a perception that it could be --

>> there is the tariff discussion and for the u.s. will want to reassure this is not the start of a large-scale trade disruption, but of course there's also the question of currency. said perhaps a week and dollar would be good for the u.s. -- >> i feel like we have moved beyond, but we also heard from the new national economic advisor who says they have a strong dollar policy. have pulled that rhetoric again and we have seen that strengthen the dollar come up with a coming from. the u.s. has had enormous trade

-- has an enormous trade deficit. far have gone so between being for doubt and not caring. assets atrices into this stage? it could just be politics, it is more likely to be tumescent politics than anything else. investors, have is a priceless and i think when we think about any political issues, the first thing investors are viewing is the for how it effects central-bank policy this results in a downgrade in global growth through reduction, then i know

potentially that means my central banks will be rubbish. mostnk outside of that, investors are looking through it because it is too hard a price. day it disappears, then you have it in your portfolios for si from akamai think most investors -- >> to take a look , trumpeuropean sector said he is concerned about german imports into the united states market. reactionsknee-jerk just knee-jerk reactions more is it built a leaf that is where the center of the action will ultimately come through.

>> good question. absolutely right to start taking into account. my perception is we have to that if they are coming into the country, someone is benefiting benefiting from that, so certainly our perspective is will it become more widespread across the sectors, different sides, no. -- no. effect in a negative fashion, the u.s. consumer and that will keep a lid on how broad or significant this trade issue gets. >> coming up tomorrow,

exclusively from the prince. abouty talk to mod imprisonment. this is bloomberg.

>>

confirmed as vice president, he may also be given a particular portfolio and put in charge of the relationship with the united states. he will have a very strong say in terms of how to manage a trade relationship. >> thank you, professor. steve tsang. coming up on bloomberg surveillance, a conversation , formerncesca papa dia chairman of general market operations at the ecb. this is bloomberg. ♪

♪ >> good morning, this is bloomberg surveillance. berkeley shares are trading strongly after hessian has acquired 5.2% of voting rights. he says it welcomes the firm as a shareholder.

asset management is at the services. we know how he operates and if there is agenda behind it. >> he has made several high-profile investments in u.k. financial companies. mo is to beenema -- quiet in public. want some on the board and they would double the share price. quite clearly, they have decided to go public and they want some changes above. >> what are they is the question. may radically transform their investment strategy and that was

big surgery. do you think they are looking at a similar scale here? doublinglking about share prices. it would require a lot. >> if you look at the other companies, they eventually made 30%. i'm not sure which category that will be fallen. barclays is an interesting subject. it trades more than 30% in terms of market value. quite clearly, there is a valuation gap. organically happens , k or whether that will be shut down in the project be abandoned , we don't know yet. him tod be assets forced

sell? >> it could be one of the options discussed. an investment bank is an hoarsely difficult thing to do. once they collapse, they don't use -- certainly, you could sue -- pursued a strategy where you could sink it back. rather than trying to boost your trading businesses and going back with j.p. morgan. barclaysn morris and up 3%. we will be back. for more bloomberg reports, be sure to pick up the latest issue of bloomberg businessweek. this is bloomberg. mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us."

that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. guy: 29 minutes past the hour. francine lacqua and guy johnson

because tom keene has the week off. francine: a beautiful thing. guy: let's talk about what is happening in european equities. karen ward of jpmorgan asset management is with us. momentum is beginning to roll over in europe from an equity point of view. are we to get to the point where we are thinking this is as good as it gets and maybe this time to start taking a few chips off the table? karen: the result a lot of excitement about this great convergence between europe and the u.s. european unemployment was falling and as you saw that feedthrough to a strong growth import -- growth performance, the ecb also responding to that. you have the combination not just for european investors but international investors. we saw over the first week of the year, some slightly more

patchy data, business and consumer surveys have been a bit more spotty. ,nflation has not come through so people are paring back their expectations. that great convergence question is being challenged. the u.s. in that equation of who looks the best, the fiscal stimulus is adding to the earnings outlook, but i don't think we are meaningfully rolling over in europe. i think it demonstrates that growth story is going to take a little more time, certainly pricing power is coming to the table a little bit earlier. it will come and the ecb will be patient. we just have to wait a little bit. in: if i am up very early the united states and i am watching this and i am thinking

europe is not quite delivering , how do is expected make up for that? if the currency goes up, you are still in. a fiamma euro investor, i've made 4%. if fiamma dollar investor, i've dollar -- if i am a investor, i've made 20%. karen: if you look at the twin deficits as we get this great big fiscal deficit on top of it, all of it points to a lower dollar. karen ward of jpmorgan asset management sticking around. plenty of conversation still around -- still to come. putin wins more

than half the balance -- 75% of the vote. he barely campaigned and some of his rivals describe the election as a farce. he is expected to continue to try to rebuild russia as a world power while dealing with a home.nt economy at president trump is calling for the death penalty for drug dealers in some cases. he also floated some other initiatives to combat opioid addiction. president trump will roll out more details today in new hampshire. in austin texas, two people were inured and in -- injured another bomb explosion. authorities have warned people in austin not to touch unexpected packages left at their home. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much.

