>> good morning from bloomberg's european headquarters, i am anna edwards. disses bloomberg daybreak: europe, and these are your top stories. month what he expected hike is not a done deal. reject there set to border.n for an irish >> oil heads for a second weekly gain as treasury weighs outcome of a key opec and non-opec meeting. we are live in jeddah. >> the u.s. attorney general is said to have told trump that he is not the target in the robert n probe.and cohe

u.s. stocks coin. ♪ -- u.s. stocks decline. ♪ anna: a very good morning everybody. it is just 7:00 over in berlin with matt miller in paris, or with many other places beyond. matt, we still have a late hearing of losses in the u.s. over those headlines around the probe being conducted in washington. that was part of the story in yesterday's session. the focus remains on commodities, inflation and technology. the msci asia-pacific index down. japane chief chipmaker in making everyone question just how many handsets they need. inflation is also still very much a part of the conversation.

we now have 2.91%, on the u.s. 10 year. that happened in yesterday's session. breaking market expectations of inflation and given a clue of where the markets think that inflation will come in. people again are asking about what the link is between the comedy surging have seen, not just in oil but an aluminium and elsewhere as well. we are seeing some of that reflected in bond markets. oil,t the nymex crude because we are watching commodities, but also because we are live in jeddah for the opec meeting. matt? much there has been so talk about the flattening of the yield curve, and no matter where you look, the five, the authorities come of the twos or the tens, we see a flatter yield curve than we have seen over a decade.

i have the 10 years of the yield curve here on my chart, you could interact with it on bloomberg and you can see that we have not seated this flat -- the very beginning of this year is 10 years ago today, and now we are looking at the most recent one. we saw it slip a little last night, but otherwise, it is the flattest it has been in 10 years. the bottom end of the curve has come up, and that is really what is happened. .he third-year comes down a lot we will talk to all of our guests about why this is happening. anna? anna: there were comments around the probes, and the involvement of president trump michaelnvestigation of cohen. they are expected to be a little bit positive on u.s. trade. but we are little bit flat on the curve.

we will be talking to one of our guests come at the chairman and ceo of the nissan-mitsubishi alliance. that is a 6:30 united kingdom time. we will also talk about markets in china, perhaps that is one part of the story. let's get the first word news update now. u.s. president donald trump praised james comey for his honorable conduct during the , and asked then fbi director to drop the investigation into former national security adviser, michael flynn. that is according to memos turned over to the house committee by the u.s. justice department. trump tweeted. out,s comey memos just clearly showing that there was no, vision and no obstruction. releasing classified information while the returns continued.

the u.s. attorney general was said to have told donald trump at he was not a focus on the robert mueller investigation or into the probe of his longtime lawyer, michael cohen. familiar to people with the matter, rosenstein brought up the investigation himself. they say that the developments helps to ease the president? desire to remove rosenstein or mueller. there you can investigation into the crucial issue of what happens with the irish border after brexit. according to three people familiar, while the united kingdom has not made a formal proposal, it has indicated that the backstop solution to maintaining an invisible border should apply to the whole of the kingdom. it would mean the whole of the united kingdom stays in parts of the single market and customs .s union

the bank of england governor has said the united kingdom should prepare for a few interest rate increases within the next three years. after he told the bbc that they would make the decision "conscious that there are other meetings that they could act this year" generally,1% in consumer prices rising in march. that comes as the bank of japan governor kuroda begins his second term, vowing to achieve 2% inflation. this week's national bank president says he is not an a hurry to a just policy despite -- thomas jordan made the comments hours after the swiss frog broke through the oneear -- the swiss franc

up. it is a relatively volatile situation still, so we remain very prudent at this point of time. >> global news 24 hours a day on tick-tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on .loomberg at top we have seen the regional index here in asia snap two days of gains, tearing back its weekly gain, right up about .03%. the yen is weaker, we have seen a rise in insurance talks -- stocks, but asked where, it is determined by what you've seen in taiwan. tech players really driving down the region. .04%.done by

is -- therehe index was a disappointing first-quarter numbers for this company, also disappointing forecast for the following quarter. -- tsmc alsoto cmc fall. in australia, this company looking a bit lower although after snapping a five day the ceo standing done today with immediate effect. in singapore, a healthy baby of page and health care, up to as -- in singapore, a healthy day for health care. up as much as 50%. opec andisters of non-opec stations are gathering in jeddah to discuss the global oil supply and production curbs. we have a guest who will shed some light on the plans of the assembled group.

emery is here with us. emery? anna.d morning, just minutes before the ministers will meet from opec and not opec here in jeddah. thank you for joining us this morning. ?s the glut gone that is what everyone wants to know? >> no. >> no? >> in my opinion. >> should the cuts be extended in 20 18? >> we will review in november, when the current agreement expires. >> what kind of for puzzles are being discussed on the table, if you were to extend the cuts. we do have to exchange the five-year average for the 10 year? don't know how opec works, but from my perspective of the program, i think we need to look into the supply regularly, it is a very dynamic

issue, very fluid. production comes from all sources, we have u.s. shale oil, we hear that it is ever increasing and production. so i think that regular review like we are doing now, is very useful. reporter: do you see this regular review turning into a more permanent framework between opec and not opec? guest: i toume it is what it means, meet together and review and look at numbers, look at the situation, the markets, the supply side, as well as the demand side. this needs to be done i think, at least twice a year. , is to continue meeting at least twice a year. reporter: wendy's see the market ?ebalancing guest: i think it is -- if it is

