on thel be savings background. it's not the investment bank. footprinte does, the of the investment bank and what you can do to alleviate investor concern. the parallels with barclays are uncanny. he was a retail person. francine: the 10 year yield is hovering just below 3%. a new chief executive is set to he had to leave after two years. be considering back at of cash equities in the u.s.. think he'snt do you the right person for the job? and support for pompeo. sonja: he will not get the time divided senate committee he should get. that's from a market point of votes for the cia chief to be view. the next secretary of state. does this mean for u.s. foreign whether this is fair or correct, policy? ♪ that's not what it's about. they event three years already. his time will be shortened by three years that he probably would have had it. good morning, everyone and welcome to bloomberg. i'm francine lacqua in london. it's very interesting.

.hese are your markets the first communication will be crucial in laying out the plan. we start with the u.s. 10 year yield. i'm not sure if he is there yet or not. ofre getting a little bit news out of germany but this is where the u.s. 10 year yield is. whether he is saying this is the 2.96. plan and wait another six weeks. yesterday we were at 2.98. that 3% level is psychological importance but a lot of people say what make as much difference. that really is the key point of the plan and that will determine how much face -- faith investors put in them. francine: thank you very much. the business confidence coming hour, ap in the next in at a hundred 2.1. that's slightly below estimates. conversation with alastair campbell. we will be talking about that a little bit later. he was the communications director for tony blair. bloomberg, we will this is bloomberg. ♪ atk with the global head sids dell securities. get your questions through tv . later on we talk brexit. we also have a conversation with the chief executive of spot

markets. straight to the bloomberg first world news. here is ed ludlow. least 10 people killed and 15 injured when a than slanted to pedestrians on the north end of toronto. the suspect has been arrested after dramatic standoff with the police officer. they say it's too early to speculate on a motive. country's worst masculine -- mass killing in almost three decades. french president emmanuel macron is in washington. he will attempt to keep the u.s. in the iran nuclear deal. it's the first state visit of the trump presidency. president macron says his agenda says issues -- says his agenda includes issues that go beyond in u.s. and france are it washington, senior trade officials from the u.s., canada, and mexico meet again today and

intensified push to make cash -- to reach a nafta agreement. the three sides have entered a concentrated phase of talks. over the weekend, mexico scores separate commercial victory. the head of china's top investment firm says he has redirected the country's financial firepower to europe and japan amid trade tensions with the u.s. area he made the comments in an exclusive interview with bloomberg. we will be more proactive in looking for the deals in europe. we are doing a lot of japan. that's the last 10 or 12 years. capital can go wherever it is welcome. >> back to washington, divided

senate or relations committee has voted in favor of mike pompeo to be the next secretary of state. the committee backed his nomination after a kentucky earlieran reversed his opposition under pressure of members of his own party. it pays -- it paves the way for him to gain full approval from the senate later this week. the u.k.'s upper house has voted against prime minister theresa may on a key piece of brexit administration for the third time this week. have ensured the bulk of economic rights are written to into law after brexit. former u.s. president george h w bush has been hospitalized after attending the funeral of his life. >> are not interested in telling was admitted to people how to think. i'm interested in making people houston messitte this hospital trip over things.

on sunday morning after infection spread in his blood. george h w and barbara bush were brilliant ideas. married for 73 years, the longest presidential marriage in u.s. history. news 24 hours a day and at tick tock on twitter. powered by more than 2600 journalists and analysts. this is bloomberg. tom: good morning, everyone. 3% remains the focus right now, let's get a pulse of for investors as the yields on the u.s. tends to flirt with the threshold. germany. this is with chancellor merkel it's been pushed off in part by higher commodity prices. visiting later in the week. joined by a different here is how market dispense have been doing the moves. >> we look at the decompose nature of the tenure move on that -- move over the past germany 648 months ago. couple of weeks, i would chalk i look at the zeitgeist on this. is rolling over in business that up to be a little bit of inflation risk premium coming confidence, or is it? back into the yield curve. >> i think the 3% threshold is cooling inhave is a enough to get people's attention but i don't think is necessarily business confidence. a bad sign. i wouldn't say it's the end of >> we've seen nominal growth the upswing it.