european officials have told investors around the world that they are right to bet on a gradual reduction of monetary stimulus. on the eve of the june 20 members expressed it -- expressed confidence in reaching the institutions goal. francesco papadia, former director of general market operations joins us now. we are also joined still by karen ward of jpmorgan asset management. what is the biggest mistake central banks have done? we have talked about how they underestimated the amount of slack in their economies. should they have seen it coming? francesco: if you asked what is

the biggest mistake of the central bank during the crisis, you have to think more intellectual mistakes rather than practical mistakes. in practice, they did what needed to be done, but as you said at the beginning, central banks did not expect that the crisis would be so deep and would last for so long. to do thingsced that were not written in any textbook. do you see a dichotomy between what the ecb wants to do and how the markets are interpreting it? we have heard from a couple ecb policymakers that say markets are falling more in line with what they are saying. francesco: i think that the ecb is exiting it's easy policy.

sometime, they refuse using the term tapering, but they are tapering. in a way, this is a great achievement that they managed to do that without a taper tantrum. they are doing that in a very gradual way. they keep saying that they have to be prudent, persistent and patient, and they have the luxury of doing that because the economy is doing fine. famous 2% should be achieved. guy: the output gap already closed, do you think it is already closed? francesco: the measure of the -- very different views on it. you know the ecb is insisting a extended measures of

unemployment, a substitute of the output gap, all the work is avoiding and overheating the labor market. the discussion is ongoing about the output gap. the question is whether it is closed or not, but it is clearly closing so that is obvious. we still seekaren: tremendous country dispersion and we have just seen in the latest italian election that the populist parties are still benefiting from the discontent in parts of the eurozone which are not feeling the fruits of growth. theis that this person in political environment affecting ecb policy? francesco: the ecb cannot do anything about italy. italy has to take care of itself , which it does not seem to want to do, given the electoral

results. the ecb can look at the area and its aggregate and there are differences between germany that is probably at full employment and italy, which is very far from that. that would mean that italy would have to do a lot, which does not seem to be coming, given the electoral results. karen: does it also mean that italy is actually shutting itself off from having a voice at the table? we may get an italy government in three months, six months. francesco: it is a bit worse than that. it is not that they are shutting themselves off, but they are making the task of everybody else more difficult. i imagine that conversation between miss merkel and mr.

mccrone. he says we need to do more sharing and she says i'll more willing to do that with you, less willing to do that with italy, especially with the electoral results. they are making the task of the entire endeavor more difficult. guy: can i come back to the issue of the euro? karen and i were discussing the impact the euro is having. people are increasingly going into europe on a unhedged basis. mario draghi desperately trying to not talk about tapering. his job seems to be the -- seems to be to hold the euro down right now. francesco: let me say that my understanding is that the ecb themoved away from thinking

inflation rate is the -- of inflation. inflation starts in the labor market and so the importance of the exchange rate, foreign inflation developments in the euro area is seen by the ecb as much less important as it was maybe 15 years ago. that is a first for mark. -- first remark. the second is to look at the united states. i look at the situation, they are probably at full employment. fiscal expansion is coming strong. review on likely to the upside, it's interest-rate interest rate policy. you have the wildcard of

protectionism and that increases inflation. if you put these things together, you don't come with a weaker dollar, at least in the short to medium term. discussong-term, we can the deficit and things like that. in the short run, i see more dollar appreciating. guy: the interest rate differentials have had almost no impact on the foreign-exchange story. bunds, about as wide as they have been for as long as i can remember in terms of interest rate differentials. interest rate differentials to not seem to be exerting the same gravitational force. interest rates should have an effect, i agree but they are not, and why not? francesco: interest rates are very difficult to forecast and there is a whole industry that says you cannot forecast that.

anything you find will be proven wrong the minute after you find it because the speculation in the market will kill any relationship you find. if you have to make a forecast, then that is the most reasonable expectation, that the dollar will go up. francine: when you think the ecb needs to be more communicative in talking about interest rate rises? francesco: they made very clear that interest rate rises will qe. after the end of net this is coming either in september or in december. i don't think it matters, but if there is an importance, it is not because they could buy a few billion euros of stock in the remaining quarter of 2018, but because that would prolong the

time over which they would start thinking about increasing rates. i think the second half of 2018 would be important for qe and the end of 18 would be important for interest rates. francine: mr. papadia with a wonderful book out. if you were to write another chapter for the person who replaces mario draghi, what would it be? francesco: this book is about exit, not the exit we have been talking about, but the exit from the very new modalities of central bank -- a central banking during the crisis. it is a book that says we had very good times before the crisis, can we get back to then? maybe not completely, but to some extent.

