guy: under pressure, carney heads for a rate hike next month. money market pricing and the bank of england drops below 50%. trump, not a target. he isn't the focus of the special counsel investigation. rosenstein'sand jobs now safe? inuld they pay a fine relation to the whistleblower scandal? he can continue as the chief executive. the board say sthey have full confidence in him.

welcome to surveillance. i am mark barton. stocks down for the first day. the fourthing for weekly rise, which is the best run since october of last year, down by 0.25%. lower for the day, a blowup for the fourth consecutive day, down to 1.4040. is mark carney being an unreliable boyfriend again? inchingear yeild, lower, we have not been at 3% since the back end of 2013. 2.92%. a big move up in yields and global bond markets,

particularly for the u.k. 10 year, which saw the biggest increase since january. coming up on surveillance, we talk sterling. later, francine and tom chat at meeting. pring have got for you? . here is taylor riggs. praise donald trump d james comey for his loyalty theng the 2016 campaign, asked for his loyalty and dropped him to drop the investigation into michael flynn. that was turned over to u.s. committees by the u.s. department of justice. comeytweeted, since the memos came out, they show there is no collusion and no obstruction. he leaked classified information. the witch unt

continue? rosenstein told donald trump last week he is not the target. according to several people familiar with the matter, rosenstein brought up the investigation himself and offer the assurance during a meeting with trump at the white house. they say the development helped president's desire to remove rosenstein or mueller. european union officials will adjust the issue over the irish border after brexit. according to three people familiar with the eu position, britain has not made a formal proposal, but has indicated that the solution for maintaining an invisible border should apply to the whole of the u.k. it would mean the entire u.k. stays part of the single market and customs union as a last resort to avoid a border in ireland. price indicator

slipped in march after hitting 1% in february. consumer prices rose 1/10 fo 1% in march matching estimates. "second term,oda beginsat is as kuroda his second term. will take longer to lay out the plan for unconventional stimulus. that's according to economists surveyed by bloomberg. no change to policy settings or languages expected from the governing council meeting next week. respondents pushback their estimates for when the ecb president will communicate the next step towards normalization. they still see asset purchases ending this year. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world.

i'm taylor riggs. this is bloomberg. mark: getting some breaking news from opec. opec and his committees will end with no new recommendations, this is not a surprise. we were not expecting anything around the news that opec has managed to balance the market with the big event taking place in june. opopec will keep the five-year average guage. they said to keep the five-year average gauge for the market assessment. they will propose to host and opec meeting in september. we have already got a meeting, of course. nymex-crude, the one year move, $35. crude, brent crude at or near four years. way, because the

boe governor said they should prepare for a few rate increases, but mark carney hinted that the next rate hike is not a done deal. will make the decision, conscious that there are other meetings at which they could this year. researchd of strategy at unicredit is with us. this is a perfect chance to look at our wonderful wirp work function. this is the interest rate have ability for may. look at the top left. now it isow 50 and sifted 4.4. if i stick in the 19th into that bar, woosh, 77%. it was 80% earlier this month, wasn't it. are you feeling of confident for may, or not? >> i think it is more likely

than not that they will hike, but it is evidently risk off and not more than they had increased. i think it is a clear acknowle dgment by carney that there is a clear move in the data. which has been in sync with the data we've seen globally. i think beyond that, as far as ruling is concerned, the tendency is to skew to the downturn. the market over the last couple of months has jumped the gun and started processing in aggressive monetary policy. mark: this is pound-dollar, down for the fourth considered of day. would like to make a distinction between cable and euro-sterling, because i think this will be more a ffected by the dollar.

i'm not bearish, because i think a lot is already in the price. i think over the next month or so, given how aggressive the market has done in pricing in boe monetary policy tightening, i think one week ago we were pricing in 50 basis points with quite a high likelihood. the repricing of that will put some downside pressure on sterling. but i would like to make a distinction. campbell i think medium-term goes higher from here, largely on weakness of the dollar. mark: and euro-pound? terlingink euro-s goes higher, but i do not think there will be a big change in the fx market. i think we will gravitate between 88 and 90/ carney at risk of being labeled an unreliable boyfriend once again?

is he at risk of getting that phillips dropping label, the unreliable boyfriend label of 2014? i like these things. >> for the bank of england, the reality is, for the last four or five years we had a lot of flip-flopping, we had this forward guidance with employment, and inflation. but to be fair, this time there was no real explicit reference for may. i think carney pretty much stated the obvious, implicitly not be onat may might the table as much as the market things. i do not think this time around the bank of england is running a risk that they could be deemed as unreliable, largely because the data disappointed and inflation is receiving. that, they all

should have said this six months ago because they put a lot of emphasis into that input driven pickup in inflation, which was not really being driven by a closing of the output gap. therefore, they should have been a bit more relaxed on inflation and monetary policy tightening. mark: so, he is not an unreliable boyfriend, so says, vasileios, who stay swith us. we have a deepening of this domain in brexit talks. written indicated that the eu's suggestion of having an invisible border that keeps northern ireland in the customs union could apply to the whole of the u.k. bureau shief is with us. why is the eu rejecting this deal because isn't this what they agreed on a couple months

ago? reporter: first of all, this is not a deal. being floatede by u.k. officials to see if they can ♪ get any traction. they want to join the customization by stealth. that would mean the u.k. has access to the single market and customs union, without the obligations. for example, they would not have to -- they could do trade deals with other countries around the world and would not have to apply with the tariffs. the u.k. is trying to join the customs union by stealth, more or less. mark: are we beginning to see any signs of progress? i think it was only wednesday when the proper negotiations on the future trade deal began. i suppose it is too early to have any signs of progress. is there any light at the end of the tunnel? personal level, i

would believe we are seeing a little bit of progress. what we see is the u.k. government on a journey and that journey could end at a point where they except they have to join the customs union as a full member and respect the rights and obligations they will have to face as part of that. what we are seeing is a small sign of progress, shifts from the u.k. government. i think we are beginning to see some shifts. doyle, theara bureau chief. cash. per share in that's in pounds. ofileios is here, head

strategy research at unicredit. everyday it is something new, whether it is the house of lords, rejecting the amendment, which puts pressure on may to reconsider her customs union view. leios, here we are friday, another friday. where is your head when it comes to progress in brexit negotiations? vasileios: i think progress has been limited and we expected it to be limited. there are many red lines the u .k. government has imposed, but they will have to be crossed. we've said all along that the negotiation power of the u.k. is far more limited compared to that of the european union. to be honest, i do not know what the end game will be for the irish border or the customs union. we have had extremely complicated matters and to an

couldin extent, you call that an unsolved riddle, but i think in the end, we will see more concessions by the to 10, theat zero u.k. has already met a lot of steps towards meeting the eu, and they will have to do a lot more. i have been hearing a lot about trade the u.k., starting a lot of trade deals with countries outside of the european union. the fact of the matter is, and no matterdisputed, what we are discussing about the possibility of striking new trade deals, the reality is, it itto the u.k.'s benefit that keeps as frictionless as possible the trade dealings with the european union. therefore, the u.k. will have to move to meet the eu. mark: more red lines to be

crossed. so.leios gkionakis says opec and its allies said to be close to ending the oil glut. and disturbing the peace, the imf says trade tensions between the u.s. and china risk eroding business trading. this is bloomberg. ♪

mark: economics, finance, politics. this is bloomberg surveillance and i am mark barton. let's get the bloomberg business flash. willr: barclays ceo keep his job. the financial conduct authority prudential regulation

authority suggested they should pay a financial penalty, alleging that the lack of should allow him to continue to perform his role. the bank also plans to recommend his reelection next month. ericsson jumps this morning after the swedish wireless network posted better-than-expected first-quarter earnings. the sales remained after production costs, rising 35.9% on an adjusted basis, most of the figure from one year earlier and a sign that it is making progress. the u.s. treasury department is considering using an emergency law to cur chinese investments. the president could declare a national emergency in response to "unusual and extraordinary threats." that comes as the trump naministration looks to chi

for what it sees as a violation of american intellectual property rights. to cater is back i in the spotlight after allergen said they were considering making an offer for shire, but hours later said they would not make a bed. takeda's offer was then rejected, the upper worth 43 billion pounds. idire says the value of the b significantly undervalues the company. that is your bloomberg business flash. mark: let's focus on trade, the he risingariffs, and t threat of a trade war, big focus meeting.e imf's listen to this. >> we do not know as of yet what are the results.