upwards of 5% and the yield climate index has seems mispriced. declined for a couple of months now. change a 35 year trend it seems like the economy is cooling down. tom: we talk about in bonds. we think it is just begun. >> you may have a market looking manufacturing, part of the analysis is trade. of the fed and say how much are they willing to let patient run the present is upset about a german surplus against the above target. to pushfed is not going american deficit. what is the buoyancy of german back, maybe we need a little bit of a steeper term structure. trade? francine: how should investors be positioning? >> german trade is very much supported by the low value of let's bring in our guest for the the euro. hour. is the global head of asset it's part of the eurozone. securities. that makes german exports much more competitive if they would be if germany had its own currency. on the other hand, trump is he's responsible for the fixed income markets. worried about the trade deficit with germany. his own policy of the tax cuts paul, great to speak to you. will increase the trade deficit. 3%, do we care if it's psychological or do you see a the trade deficit is homemade. little bit of investor francine: good morning from anxiousness? paul: it is an important number. london.

do you think the growth momentum has peaked? it's a psychologically important it looks like it has. number since we seen that number. i would say currently we are not many market commentators have called for that 2.8523.1 range for some time. yet in a downturn. there is a cooling now. don't think the actual whether the economy may come back, i don't know. investors who talk to are really shocked or surprised by this. it shows continued confidence in it looks like it has peaked. the global and particularly the francine: we look at factory --ers, outputs seen start u.s. growth momentum story. i think for rate investors in particular, with positive about seeing sharp drops. that is it continues to give the fed room to return to a normal does brexit make things worse? rate environment and it quick it doesn't make things better. continues to foster expectation that we will see hikes as are a lot of german companies are running into competitive constraints. they find it more difficult to currently expected. these get used to hire new qualified staff. from is bad news coming in trading back into a market that is not supported ila rates. or slightly marginal higher rates. britain and other countries of but does it mean for how you the eurozone. view things? paul: i think we had that globally, this upturn we saw in

stronger than inflected -- the last year is cooling down as well. inflation number in january and tom: we meet with you every it think that triggered what many people have called the return to volatility in the market. month about the confidence of that momentum continued with a the nation. tariff discussion, with the we never talk about the arts debate, which is migration and fiscal stimulus discussion. refugees as a whole. i think we now have several abouto the executives say months of recalibrating. i think clients are ready. the politics and the emotion of we see people taking advantage this contentious issue? of the trading activity -- trading opportunities this volatility presents. >> i think this debate is cool one of the key positivity's is down a little bit. that there are two sided views. there's less certainty and predictability on what happening over the course of the year. that leads to opportunities. on the other hand, the big inflow has stopped. there are positive examples of as long as those opportunities are underpinned by strong refugees getting into liquidity, and customers can get in and out where we play leading apprenticeships and finding jobs roach -- a leading role. in the labor market. it's a very strong story. at the same time, the refugee francine: let me bring in my crisis came in the middle of a chart. boom. the spending on the refugees you have revealed what happens seems affordable.

after it touches 3% or do not really care? paul: we -- i would say there is no panic about the refugees. this is an issue, but it seems care because the under control. tom: within your study, what is velocity in which the yield continues to rise may indicate a to geographic dispersion say higher-than-expected inflation expectation. expectse, right now we consumers in germany? is it highly polarized? to percent of the end of the year. the majority of the market expects three hikes in 2018. >> not really. we surely care because of the story changes for better or for germany is a very decentralized country. worse, that will drive more we have a couple of strong economic centers. trading activity and there will be a change in the market environment. this is different than france francine: how would impact of paris forything is in the parts the market? if you look at the spread between the s&p 500 earnings the u.k. with everything in london. we have had convergence among yield and the 10 year treasury, regions in the last 15 years. it's the narrowest level in eight years. had in germany is how much is it have an impact on other parts of the market? that's interesting as well convergence. .rancine: let me bring in sonja: because we saw a lot of volatility in equity markets on the last several months as a result of some of things i if you look at german equities.