ecbnext chairman of the would come in a likely situation. mario draghi has done the dirty work, so to speak. chairuld think that a new could come back to some extent and from that point of view, it would be a good candidate. than you are not sure that the dirty work would not need to be needed for another eight years. in terms of timing, this may not be the worst possible timing for a person like the president of the bundesbank. fromine: great comments the former director general of general -- the former director of general market operations at the ecb. guy: let's talk about turbulent

times elsewhere. kingdom holdings has revived talks to raise up to 1 -- up to $5 billion in loans. will be airing our full interview with the most famous face, then saudi arabia's so-called corruption crackdown -- with the most famous face in saudi arabia's so-called corruption crackdown. unfortunately, i was out of that group, but fortunately, i and so i it right now am not the person who is going to come and say i forgive but don't forget. guy: joining us now is erik schatzker. thatther participants in give us the,

skinny. it must've been a fascinating conversation. i have known the prince for almost a decade, so i approached this interview with both anticipation and trepidation. but would he be like? the man spent 80 days in confinement at the ritz-carlton. is one of the most fascinating men in the middle east, the richest man in the region. will the life be like going forward? one thing he has assured me, there was no torture of him inside the hotel and another thing, there is an agreement between him and the saudi government, the details of which you will learn in tomorrow's interview. he is back to his hold self -- his old self. he is energetic and intense. guy: but not a changed man?

erik: not in my experience. clearly there are many questions that remain to be answered. what was life like for him inside the ritz-carlton? was he able to talk with other detainees? who did he negotiate with, among government officials and what did they want? why was he there in the first place? we also talked about his business and his investments. does the agreement with the government pertain to those. can he travel? what about his bank accounts? i don't want to leave you hanging, but those are all things he discussed in those are questions we answer in the course of this interview. guy: i think you do want to leave us hanging because the anticipation is growing. looking forward to hearing about that. across bloomberg tv and radio,

exclusively from this man. the kingdom holding founder and chairman. francine: shifting from one political situation to another. this morning, a kremlin spokesperson called the u.k. accusations on a spines poisoning -- on a spy's poisoning slanderous. >> first of all, russian gas is applied to european consumers based on market conditions at a competitive price. should the statements become reality regarding alternative sources for gas instead of russia, that will damage the consumers is that will not be beneficial to them -- because that will not be beneficial to them. russian gas is the most competitive in terms of price. it is a reliable source and we can step up the volume of supply. that is why russia is committed

to comply with contractual obligations. >> the from minister said she will potentially cut off lng and natural gas from russia. concerned of the prime minister? >> every country, commercial operator and company is free to choose whatever supply it wants. we are committed to continue our supply at the most competitive conditions including the most competitive price. should any country up from another supplier, i don't think conditions will be that beneficial for them. guy: that was energy minister of russia. still with us, karen ward of jpmorgan asset management. when you look at inflation dynamics, they seem to be not correlated so much with the price of oil so much. do they come back at some point? karen: i think we have seen a bit of a q1 weakness in a lot of the data.

it does still say when you have that spike in inflation that comes through, it does affect the economy quite quickly. what is remarkable is how the energy market is changing, how it has changed in the last seven or eight years. now when you have oil price push above $60, suddenly those rigs establish themselves in north america at incredible speed and are now suddenly pulling oil prices back down. oil's ability to shock us in the way that it did because now the supply response to global demand is so much weaker. it has changed entirely, the global dynamic. guy: oil companies spend a lot of money trying to get production down as a result of this. that could have gotten a green light at $660 a barrel now has to be at $40 a barrel.

-- am i happy with how the oil companies are responding? are they still going to be kicking out the kind of yields they have been? karen: absolutely, and i am sure that will remain. look atainly want to oil companies in check. it is part of how the energy market itself is changing. it is part of how efficiency energy is changing and how preference toward green technologies, that is a deep-rooted consumer trend. they are adapting to all of this change and putting in place their business model to cope with how things are going to look. francine: what does that mean for your investment strategy? it is the case as we see across markets that the level of

disruption is phenomenal, which means the gap between winners and losers in this second there is really significant -- losers in this sector is really significant. guy: as you go through that process, what are you picking out? you can look at everything from amazon's impact in whole foods, to the shale story into the oil story. where are you seeing disruption coming through and if i want to pick winners and losers, how do i take advantage? karen: that is exactly it. it is every sector. if we think about how technology has been affecting i.t. companies, consultancies, it is permeating its way through every single sector. , thatttom of the bridge