♪ >> we do not know where it will end or the ramifications. it could begin between the u.s. and china, but others will enter and the world economy will be affected. >> nobody will benefit. we believe in trade openings and things that will benefit everybody. >> we have a very strong economic relationship with the united states and china. ee are very keen to ensure ther is no such thing as a trade war. there are no winners. we do not believe there will be a trade war. >> we do know that staying away from obstructionism has lifted so many people away from poverty. it will help us. we fail if we need protectionism and more protectionism because they are only losers in this.

mark: vasileios gkionakis from unicredit with us. trade war, vasileios gkionakis, are you more relaxed about the prospects for an escalation, or are you more worried? vasileios: well, there's definitely a worry. as it was correctly pointed out, free trade has lifted so many people out of poverty and boosted global growth. let me say this, at the epicenter of all of this has been china, as far as trump's policies within the u.s. administration. what i find encouraging is the responsible china so far has been very measured and to a certain extent, symbolic. shows that china has no appetite to escalate things from where they are false and in a sense, and it could be quite ironic, it gives china the chance to shien ou -- chance to shine out of all of this and take a lead into this free trade

global story. so, so far, i think the signs extent that to the a couple of months ago we were discussing the probability of trade wars. but if we indeed go down this road, this is a slippery slope it willve no doubt negatively impact global growth and global trade indefinitely and will upset global markets. mark: i want to discuss what has been happening in the bond market. yield shot upar by 10 basis points. can you explain why we saw such a big move in yields? u.s.eios: as far as the itself is concerned, i have to say it is really difficult for me to disentangle how much of that is due to markets bracing in higher inflation. mark: we have an opportunity to look at -- it is a veryd

pronounced flattening, which basically tells you the market is not pricing in very good prospects for growth when you go beyond the two year horizon. i think a large element, though i agree. conjecture, aa large element is that the market has shifted to pricing in higher term premiums as far as the u.s. is concerned. we're talking about an extremely mature u.s. business cycle, which means statistically speaking, a slowdown or recession could be coming in a years time, purely from a statistical perspective. secondly, you are talking about massive concentration of the ownership of u.s. assets. at the same time, you are frictionbout the most filled u.s. policis. the risk premium could be pushing this higher.

one could argue the bond market has been away from equilibrium for such a long period of time. these are the two forces pushing u.s. yields higher. mark: is it a reset of u.s. inflation expectations? this is another chart, vasileios . this is the break even for the u.s., japan. the white line is the u.s. breakeven. our inflation expectations shifting? vasileios: i think they are. it is a combination of the realization that we are going through more robust global growth. don't get me wrong, we have seen an acceleration, but over the last six to 12 months we've seen a very synchronized and widespread global upswing. which means we have seen thei possibility of a pronounced slowdown is lowe so, even if a slowdown happens, it will be

milder on a global perspective. i think the market is repricing that. it is also pricing in all the after-focus of such an expansive monetary policy. and now, we are seeing commodity prices rising higher. potentially there might be a small element of trade war is being priced in. it is a low likelihood scenario. let's be realistic here. this is what central banks wanted to achieve. they wanted to make sure we do not get a deanchoring of inflation expectations to the downside. this is what the ecb wanted. francine: do you think we will get a d anchoring to the upside? no, but let me put it this way, i think it is a good and healthy development.

mark: and we should let inflation run a little bit too hot? vasileios: well, i do not think it will be a one-size-fits-all policy. i rhink -- i think things are slightly different in the u.s., especially now with the outfit long fiscal policies which are running a high likelihood have inflation getting out of hand, if indeed you get such an expansionary fiscal policy. but in the case of the japan, i do not think central banks will mind inflation. vasileios will stay with us. a big day for the swiss franc, yesterday crossing the 1.20 mark. this is bloomberg. ♪

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with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. mark: economic finance politics, i'm mark barton in london. what a wonderful week it's been in the u.k. temperaturewise. let's get the first world news with taylor riggs.

aylor: president trump praised comey and asked to drop a investigation into michael flynn, according to memos turned over to house committees by the u.s. justice department. in response to the release, trump tweeted james comey's memo is out and shows clearly no collusion and no obstruction. he leaked classified information. will the witch-hunt continue? rod rosenstein is said to have asked donald trump last week he's not a target of any special counsel robert mueller investigation or the probe into his long time lawyer michael coe hen. according to several people familiar with the matter, rosenstein brought up the investigation himself and ottered assurance with a meeting with trump at the white house. they say the development helped ease the president's desire to remove rosenstein. european union officials are

set to reject a potential u.k. solution to the crucial issue of what happens to the irish border after brexit. according to three people familiar with the. e.u. position, while britain hasn't made a formal proposal it indicated the block's backstop solution for maintaining a visible border should apply to the whole of u.k. which means it stay as part of the customs union as a last resort to avoid a border in ireland. global institution 24 hours a day and powered by more than 2,700 journalists and analysts in more than 120 countries, i'm taylor riggs, this is bloomberg. mark: the frank is low and was once one of the most heavily defended boundaries. the s&p, 2015 when it lifted the currency. take a listen how it reacted to that news when it rippled

through the f.x. markets. >> breaking news of the hour and of the week. >> spectacular is the only way to describe it. but let's get details now, a massive move in the euro, down nearly 30%. francine: we're trying to quiz them whether this was a panic or them saying we tried to defend and went the next route. >> the rates are up. and can be the end of plan b. i also think it's a recognition, you can hold a peg for a limited period of time in a storm and in a perfect world the storm would pass and if you need to move the peg or remove the peg you do so in common times. >> they already have a overvalued exchange rate and this makes it much worse. >> the french national bank wanted to fly to keep on top of the game and keep the trade weight of the index del lively

stable. get rid of the plug and it pours in. >> that was a surprise a lot of people were hurt and i was thinking when i watch tv at night sometimes, maybe not bloomberg but other things, you see foreign currency traders, they say you can trade foreign courtesy, it's easy to do. you won't be seeing some of the ads anymore. mark: let's look at the euro over the swiss the past five years. what a year it was, mid january, 2015. yesterday francine caught up with thomas jordan at the spring meeting in d.c. asked him if he needed to change policy due to the creep up. >> the french rate was very strong and overvalued many years and we started to see a correction after the french elections and since then has been creeping a little bit.

francine: the frank dropped below 120, a level we haven't seen in months. what does that mean? >> it's going in the right direction and had an overvalued twiss frank and they continue but this is expect what we expect and there's no need to do anything regarding monetary policy at this point. phillip: francine: is it going to change minds? >> we'll see. it's a fractured situation and can change one day to the other and we remain prudent at this point in time. francine: apart from trade wars is there something else that you think could make it go the ther ways. >> markets act different in terms of sentiment. russia europe, russia united states, something like take and

then we have a very different situation. francine: do you think markets are functioning in general very differently to what they were seven years ago, the currency markets? >> a couple years ago we had a recession and financial crisis and today we're in a much better situation. in general the need for a safe haven is smaller or do we have ne or two of these special events before you had a national crisis and the sentiments were different. mark: thomas jordan speaking with francine. there are red letter days and i've been doing this a couple years now and one day stands ut and that's one of them. vaselius: it was just before the announcement of e.c.b. and the q.e. in terms of developments in

euro swiss, it is one of these things for us analysts when we try to say what should happen and what we think is likely to happen. today we put out a note that says we're turge cautious on euro swiss and predicated from the fact from a fundamental perspective we converged to fair value and is close to what he s&p -- s&p is estimating. but fundamentals are not there for euro swiss to go higher but if it can turn to a momentum play because it's been very positive and sporty, don't forget, we've seen a massive rally since early february and credit miss up 5% since then. my only issue with not seeing a lot of upside for euro swiss is the following -- although at the beginning of 2017 we

started seeing swiss recent dents buying foreign recollect by sits. these moves should be moderated but came to a thault the end of the year thanks to the portfolio balance data. >> one of the stoningssl building blocks to grind higher seems to be missing there. at the same time, i don't think it has to do a lot with risk appetite. the swiss frank has decoupled. corruption now? vaseleios: the only currency that's behaved has been the yen. the correlation with risk assets and the swiss frank

simply is not there and largely because the s&p tried to service it by bringing interest rates in dangerous territory. mark: does it have the freedom, is it in a better space to think of changing that crisis era? has been the big step taken by abandoning the floor three years ago. i don't see the s&p moving before the e.c.b. moves. if our forecast is right and we see the first rate hike by the e.c.b. by mid 2019, it's still long distance for now for the spw to normalize. mark: breaking news. expected first quarter to rise to 130% on the year. crossing the bloomberg terminal. vaseleios stays with us. plenty coming up today.

the brexit, the ecb pushing out as trade concerns rise. next, him he keeps his job after u.k. regulators and his attempt to unmark a whistle blower. this is blerling. this is bloomberg. . ♪

♪ mark: economics and politics, this is "bloomberg surveillance" in london. aghi will release a plan

according to the bloomberg economists. they don't see a change to policy settings or language at the council meeting next thursday but anticipate asset purchases ending this year. we'll go to paul gordon in frankfurt in a second but va seleios:. any tweaks or is it an easy one for the e.c.b.? guest: i wouldn't call it an easy one but don't think there will be a change in language. lets putt some perspective to recent lowdown. we've seen indicators rise to a high. it's natural to expect a loss of momentum. mark: this is the city economic surprise, 2012, london. >> i'm skeptical at looking for the prize indices, and day time

towards becoming letter and period r -- becoming better and better and makes it more difficult to deal with the surprises. i choose to look at the absolute level of data and we're still cruising on sentiment indicators at levels that are just above long-term averages and still consistent with annualized growth of 2.25% in the euro zone. so i think there might be some acknowledgement of the dispersion of risk especially on the back of the possibility of trade wars. but assuming we get a stabilization in p.m.i.'s, a slight decline. and i think the e.c.b. likely will see through that and we maintain the view we're talking about a widespread recovery. mark: we'll get to paul gordon, our central banks editor.