about the stocks and inventory, we are getting close to that. in my opinion, the balance is between supply and demand. the twoe within percentage point of each other, the consumer will get what they want, and the supply will find the market for the producer -- for producing. month, trump is likely to not sign the waiver is a labor new sanctions. so we could see 200,000 to 500,000 pounds of oil from iran coming off the market. are there discussions of what could happen if this is the case to be honest with you, no. we have bigger problems than that. venezuela.bya, if you add all of them, the impact of sanctions or no sanctions in iran is really very small, in my opinion. that is my way of looking at it? reporter: are their discussions over what is happening in those

countries, such as venezuela? . guest: we do. we invited the ministers, particularly libya and nigeria from time to time. us on what is the development and the challenges that we are facing. venezuela is one of us. they are members of us, so get to know exactly what is happening. reporter: bloomberg reported that the saudis are targeting $80 a barrel. is too high?that do you think it is fair? or do you see a fair price? $80, if you ask me, if you had asked me that next week -- if you asked me that next week, i would say that it is a huge jump and not .ealthy if you ask about $80 in 2020, i think that is a different thing. we need to go back to the saudi and ask them exactly what is best what we're talking about.

the timing of it. reporter: what do you think is the present day fair price for oil? good. i think 70's is between $55 a barrel to $75 a barrel. up and dumbs, between those two numbers is manageable by both sides, by the consumer as well as a producer. when you have two uncertainty, i don't think it helps anyone. reporter: we are in that range now, say must be happy? guest: much happier than the last time we met. [laughter] reporter: thank you so much. mani oilthe owo minister, matt. matt: ann marie buerkle in jeddah, at the opec and not opec meeting. noing up, trump says collusion, no obstruction. what do comey's memos really

tell us though? frankwe also see the regular went 22 the euro mark. what does it mean? this is bloomberg. franc breaking the 122 the euro mark. what it means. rk. what it means.

♪ is 7:16od morning, it here in berlin, 1:16 in singapore. the msciok at asia-pacific index, down on technology concerns. really, concerns about the iphone is spreading across the tech sector. let's get the bloomberg business flash with juliette saly. matt, the u.s. treasury department is considering using an emergency law to curb chinese investment in sensitive technologies. under the law, the president could declare a national emergency, allowing him to block transactions and sees assets.

that comes as the trump administration looks to punish china for what it sees as violation of american intellectual property rights. joinedechnology stocks their peers in a global slide after a disappointing sales outlook from apple's chief supplier. it saw its biggest loss since february, in fact, since june, 2013, after predicting sales of a billion dollars less than what analysts had projected. that was followed by a report by the imf saying that mobile phone shipments declined for the first time. a reminder that the industry might have peaked. this company is back in the spotlight after a battle, when they said they were considering making a bid for the other company. rejectedology group takata's proposal.

shire saying that the current terms significantly undervalued the company and its concept. but they said that there are willing to negotiate. that is your bloomberg business flash. anna, mad? anna: we started the program with an interview about the oil price, the focus for us. it is also a bigger broader market focus on the commodity story, because of how they have been performing this week, moving higher -- aluminium, nickel, oil and earlier. bond markets?o to the severe investment manager at abilene standard investments is here with us this morning. good morning to you. let us look at what we have been seeing happening in commodities, really getting into gear this week in a way that was not as broadly last week. to yours that do inflation expectations? i have a chart here, it shows

that the u.s. brakes even on the tenure and 30 year, writes move higher and commodities move higher. so inflation expectations are building? the oil prices have been trending high for some time now, which is based into our inflation expectations. we have been expecting inflation to normalize and head above 2% on the cpi index, which are have seen. indeed, the brightness of the commodity rally over the last couple of days have been notable, and the bond markets seemed to wake up yesterday. it has been my view for a while now, that we should expect either a higher rate of headline year, or somehe shock runs which are higher than what the market is expecting. that is part of the reason we have seen smaller treasuries. at the chartoking as well, it shows expectations expectations -- it shows

inflation expectations. is inflation expectations are rising, and of course this does not include the latest blitz in commodity prices. cpi rising, but not as much. do you think the fed is comfortable with commodity prices running higher? guest: there have been a number of speakers from the fed talking about how they target is symmetrical, that that they want the market to believe. that 2% is the ceiling. when you look at the difference between the cpi and the ec index, and how it is calculated, it is important that we recognize that the consumer indices the fed is looking at, they are one or two stages improved from import prices. if you look at the survey data, prices are incredibly high.

when you work for the logic of forms are sitting in the middle and margins can expand or contract. it is not a straight feet through from comedy into higher best from cut commodities into higher prices. of allat the broad gamut of that induces and i see price pressures telling me the economy is at or close through full employment, and growing above trend. the fedns that needs to adjust their policies. other than looking at the price of the tc index, and saying that it is not at 2%, we should hike. basis,o on the long term i was reading a piece talking about how hot the fed will allow the economy to run. the fed has a history in the past two decades of shutting inflation.