mentioned, we didn't see anywhere near as much volatility in the bond market. term, look at this down it certainly seems to be tracking to a more steady and what does it mean for german equities? gradual change of pace. sonja: it's very strongly linked huge swings and to the sensitivity of change in the economic data. volatility. it's about customers being able it's one market that has very high sensitivity to once going to get in and out of liquidity. francine: you are confident on in the second derivative. i would agree about the u.s. economy so it's base we assigned the was economy is strong. we have seen the peak in growth are you ever worried about them overheating? paul: i think we talked to and it depends where leveling that will stop and whether investors, that doesn't seem to be anyone's base case right now. something more sinister is going of people think on, which is assuming moderation for the time being. francine: we speak to peter navarro on a regular basis. the fed should go faster. he was the one behind the strong if he is like we are kind of in the goldilocks zone where inflation is moving predictably higher in meeting expectations and- anti-chinese policy and we'll get to 2% and therefore the fed can stay on has advocated being tough on germany because of a surplus. that steady and stable path. do you see the u.s. going after

that's most investors race case germany? clemons: if the u.s. at this moment. francine: do you think the fed administration studies the issue, it will note a trade war has to hike more rates than they with germany will have a massive have priced in the market? negative impact on the u.s. do you worry about communication because production chains are from the fed? paul: inflation is one of the highly integrated, and a lot of number one areas of focus. impulse are intermediate goods for u.s. firms, so the u.s. is when i was last on your show we talked about signs inflation. all ofllips curve broken shooting itself in the foot and i don't think peter navarro gets those things. we've moved beyond that and i this right and is misguided. francine: thank you. think there is consensus that inflation is slowly coming back. i don't have a strong view on whether his overheating. we just need to continue to watch the data. let's get to the bloomberg first word news. taylor: the nuclear deal with iran and trade will be the talk heard the things we have of the agenda when president trump band the france -- and is that jay powell is a strong indicator. he likes to communicate. macron meet today. they had dinner at mount vernon. today, macron will try to we think there will be a good flow of information out of the fed coming forward. we are waiting on convince trump to keep the u.s.

and the iran agreement" discuss data as it relates to inflation. francine: thank you so much. unilateral trade. the white house seems to be paul hamill stays with us. backing off of its chance that if you are bloomberg customer you can watch the show using tv . -- officials are cautioning you can follow all of our charts and functions and influence the conversation by clicking ask the republican lawmakers and other guest a question and get your conservatives to temper the descent of him. of szans for paul hamill he was under fire for ethical lapses, involving renting a room dell securities. the two coming up. for the wife of a lobbyist. a german bank is said to be in tennessee, the suspect in the considering brought cuts to its murder of four people at a waffle house restaurant is not u.s. cash equities. we look at that -- we look at talking. police arrested the suspect one what that means next. mile away from the shooting site, and he has showed signs of mental instability and has had this is bloomberg. extensive run-ins with the law. former president george h.w. bush is being treated for a blood infection. mr. bush was hospitalized in houston after attending the funeral of his wife. he is 93 and has a form of parkinson's disease. global news 24 hours a day on air, and to talk on twitter,

powered by 2700 analysts and journalists in more than 120 countries. this is bloomberg. francine: thank you. over the past few years, value extraction global business has been demonstrated by the buybacks, but what impact does it have on the rest of the economy? , a professorcato at the university of college london, says in modern capitalism, value extraction is rewarded more highly than value creation. she joins us now, thank you for coming on. if you look at what you advocate, so you want to rethink capitalism and what you say is we are doing wrong because you are not creating value but taking it away, do you think these executives are listening or changing? mariana: the key point of the book is these critiques, which