is where you have to be ahead of who is on that winning streak and who is going to be on that losing streak. francine: thank you so much, karen ward of jpmorgan asset management. let's talk tech. guy: apple may be saying goodbye samsung. the technology giant is said to be designing and producing a next in screen in a hurt -- in a move that could hurt suppliers. we are joined by our chief managing editor in hong kong. this is one of those interesting trades. if apple does well, samsung as well. apple has a lot of cash and is starting to put some of its work internally. how big a blow is this going to be for asian tech? apple has become the most valuable company in the world, is because it does not manufacture a lot of its own products. it has suppliers scattered

throughout asia where it depends on them to come up with these components that it puts into devices like the iphone and the ipad. the challenge is it is hard to get your products to really stand out and be distinctive if you don't have anything except the software. software has been important for them, but now they are stepping into hardware aspects and make their phones stand out. they did it with chips for a bit and now sources are telling us they are working on micro led. nearhave a secret facility their headquarters where they are designing these new screens and producing them in small volumes and trying to see if they can develop this technology that will be more advanced. the only producer at this point is samsung electronics, so it is a challenge to samsung.

samsung has a very diversified some'sio, but there are -- there are some screen the player -- screen suppliers that may be more vulnerable to this switch if apple is able to move away from older technology. francine: winter stand this is a significant investment. doing know if this will actually be for other hardware -- do we know if this will actually be for other hardware? peter: sources emphasized to us that this is cap -- this is challenging technology. it is difficult to manufacture. apple point in the past, looked at dropping this project because it was a difficult to proceed. it is not clear that they will be able to get this to market and present a challenge to

areung, but clearly they thinking about where in the hardware supply chain they can take ownership of these products , developed their own intellectual properties -- develop their own intellectual properties. -- wasx was the only their first phone to have an all led screen. they got those screens from samsung. the iphone x did not stand out as much as apple might have liked. francine: peter elstrom, thank you so much. coming up next, we speak with kit juckes, he is the societe generale chief fixed income strategist. this is bloomberg. ♪

♪ francine: tensions of the g20 treasury -- at the g20.

the treasury secretary says he misspoke. we are live from one is at us -- we are live from when us at his -- buenos aires. the apple affect. good morning everyone. the talk is about treasuries, but we have kit juckes coming up. we are looking at the fed on wednesday. guy: the fed on wednesday, the bank of england on thursday. jay powell's first outing. that press conference could be interesting. francine: we will certainly be listening in. first, let's get to the bloomberg first word news. a not very surprising

landslide victory for vladimir putin. with more than half the ballots counted, he has 75% of the vote. his defiance of the west has played well with voters nostalgic for russia's superpower status. president is taking aim at special counsel robert mueller. he made his most direct attack yet on the justice department sticky investigation into russian meddling. he used mueller's name for the first time in a tweet and criticized his staff. 's personal lawyer said the investigation should be shut down. for the first time in 15 years, there will be a new governor at china's central-bank. the long serving governor will take over at the people's bank of china. it is a sign that china wants policy continuity at the bank. he has indicated that he will push to maintain the course set by his predecessor.

the saudielings from billionaire who was detained for a number of months in that anticorruption crackdown. he spoke to erik schatzker next close of interview -- in an exclusive interview. >> unfortunately, i was out of fortunately, -- unfortunately i was part of that group but fortunately i am out now. i forgive but don't forget. taylor: we will be airing that full interview tomorrow. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. francine: thank you so much. this is looking at the data board, a little movement on european stocks.

globally.lining we did see a little pressure coming from asia. investors trying to figure out what they will do with the main risk events of the week. decisions, brexit talker -- brexit talks. 106.1. guy: 106.01. hammerson and clip be a coming in and making a bid. the market is not trading hammerson yet. it is involved in its own takeover, so that will be getting fascinating. barclays, there is an active invest -- activist investor. what do they want? that is the question. stockstocks -- henkel have some issues in the united

states. micro focus has lost 60% of its value this morning. it lost its ceo. that is a great day if you are short that stock. francine: investors will gather in buenos aires. treasury secretary could face some frosty reception as the g20 summit is inspected to provide an opportunity for the international community to air their grievances against president trump's steel and aluminum tariffs. >> china points in its recent history has moved toward markets. they have joined international institutions and they were allowing market pricing within their own economy but in recent years, that has stalled or even reversed. that is a concern for the world because it means the world cannot grow as fast as it should.