the world simms to have changed in many ways over the last two decades, low inflation has become a feature. do you see the fed's shutting down that inflation, if it starts to -- >> yes. a fair it is observation, i would agree with you, the road is dramatically different from the 70's. 10,n't think the notion of 50% inflation, we are nowhere near that -- to go back to your original question, does it mean being priced into the market? i think the market is over focused on the median. they really did not see this evolution of the signal, which is to say that the number of participants who want to four hikes in 2018, were shy of moving the median to higher. that means that we are quite close, we just knew some continuation in growth and improvement that we are seeing. might have them guiding us to four hikes, which is not priced for.

matt: as i was playing around with the great function on the bloomberg terminal, showing the curve in the 3-d, you can really see the front end has come up of the curve, the long and has flattened out. what do you think the fed should do in reaction to this? we heard bowler talking about the fact that they need to pay closer attention, but it is odd, because of course, they? guest: are partially responsible for this? guest: i am glad to say that,. that would be my first observation. i find it incredibly strange and worrying that the federal reserve might take an economic signal or forecasting signal from a yield curve, which they have spent the past seven years almost going out to stock in the fashion. their last program was intended to flatten the yield curve.

anna: it was a while ago, wasn't it? guest: it was. but if you look at the duration in which they have withdrawn from the market, and see how they are unwinding their balance sheet, letting bonds mature, it means that there has been and is this exerting of influence on the yield curve, which exists on hold.easuries they so for them to say that it is not a recession indicator or worry about it, it find it strange. they could do something about it, they could steepen the curve, and sure that the banks and maturity -- >> so there should be less talk of getting signals from the market, and more trying to change the shape of the curve? guest: i personally don't think it has been a recession indicator, because it tends to flatten at the end of the fed tightening cycle. it is often been the case as you described, that they end up

killing the cycle by being too aggressive at the end. so yes, it has been a recession indicator because of fed policy tightening, but if the curve is frightening wealth policy is not tied at all, i don't think it is an indicator. in fact, i don't think bond prices have been giving us a signal for the past seven years, because of that reason. because the fed and other banks it. been tightenin distorting matt: great to have you with us, we will keep you with us. i would like to .1 thing up. we is a lot of shorts here in the program -- we is a lot of charts here in the program. , youpe b tv can see all of our charts, they are interactive and you can utilize them for your own purposes. -- if you type in g tv . this is bloomberg. next, we talk about brexit and the irish border back in the

spotlight. can the united kingdom and the eu agree on a solution? terribly unlikely, until the final day of negotiations. this is bloomberg. ♪

♪ bloomberg a 2:30 in tokyo. london, 6:30. the dollar against the yen, 107.64 is where we trade. stories in theg fx markets, including switzerland. let's check on the broad markets. guy: asian markets trading a little softer this morning. the chinese markets, look at what is going on in asia and you will see that. asia's csi 300 down 1.5%. the session in the states, despite the tech selloff, with -- which seems to

be driven by concerned about apple, it didn't visit -- finishing positive territory, but pushed up toward the close that close. the yen is weakening, the aussie dollar is trading a little weaker this morning. the bloomberg dollar index is trading up by .1%. the story out of the bond market yesterday was what happened in the u.k.. it appeared to be a supply driven story, but the tailwind behind it was already there in terms of the sentiment story. 10-year, 30 year, five-year, well represented on the gmm this morning. then we got the carney comments. interesting in terms of his expectations to see future interest-rate rises in the u.k. optionality is what he is trying to create. the dollar index is down .3% and commodities remain front and center. s&p futures are mildly positive, up like .1%.

ftse futures up by around .3%. their values are pointing us to a positive start in europe. anna: thank you, guys. traders london-based will be making an early exit to the beach with the unseasonably warm april whether? -- weather. the eu is said to reject the potential solution to the crucial issue of the irish border. they have indicated the whole country could stay in some parts of the single market and customs union, but according to people familiar with the position, the commission is only said to want or offer special status to northern ireland. at aberdeennvestor is still with us. it is complex and comes down to the backstop solution for the border in northern ireland, because the plan a is something to do with the trade arrangements. we don't know what that will be in the future, so this is the plan b. on how much this

distinction really matters to markets right now? guest: clearly it does matter because it could be a sticking point that unravels the whole piece. it is rational for the market to start thinking about buying outcomes, whether i get something good or bad. the specifics of the irish in termssue is complex of economics, politics and physics of the situation. i don't think the customs union is a solution because the frictionless order comes from the single market regulations and the fact that checks have at force. that could be agreed to with an arrangement, it doesn't have to be the customs union. anna: is the customs union simpler than a mutual recognition sector by sector? ostensibly, you

need to do that for a customs union. it is about tariffs for revenue generation. that is why the eu chose a customs union to generate tariff revenue. mutual recognition doesn't stop us from signing a trade deal, which is a plus side of leaving the eu and therefore, getting -- that alters the economics considerably. matt: as fascinating as i find this continued brexit conversation to be, i will break in with company news. erickson coming out with a gross -- gross margin of 35.9% compared to the street estimate of 32.7%. blowing away the street expectation on what is typically for a tech company like this the most important level. more important than that is making money and the -- would lose money to the tune of 600 million swedish krona, 617 million swedish krona was the estimate loss. million made money, 900