are not just my, which is about short-termism is being awarded over long-termism and we have been financing other parts of the sector, as well as the real economy, and those critiques have not actually led to change, partly because it is not enough to bash value practices but we need to go back to think where it comes from. unless the critiques are nested within a new debate about value, we don't get anywhere. in economics as a profession, value has gone from economics to business schools, so we talk about shareholder value and value change but the big debate before the 1970's was about different theories of value. today, there is one being taught called econ 101. when you don't have a contested terrain around value, it is easy ♪ francine: economics, finance, to present yourself as a welcome value creator, whether you are a

pharmaceutical engaging with politics, this is bloomberg. value-based pricing, or a silicon valley company, a creator, who once less tax and talk banking. deutsche bank is mulling a broad cuts to its cash equities relation. that is the problem. business in the u.s.. francine: given where we are in the decision could come this capitalism, should it come from week and may be concluded as space to regulate and force the part of a wider restructuring of debate? is it executives changing how the investment bank. deutsche bank report earnings on thursday. they operate? let's get to our german banks mariana: both. reporter. the premise is values created first of all, talk to me. collectively. a new executive is in charge. as soon as you admit that, the does he need to move quickly to words you used, regulation, show investors he's the right becomes less relevant. guy for the job? exactly. he wants his stamp on the bank you are not intervening in the market but code creating adco shaping the market attain public, private, and third and that's likely to happen this week they announce quarterly sector -- francine: you see an appetite for a chief executive to change earnings. but remember, this project has how they operate? mariana:.it depends which one been going on for a while. it was launched under the look at telecom previous ceo, so he's basically, it depends on which one. christian seven, the new ceo, he look at telecom, they are reinvesting back into

production. cisco, one of the most d can now leverage the results of that review. financial iced company, so there he is likely to announce this week ahead of the annual general meeting next month. are choices to be made and i cuts, is if we do see have found in my experience of speaking to businesses, that those who want to compete it going to be in the u.s. part produce higher-quality goods and of the business? be in u.s. cash services and like this message. they know what they need from equities? focus one cuts will policymakers. they do not just a bus regulation and tax. they made a serious partner. this is not about the state of the u.s. business according to our information but we do expect more to come. business. tom: i want to congratulate you we don't exactly know where. .or jumpstarting the debate setting -- sebbing has how much do we need to go back to classical economics? i am assuming you did not write the book in the british library reading rum, but what kind of said he wants to pull back from units that are unprofitable. marks to need to go back to to accentuate or improve our he wants to catch up with rivals economics? and that's not so much in the u.s. for the domestic rivals are mariana: it is funny you say so much stronger area they have that because of the close to the lost so much ground. british library and that

it would be extremely costly and actually did write it there. francine: tom knows everything. perhaps impossible to catch up with them. it's more likely they will do mariana: i have quarter kids at that in europe. home, i cannot write book -- i have four kids at home. i cannot right there. i do what you said, go back to cash equity is a particularly low margin area. classical economic theory. business has structurally moved away from banks and that's why by classical, adam smith, david ricardo, and karl marx. what distinguishes them from cash equity will be one focus. it will not be the only focus. modern day is how they thought and the u.s. may not be the only about value was through jogger feet. -- the only geography. emphasizing the objective orncine: today to accelerate conditions of production. you first had the theory of value were you look at division of labor, technological change, do they actually need to refocus? how it was affecting it -- by the way, how we do today with right now what the new robots -- and they use that to come up with a theory of price. ceo is saying is he will stick current modern economics, taught with as much as he can with the all over the world, does the old strategy. opposite. he will focus on execution. it has a. that's the case for the retail price.as long as you have a bank where the merger of -- it has a. price and as long -- it becomes deutsche bank's retail unit and a theory of price.

postbank, a subsidiary, is going tom: a friend writes about a to plan. labeling. karl marx and person to shut. there's not going to be much of a strategic realignment there. do you drivemarx the management unit was recently ipo'd. forward for a ceo today? we do expect some sister aged they will go, she is out of changes their -- some strategic print mind. what part of classical marx changes their. can you pull forward to 2025? mariana: when of the interesting things about marx's he was he has said that execution is the focus. francine: thanks so much. different from adam smith. they had the labor of value but smith had a production boundary where he called productive all what does this possible pullback from deutsche bank mean for banks and trading activity in the people who work inside europe. paul hamill is still with us. factories and different types of industrial labor as part of the labor theory of value and he took outside the protection paul, do you see opportunity in boundary -- production boundary europe and why? your -- see very big the finance and clergy. of peopleold list very big opportunity in europe and globally.