in frankfurt, you've spoken to the economists and what's the general consensus when it comes to the path the e.c.b. takes in policy and language the next 6-9 months? trevor: they still expect the q.e. will be brought to a halt by the end of this year but the e.c.b. will go slower now in making the necessary steps to get to that point and one is breaking the link between inflation and bond purchases and saying stimulus -- and saying folks are set on interest rates, and the other is making the announcement. most see the division taken in frule anded number of people saying a decision in june dropped quite dramatically. go slow and go slow and more than we thought than a month ago. mark: paul gordon, central bank chiefs. the link between the program and inflation, some say is the

next to be dropped. >> look, i think right now we shouldn't lose perspective to the fact it's all about the output gap. and the output gap certainly is diminishing. and if we were to compare it to what the e.c. and the mark says where we're expecting 6- months ago, it's diminished at a faster pace than people expected. even taking into account the recent slowdowns and indicators, it's only natural we should see a potentially slight jump in headline numbers, largely coming the back of the sharp rising oil prices. we've risen to 7.5% this month. personally, i would not expect to see an announcement in may. we were always lingering towards the summer and start slugging things and then the announcement of the tapering through september and the last

quarter of the year and the purchases by the end of this year. i don't think anything has changed. mark: let's look at the chart, a lovely quhart, the 60-day range of the euro-dollar. third title since the infection of the single currency. and the previous iterations, mid 2007 and mid 2014 and erupted into the two biggest euro moves since 1999. certainly it's stunning work watching. guest: i love the title, by the way. phillip: are we to read anything into this? guest: it's undeniable the euro-dollar has gone nowhere and is a result of two factors. first of all, there were a lot of stretch positions, long positions in? the speculative community and these are still in place. i think rightfully so because i

think what's going on in the u.s. with the fiscal deficit will be detrimental for the dollar on a medium term per speckive and there's been a sloweddown of indicators, a reasizele of the possibility of trade pops. i think americanly it's a bit stop and the euro-dollar will grind higher. timing when this will happen, i think it's very difficult so i think you just hold on to your fundamental views and the fundamental views says there is going to be a few concerned. as far as i'm concerned there will be a rebalancing of portfolio locations spoke -- into other reasons especially the euro zone coming out of substantial bearishness and imply more flows in the euro zone and therefore it will provide a further tail end to the europeo dollar.

it's undeniable to acknowledge the euro-dollar has gone nowhere. mark: final yes of -- final question of the hour, great to have you. give me a trade that i'll love and traders can get their teeth into to. uest: i've been surprised by it. i see dollar cat downside and euro knock downside from here. mark: great to have you, the co-head of strategy research at unicredit. barkley's thoughts of keeping his job. the regulators looking into his attempt to unmask a whistle blower. this is bloomberg.

mark: economic finance politics, this is "bloomberg surveillance" in london. check out gmgo, a wonderful function and shows the entirety of the markets.

the left column, equities, it's a day you're seeing some markets up and some down. we're headed for a fourth weekly run and probably is the key takeaway, fourth weekly run, the best run since october. let's look at the currencies falling against the dollar today. the big interesting currency move yesterday was when the euro moved through 120 against the swiss frank. bond yields, the big moves happened yesterday. the ten year yield shot up by 10 basis points yesterday in conjunction with many other moves across government bond markets and commodities. mar clays guest will keep his job after attempts to unmask a whistle blower and dates to june 2016 when barclay's board recruitment oneous

of a colleague. joining us, head of finance, is lisa. is this a huge sigh of relief for jeff staley? lisa: i would think so. this broke in april of 2017 and has been a massive question mark hanging over his head for almost a year or a year now and potential thread he would have diamond to not fit or proper by the f.c.a., which would have meant i had to give up his job. mark: is there a little star by staley's name? he'll get a fine reputationally. it's not ideal, is it? elisa: in speaking to the experts they've gone as far as they could have just before coming to the conclusion that he's not fit and proper. ashley: remind us about the

incident and what happened and what he did and why he was under investigation. elisa: whistle blowers are encouraged to come forward and the whole point is they maintain their anonymity, certainly in relation to the accused or potentially accused. there were several attempts to unveil the whistle blower and there was clearly a mistake and deemed to be an honest mistake. mark: putting this aside he has enough troubles on his plate, the latest in the form, the guys of a man called edward bramson. what does he want? what's the latest? elisa: we have a activist shareholder and the chatter in the u.k. papers have reported hey come in to see and get rid of the trading units. we haven't confirmed those reports ourselves so at the

moment it's reported by all the papers. yes, that would clearly be a very different strategy to the one taily has been pursuing which has been 1-1. and certainly supporting the investment bank and growing certain parts of it. mark: it takes a little bit to wind itself up to give you comparisons to barclays and versus its peers and until it comes up we'll chat. staley have? is he the next big bank c.e.o. to be under pressure would you say? elisa: part of it was related to the whistle blowing affair and the investment bank returns that haven't been as strong as he would hope so. e will learn more next week.

mark: the arsenal manager will step down. i won't ask you for a comment being a manchester fan. and my floor manager is laughing. i wish we could get the camera on him. there you go. he's a manchester united fan as well. arlen beggar who has been at arsenal for a couple decades. he's leaving the end of the season. that's the star of today's fan. manchester united well done, lisa, head of finance in europe. austin vega steps down. surveillance continues. . ♪ francine: pound under pressure.

england dropsf below 60%. the deputy attorney general said to have told the president he is not the focus of the special investigation. and saley to stay. the regulator signally bar barclays boss can continue his role as chief executive. the board has the role of chief executive. i'm francine lacqua with tom keene in washington dc for the second day of the imf world bank meetings. yesterday was fun, tom. of course, everyone is against trade war. but you see some of the margins benefiting at the short-term. for example, the big producers of soy beans. tom: i noticed a shift i had never seen before, the shift o ver to debt deficit.

you -- if you have to ask the board for your full confidence, like at barclays, that's a problem. francine: he didn't have the board behind them. tom: do i have the full confidence of your board? francine: only on thursdays and fridays. some of our guests today include david lipton. we have the spanish economy minister and the german finance minister. miss our special coverage from the event. that is at 2:00 p.m. new york time. now, let's get straight to the bloomberg first word news with taylor riggs in new york. barclays willo of keep his job after the investigation by british

regulators, and the probe thesed on unmasking whistleblower. stay insay he will his role. they will recommend his reelection at the shareholders meeting next month. president trump has been told he is not the target of the investigation into russian election-meddling. or the probe into his longtime lawyer. deputy attorney general rob rosenstein offered the assurances to the president last week. downsay that has tapped on the president's desire to fire either robert mueller or run rosenstein. the phone lines to be used by moon was tested today. mate over brexit

negotiations is about to get deeper. according to people familiar with the matter, eu officials are set to reject a proposal, which would mean the whole u.k. remains part of the single market and customs union. the eu only wants to give that special status to northern ireland. global news, 24 hours a day on ticktock onnd on twitter. tom: equities, bonds, currencies, commodities. just one screen today with the vix remaining the same and futures at -4. it is a bull market in oil. francine: this is what i am looking at. if you look that european stocks, they follow asia a little bit lower. technology shares came under pressure.

this is because of earnings that disappointed asset classes over asia. i'm also looking at the u.s. treasury yields. as you say, yields are studying. they did remain on track for the biggest week we surged since february. mark carney spoke to the bbc saying, if they were data dependent, and were concerned about brexit, that impacted the ability to raise rates. the pound currently at 1.4055. imf meetings are and trade tensions have been the main topic of discussion. we have had the broadest expansion in years, but many fear protectionism. definitely some c onflicts, which could damage growth, which has not lower prices yet. >> one extent of the damage to growth would be. >> we do not know where it will end. we do not know the ramifications.

it begins between the u.s. and china, but others could come in. the world economy will be affected. >> nobody will benefit because what we believe is in trade openings and trades will benefit everybody. somebody, but if it. >> leave a strong relationship with the united states and china. indeed, from our point of view, we are keen to ensure there is no such thing as a trade war and there are no winners from a trade war. we do not believe there will be a trade war. >> do that free trade and trade has lifted so many people out of poverty. so, it will not help us. we fail if we need protectionism with more protectionism because there are only losers in that. francine: now for the latest on the global outlook, catherine mann. privilege to speak with

you. this is really our world, where they talk about the concerns pe forave, the hoep f broad-based recovery. what happens for you now? >> one of the issues is the federal reserve is on a path for normalization. that's the appropriate thing for them to do. some of that path involves getting risk back into the financial markets. getting the price back will be a bumpy ride. it is in part and to think about, what will the real investor do when faced with some choppy waters in the financial market. it is this interplay between financial market volatility and real investor choices to engage in the real investment necessary to keep this global economy on track. francine: are you expecting a lot of volatility in the markets and where would it come from? is it global volatility? catherine: it has to be on a normalization path, so

there is room to maneuver in 2020. we have to have rate hikes, is it three or four? we have three in three at the citi forecast. that will have to be done to get risk pricing back into the market. right now there is no credit risk trend. ,here is no equity risk premium which is too high. there is no, you know, the dollar is disconnected from interest rates. in order to get us back to a normal financial market with risk priced in, you have to make money more expensive. tom: much of our conversation here touches on your storied career from brandeis to citigroup, your classic is the trade deficit sustainable. if you were going to have a cup of coffee four blocks away at the white house today, what would you tell president trump about if the trade deficit he fears is sustainable?