swedish krona adjusted. missedst is that sales -- i guess you could say missed, slightly in line -- the estimate -- erickson came out with 43.4 billion krone in sales. you will definitely see these shares react when they start trading. erickson coming out with a new dusted gross margin higher than the street expected. back to brexit. as you can imagine, james, it is not as interesting from the outside of the u.k. as it seems to be inside. have you ever thought about not really worrying about it until the last week of negotiations? james: yes. [laughter] james: that is the short answer. i don't think interesting is the word i would use to describe these ongoing negotiations. i do think it is a distraction

and an unwelcome distraction most of the time. it is importantly important what euget is good for the countries, good for the u.k., good for the relationship between us. journey is going to be circuit us and fractious at times and i do try to look through the noise as best i can because often, there isn't a lot of signal value. on the irish border issue, i think it is important that we are cognizant as investors of how things are progressing because it is one of the issues which is most difficult to is thatand my view ambiguity will be the means by which some of these issues go specificity in the irish border issue seems to be difficult. possibly hasrney to spend more time talking about brexit than he wants to too. let's talk about what he has been saying on rates and he says there are other meetings

available and that sent the pound into a little fall. i've got a chart that shows what it did in reaction to carney's comments. where does this lead to the bank of england? james: i thought it was a bit strange. as guy noted, optionality is what he was trying to achieve. roughly 85% priced, they were almost bound to price hike in may regardless of what happens. that was maybe a position he felt uncomfortable being in, but whyistically -- this is high have been frustrated by central-bank communication for years now -- it becomes an albatross around the neck. it has been unreliable. you can get yourself and not here because if you communicating effectively, you pull forward the policy move. in order to smooth the path to a hike, you announce the height and the markets moods for you. you have moved the policy step from the meeting to in advance of the meeting.

you can't escape that by hiking or cutting when it is not priced by the market. knotset themselves into where they have to ebb and flow with communication where all it does is create volatility. once everyone is positioned for the height, the thing to do is see how the data pans out and the market will unwind if the data isn't good enough. matt: maybe more important to the future, large global economies. yesterday, it seemed angela merkel was really dissing emmanuel macron macron and his plan to strengthen europe. she seemed to be a good potential partner when the coalition talks happened, but germany is not helping the french forward move of this plan for europe, are they? james: not at all and it doesn't surprise me. if you look at the german election, the support, and who from,ost support -- votes they are being pressured from the right -- it was unlikely

take ae parties would very pro-federal european view. that is what some of the spd would like, and that seems to be the angle macron is taking, but there isn't and hasn't been a broad-based populist support for those steps across much of the eu. in germany, they do need to concern themselves with their own domestic electorate. for that reason, it is difficult to see quite the aggressive steps ofthe federal finding favor among angela merkel and her cabinet. matt: james, thanks for joining us. james athey senior vestment map -- investment manager at aberdeen. , the solermaceutical public suitor of shire now. iner allegan backed out

making a bid for the biotech group. shire has rejected a proposal worth $60 billion for the company, says negotiations are ongoing. for more, bloomberg's asian consumers reporter joins us from tokyo. can you run us through what has happened so far? it has been an exciting 24 hours in the pharmaceutical world and for investors. ae japanese drugmaker tecate interest showed it was in shire. yesterday, they disclosed they had made an offer for shire last 4650 pounds in stock and that was in after shire rejected. really's -- real story came when allegan disclosed it was also considering acquisition of

shire, but it was an announcement that five years -- hours later, they walked back. takeda has said it is interested in pursuing talks about a possible deal, but it has been in exciting few hours. anna: this is a perennial takeover target, shire. why did shire reject this deal on the table from takeda? shire's statement said it undervalues the company and the drugs in its pipeline. the 46.50 offer is a 50% premium to shire's share price before takeda made its intentions known. some analysts are speculating that because the offer came majority in cash and stock, they probably need to up the cash portion of the offer to sweeten the deal for shire shareholders. in tokyo on that

story. the swiss franc broke through the one hunt -- 122 the euro mark for the first time since 2015 during yesterday's session. hours later, francine loblaw caught up with the french national banks president thomas jordan. was veryhe bank strong. overvalued for many years and we started to see a correction after the french elections. frank dropped below 120, a level not seen since 2015. what does that mean for monetary policy? >> it goes in to the right direction. we had this significant wervalued swiss franc, but saw certain corrections. it continued a little bit, but we have exactly what we expect and there is no need to do anything regarding monetary policy at this moment. francine: it is a psychological level? will it change currency traders mines on how they view swissie? aomas: we still have

fractious situation, it can change day by day. we remain prudent at this point. francine: when you say it can change, apart from trade wars, is there something else that could make it go the other way? thomas: markets react very quickly to changing in sentiment, so north korea or something else, russia europe, russia united states. then we have to very to situation. markets: our functioning very differently to what they were 5, 6, 7 years ago, currency markets? thomas: a couple of years ago, we had a big recession, we had a financial crisis and today, we're in a better situation. in general, the need for safe havens is smaller. before coming to write a financial crisis and the sentiments were very different. matt: the swiss national bank

president thomas jordan speaking with francine lacqua. interesting, the taken the euro so long to get back up to the level it was before they put their caps on. really, the beginning of 2015. dollar-swissie came back right isy and the u.s. dollar almost -- also important in terms of trade for switzerland. anna: part of the story with the euro swissie is around 1/10 of the euro and the recovery of the eurozone story. a reform story there, we talked about that with james. stephen engle is joining us from hong kong, with the chairman and ceo of the alliance and chair of mitsubishi mortars -- motors. >> thanks. let's get right to our conversation with carlos. thank you for your time on bloomberg television.