we continue to hire the best talent. being a productive. you have seen us in q1 perform strongly and very proud to be people being a productive. marx refine that. he said it isn't about the part of the citadel team under category of work. he said what finance is actually my colleague, joe mccain. doing. it is not a normative question, largest maker in u.s. he did not use productive or equities. unproductive to say you are good or bad but where he thought profits were coming from. we hired kelly brown it from goldman sachs. issue is if you take that today, with the could mean europe inased and is instead of ourselves bashing particular, there are big hedge funds, derivatives, and opportunities. one is in cash treasuries. being part of the problem and provide fair, value extraction, we could ask, to do we reform finance competitive, transparent liquidity and that something our model in particular stands out produce capital development of the economy, innovation, in these conditions. long-termism? you were talking about germany, and what germany has is a public whichalled the ksw, we are going to expand our treasury operating -- treasury offerings here in europe and provides long-term finance to asia. german industry. to producing on treasuries, is a

high-quality goods it has been exporting. because people are retrenching? it also has other institutes and or because you see a space? a mission, a green transformation of the country, which has allowed the steel there was also the cme. does that influence where you want to expand? industry to transform itself, unlike in the u.s., where steel me give you a couple run cooler going to get handouts. how do you crochet of market of answers for the question. group a different understanding youdo you reshape -- how do the first is, there is opportunity, because our model is very different. it's innovative. co-shaped the market? resume? --oes this resume? in other markets that might be harder to see but in more volatile told -- more volatile markets its very valuable. does this resonate? sonja: it is a slow transition. we have to come through on where we think the biggest issues are. our volumes were 10% higher. short-termism has several bases that's a good way of showing our to it, so we had talked about model stands out. boardroom compensation to start. we have a great product, we have very strong u.s. domestic franchise, and we hire the best is it of mind tom long-term talent and expand logically. goals? we had talked about -- is it in line with long-term goals? we think it's about appetite for our model.

francine: this is thoughts? so begin, can we blame them if -- this is swaps? we cannot defend why they had been doing it? started expanding it has a magnitude that we can now claim we are failing to invest in economic capacity. significantly our presence in the u.s. for custom swaps. i would probably broaden the is core to our swap debate and this is something that has gained traction, the idea around benefits of capital business is central clearing of our swaps. values. we are about six years behind in europe with clearing but at the governance,cial, end of this year it opens up a questions we should engage huge pipeline of potential clients. corporate script. francine: paul hamill stays with not that there is a clear answer yet, but we have a slow transition into the idea of what us. is the proposition that the spelling out good news in tech. show the results asset management industry? of capital markets to address the concepts. tom: just as a final question, company went for a shopping spree. a closer look at earnings up ahead. ♪ let's drag karl marx into the next board meeting of a fortune tennant company, maybe jpmorgan -- fortune 10 company.

shareholders like incentives. to the police will get the executives to go to a broader or rational labor or employee incentive? where are those police? mariana: first, i think we need to change what we are talking about. i mentioned with the issue of robots and we are talking about the potentially taking people's jobs. the problem is when you have a lack of reinvestment of profits that can to production, that becomes a problem for jobs and skills. 1821 in hiso in textbook on political economy, chapter one on machinery, mechanization causes labor displacement. what happened for 200 years is it did not matter because as long as profits from machine a were being reinvested in another part of the economy, that

created jobs elsewhere and they get nurtured. an investment crisis with record level profits not being reinvested, $2 trillion in the u.s., and record level finance civilization getting worse. so apple did not engage in sure buybacks under steve jobs and under tim cook, it does. there are choices to be made by governments, with silly policies and mission oriented policies, and within the corporate governance structure. what i tried to tell policymakers is there no point in talking about innovation and less they combine it with thinking about -- unless they combine it with thinking about corporate governance. rethinking the table to challenges ahead around health, climate -- that has to be the conversation. tom: summer reading list.