catherine: of course, the trade deficit he would like to see is a smaller one, but the policies currently being undertaken, the large stimulus, will move in another direction. stimulus encourages consumption and investment. that is what it is designed to do. the cycle is a little bit odd, but the end result of that will be a larger fiscal deficit and so, is it sustainable? the deficit right now is a lot smaller than when iw wrote that book. tom: this is the blue book, the green book and the brown book. we will focus on fiscal in the sixth hour. the answer is, in three years will we be talking fiscal deficit? is, does: the question this call into question sustainability? ld say the

sustainability question is not on the external side, but the internal side, the fiscal side. that is where the problems will lie. isncine: how can you -- anyone going to try to mitigate the problems? catherine: i think there are differences of views about how much the denominator will move, gdp. some people think the stimulus package will have a large effect on the denominator, the potential rate of growth for the u.s. economy, which is the means by which you pay off the obligations you have undertaken, the numerator, the fiscal. there are other people who see this as gdp growth, which will be short-term, short-lived, the sugar high. as the fiscal stimulus runs off in 2020, you will not have the sustained increase in economic growth, the potential growth which will make good on obligations and that is when we ran into sustainability problems, when the market worries. francine: what are the terms of

a recession in three to four years? catherine: we do not have any recession included into our projections. however, we do have a big delta on growth between 2019 and to0, going from 2.8% 2.98%. francine: i don't know if you ran into dr. nabarro. catherine: we will on saturday afternoon. tom: you will meet with dr. navarro. how will you explain to him that this is not about china the evil empire. you own the phrase dysfunction within economics. catherine mann, how do you explain to secretary ross and even lawrence kudlow, stop worrying and push exports? catherine: there is some question as to whether or not people's biggest concern among the crowd is promoting exports or protecting against imports.

i think there are some differences in views on which of those is the better way to reduce the deficit and i think we're all worried the approach that will be taken will be to introduce imports. tom: thank you for the getting our coverage here for the day. this has been a fabulous imf meeting. francine demanded we put it all together and we will do that at 2:00 p.m. new york time this afternoon. you will see this worldwide. we will do a special program. i am really focused on the debt and the deficit discussions here at the imf. stay with us for special coverage this afternoon. this is bloomberg. ♪

taylor: this is bloomberg surveillance and i am taylor riggs. it is now up to takeda pharmaceuticals to make the next move in the fight for shire. takeda is the only public bidder. said it mightegen make an offer and then said it would not. shire has turned down the $60 billion bid, but said it is willing to negotiate. ericsson is making progress in an attempt to reverse its fortune. the swedish maker of wireless networks reported earnings better than expected. ericsson's gross margin almost doubled from one year ago. the company is facing a weak market for mobile equipment, but cost cuts from a new product line are helping. wenger of arsenal will step down after 22 years in

charge. and that is your bloomberg business flash. tom, francine? tom: taylor, thank you so much. [crosstalk] tom: none of it matters. you and i were babbling to have jon ferro. this is why. vender,t wender it is right? frenchman who brought arsenal to the top has not been doing a good job for the last few years and you have no idea, tom, how much is man was written about in the u.k. press or twitter. there were some of the most famous people the world saying, he needs to go. the fact that he is stepping down is huge. tom: where will he go next. will the coach a world cup team? francine: you are looking at it wrong. tom: get jim o'neill on the

phone. francine: it is about arsenal and who they will approach for the next coach? a lot of people want to buy it. tom: turning to catherine mann, how about those red sox? catherine: well, you know, it's my team tom: i would not have been able to answer the question on red sox. francine: that is why we have catherine mann here. catherine: i think it is a brexit thing. you have arsenal on top. francine: there is always a brexit if you dig deep enough. the swiss national bank president says he is not an array to shift policy. he spoke to me hours after the franc broke through the 1.00 euro mark for the first time. >> it can change from one day to the other. we remain very prudent at this

point in time. francine: i do have to say the president was quite cool about that level. he said he was here to talk about the world and how switzerland fits into this. jane, we heard there was no change in policy. do you believe in. -- do you believe him? >> i do believe him because it is really overvalued. this is something we are quite relieved to hear because the years they have been trying to establish an environment when the swiss franc would be weaker and the policy is very aggressive. they are the only g7 ban k that has intervention is a policy call. say it is awould safe haven currency. but this is really quite interesting right now because of the big russian twist in this story. there is a lot of speculation that right now one of the reasons the swiss franc is weakening is because rich russians are pulling their money

home. this is a story that runs back to 2014, maybe 2013, when we had thatkrainian issues and at point, we had a lot of russian money going into places like switzerland. now it seems like it is coming back. if you look at the italian elections and if you also look at what happened with the couple days of tension with north korea, and i asked this of thomas jordan, i asked if it was still a haven, and you are arguing that yes, it is, but just with less russian money. jane: i would argue it is still a haven, but i would admit it has not been perhaps as good of a haven over the last year and a half as the yen. one of the reasons for that is because relative to say, the yen, the risk is they would intervene. there is something there that traders could potentially get their fingers burned if they use the swiss franc. maybe the yen from a practical

purpose is the better safe haven for people to use. what i think of this precious story is, it is a different dynamic. there is this talk at the moment that many people are arguing, let's just try and get the russians where it hurts. this refers also to the u.k. the foreign secretary from the u.k. months ago suggested we chased the very rich russian being investeds in the london property market. is in 2014, and the boosted the level of swiss franc and now we have sanctions having the opposite impact and may be money to go back home to russia. tom: jane, is it all about flows now? army anywhere near the fx market? or where the rate differentials matter?

-- are we anywhere near the fx market or where the rate differentials matter? has: you are right, it not had the same impact that we would expect to see during a textbook scenario. the reason for that is the politics within the foreign-exchange markets, since the beginning of the trump election. there is so much rising flow that the rate has taken a backseat. but i would warn on that. physically speaking if you look at long-term charts, you do see periods of time where the rate differentials do not seem to be driving foreign currency curves. but overtime, they are reducing the influence and the difficulty is, trying to figure out the trigger, something that will happen that will force the toket to appay more heed interest rate differentials. francine: jane, on the pound, it is clear that investors have told expectations for a

tightening cycle, after slower wage growth and after mark carney was talking to the bbc yesterday, would you be short on pound ahead of the boe decision. jane: i think the market will now be far more focused on the boe decision. a few weeks ago people thought it was a done deal. the guidance we gave them by the mpc at the end of february was quite strong. now if you look at the probability for an interest rate hike in may, the market is undecided. that is the way it should be, in a way. we have several bits of data which suggests a lack of momentum within the u.k. economy. it is only right the mpc should be sitting down and assessing this one out come may. but i think there is criticism coming forward guidance. i think it was too diabetic. interest-rate decisions should be about the data and not a foregone conclusion. tom: jane foley, thank you so m

uch. with us, catherine mann, citigroup, with her work over the years in trade and particularly, in dollar dynamics. one thing i find fascinating here is the idea of percolating, as we saw with mr. carney today, the dollar and currency actuations are doing the work for a given central bank. we have had a weaker u.s. dollar. is that equivalent to the rate increases, so chairman powell does not have to take them? catherine: you mean if the dollar happened to turn around. tom: ysees. a weaker dollar over the last 12 or 14 months, how does that change things were chairman powell? catherine: they are still looking for inflation in the u .s. not much more. there are certain people in the market who believe inflation is around the corner, going to be a rampage and the federal reserve will have to raise interest rates too much going forward into the second half of the

year. there is certainly that crowd and a weaker dollar would only precipitate that to a greater degree. tom: we are seeing banker after banker. in the press conference, mr. carney today and maybe chairman powell today, "ye ah, but, it's not there." centralpens then went bankers say, we are hoping for inflation, but do not he it. catherine: one of the biggest issues is the pathway towards normalization is part of the reason it is in train is because financial markets have got to reintroduce risk premia into prices. the risk premiums are missing. and in order to get money to pay attention and price risk right, you have got to make it a little more expensive. part of the reason for rate hikes in the united states is not about inflation. it is about risk pricing. and that process has got to take place. and you have got to get it into

the market and have room to grocers to slow. francine: right, but they are targeting inflation. catherine: well, they are targeting inflation -- the u.s. has two mandates. francine: sure. catherine: but you look at the minutes of the meeting and it is are the financial market and asset prices do play a relevant role in the decision-making of central banks. you cannot completely ignore that. financial market prices and the pricing of risk in the market is an important ingredient in the reserve. francine: but what are the chances of inflation shooting up very quickly? above the target. you do not think the u.s. is overheating? catherine: i do not. if we look at structural characteristics regarding the way wage inflation was designed, the structural changes and a structural changes in the transition of labor market and the cost of labor, there's an

awful lot of flatness there and many people are looking for nonlinearities. then we get a big spike. i find it very hard to make that argument. tom: i want to touch on this over the next 30 minutes. how is our dysfunctional relationship with china going? catherine: ooh. catherine, how are we doing. from your criticism, how are we doing right now from the discourse of xi and trump? catherine: arguably between those two gentlemen, the discourse is still rather reasonable, but amongst everybody else it is pretty frosty. so, you know, things are -- [crosstalk] tom: we will have more with dr. catherine. also china as catherine is the savior of this morning. we have a full day here of meetings of the international

monetary fund and the world bank. terrific conversations ahead, including adam posen. douglasre thrilled that will join us, he is concerned over the 6% of deficit to the gdp. markets are quite this morning. photo of the backdrop in these meetings, oil is higher with brent crude touching $74 a barrel yesterday. yourdio coast to coast, morning briefing. stay with us from our 99.1 fm studios in washington. this is bloomberg. ♪

tom: "bloomberg surveillance." let's be clear. we miss new york city. we miss the construction project known as laguardia airport