francine: during us now from buenos aires is michael mckee. michael, that was a great interview. is on a the focus possible trade war between the u.s. and china. can it turn ugly at the g20 or is there another forum? it certainly could turn ugly because the chinese are here as well. not just a chilly reception but steve mnuchin is the man in the hot seat because the tariffs are so unpopular with other members of the g20. is to try to turn the anger toward china, producing overcapacity at depressing prices and they are the ones who cheat in trade all the time, that is the u.s. message. they want to get allies on their side because the trumpet administration is thinking about applying some sanctions on china

for intellectual property theft. that will be coming up soon so that they can get people on their side, they can turn the world, they hope, away from criticizing the trump administration. g20, i think originally, it was regulations and cryptocurrencies. has that been supplanted by trade and possibly policy? michael: they're going to continue those discussions, regulations around the world. the u.s. doing a rollback on bank regulations. cryptocurrency is a big issue, especially for the central bankers. the ones i have talked to have said it is not a major systemic problem for the world right now but we do have a problem because their currencies are used for illicit -- but we do have a problem because cryptocurrencies are used for illicit trafficking right now. guy: what happened with malpass

in this new speech -- in this misspeech? how did we get to that point? the u.s. and china have been holding these multiparty talks for some years. they call it the comprehensive dialogue. they fell apart last summer when the u.s. and china could not agree on how to take it forward. ofid malpass got up in front international financers and said he discontinued the talks. the u.s. never formally announced they did that. they called and reporters and they are walking it back. they said they are stalled, but not discontinued. secretary mnuchin is still talking to his diet -- his counterpart in china.

a bit of an embarrassment for the u.s. in its effort to turn the world against the chinese. guy: will there be a problem with the communique? case, we have the obtained a copy of the communique and it looks like they are finessing one of the problems they had a year ago when steve mnuchin refused to sign on to the normal g20 language that commits countries to free trade. they're going to talk about the importance of trade to the world and this communique without stressing the free trade part. they hope that will be acceptable to everybody and their going to stress the fact that the world is growing very strongly in the worst thing in the country can do is turn inward, a little bit of a shot at the united states. it could always change between now and tomorrow night, but that is the plan right now. francine: thank you so much, michael mckee.

joining us here in london is kit chief, societe generale fx strategist. is it any wonder that people are looking at yen for a haven? kit: i don't know if people are looking at yen for a haven for all of the people who are short the yen have just given up. short yen, long yields, money , some ofnto equities that is cracking a bit. francine: there is so much going on this week. brexit talk in brussels. you have all of the political concerns in the u.s. and the fed. kit: trade talks and trade

disputes, it is rumbling away in the background and it is eating away at confidence if we do things to hurt global trade, we are all going to see softer growth and it looks like a spat that is going to last. the fed is in the markets because of what is going to happen on wednesday. we are all going to come up to below 3% and then go sideways. anything that pushes significantly higher against this rumbling trade spat, i think you could get the world into a much less comfortable place. guy: you cannot take me the direction i want to go which is spread between the u.s. and germany. when does it start to make a difference and how much more could we see in terms of the

spread widening? kit: we can only see more if treasury yields move higher , for all theyields people who come under program and tell you that bunds are overpriced and the reality is yields are held down and until they stop, they are going to remain low even if we know they are going to start. if we are going to struggle to get to 3% in the u.s., the spread remains high for a long time and does not tell me much about the world. francine: thank you so much, kit juckes, societe generale, sticking with us. global inflation and if possible tit-for-tat trade war. this is bloomberg.

taylor: this is bloomberg surveillance. in london, shares of micro focus plunged after the company warned the short folly bigger than expected. the also said the ceo is stepping down -- and they also said the ceo stepping down. investor edward branson

-- inquired a 5.2% barclays investment. he is known for targeting a number of british money-management firms. -- i made an offer of $7.2 billion. that is about 8% more than the deal they agree to accept from general dynamics last month. they provide cybersecurity and data analytics. that is your bloomberg business flash. guy: president is taking aim at special counsel robert mueller. he made his most direct attack yet on the justice department ticky investigation into russian meddling in the 2016 election. the president used mueller's name for the first time in a tweet and criticized his staff. 's personal lawyer says the investigation should now be shut down. joining us for more is kevin

cirilli, our chief washington correspondent. decode this for us. tell us what we should read into this tweet. what it says is that the trump administration is now willing to go full force against bob mueller and this rush of rope. probe --is rush of this russia probe. they feel that this investigation has gone on way too long and that it has expanded beyond the scope of collusion. the trump administration says there has been no collusion, that they now feel that this has gone on an expanded. in point, what happened last week with regard to the trump organization subpoenas. they want this wrapped up. the question is whether or not bob mueller is going to listen and the safe that is that he won't.