read david ricardo. read everything. where else are you going to get classical economics dragged into 2018? mariana mazzucato, thank you. sonja land, thank you for a smart conversation on equities with fidelity. bloomberg worldwide, coast-to-coast, across america. bloomberg daybreak: asia bloomberg radio, -- bloomberg daybreak, bloomberg radio, where is my ricardo? ♪

♪ good morning, everyone. this is bloomberg. i'm francine lacqua in the tech sector. google's advertising business is booming. it topped consensus and rise sees at the fastest pace in years. now is paul hamill and are tech columnist. this --as spent at money at this kind of pace before. a couple years ago they were spending at a similar level and they brought in a cfo from

jpmorgan and she has really reigned in costs on the moonshot projects. they were hemorrhaging money on things like satellites and ofnes and all sorts businesses where wasn't a neatly clear how they would monetize that stuff. spending has increased but it's on core parts of the business. infrastructure, but really supports other core elements of the advertising business. francine: do we see it evolution? at what point in the evolution is it? alex: it seems to be an admission that they recognize the tests they are facing. regulators are clearly cracking down on the likes of facebook and google has almost as much data as facebook does. if they are where they could be next, and two main -- and to

ensure they maintain growth, they have to invest. francine: with a trade treasuries and swaps? what it is ♪ type of companies become? tox: they get as close tom: bloomberg surveillance. francine lacqua and lending and tom keene in new york. regulators as possible without being regulators. mazzucato with us and on the likelihood of them becoming a bank seems unlikely. a book that is important. releasingequire people are emailing me they are buying your book off of amazon right now because they want to geo back and get bored by financials and possibly secretive data they do not want to reveal. that's certainly the case with apple, facebook, and amazon. david ricardo. there's a lot they can do up to there is a grave review on your that point such as android pay. ravera -- there is they want to learn about consumer behavior without becoming a bank. we're talking last review on your book treatment history does president trump need to read? perhaps he should be the other unlockingon-air about book, the entrepreneurial state. i don't think people appreciate how unique he is. your front door with your mobile phone and let someone from he is the first to go after the object royal organizations in amazon deliver your package, the u.s., the drivers of something i would never do and innovation in silicon valley. you said you would. once next? ronald reagan increased the

-- what is next? budgets of the innovative states that amazone reason and decreased the welfare states, problematic. trump is the first to go after has alexa is to own that interaction with the consumer. organizations, like the sister organization of darfa and the andle wants a similar thing department of energy going after wants to own the interaction with you, the consumer, so it andsee how you are behaving and notn resolution, then push adds an additional services. that's something they can do only are budgets being attacked as irrelevant. francine: let me bring game -- i with nest come with pixel, and with google.com. would you open your am going to jump in to bring author, professor and front door with the phone? paul: mi millennial? francine: we'll leave it at known for the most watched ted and we put you in that. get straight to the together and i know you know each other and read each other's bloomberg first word news. books, which i love. canada, at least 10 people wealso goes back to what have been killed and 15 injured want our children in the future when a van slammed into pedestrians in the north end of toronto. generation to be. ken robinson, what do you get been arresteds asked the most in the streets? after a dramatic standoff with a police officer. is it on the way that the school

to'ssay it's too early back to late on a motive. educates people and gives a society which may not be as it's one of the country's worst ever mass killings. creative and helpful as we want it to be? ken: actually, i do get stopped emmanuel macron is in washington for a three-day trip that will include an attempt to keep the a lot on the street, mainly from u.s. in the iran nuclear deal. parents and kids, who are it comes after a lavish welcome and presence -- in paris last year. grateful and say so that the things i talk about are getting it includes issues that go beyond america and france. out in the public domain because a lot of parents worry about german chancellor angela merkel is due in washington on friday. and senior trade officials from whether all this pressure on the u.s. cabinet and mexico meet kids is the right thing to do, again today in a intensified they worry about the testing, and they know kids have talents push to reach a nafta agreement. and interest then opportunities mexico's economy minister said an mainly what i get is that the three sides have expression of gratitude. entered a concentrated phase of francine: does that feed into talks. over the weekend, mexico scored a separate marshall amid trade tensions with the what you are writing about? does it feed into the society of what we are creating? , iiana: as soon as i saw ken