. we will be the this afternoon if you enjoy me cursing at laguardia. we will be there after our 2:00 p.m. schedule today. francine: london thinking about whether they can afford to go on holiday. [laughter] if you look at the pound compared to the u.s. dollar, down for the fourth day, longest run of losses this month. quite beautiful, isn't it, london? church -- you can see the architectural elements over in washington. --hout meeting, the question without question, the theme of the fiscal policy in the united states of america. we're focused on our first word newws. here's taylor riggs. taylor: president trump is no longer as anxious to fire

special counsel robert mueller or rod rosenstein. people familiar with the matter said that rosenstein told the president he is not the target of the investigation. the present has added former new york mayor rudy giuliani to his legal team. he's a former federal prosecutor . steve mnuchin says that sanctions on russian oligarchs had the impact that the admission she wanted. the ruble has fallen 8% in the markets have been rocked. he told fox it they would not rule out further sanctions. chineseency lawmaker investments in sensitive technologies. authorities have the middleton next month in order to report their options to trump. he could declare a national emergency that could allow them to block transactions and seized assets. the top democrat in the senate

says he is on board with decriminalizing marijuana at the federal level. chuck schumer says he has seen too many lives destroyed because of the criminalization of marijuana. global news 24 hours a day on air and on tick-tock on twitter power by journalists and analysts in over 120 countries, i'm taylor riggs. this is bloomberg. in: acquired a day washington and maybe a quieter week for the present. he was in florida with abe and news of mueller and rosenstein. all pushed aside by what will be the next shoe to drop. stephanie baker with her work on mr. manafort and money flowing around the mediterranean and part of eurasian is definitive. wonderful to have you with us today. an open question on a slower newsday -- is this just about money moving around?

is all this discussion about money laundering? stephanie: the mueller investigation has really taken the lead on following the money. that is where it has taken them. is why itort, that has taken the indictment against manafort to bank fraud and money laundering and that is why we have seen this pushback from manafort's lawyer saying that special counsel robert mueller's probe has overreached and we saw saying herday andeded his authority mueller pushed back and said basically i'm following the money and looking at manafort's connections with russian backed ukrainian oligarchs and the russian oligarchs was the natural course of the investigation to follow. tom: you mentioned connections

with rudy giuliani joining the president's leadin legal team. of mr. the linkage giuliani as a former u.s. attorney with the president u.s. attorney and the present people looking at mr. cohen and the president's affairs as well? are they kindred souls or generationally separate? stephanie: giuliani thinks he can bring the mueller investigation to a close more quickly because he has a relationship with robert mueller going back to 9/11. when giuliani was mayor of new york and mueller was head of the fbi. they did work closely together. whether or not that relationship is going to bring this investigation to a close more quickly remains to be seen. i think the investigation has to go through a number of steps. mueller willk

conclude his investigation until he can get that sit-down interview with trump. trump has been much more reluctant to do that interview since the rate on -- raid on michael cohen's office. giuliani thinks he can be the middleman to negotiate a quicker deal. francine: how many investigations are there? there are multiple investigations on different things. there is the obstruction investigation -- whether or not trump obstructed justice with the firing of james comey. there the russia collusion investigation, looking at whether or not trump campaign officials colluded with russia. then you have the manafort investigation and indictment on money laundering charges. there are parallel investigations. we still have not seen anyone

charged over the hacking of the dnc. i would expect that to come out in the coming months. importantly, both of the summer is "the threat matrix." it's a fabulous book about 9/11 and the linkage of the fbi from j edgar hoover on forward. how beleaguered is the fbi right now? there is a story and all the number names. it's being thrown at the american public and our global audience as well. how much disarray is the threat matrix right now? stephanie: i think the fbi is beleaguered given that you have seen the consider th concerted k s on mueller and fbi officials over this investigation as well as the attacks on james comey we have seen, including from leading republicans. i think there is a concerted attack in many of the

rank-and-file fbi agents are feeling a bit under the gun and under attack. will that necessarily means that the investigation, the mueller investigation is going to be held up. by my the story broken colleagues in washington about how rod rosenstein told trump he was not a target of the investigation. boughtems to have rosenstein breathing room because there was speculation that trump might try to fire him. i think that has taken the heat off of the mueller investigation for the time being. that doesn't necessarily mean that trump will not be a target in the future. francine: stephanie, thank you so much. catherine stays with us. gaspar.k with vitor

really a lot to talk about with him, monetary policy, maybe less than any change of that it will have on banks. that is coming up shortly. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i'm taylor riggs. let's get the bloomberg business flash. nintendo's $30 billion rally in the last year may depend on cardboard. the japanese cap they started selling cardboard add-ons for its popular hav hybrid. it transforms switch to a miniature p&l, robot exoskeleton, and other objects. the intended wants to attract more users under the age of 16. bracket bank attempts to growth

after its worst year ever has had a speedbump. first-quarter sales hit the british company. sales were flat after cyberattack and a busted product rollout. china is blasting the u.s. government over that seven-year ban on buying crucial american components. equipmentications maker called it unfair and vowed to fight for its legal rights by any means. that is your bloomberg business flash. tom: thank you so much. i want to give you a little window into what goes on at the imf. when you are in a bar at the imf in washington, you do not talk about arsenal football. you do not talk about the boston red sox. you talk on your cell phone about nerdy fiscal policy. this is the gift of the imf.

these blue lines, which you can barely see, is every other country. that little red line up there is the united states of america. for those of you on radio, i will throw this out later on twitter. francine: if you have time to go to a bar. usually imf meetings are full on. tom: it was a quill, but it may have been at hand. here's the point and this is serious. vitorlk of this imf is gaspar's book. some years it's a big deal and friendly some years it's not. this year it is the only deal. the head of the imf fiscal affairs joins us this morning. what an honor to have both of you together. did you know it would be a guns and butter america? vitor: definitely not. we wanted to make a very strong policy point, which is given that we have a broad-base and

strong world recovery, it is good times and it is precisely in good times that one must build fiscal buffers, which basically means bring down deficits, bring down debt, prepare the public finances for worst times that will inevitably come. tom: this is such a crucial question. your theme is safe for a rainy day. if the united states can upset the global fiscal applecart because donald trump cannot say for a ready day? when: it's very clear that you focus on advanced economies and the chart that you show is for advanced economies. 2023ve in our forecast for every single advanced economy with declining public debt to gdp ratio and the united states because of the tax cuts and jobs

agreementcause of the has a deficit between 5% and 6% of gdp going ahead, which leads to the ratcheting up of public debt. tom: this is so important. economist esteemed running the affairs of the world and catherine mann with trade and monetary policy. how do you link his world and the concern over the united states debt and deficit into what central banks will do? catherine: i think a really important question there is when will the markets recognize that there is the fiscal deficit out there? right now they are not pricing and to long-term interest rates. what point do they do that? at what point is there is this huge realization it has to be financed? if it is finance of the short end, it runs and the balance

sheet of the federal reserve and you have to double whammy's on the supply side. if the fiscal deficit is financed at the long end, you have high interest rates at the longer and. francine: does this become a problem before the next five years? catherine: absolutely because the spending is out there now. even if there is a return to it. tom: this is so important that stan colander said to you and me the other day the goals to get down to a trillion dollar deficit. that's extraordinary. francine: it is extraordinary. we were speaking to someone yesterday who said it's not ideal, but this is what the u.s. policy is. they can stay like this for three or four years and that's when it becomes really pricey to fund. vitor: what we emphasize in the case of the united states is clearly the united states does have room to maneuver. it is more or less clear that

public debt to gdp ratios cannot continue going up forever. moreover, the united states faces a demographic transition with the population aging that has implications for health spending. it has applications for pension aending so we advocate medium to long-term approach for public finances in the united states that will put deficits and debts safely, downward path . francine: if you look at the tax cuts, how much does that add to gdp and is that mitigate fiscal spending? catherine: we haven't adding half a percentage point next year and adding a couple percentage points. the real question is whether or it's a supply-side effect or demand side. there are significant

differences of views. review came out with a of the implications of the two packages for potential output. they had a supply-side effect that was noticeable. that could be a benefit. tom: jason furman was on our desk yesterday and he had your affairs both open with the peterson institute. here's where jason was looking. this is hard to see. all you have got to know is the united states looks like a banana republic in this chart 117% debt go out to to gdp. for our global audience what that means for the united states. are we on the edge of japan? are we on the edge of italy? is the united states a special case? vitor: the united states is a special case. reserveed states is the

-- issues the reserve currency of the world coul. u.s. treasury are typically regarded as safe assets. we are concerned with that and ephesus in the united -- debt and deficits in the united states because we have this upswing and the increase in debt is procyclical. we do support the corporate tax reform. the imf has been calling for corporate tax reform in the united states for years. the cut in the corporate income tax rate brings the tax rate in the united states to the average of the oecd. with the mann here was oecd. francine: have there been distribution problems with how the tax cuts have been implemented? vitor: what we do find using the standard model -- we used by

itersity of model -- deyverson the models and what we found is that tax cuts and jobs act will improve the situation of every quintile of the distribution in the united states. the first quintile, the richer, gain disproportionately, but the lowest quintile also gains quite a lot. shaped pattern of gains, which we interpret as meaning it will increase polarization in the united states. francine: catherine? catherine: that's true. if we think about the supply-side versus the demand side affect, you don't get a lot of supply-side benefits coming out of that. tom: you came out of m.i.t. and you are at a classroom at brandis.