guy: is the story accelerating? bet is that -- safe he won't. guy: is the story accelerating? the story around washington suggests that things are coming and maybe imminently. that is a great point because it does feel that this is entering into the final chapter but at the same time, i talked with other sources who say this is going to drag on for the next couple of months, particularly around the time of the midterms. there were a series of indictments that have come down and i would just note that there was more than a dozen russian entities that were sanctioned last week and the crux of them were named in mueller indictments. on the one hand, the intelligence community is taking seriously what the mueller probe is finding with regards to russia. the question comes with a they will find anything that penetrates that inner circle or something behind paul manafort

-- beyond paul manafort, who is facing serious charges. we don't know because these investigations don't operate under a deadline, but they are operating under a prism. thecine: where are republicans on this and does president trump really feel emboldened after firing rex tillerson? kevin: last thing first, yes he does feel emboldened. whether or not his nominee as the first woman to lead the cia gets confirmed, she has a tough confirmation fight because of allegations she covered up torture. mike pompeo to replace secretary tillerson, seemingly would have an easier path forward. the republicans in regard to the russia probe, they are divided. some of them are saying that this probe should continue and

reach a natural conclusion on its own, people like the republican from oklahoma. others are in line with the administration and walking in lockstep with them. guy: are people talking about a primary challenge to a sitting president? kevin: yes, senator jeff flake in new hampshire. a lot of chatter about that. guy: thank you very much, kevin cirilli. interesting conversations happening around washington. coming up on bloomberg markets, we will speak to ray washburn. look for that interview right here on bloomberg at 11:30 a.m. in new york, 3:30 in london. ♪

francine: good morning. this is bloomberg surveillance. -- taking his seat earlier today. he was quick to signal he would maintain the recent policies. joining us now is our chief asia correspondent as well as kit juckes, societe generale.

>> good morning. he is something of a known quantity. i think he will be welcomed in global investor and central-bank circles. he is from the reform school of thought. he has gone on -- he has been on board for liberalizing financial markets and is expected to continue the process. he spoke to reporters earlier today at the great hall and made similar remarks that there are continued reforms. the big question is, how much political power we have to do that. him. a challenge ahead for francine: kit, what does it mean for your column? kit: of it means stability.

the core has been about sacrificing. allowing the currency to appreciate against the dollar, less in trade weighted terms and then slowly start to tackle some of the underlying issues. this is more of the same square in terms of this is what we do. the challenge is the debt issue because we all have it. that is the bit they have not really gotten their arms around completely. ar the currency, this is killer, really. talking about that deleveraging process, his definitely going to push this. deleveraging story do you think -- this deleveraging story. the you think this is really going to take place? >> it is a very important point.

the headline is that china has a new central bank governor but the backstory is he is usually jinping's chief economic advisor. outright deleveraging, but trying to slow the pace of credit growth and they are tackling risk in certain parts of the economy, shadow banking and other parts of wealth management. that agenda is very much on track. francine: chief asia economic correspondent, thank you very much. kit juckes is sticking with us.

guy: i am guy johnson with francine lacqua in london. let's get a "first word news"

update. taylor: voters in russia have given vladimir putin their overwhelming support. he barely campaigned and some of his rivals described the election as a farce. he is expected to keep trying to rebuild russia as a global power while dealing with a stagnant economy at home. russia's energy minister says that the oil production cutback deal between opec and his country is not a permanent one. he spoke to bloomberg. >> we believe that at a certain point, the market will reach its balancing point and there are different assessments as to the timing of that. as soon as the goal is achieved, we will start considering gradual withdrawal or exit from this deal. taylor: opec and russia may discuss phasing out the deal in june. president trump is calling for drug dealers to get the death penalty in some cases.

it is part of his administration's plan to deal with the opioid crisis. president trump will roll out more details today in new hampshire. in austin, texas, two people were injured in another bomb explosion. authorities have warned people in austin not to touch any unexpected packages left at their homes. global news, --global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. back to russia and vladimir putin has claimed a landslide victory, taking 77% of the vote with almost all ballots counted. the results come amidst a

depomed expand with the u.k. a kremlin spokesperson called accusations slander is. -- slanderous. spatat diplomatic heightened tensions with the west and will certainly play high as putin takes on a fourth term. it will talk about the economics in the financial situation in russia. i am joined by the had of financial trading at accra. thank you for joining bloomberg tv. >> thank you. anit was set up as alternative to the big three trading agencies after putin complained of their treating of russia but you have not been afraid of ruffling any feathers. you said more lenders could follow. who do you think is next? among the tophink