wanted to hug him. you speak to what parents feel u.s., he made the comments in an and give us a narrative and exclusive interview with bloomberg. discourse, which i think helps kids with ted top and reading we will be more proactive in your work. looking for deals in europe. sometimes it is misinterpreted, so the idea that you do not need there doing a lot in japan structure and classes isn't what you are talking about. last 10 or 12 years. i think it is also the exam culture and the way we try to engage with students is linear, capital can go wherever its welcome. automatic, and doesn't allow creativity to be nurtured. however, at the same time, there : committee has voted in favor is a lack of emphasis on basic of mike pompeo to be the next skills, like reading. secretary of state. i prefer my kids to run rand paul of kentucky reversed philosophy rather than code. his early opposition to the later.n learn to code pressure of his own party, it will be hard to get critical thinking skills later. including donald trump. he can gain approval from the ken: i think you are right. full senate later this week. a lot of people know me from my work in a tent talk in 2006. the u.k.'s upper houses voted against theresa may on a key

people say, you did not say this piece of brexit legislation for or that. the third time in week. i said, it was 18 minutes, give me a break. wouldacked the bill that there's a question, creativity have rules on political and is a practical process -- there is no question, creativity is a andal rights for britain practical process. at the creativity is as british law after brexit. a compliment gates -- it important as literacy. i mean that. if you talk about human beings complicates her plan appeared george h w bush has been have what this delicious us in the world, -- what distinguishes hospitalized just after attending the funeral of his wife. houstondmitted to response and what creativity takes. creativity is rooted in methodist hospital after an infection spread to his blood. knowledge and understanding and they were married for 73 years, the longest presidential skill and discipline. you cannot beat the creative marriage in u.s. history. musician and due course if you global news 24 hours a day powered by more than 2700 do not understand the journalists and analysts in more than 120 countries, this is disciplines. bloomberg. it is a rigorous process but it is not other than mathematics francine: thank you so much. literacy, but about fitfully all in an engaging way. francine: does that change the we have breaking news out of the u.k.. let's have that chart for you. foundation of economics and first budget surplus translate at all into how we should look at economics and

what kind of economic society we since 2001. are building? mariana: if we pay attention to many of the ambitions different i don't know we have a longer-term pound. the resurgence in recent months, countries have around innovation that looks at inflation in a new and the skills required for forecast. people to be more creative and that will mean it complicates build new and interesting the immediate interest rate hike. organizations of the future, we end up getting too much emphasis on areas that perhaps they it's certainly a pound at my terminal. i'm told it's coming at any second. should be taking i don't think we see much entrepreneurship classes and they should learn how to code. movement after the u.k. posted in italy, where i am from, there its first current budget has been a common analysis that surplus. denied. president twice italian growth is falling because we teach too much literacy and philosophy and we an overnight stay in moscow need to teach more entrepreneurship classes. that is where i think we need to during the miss universe pageant. that's according to james comey. make sure you are not flight records obtained by misunderstood because i think it is the opposite. bloomberg provide fresh details when you do not have on what happened that weekend, imagination, you have no real way to be ahead of the game which has become a focal point of the investigation if they instead of always catching up. colluded with russian officials to win the election. to have this critical thinking skills and imagination, you have