the moral imperative is that we hate debt and we should not be in debt. all the academics like you and mr. gaspar say that debt can be beneficial to society. everyone watching the show worldwide says the u.s. is out of control. are we out of control with our debt dynamics? catherine: the answer to that is that out of control is a very strong statement. tom: are we out of control or not? catherine: 6% is a huge number for an advanced industrial country at this stage. tom: what if we go beyond that? douglas holtz eakin will be on later. he is the first one i heard say 6%. what if we go to 6.5% or 7%? what are the reactions of that? catherine: once you are at 6%, the reaction functions will have set and. tom: do you agree with that, mr. gaspar? that's an incredible statement. you are not happy you are here, are you? [laughter] vitor: i have very happy to be

here and i'm very happy that you have me here. i think one has to think in the following way. the current debt in the u.s. with increasing debt and deficits cannot continue forever. clearly there is a widespread recognition that the debt path has to be brought under control. the united states has the tools and has the will to do it. at this point in time, we don't know exactly how that's going to take place. that thatcommend is is done soon and done in a way that is clear and credible. francine: what about developing nations? we spend 10 minutes talking about the u.s., which is fine, but what are developing nations doing to their tech structures? vitor: that is a great question. what we see in the fiscal monitor is that in our forecast, ies thirds of the countr

around the world what have declining public debt to gdp ratios. one third will have increasing public debt to gdp ratios. the proportion of countries with increasing public debt to gdp ratios in good times is 53%. that is clearly too much. andave too many countries two important countries in the world where public debt to gdp ratio's are going up. in the countries where we have that trend, there are low income countries and the concern that is mostly that they may not have he tax capacity, the capacity to mobilize revenues to sustain the 2030 sustainable conference calls. tom: i know that this is important that this is important and we should compare and contrast the u.s. and the united kingdom. i mentioned 10 116%.

the united kingdom looking at a much better number, 82%. francine: if you look at the number, it cost the job of a lot of politicians. when we look at the austerity drive at the u.k., depending on who comes after theresa may, they will reverse it completely? catherine: probably not reverse it completely, but an awful lot depends on what happens to the u.k. economy in the course of brexit. and what kind of damage that causes to the economy and what kind of offsetting policies might be put into place by the next government. i very much like the example of the united kingdom because if you go back to 2010, there was a clear political consensus that it was necessary to bring down deficit and debt. you may recall the deficit at that point in time in the united kingdom was double-digit because of the global financial crisis. out aited kingdom put

coherent strategy to bring down the deficit. intended and 80% cut in terms of proportion. 80% of the cuts were coming from the spending side and 20% from the revenue side. it was actually 90-10, which is the type of composition more .eneficial to debt to growth they have developed institutions like the office of budget responsibility that puts them in a particular comfortable position to tackle challenges ahead like the uncertainties associated with friends it. -- with brexit. francine: we have of your question. what is the imf forecast on greek fiscal budget policy in the short run ahead? will lead to early elections? what will be the side effect of that? vitor: the only thing i want to say on greece is at the imf has

been insisting for a while that we need a two leg strategy. we need policies that will put public financial stability in place in greece and will sustain growth. on the other hand, we do need debt relief to put public finance in greece and a sound, sustainable path. balance willf this be discussed later today by the director of the european department. tom: one final question with catherine mann. here is "the washington post" and not a single word on fiscal affairs. how do you get fiscal affairs on the front cover of newspapers in america? catherine: when interest rates go up. on the long and in particular. tom: how many races are we away -- raises are we away?

catherine: it may be a while. depends on whether the financial markets take note of the selloff number. tom: catherine mann, thanks for joining us. gaspar, thanks for being the talk of this meeting. on fiscale primer economics. saving for a rainy day at the international monetary fund. we are going to continue discussion with adam pozen of the peterson institute. and yes, we will speak with governor carney and the bank of england. from washington, please stay with us worldwide. this is bloomberg. ♪

♪ tom: this morning, quiet markets and a quiet washington. the present appears -- president

appears to have a key democratic vote for secretary of state pompeo. candidate, mayor, and u.s. attorney says mr. mueller should be "allowed to do his job." america is not saving for a rainy day. there are trillions of reasons to read cover to cover the imf's fiscal monitor. this is "bloomberg surveillance." live from washington and the meetings of international monetary fund and the world bank, francine lacqua and tom keene. you have a panel today. francine: we talk about financial inclusion. i will be speaking to clean lack laxima and auen lot of the talk will be about the relation of the u.s. and china. we talked to central bankers and finance chiefs and all they were worried about were trade wars. they were trying to figure out how trade wars impact their day-to-day jobs. does it impact monetary policy?

if you are a finance minister, how do you prepare for? tom: the comments from the minister of columbia where particular heated. francine: paraguay would benefit. tom: the real focus on the u.s. deficit in this hour and how it fall them to monetary policy and volatility in the markets. in new york with first word news is taylor riggs. barclays willo of keep its job after the investigation by regulators. they focused on the attempts to unmask and whistleblower. he has to pay a fine, but he does not like the fitness to stay in his role. barclays boards say they will seek his reelection at next month's board meetings. president trump has been told he is not the target of the investigation into a russian meddling and the probe of his longtime lawyer. deputy attorney general rod rosenstein offered the assurances to the president last week.

they say that has 10 down the president's desire to fire either rosenstein or special counsel robert mueller. for the first time since the korean peninsula was divided, there is a hot line that connects the leaders of the two countries. the phone lines used by kim jong-un and moon jae-in was tested today. the first call is expected to take place sometime before friday's historic meeting. the stalemate over brexit negotiations is about to get deeper. according to people familiar with the matter, eu officials are set to reject a possible u.k. solution to the future of the border between northern ireland and the republic of ireland. the british proposal would mean that the whole u.k. stays in parts of the single market and customs union. the eu on the wants to give that special status to northern ireland. global news 20 for hours a day on air and tick-tock on twitter powered by journalists and analysts in over 120

countries, i'm taylor riggs. this is bloomberg. tom: oil really a backstory here. 68.476 on nymex. other than that, quite markets. francine: stocks in europe declining. looking at what happened in asia and there's a little downside coming from tech stocks in the dollar extending weekly gains. and i'masuries steady also looking a lot at the pound. the pound weakening after mark carney tempered expectations for a rate hike next month. you can see that there are more agreements and brexit talks. you can see the pound. greathat a set of charts out of the imf to understand the dynamics of the global system. we really back with three circles in the middle of the volatility of february.

we come down with a vengeance and not quite back to where we were. let us call it from 10 to 50 to 16 on the vix. that little bit of stock market talk within the imf meetings. francine: what i'm looking at is a really cool chart that hillary clark did for me. this is the spread between the u.s. two-year yield and the german one. this is one of looking at. because itatters tells you and all sorts of ways exactly how the differential takes place. we talked to many central bankers yesterday and said do they need to catch up if the fed moves quicker than expected? what impact does that have on their monetary policy? tom: in this hour, we really focus on the affairs of the imf and how they link and america's debt and deficit. adam posen is with us from the peterson institute. he has been wonderful and providing perspective on monetary economics. we are going to go fiscal on it

in this hour. infirst, we need to bring kevin cirilli. let me bring up a morning must-read. this is how fast the new cycle is. a wonderful essay over at "the washington post." 11 senators are about to make a big mistake could there ar. there are no ethical questions hanging over mr. pompeo. it would breach two centuries of president in which the committee has carefully examined the credentials and qualifications of the president's nominee. i guess it's good news with the democrat coming over late last night, but why is this occurring? why are we going after a guy who is squeaky clean? kevin: two things -- it's because you have democrats now just a couple months out from the midterms. a lot of 2020 posturing going on. coupley, as i told you

weeks ago i believe, mr. pompeo is safe. support, atkamp's centrist democrat of for reelection. tom: she's got to get reelected and republican dakotas. kevin: it's going to be safe. what is more interesting is gina haspel for cia director that will replace pompeo because of the well orchestrated attack politically outside of congress because of her position on torture. that is where this is going to get super interesting. tom: i must ask you about the news last night, which is mr. giuliani will longer over and get paid by the hour for mr. trump. what is rudy giuliani going to do for the president of the united states? kevin: let's get really into the zeitgeist because for our audience, it's really interesting. a rough week for james comey's book tour. in the book, he pretty much called rudy giuliani a show boater. that's what someone argue is

an interesting word choice. in the context of president trump's decision to part in scooter libby and higher rudy giuliani t, this is a big back and forth/ . he was rumored to be potentially a nominee for ag. he keeps him in the fold of the white house one not having to go through the confirmation process. francine: i could listen to kevin all day. the news flow is actually unbelievable. [laughter] people globally come a doesn't move the needle? -- does it move the needle? adam: what moves the needle is the reality of the china-u.s. trade. what moves the needle is the possibility that pompeo's mission to north korea may bear fruit and trump's treatment of abe. what moves the needle is how much the oil price moves

backstop putin beyond his trunk connection. the big sigh of relief that the , richardd nomination claret after vice chair, is seen rightly as a moderate, sensible, qualified person. this is why you are to the degree that this kind of news matters. that is why you are not seeing those things in markets except the china-u.s. conflict. francine: it is gaining momentum the idea that the president will meet with the leader of north korea. could it come as soon as two or three months? kevin: within the next month is what i hear. on the issue north korea, to get back to japan, i think that's going to be a very interesting dynamic. pompeo, he has already met with north korean officials. that is why the pressure on centrist democrats to get on board with this because the

geopolitics of the negotiations, he is already serving as secretary of state. francine: what about the kushners? kevin: there are the investigations into the financial dealings of them particularly in new york that continues. from their perspective, they feel that this is all putting pressure on them to really not extend business while president trump is in the white house. if you think back to the clinton administration and what happened with the clinton foundation, it is the same type of intensity and quite friendly business anxiety that surrounds someone when they enter to politics. tom: dr. pozen, we need to parachute the doctor from berkeley to give us economic history. this has happened before. and the gilded age of america, that capitalism in relation of american politics.

adam: if you think about the time between the end of the reconstruction and the first world war, you have to huge inequality -- you had huge inequality. did you see the movie "linc oln?" they had people running around doing politics in a very correct way. does that matter? the votes somewhat. tom: i saw daniel day-lewis. what's important is the age you speak of ended up with the joint of the panic of 2007. are we over confident in our global financial stability right now? thereprobably not because has been a lot of cleanup and we are through our panic. 9.at was 2008-200 what you ended up was with teddy roosevelt, a progressive republican who did trust busting and cleaned up government.