100 banks, the institutions are a problem with toxic assets. namesaround five or 10 but the next step is from the central bank because it -- expect new names this year, definitely. report --as a recent these funds could be put to reform a bad bank. 17 -- >> we were talking about the problems of these institutions. thes our assessment that level of toxic exposure has been created by central banks around 500 billion rubles. it is really an impressive

amount and is a reflection of an economic situation of these institutions and there are lots of questions to the central bank as well. >> with this affect the inflation rate at all? >> no, because we are not talking about new money. no new money in the economy, yet. >> our interest rates still too high -- are interest rates still too high? >> it is. we expect rates to go down and inflation to go down as well this year and it is a new reality for russian banks and russian companies with a lot of issues. >> with this diplomatic dispute going on between russia and the u.k., are you worried that russia banks could be pushed out of swiss payment? in terms of russian payments,

they are required to face reality because our own bank of russia -- i have concerns, but it think we will find it is a good decision. -- have been hitting record levels. does deterioration's a relations with the u.k. threaten these inflows? think about the situations, i think purely about the economy and we are not talking about foreign investors, we are talking about russian citizens and their own money. relations between the u.k. and russia will affect this. >> so you can put that kind of separate. all of russiaat

becoming less reliant on oil? they promised they would diversify, but we have not seen much of it. >> in terms of gdp growth for next year, we have assessments that our gdp growth is constrained without structural reforms and this question depends on the oil prices. this is a key factor. i can't expect a significant move this year or next year. i think this is a long-term process and we should start as soon as possible. >> what are the structural reforms that are needed? you used to work for the central bank. it was said that even if oil went up to $100 per barrel, gdp would not grow. a focus on industries not related to oil. it is not so easy to create such

an economy. >> thank you so much. that was the head of financial institutions rating at accra. they rate all the banks and even though he is in moscow, he has ruffled some feathers in terms of their reports on local banks. he is also the former chief economist at the central bank. much,ne: thank you so talking to the head of the analytical credit rating agency. to have hisesting views on the kind of longer-term prospects for russia. with us, kit juckes, societe generale. kit: i always want to like the ruble but with oil prices where they are, there is not much incentive to want a stronger currency, so we will get rate cuts rather than currency strength. we are in a risk-averse environment.

russia is a center of a fair amount of geopolitics. it is softening. i will come back and want to buy this at cheaper levels. guy: a bit of cable action over the last few minutes. the wall street journal flash showing the eu and the u.k. reaching a broad deal on the brexit transition terms. thoughts? we look as if we are going to get a deal. we have priced in rate hikes. the big test is going to be the economic data, not monetary policy. i think there is a balance of risk. we have sufficient optimism .bout a transition deal the big test is the economy. in the background, sterling is as cheap in real terms as it has been in the last 30 years.

it is kind of completely asymmetric. i keep forecasting it not doing very much. that is what a symmetry looks like -- that is what asymmetry looks like. francine: are you expecting cut -- some kind of broad range agreement? i can't believe they can nail down enough of the nitty-gritty fast enough. it may still be dependent on something to do with the irish border because i am not sure we have resolved that properly. principle rather than detail. why is the pound moving up on the back of that? kit: the underlying sentiment on sterling is very bearish.

it is cheap in trade weighted terms. we took sterling not that long ago, much cheaper than it was in 1992 and we took it down to where it was when the banks needed bailing out. it is not that bad. it is bad, but not that bad. guy: i am filled with hope. kit is going to stick around for more cheery thoughts. he will be coming back in a few minutes time. if you are about to enjoy your commute to work, tune in on bloomberg radio daybreak. york,n hear that in new and the boston bay area or across the u.s. on sirius xm. ♪

taylor: this is bloomberg surveillance. just breaking in the last two -- they numeral brand say for new independent directors have been named -- cointreau new independent directors have been named -- four new independent directors have been named. apple is designing and producing device displays for the first time. they are being built at a secret facility near apple's headquarters. it may be several years before consumers see the results. dozens of u.s. business groups are urging president trump not to impose sweeping tariffs on china. the u.s. chamber of commerce and 44 other associations wrote a letter to the president.

they urged a measured response to china's theft of trade secrets and other policies. francine: thank you so much. facebook drops more than 3% in free market trading and officials in the u.s. and europe demand answers concerning a massive data bridge. a report says cambridge analytic kept information without consent. we are joined by bloomberg's senior tech reporter. kit juckes is still with us. a spot of trouble for mark zuckerberg. >> i think they are going to have to explain this. there were calls for zuckerberg himself to appear before congress and parliament as well to explain what happened. him and itops with think people really want to see him explaining what happened. francine: what have they been

accused of? this is the fact that they did not tell users their data was breached. >> an academic affiliated with cambridge analytic outcome of this political research firm that was helping them trump's analytic, this political research firm that was helping with trump's campaign, they were harvesting data about all the people they were connected to on facebook. a couple hundred thousand people filled this survey and they got records on 50 million facebook users. facebook was unaware of this at the time. sticking to their attention sometime in 2015 and they did not go out and tell the users we think somebody has gotten your information without your permission. they were very quiet about it. they suspended this researcher and project and subsequently have banned camera jelinek -- cambridge.