obviously a priority for you up until 2022 is the alliance 2022 as you are going to boost unit sales to 14 million, double synergies, get more easy's, but you have this other challenge floated out there -- superfine or altering the very complicated cross shareholding of the alliance. why undertake that while you are trying to do this other ambitious alliance? carlos: you are right to say that the first task is the business, the development of an beiance 2022, to grow and profitable. prior to this, the main preoccupation is about the sustainability of the alliance, the reverse ability, discussion holding will continue for a long time. preoccupation that the present structure would not allow this to continue. stephen: d believe that? but i: i don't think so,

have to listen to the stakeholders, sit down, and try to look with the board of nissan, with fair know -- fernot, and stakeholders to make fact that the alliance is your is shared by all the stakeholders. work that ongoing needs to be different and there needs to be a solution. stephen: what are the first steps that have been taken? carlos: it would be fair to say that this is within the term coming. toween now and 2022, we need come up with a solution that would satisfy all parties. all parties have to agree on this to make any move, and i am pretty optimistic on the fact that when we go to the roots of why people are preoccupied about the sustainability, we are finding a solution. stephen: we have talked a number

of times. repeatedly, i have heard you say the alliance is the best way forward for shareholders and stakeholders. ageou approach retirement -- you aren't retiring, but you are 64 -- what made you change your mind? carlos: i am not changing my mind. as long as you are here, there is no worry, but what happens after you are gone? mainis one of the concerns. i would say we have to solve something which supposedly may happen after my term is finished. again, i think we are on the right track, i think this alliance is working very well. the main concern is how to ensure the stakeholders that we continued to go well in the long term. stephen: and have you are restarted negotiations are talks with the french government? you will need french government

approval, japanese government approval, nissan board, renault and mitsubishi -- beginning,from the this started on a win-win basis. everyone needs to agree. that is why we have been going for 19 years without any problem and good performance for the companies. we just want to make sure that no matter what the solution we may find, everyone agrees. stephen: are you getting indication that the french government would be wellington -- willing to sell down its 15% stake or exit altogether? you are the chairman, whether renault would sell down its stake to give voting rights back to nissan or give nissan share up to -- >> no, no. all of these are consequences. first, you need to say -- to define what you want and what is a solution that everyone agrees. the function of the solution, you will have consequences in terms of shareholding,

organization, processes, succession, etc. say who willly to sell what and who is buying what. we may not even move on this front, but this is not an objective by itself. this is a consequence of a solution. career: you have built a , the tire company in north america and then into renault and nissan of cutting cost and restructuring. t, the average employee contributes half per head of the nissan employee. that is not sustainable, is it? carlos: it is a profitable company, one of the highest rates of growth for the past three years of all carmakers. it is a hefty company and will grow. one of the reasons for the average income per car is lower at renault compared to some of the peers in the alliance is that renault is not present in

the north american continent. thes north america that average income per car is highest in the world. if you aren't in north america and are present in markets where the average price of the car is lower come automatically it transmit -- translates. it is not the ability or inability of the company to perform, it is just due to the geographical footprint, which one-day or the other -- >> it is a complex situation, but it is a very bottom line from renault and nissan? carlos: the alliance is going well, everyone agrees on this. and the two main governments involved. everyone knows it is going well. no one wants to mess it up, they wanted to continue. the only question is how du make sure all the stakeholders feel good about the long-term sustainability? that is a fair concern. there would be no solution unless it would be accepted by

all the parties. to discuss this, we have plenty of time, and a solution. stephen: is mitsubishi on the table with a merger? is obviouslybishi a part of the alliance and interested in anything that would modify any organizational structure. stephen: would that be a lower framing who -- fruit hanging fruit? carlos: nothing will move unless we find a solution. we aren't going to go step, modifying here and there. the cross holding has not been touched for the last 19 years. i always said we would not touch it unless there is a strategic goal. unless that is here, i don't think you'll find that. or four five years years, 2022, will nissan and renault be merged? carlos: no one can answer this question. stephen: how about china? five years, they

will eliminate the joint venture requirement. you have said you like your partnership. d.c. opportunities to go in by yourself? carlos: the opportunity of going whenrselves will exist aggregation modifies. we are happy with our partners today. there are lots of technologies, lots of new products, mobility services coming our way. the question is are you going to continue to do this with a partner or alone? this is a question every manufacturer will have to answer by them selves. -- we have many partners because we have three companies and each company enjoys different partnerships. we are doing well, we hope to continue to do well and work with partners as long as it suits our needs and our interests as well as theirs. stephen: we move more production on the mainland -- i know infinity, the goal is to get up

to 90% domestic reduction, but they are cutting the import tariffs. without any doubt, to be competitive in china, most of your supply needs to be chinese and i don't think there is an exception. blow this percentage, it is temporary. we all know that in order to compete in the largest market in the world, you have to be located there. bangen: is this a big reform, when xi jinping announced the eventual reduction for tariffs for imports and eliminating a joint venture 50-50? people i talked to said they have gleaned as much technological advantage from the foreign partners as they can get. becauseit is a signal it is telling us long-term in advance, when planning for the future, you have to consider this, that you aren't going to have this obligation on you. if you want to continue with your partner, it is fine, but you are not obliged by law. i don't think it will change anything in the short-term, but

it will help us when we are planning 10 years down the road because in china, you can't just manage a business on a yearly basis. you have to look 10 years down the road, what you will bring. this is very important to us. stephen: how about russia? are you confident in the russian market and if there is a merger, eventually down the road, does that put renault and nissan in a sensitive position with russia and iran? carlos: i am optimistic on russia, the market is one of the highest rate of risk every's -- recovery this year. we suffered when the russian market was down. hopefully, you are going to see that all these investments the alliance have done, particularly renault, are going to get a lot of dividends. we are the law this -- largest automated group -- automotive group in russia. this is going to continue. we have a target to be a 40%.