you had assassination attempt on the people tried to clean up. that is an sense what we may be looking at less than financial instability. tom: dr. pozen will continue with us as we really look into the debt and deficit of the nation. kevin cirilli, thank you so much. have a wonderful day in washington as well. later on, we will put all this together with these meetings and the linkages into the advanced economies. we will do that and a special 2:00 p.m. this afternoon. a lot of the highlights we have seen, plus important and timely interviews. stay with us. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs.

up to dictate a pharmaceuticals in the next fight for shire. they are the only public's better. allergan said they might make an offer for shire, but then they said they would not. shire too turned down the $60 billion bid but said is willing to negotiate. trying to reverse its fortunes, the swedish maker of wireless networks posted first-quarter earnings better than expected. the growth margin almost doubled from a year ago. the company is facing a weak market from global equipment, but cut cost cuts and new global lines are helping. one of the managers of the world's best-known clubs is stepping down. downals wenger is stepping and has faced calls to step down in recent years.

he last won the premier league back in 2004. that is your bloomberg business flash. francine: this is huge news. there cannot be bigger news in the world of sports if you lived in the u.k. let's get more. he is a little bit of a football fan and has been covering it for us. this is a person that really brought arsenal to fame and then has been more fractious with the fans and the investors. he has been there 22 years. what does it mean for arsenal? ed: 22 years or 20 seasons. there has been a sustained campaign of pressure from fans on social media and in the stadiums vocalizing their chance -- through chants and science for him to leave. arsenal has not performed well. the last one came in 2004. you look at the competition with their rivals like chelsea and manchester united, they have won trophies on a regular basis in recent years.

arsenal has not made the big marquee signings the other clubs have had. money talks and it's difficult with that kind of pressure. it'sdifficult that unusual for the manager to stay that long. managers have been going in and out and he appears to have gone out on his own terms. francine: it's amazing how much attachment there is for millionaires and billionaires around the world. someone whong to said i want to buy arsenal one day and the first thing he would do is get rid of the football manager coul. who will replace him? ed: it's an interesting point. in the statement, arsenal's owner said the reason they invested in the club in the first place was because of wenger. andurrently manages celtic it's one of the favorites. some say eddie howe might be in

the running as well. there has been this merry-go-round of managers. would not be surprising if one of the other managers left the club and a premier season. you can see them end up at arsenal. arsenal do have a reputation for a long-term approach. you see that with the way they run their business. ,anchester united, for example with alex ferguson is the only other club in recent history to have a manager for so long. they have been preparing for this for some time and have a good idea who the candidate is. the book you favorite right now is brandon rogers at celtic. tom: thank you for the brief this morning on english football. jonathan ferro will have much more on this later. he is a student of arsenal as well. this is the interview of the day right now. if you care about the debt and deficit of your nation for those listening to america with the extraordinary chilean dollar deficits this is as good as

it gets. n synthesizes material debt like no one and with us is douglas holtz eakin. he was the first person who looked at me and said we are heading for 6% deficit to gdp. can you say that again? you were brilliant on this. you nailed it. are we going to 6%? douglas: i hope not. we certainly could get there. tom: we need the little g. we need the growth rate to glide out of those bad growing paths. do you have any confidence of the little g is there? douglas: i think it will be there in the near term, but there's not enough anywhere to get us out of long-term debt problems. to fix the underlying problems. tom: i cannot really say enough about the value of the fiscal monitor of the imf for those of you academically inclined.

this is a deficit to gdp. i call this the holtz eakin chart. adam, on the left of this chart, i will put it up to social later is the twin deficit of worry and time and place. is that what the peterson institute will write about in three years? adam: we were writing about it last year. right,ot get the number but a good chance that trump wins. if trump wins, there will be huge tax cuts ended fiscal -- and huge fiscal stimulus that will ruin the trade deficits. i did not see this particular budget busting bill, but the thing that has been surprising is the weakness of the dollar. if you remember the twin to visit story of the 1980's, everyone expected the fed to be moving up and you expected the dollar to rise. francine: why has it been weak? adam: fair question. idon't want to overdo it, but

think one reason is there is a risk premium associated with trump and mr. some policies -- at ministration policies and the out.l of blow francine: do you think there was a weak dollar policy? why should that matter? adam: you have the fed committed to a path arises. the fed is ahead of the other central banks and rising. adam knows about this more than i do, but we go through this game about what does the treasury say about the stronger dollar or weak dollar? we look at what the fed is up to. the reason why this has had less of an impact and was easier to forecast the most people think is we have the same budget deficits now that we would've had in 2020. we've not changed the picture much.

we have accelerated the arrival of all these numbers. i took last year's cbo forecast and this year's cbo forecast and subtracted two years from the whole numbers and the lines practically much. adam: it was coming, but the accelerating means we have accumulated more debt for no reason. francine: the u.s. can finance that. this is because you are wasting the money. you are wasting the money in two senses. you're wasting the money versus other things you could spend it on. you had my colleague jason furman on yesterday. the second thing -- and i think doug and i probably agree and he can correct me -- if you have a recession, the g cannot stay at this level forever. and youave a recession have blown out you don't have anything for when you need it . douglas: my bigger concern is that we have a lot of debt and

we can finance it. we make that argument and people will continue making that argument and one day it will not be true. i don't want to find out what day that is. tom: i want you to explain the constraints that chairman powell has because of the debt and deficit perceived by so many. 's chairman powell's degrees of constrainedchoices because of the trillion dollar deficit? choices maybe not its but effectiveness. or any central bank is a taker of fiscal policy. its goal is not to move fiscal policy. when banks do that, it causes problems. the issue will be if you are mentioning another financial path. if there's a recession, and the fed does not have rates up very high, they don't have much room to cut. if the fiscal policy does not have room to stimulate, they have to be more aggressive. tom: i was flabbergasted at the cbo report buried by all the

other news of the trump administration. ischart three of the report an american no one is ready for. non-thousandf sub -- 9000 farm payroll. is that the nastiness of cbo? is that a real prediction of what's coming down the pipe? 30,000 to 60,000 job growth does not get it done for the politicians. douglas: at some point we are at full employment. we think we are near if you at that point -- we are near it. given the slowing growth of the population and demography, that is the right number. we will end up there. that will not be a bad thing in the sense that we will have fully people employed -- people fully employed. it will be a good thing if we have wages rising and better productivity growth. this is all about productivity.

that is the issue in the end. adam: that's a deathly right. this is what japan and germany faces. their rate of labor force growth is not that high. the actual per capita income is going up because they still have productivity growth and investment. one last thing -- this is where the fed going back to chair powell and the fed -- they have room to explore. i'm not completely convinced we are at full implement. -- employment. some of the arguments were made previously about why the fed could afford to explore how low they could go. i think it is still a validity. francine: what is the chance of the u.s. being intercession the next 36 months? adam: i think the chance of the u.s. being intercession are quite low is because of fiscal stimulus and other actual positive things. douglas: i would agree.

you pointed to it at the top. , this is justkly incredibly important conversation. if you are sitting with one of reviewers having breakfast, should they be concerned about this new world of a trillion dollar deficit? adam: they should've been concerned before. douglas: what is beneficial about this is the large swath of the mac in public is unaware there's a fiscal problem. there's been a fiscal problem for a long time. last year before the tax cuts, we were on track for 1 $10 trillion in deficit. tom: i had a very emotional conversation with alan greenspan. his good friend just died. him and the rest have been crying wolf for years. are we still crying wolf on the debt and deficit? adam: we will find out. i hope not. douglas: the cry is certainly real. the problem is here and very large. it will have significant

consequences. will we see actual action by the u.s. congress and president? to date there is no evidence of that. tom: congratulations on getting out front on the vector of our debt and deficit to gdp. this is a wonderful conversation as well. we will continue with dr. posen. we will link it to the markets and we will do that with isabel of blackrock. stay with us. from washington, francine lacqua and tom keene. this is bloomberg. ♪

francine: good morning, everyone. we have live pictures from washington. there is good weather, that's a good sign.

good morning to you from washington. this is the second day of the world bank imf meetings. we are hearing from the may.sman for theresa the u.k. is confident of reaching a solution on the irish border. this is one of the sticking points when it comes to negotiations. we don't know what they are thinking yet. tom: it is really giuliani's new york and the former mayor will give us assistance to his good friend. he will provide legal counsel to president trump. as mentioned earlier, he will not go a through a confirmation process. washington,ack to we are thrilled to come to you from our washington the studios and radio. byis a washington transfixed fiscal policy and debates as well.

this is over the trump administration. mr. pompeo is front and center this morning. francine: we will get to u.s. politics, let's get to the first word news. taylor: president trump no fire robertxious to mueller. people familiar with the matter tell bloomberg rosenstein told the president he is not the target of mueller's investigation or the probe into his longtime lawyer. the president added really giuliani to his legal team. he's a former federal prosecutor. steve mnuchin says sanctions on russian oligarchs have impact. since the sanctions were imposed, the ruble has fallen 8% and metals markets have been rocked. he would not rule out further sanctions. the treasury department may use an emergency law to curb chinese

investments. authorities have until next month to report their options. the president could declare a national emergency which will them to block transactions and seize assets. the top democrat in the senate is on board with decriminalizing marijuana at the federal level. chuck schumer said he has seen too many people's lives ruined it because they had small amounts of marijuana. endorsed letting states decide how to regulate the drug. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. tom: thank you so much. we look at the earnings of industrial america, two different stories. general electric in a huge restructuring, this is closely watched, especially the ending of ge capital.