this is the first time they have come out and told users they had a problem. guy: facebook is a data monetization machine. that is what it does. how does this change the investment case run facebook? -- case around facebook? is this a kind of case that highlights that and as an investor into facebook, how do i treat that story? investment community is reacting to the potential for regulation. they are worried that facebook will get hit with really big fines and there will be regulation that comes in and disrupts that monetization. there is a bigger question as people become aware that when they go on a service like facebook, that they are the product. it is their data being monetized.

maybe people stop using it and that is a bigger problem, long-term. guy: zuckerberg talked about fixing the culture and we have seen this in some of the ways they treat advertising -- they have trying to fix some of these issues. we see how hard it is at banks to fix culture. how big of a culture problem does facebook have? >> i don't think it is a culture problem, it is a business model problem. the question is, who is targeting you and on what basis? they are going to be much more upfront about telling people this is exactly who we are sharing the data with. these are who our advertisers are. if you share data with us, you might get political ads. they will probably have to be a lot more explicit. francine: how does the business

model have to change to avoid backlash? first off, is there backlash? >> i think there is backlash. there is a big movement on the west coast of the u.s. or use it less. i think people are getting turned off by some of this stuff. transparency, being much more honest with people about what is happening in giving people much more control. put -- changed the privacy controls and put all of it in one place so you can change your settings and have much more control. francine: think you so much, jeremy kahn. is juckes, societe generale taking with us. meantime, just log onto someo> and you can ask kit questions through guy and i. this is bloomberg. ♪

francine: this is bloomberg surveillance. guy johnson and francine here in

london. some breaking news which is just confirmation of what we heard from the wall street journal. u.k. officials are believed to have agreed on a brexit transition. we understand this brexit transition deal that needs to be signed off by -- and mr. davies. for we don't know is the exact nature of this political agreement to have a transition deal. we are seeing a little bit of movement on the pound. we are back with kit juckes. what of the supporting levels for the pound? -- what are the supporting levels for the pound? kit: this will give us some good news to keep us here. you have a center of gravity. it is struggling to break much above that and you would need to

clearly get the town of economical news negative. francine: let's go back to the single best chart for today and it is the yen advancing against its g10 peers. itlar-yen, we pitted against -- against the 10 year yield. we put that on social media for listeners.radio they suddenly stop correlating. do they ever come back? kit: at some point, they do come back. if you did the same thing with euro charts, it would be the same day as when mario draghi stood up and mentioned the word tapering. yen reacting to the idea of global synchronized growth causing the bank of japan to change policy at some point in the future. the yen is cheap because

monetary policy is designed to keep it cheap as it purchases negative rates but it wants to be an expensive currency with lots of net foreign assets. it would like to be an expensive currency. expensive would be closer to 90 on dollar-yen. wantwe want to be -- will to know now is how hard the bank of japan is willing to fight to resist that. guy: this land scandal is affecting abe. is that a distraction or can that go somewhere meaningfully? kit: it could go somewhere. below-yen has traded purchasing power from primus the day of the plaza recording in 1985 until the start of abe nomics. if you take that away, you will

trade 90 to 100, he me -- immediately. francine: there seems to be a drop in support for prime minister abe and he is the architect of currency weakness. what happens next? kit: the economy needs more time to get inflation back under control. we are not going to get to the 2% inflation target anytime soon. as long as the global economy is growing strongly, it is inevitable that at some point in the next 18 months, we start seeing the bank of japan change its policies and start normalizing policy just as the ecb did. when that happens, dollar-yen wants to trade much lower. francine: when does that happen? kit: i thought that was going to happen next year. i will give you the last twist.

dollar-yen has moved 10%, the trade weighted yen has moved 3%. bothered by be as this falling dollar-yen as it looks. i am terrified that it is happening. francine: thank you so much, kit juckes societe generale chief fx strategist. coming up on bloomberg daybreak: americas, a conversation with the obc secretary-general. york.s at 8:30 in new guy and i will be back tomorrow. this is bloomberg. ♪ mom you called?

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.ig shoes to feel -- to fill pressure mounts from mark zuckerberg to appear in front of lawmakers after reports that user information was sold to a third party without user consent. u.k. officials think the terms of a transition agreement have been agreed to. now just waiting for sign off from top officials. david: welcome to bloomberg daybreak. happy monday. we thought we had a big week ahead of us before the brexit deal. alix: we do not know how to cover all these. david: another crisis for the budget on friday. alix: all of this coming on the heels of another choppy market last week. .utures down about .5% it is the nasdaq that is getting hit in the futures market. take a look at table rates. the sterling, 140. a huge move higher.