on the iranian side, let's wait to see what the american decision is going to be. this, we will decide how the future unfolds. if the u.s. decides to remain in the agreement -- business as withhold fromey continuing in this agreement, we need to make sure what the rest of the international community is going to be doing. the u.s. position will be important and be watched carefully by all people who have interest in iran, and then we will tell you if there is any change. stephen: a couple of words to donald trump on the potential currency war would be? carlos: i don't think there is a trade war, i think it is in negotiation. stephen: we will see. renault nissan mitsubishi, thank you --carlos ghosn, thank you for your time. anna: stephen engle speaking to carlos ghosn, renault nissan

mitsubishi alliance. fascinating conversation about china. quick word on oil markets, a big thing today. we are hearing from novak, the russian oil minister. he says russia's oil cuts compliance in april was almost 100%. he talks about the extent of the surplus we have seen in oil markets and said the surplus, he sees it dissipating in coming months. we heard from the amani oil gut --r who said the glut is not cleared. a big focus on commodities, moving higher in recent days. a little more weakness coming in today. oil price of the weaker, but the equity story is a little weaker. that is a tech story and we will get an update at the top of the hour on that. oil is a big theme. coming up on the program, we are live in jeddah where opec and non-opec leaders are meeting to discuss oil supplies. meetingg for that

around oil supplies. could they agree to further cuts? we will have to wait until november. this is bloomberg. ♪ this wi-fi is fast.

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matt: good morning from berlin, this is bloomberg daybreak: europe. i'm matt miller. anna: i'm an edwards in the city of london. these are today's top stories. matt: sterling slides, carney hints that next month's height isn't a done deal and he you officials are said to reject the you k's plan for the irish quarter. -- border. anna: oil heads for a second weekly gain as traders await the outcome of the key opec and non-opec meeting. we are live in jeddah. attorney u.s. deputy general's said webb told trump he is not a target in the molar -- mueller and cohen probes.

♪ matt: first off, let's look at how european futures are trading. just an hour to go until the start of the cash trade in europe. we see ftse futures gaining about one third of 1% this morning but not a lot of movement on dax or cap futures. after a mixed trade yesterday, we don't get a lot of -- a real sense of direction from european futures this morning. i want to quickly bring up these barclays headlines we are getting on jes staley. it looks like they have concluded their investigations into jes staley and barclays. anna: absolutely. we have these headlines getting through.

barclays continues to recommend reelection as director. enforcement on barclays, the headlines coming through this morning. jes staley has a period to review. it is a holding statement, deferred from the fda -- fpa into jes staley around the whistleblower story. ,n terms of corporate earnings we are looking at the fast consumer goods company, health care, hygiene -- let's look at what they are doing. they say they are on track for the full-year net revenue targets and their net revenue game of up 13% to 14% in total remains constant. the comparable sales up 2%, the estimate was .6%. i wonder how the reaction will come through there. we will big into the barclays and give you detail, but i am

putting up the rms here and they the fca and pra have been investigating jes staley in relation to an attempt by mr. staley to identify anonymous letter in respect to this, the draft warningd notices setting out reasons for proposing enforcement action. there is a lot of detail to get through and we get back to matt for a look at the bond markets. matt: i'll look at the bond market while you look further into that statement. interesting that they have proposed jes staley pay a isancial penalty, which interesting. they think he has to pay money and then they will give him time to think about it. bond futures the here. maybe we will get some better sense of direction into the moves we could see in european indexes. it looks like investors feel don't feel still --

comfortable, i forget i am looking at futures and not yields. it looks like they will buy bones, pushing yields down -- bunds. yesterday, we had yields rocket up. not just in bunds and treasuries, but gilts. we had the rising yields yesterday and that could result in a little bit of a bounce today after the price went down. about marketslk more broadly. equities.picture on msci asia-pacific, down .7%. sliding on the technology story, -- tsmc putting out a disappointing forecast. storyis a fascinating around commodities this week and what that does to the yield curve in the united states and inflation expectations. about two point 9%.

breakevens, market expectation now at its highest level since 2014. oil is down a little, but $68 a barrel. what will the target be for opec and non-opec? we are live in jeddah. we will also be speaking to the european commissioner for economic affairs. he will be joining with his thoughts. the european commissioner for economic and financial affairs. let's get a first word news update with juliette saly. trump hasdonald praised james: -- james comey for his honorable conduct during the 2016 campaign, soft his loyalty and asked him to drop an investigation into michael flynn. that is according to men most turned over to house committees by the u.s. justice department.