the thisgnant frankly stuff against honeywell doing better than good. i made a big note 90 days ago about the organic revenue growth of a successful honeywell. they move forward with guidance and the forecast, which is a positive tone for honeywell. this is a bellwether for american industry. francine: they say it's great to look at the numbers, but the concerns regarding trade wars and the economy, they are focused on the forecast and how they see the future. honeywell is saying they will boost their forecast. tom: part of that may be make america great again. president and his dues yes of has delivered 3.1% gdp growth over the last three quarters. someone who has been supportive of that is the second deckers in arkansas.

adam is with us from the peterson institute. it's wonderful to have you here. you live then trump country. do they waver? do they waver over all of these scandals and discourse? >> i think the main issue talked about revolves around trade more than the chattering classes in washington talking about scandals. they are concerned about how the trade conflict between china and united states affects farm prices. arkansas has farming as the biggest portion of gdp. -- their idea of agriculture is the hamptons in the summer. what do you tell the wall street

guys and use of the bar with your sparkling soda, you've got to tell those guys what it's like out there in the real world. the steel and aluminum tariffs across the board are something i did not support. i feel like targeted tariffs are the only way to go. the real one action is a much more sophisticated approach which could reduce a bilateral discussion that is overdue in many categories. retaliation is frequently against american products. you see the eu list, the china list. where people are putting their soybeans in the ground, they are concerned. want an administration that reduces nontariff barriers. they are concerned when they think it's going to be a cost of negative impact. francine: should the u.s. not deal with china in terms of intellectual property?

support ofave the europe. >> the eu and the united states have intellectual property theft and licensing is a big part of the decision. we will have that as an allied front. francine: what would you target? you said you would do more targeted tariffs or trade tensions, what would you do? >> the three or one action where we look at the worst behavior by china is the way to go. i would like to see us have a like the discussion united states and japan had it in the late 80's. tom: that tweet two or three days ago from the president the distinction of bilateral versus multilateral is a two-part question. is multilateral dead? is president trump's bilateral my way or the highway?

>> it's a way to use excessive , butage and would be ok it's not going to work. somebody's really big issues like intellectual property theft and tech transfer, you need a multilateral solution. multilateralint is in the sense of we are going to have one big round to get everybody on board, for lateral japanr it's the tpp or and australia coming together on tech. we heard last night and all republicans in washington singing coombe by. signed in that was lima, they take out the intellectual property aspects of it. adam: they actually don't. that's not true. tom: these discussions here, these back-and-forth's coming down to the five -- fine print

where you got to get reelected and that comes back to people in the second district in arkansas, they don't trust washington. how do guys like you get that linkage back, that trust back where a domestic america trusts are international experience? >> there's not a lot of trust between localities and washington. i think the way people see it is they want to see things get done. like hills that are progrowth and produce economic growth you talk about. what happened? i saw you out of the garden at that signing and a lot of people were more enthused. how can you support all of these different theories of tax policy, when you are going to

enjoy chronic trillion dollar deficits? you're wrong about that. i think the statistics show it. we've got two thirds of the budget growing at twice the economic growth rate. that's what needs to be reformed. adam: the part of the budget is growing that fast's health care and asked going to kick in for 30 years. is $200 billion a year. we will talk about another time, like three minutes from now. thank you so much for joining us. we will continue with adam pozen. please stay with us in washington. francine lacqua and tom keene. this is really cool.

he has the gloom and terminal up in his office. they can see all of these charts. this is bloomberg. ♪

the business check flash. nintendo had a rally in the last year and may depend on a cardboard. they started selling cardboard add-ons for the hybrid console. turn things into cantos or other objects. they want to attract more users under the age of 16. they were returned to growth after a speed bump.

this hurt first quarter sales of the british consumer goods company. revenues were flat after they were hit by a cyberattack during a product rollout. that is your bloomberg business flash. francine: thank you so much. traders are split on a 3% 10 year as inflation bets are rising. is is a blackrock investments and still with us, adam pozen of the peterson institute for international economics. let me kick off with you. let's start on equities. this is what a lot of people looking up, they are worried a trade war will impact future earnings. isabel: i don't know. we remain confident on equities because earnings will be

something we haven't seen since the rebound post crisis. obviously, trade wars are a concern. so far, we are not in one. i think most people are still hoping that cooler heads will prevail, even if we see skirmishes. francine: what will give the market the impetus one way or the other? are you expecting more volatility? will that come from voluntary policy -- monetary policy? isabel: when you think about the return of a portfolio, we were around 5 last year on a one-year rolling basis. the long-term average is just below 1. now we are back toward 2, which is still pretty good. i would say we have returned to normal after last year. we heard mark carney

an interview yesterday. he tried to re-shift the market expectations on an interest rate hike. is there a concern that markets are mispriced? others around the world? isabel: our analysis suggests that inflation is coming back gradually in the u.s. and we will have a modest overshooting the target. that's of the fed has been predicting. namely, you continue gradual normalization, that seems appropriate. inflation seems subdued. the central banks, it's a little trickier. we expect we had the and were slowing down. is it going to be made? is it going to be the next one? all rates are going up. see seasonalo

factors and data turnout. the central bank needs to take that into account. tom: you mentioned the william sharpe ratio. it doesn't of data in it. everybody is cramming for the exam. this idea within the market means correlations, linkages of companies, indexes, nations. beta, in a land of normal where measurements actually measure was going on it? isabel: it's a quasi-philosophical question you're asking. tom: we have interest rates compressed. we don't have sailboat, can we use these traditional matters? isabel: i would use this as the only metric to base decisions on.

it's a useful benchmark of people are talking about volatility going up. we are very much going back to normal. what we saw last year was not normal. just rates are normalizing. other things are normalizing as well. that is true of volatility. word i hate the normalization with banks because of the economy. world where all asset classes were moving up and down almost simultaneously except for a few, that's going away. we are starting to see differences in the u.k. versus the u.s. versus europe. that is the real normalization the matters. within that is the normalization of central bank balance sheets. that is the arch matter of isabel's work.

do you have the confidence of chairman bernanke that we can exit from those balance sheets? that we can tighten in a controlled manner and provide stability? adam: i don't know about stability. i wish them well. i am more confident than bernanke. there is no problem with tightening the balance sheets. they matter what when there's nothing else going on. tom: do you agree with that? life is going to be great? isabel: they would not be normalizing if the economic conditions didn't allow it. they are doing it because they expect it will not have an impact. toncine: they were trying normalize for such a long time. isabel: they were not. francine: we were talking about this 18 months ago. we are not having higher

debt issuance, which is something that was not part of the balance sheet normalization strategy. that can lead to a faster rising interest rates than would've been the case. as long as the ecb and the bank of japan by large amounts of flows outat's pushing into u.s. treasuries. is again,issue interest rates can move. we have had times were interest rates of got up faster and the world has ended. we hope we are in a world now where interest rate movements can happen and it's like normal. some people lose money, some people gain money, but it's not destructive to the real economy. tom: adam pozen is with us from the peterson institute. isabel is with blackrock as well. conversation with the german from france.

he will join us for an important conversation from these meetings of the international monetary fund. this is bloomberg. ♪

tom: good morning. we want to get to a single best chart right now. isabel is with us from blacklock and out of pozen of the peterson institute. let's drag out this chart. our depth to nominal gdp with a red circle and a green circle in 1986. this is the arch chart. weird using templates and discourse that don't fit now because we are using discourse of 19 86. this has been able to be financed for a long time. we are getting something for the money. now we are spending a lot of money about getting very much for it. we are not getting infrastructure or investment. we are getting at the levels of , we are up in italian

levels and belgian levels. does mean that if ventures rates go up, it's more meaningful. tom: particularly to your academic work on germany, are we -- is the price of this in america, those worries of debt and, in europe. adam: it's a really good question. there is a worry that we get locked into two politically economic cycles. you get in a cycle were they keep cutting things you don't want to cut because the excuses given we can't raise taxes. that ends up eating at your productivity and eating at your wage growth. the second bad cycle is you can view some of our problems in the budget as the underlying productivity slowdown.

you've talked about this before. we have had bad news on trend growth. the tax bill isn't going to help that at all. that's what i think reinforces these dynamics. francine: i want to squeeze in the inverted yield curve. it has suggested a recession. let's bring the chart up. as a belt: we have not seen conversion. people get excited about a flattening. this is back at the highest level since 2014. let's not get carried away. it's not unusual. what i am looking up is the 10 year real yield up 30 basis points. the market growth has gone up. that is good news. tom: thank you so much for this conversation. thank you so much.

the high point of this international monetary fund myting, maybe it was conversation with dr. greenspan, or maybe it was my bow tie. it's in italian bow tie. francine: i bought this for you. tom: i wasn't there. francine: it was handmade. mr. berlusconi picked this out for me? this is bloomberg. ♪

alix: president trump was lower oil prices, but commodities say

no way. opec and its allies keep trimming oil output in a tightening market. consequences, the u.s. is to punish china for violations of intellectual property rights. a good book chinese investment in its crosshairs. ge stands by its profit forecast as part of the latest earnings report. shares are up. a very warm welcome to you. we made it. david westin is off today. he's taking advantage of this beautiful day in new york. the vacation thing is really great. i wish him well for the one day off. and exiting session is developing this week. futures in the u.s. are flat. dow jones is flat as well. the dollar stronger across the board, 120 34 euro-dollar.