in response to the release, trump tweeted "james comey memos just out and showed clearly that there was no collusion and no obstruction." also, he leaks classified information, wow. will the witchhunt continue." rod rosenstein is said to have told donald trump last week that he isn't a target of any part of special counsel robert mueller's investigation or the probe into his longtime lawyer michael co. in. according to several people familiar with the matter, rosenstein brought up the investigation himself and offered assurance during a meeting with trump at the white house. they say the development helped ease the resident's desire to remove rosenstein or mueller. reject aals are set to potential u.k. solution to the crucial issue of what happens to the irish border after brexit. according to three people ,amiliar with the position while britain hasn't made a formal proposal, it has

indicated the block's backstop solution for a maintaining an invisible border should apply to the whole of the u.k.. it would mean the whole u.k. stays part of the single market and customs union as a last resort to avoid a border in ireland. the bank of england's governor has said the u.k. should prepare for a few interest-rate increases over the next few years. mark carney also hinted that the widely expected hike next month isn't a done deal. pound fell after he told the bbc that the mpc will make its decision "conscious that there are other meetings at which it could act this year." japan's key price indicator slipped in march after hitting 1% in february. consumer prices excluding fresh food rose .9 of a percent from march the year earlier matching estimates. that comes as governor kuroda begins his second term, vowing to achieve 2% inflation.

the swiss national bank's president has said he is not in a hurry to adjust policy despite low as theouching a situation remains delicate. thomas jordan made the comments to bloomberg hours after the frank broke through the 1.20 euro mark. we still have a relatively fractured situation. it can change from one day to the other. we remain prudent at this time. juliette: global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on bloomberg at top . checking in on markets in asia, we have seen the regional index fall for the first time in three sessions, snapping a pretty good streak we had been on midweek. it means over the course of the week, the region's game is up by around one third of a percent. youof this due to the fact

have seen weakness coming through in the tech players, led in taiwan. you are seeing the csi 300 in china down 1.4% in late trade. japanese stocks fluctuated with weakness in the yen, but the nikkei closing down .1%. the philippines, which performed -- underperformed yesterday, getting bargain hunters coming through. it is up by about .5%. tsmc has been the main stock in focus after the disappointing first-quarter number and forecasting lower than expected second-quarter numbers. julyng the most in taipei 2013. aac tech is following that downward trend. it is one of the iphone suppliers listed in hong kong. .p. fallinga, a.m after rebounding from host of the days trade. the ceo and announced he will resign immediately, following a

pretty big banking inquiry happening in australia. you, juliette saly in singapore. a few more lines out of barclays. we had the preamble and now the stuff they were listening for. the fca and pra are not alleging that jes staley acted within -- a lack of integrity. the board of barclays continues to have unanimous confidence. the ceo has been investigated around whistleblowing events. no fca and pra enforcement actions against barclays itself. actionsege jes staley's were a breach, but not that elected without integrity. staley has time to review what the agencies have said. let's get back to the inflation and commodities story. matt: i want to mention some headlines coming across from the saudi oil minister.

he is saying opec and its partners need more rigorous compliance with cuts. you read a headline from the russian minister novak that they were almost 100% in line with compliance. it is interesting that some opec members are under complying and some are over complying. you can see at the bottom of your screen, the total rate, average rate, is 145%. especially considering what is going on in venezuela, they are not producing as much oil as they could be by a long shot. the head ofow is global asset allocation at aon to talk about what is going on in oil and commodities and how that relates to inflation and what we can expect. let me first ask what you think about this oil story. we got up to almost 75, brent may have touched it. on non-opec.

this thing, along with the insanity in the metals market price action tends to bleed through into inflation. is that a concern for you? >> it is a perfect storm for commodities, because we have had -- the story with opec says that compliance has been remarkably good. relative to market expectations, the agreement has written -- held remarkably well and cutbacks have been generally successful in supporting the oil price. about commodities at this point at this stage in the cycle is that supply will respond to these higher prices but it takes time. in the meantime, prices can rise higher. in metals, we have seen the impact of russian sanctions. demand has been strong in commodities for the last three years and supply will come along.

with commodities, the thing that always seems to be less -- blessed with a roller coaster ride because of the way demand and supply move and the lags in supply. until pricesces up respond and then they come down again. minister russian oil agrees that things are working better than people thought. he says opec cuts agreement is working successfully. he was one of the guys who crafted it. opec plus is shorthand for that on the bloomberg. where does this leave the yields conversation in u.s. yields in the u.s.? pricesebatable -- oil still feed through into inflation, but the relationship has changed over time. where does this leave the inflation story? you have to remember this.

the rising commodities generally ind to be a one-off shot up the price level. there is little price level shock, but that is not about ongoing inflation. for that, you have to look at wages. it is far more important in commodities, but the headline inflation rate will respond for a while. that has its effect, but on an ongoing basis, this kind of commodity price -- unless commodity prices rise year on year, and that looks unlikely -- the futures are telling you that in terms of the way they are pricing commodities out the next few years. matt: what do you expect the fed reaction to be to this? we were talking earlier with james f a from aberdeen -- athey and he said quarter over quarter pc as at one point 9%. we are getting close to the 2% target year-over-year. do you expect the fed to move

three times more this year after the one move we have already seen? hown: i think it depends on the economy performs. the indications are that growth isstill strong and there still output gap, the amount of capacity for the economy is limited and unemployment is low. we have the tax cuts, so all of that suggests they need to keep pushing on rates. we have to not get carried away with all that has happened is that inflation has moved back to what the fed would regard as a reasonable level. there is at this point very little prospect of a significant overshoot of the inflation target. the underlying inflation, it will want to strip out the effect of commodity prices and on that front, it doesn't look like there is a major inflation shock. of course, they have to raise

rates because rates were too low, but it is not because -- the commodity impact is still pretty limited in terms of what the fed's plans are. ,nna: not an inflation shock you think. where does this leave equity markets? how scared are they of a 3%? now you areapan: talking because the whole business of equities, the single number is massive. the equities risk premium is the additional return you might .xpect for equities, it doesn't matter if the 10 year yield goes beyond three and the higher it goes beyond three, the more problematic it becomes because the low rates have been such a support. that is why valuations are where they are, only because the yields -- the rates have been so low. it is a matter of sense to me that equity markets, less of an effect. stays with ustta on daybreak: europe.

carney says prepare for a few rate increases in the coming years. is the bank of england still thinking about a hike next month? he says other months are available. this is bloomberg. ♪

♪ it is a: 20 in berlin. this is "bloomberg daybreak: europe." 40 minutes till the start of equity trading in the continent and the u.k. let's look at how markets are doing. as far as equity index futures, euro stocks futures are pointing down. pointing some national up. not a lot of direction from the futures trades or the bund trade. we are looking at a yields down a little bit, but 59 basis somethingthe bund is

to write home about. we haven't seen that in a long time. s&p futures pointing down, but only marginally. let's get the other world national news headlines with the bloomberg business flash. barclays hasst, said its board has unanimous confidence in ceo jes staley. the bank also said the financial conduct authority and federal regulation authority have concluded investigations into jes staley. an attemptponse to by him in 2016 to identify the author of an anonymous letter. they added neither body is asserting that he lacks fitness and propriety to continue to perform his role as ceo. the u.s. treasury department is considering using an emergency law to curb chinese investments in sensitive technology. the president could declare a

national emergency under the law in response to "unusual and extraordinary threat" allowing him to seize assets. that comes as the trump administration looks to punish china for what it sees as violations of american intellectual property rights. asian technology stocks joined their peers in a global slide after a disappointing sales outlook from apples chip supplier. it saw its biggest intraday loss after predicting quarter sales about a billion dollar less than analyst expectations. i a report this week saying smartphone shipments declined for the first time, a reminder the industry may have peaked. that is your bloomberg business flash. for: juliette, thank you the business flash. be aware, we are keeping an eye on jeddah, and recording on the ground there -- anne-marie there on the ground.

this morning, we continue to monitor that. this morning, governor mark carney says the u.k. should prepare for a few interest-rate increases over the next few years, but hinted the widely expected hike next month isn't a done deal. we saw a little adjustment in the fx market as a result of the interview with mark carney. what did you make of his attempt to reset expectations around may? tapan: i think the issue is that if expectations are too much on one side, mr. carney feels he wants to make sure -- he wants there is enough uncertainty about the rates position rather than everyone hurting on one side. herding on one side and it is right week as some of the data has been softer. it is difficult because on one side, we have drags coming in from the brexit ross s.

on the other side, you have inflation still above target. what do you do with that? he wants to raise rates. intention and wishing and wanting to raise rates is still there. whether the economy can withstand this with more rapid rate rises is a question? matt: we saw a big move in the pound, at least the chart looks dramatic humming down to a cable rate of 140. we saw a big move in gilts hitting 152 and i see german bunds touching 60 at the end of last night session. what do you make of the cheap price of bunds? bunds at 55, 60 basis points look to us to be fairly reasonably valued. that may not be a consensus view, which sees these prices as being too high. it is probably a little on the

risk side, but not that high the kinde don't think of interest rate we would expect out of the ecb suggests that those yields are too low. they look to us to be quite reasonable. anna: i have a chart that shows the two-year u.s. treasury and the relationship with its german counterpart. could anything change this at the moment? it seems the two-year has broken up a little way? -- broken away? tapan: the problem with u.s. versus german rates is we should have seen the dollar rebound on that. that hasn't quite happened. i wouldn't be surprised if that gap widens, to be candid. the real question is why that isn't feeding through into a stronger dollar on a sustained basis? for that, we look to other explanations. that two-year gap is likely to widen further. matt: i want to get your take on

merkel blocking macron's process on europe. what you think about that? tapan: can you repeat that? matt: merkel seems to be blocking macron's progress in strengthening the unity of europe. what you think? -- do you think? of thethis is typical debates that surrounds the eu 27 all the time about further -- iration or divergence think those debates will continue. i think we need to look beyond the rhetoric. the lesson the brexit is that europe probably needs to be more integrated and i suspect that is what will ultimately come through, but there will be substantial opposition from some quarters to it. matt: thank you for joining us, tapan datta head of global asset

allocation at aon. anna, it has been a pleasure. i am up with "the european open" with guy johnson next. takeda --this is bloomberg. welcome to the xfinity store.

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guy: friday morning, good morning. welcome to "bloomberg markets: european open." we are live in london. i am guy johnson alongside matt miller in berlin. matt: tech shares come under pressure. the cash trade is less than 30 minutes away. ♪ guy: carney hits, there may be a rate hike, it may not be a done deal. thun