is our us on the story to engage with critical thought and literature, philosophy, the managing editor for europe. arts, not skills taught in school trying to get more thank you so much for joining us. creativity. tom: to blend in your work with what do we know? byhave flights recorded the technology space that ken zenit not president donald robinson is an, what do you trump. think of the tech titans we had? they had class a and b jim: he hasn't testified to anything yet. shareholder, massive financial engineering, played by a he has answered questions, but not under a to be clear. different accounting book, our emily chang has a brilliant book book and others on a sexuality of the silicon have spoken to him and referred to him as a serial liar. valley, when did these guys to come more like us? taken with ais mariana: well, it is interesting. perhaps they are more like us but it is that the myth around grain of salt. there was already plenty of who they are, and using the word evidence to show that he was in the wealth creators, has made moscow for that weekend, for the beauty pageant. them to build a whole aura news that our colleague around to they are, which reported yesterday was further justifies the processes you confirmation of that.

alluded to. we should not forget -- and this pompeoe: i was told mike is what talked about in the would be a tough appointment. previous book -- is that all the technology was financed by the taxpayers. jim: it was pretty tough. everything in our smart internet, touchscreen display, theet him endorsed by siri was publicly financed. committee, donald trump had to oil,he data used today is senator whopublican and the oil barons another data is ready to vote against him and a democratic senator had to withdraw his no vote and vote barons. that is also public in the sense of belongs to citizens and how to realign the understanding of himself present. you don't get that difficulty to where the risks are, how the get a nominee out of committee. rewards should be reaped by the public, given the supply-side finance the provided in the public data. for governments, how to he was going to clear the senate anyway, even without a positive transform the digital our kids recommendation coming out of committee. francine: the french president in a way that actually reduces public value -- produces public value. is at the white house. it exists in aristotle, public he wants to talk about the iranian nuclear deal and trade. value doesn't exist for jim: that's right. economists. we talk about the public good, about analking de niro term. i think -- a narrow term.

unpredictable president, i'm i think ken's work talks about how we produce it by creating a talking about the president united states. wider community of creative been pretty people and bringing it out. steadfast in his feeling about ask about the trade and protectionism by other countries. economy, it is worth remembering our systems of mass public we know macro has developed a education were developed primarily for economic reasons during the economic revolution, relationship with him. it's the handshake. tilted toward the workforce that we're taking bets. the economy required. we don't have that economy anymore. it is important that we rethink thank you. now let's get back to trade. basic principles of education. what has been the environment been for the federal reserve? publisheda report along those lines, saying creativity and collaboration, and critical thinking are for i was in washington with tom skills in the 20% rate. that is the case -- in the 21st keene thursday, friday, and saturday. century. they are optimistic about the future. they are economic but also social, personal. they are worried about trade tensions escalating. what i want to have gone to his human life is essentially

do you expect the trade wars to creative. escalate? paul: that's been one of the we are from human innovation and main prongs of this volatility creativity and our economy is in the first quarter. not breaking that pace right the initial reaction was high now. none of this is linear. look at your own trajectory. concern among investors. on the lifeplanning the reason for that concern is you had now. this growth momentum, synchronize growth momentum that nobody could anticipate the actual life. there is not a direct line is moved beyond the u.s. into europe and china. the two what is taught in school, comes later on -- they have gone from being headwinds to tailwinds. between what is taught in school and what comes later on. we cannot addict outcome, the it that growth positive momentum gives banks rooms to return to is part of the agenda for the normality and steady and 21st century education. predictable cycles. that's what investors are very mariana: 10 i asked a question? focused on. -- can i ask you a question? this has the potential to derail or impact that story in some francine: we don't have time. way. tom: spirited conversation in london. we will drive forward the i would say the current news after the initial reaction has conversation in washington. kevin cirilli will tell us about died down a little bit in terms of concern as to what the impact the next day dinner.

might be. coming up, from jp asset people don't see it as reversing globalization or having a major impact. management, gabriela santos. this is bloomberg. there is still a long way to ♪ run. you look at the world globally, are there regions that would suffer the most? argue more constructive on the u.s.? -- are you more constructive on the u.s.? paul: we'll talk to some of our clients. is itrrent interpretation will be more localized and less entire market oriented. that will alert investors to breathe a little bit and come back from the precipice of concern around it. we will continue to see news on it every day as someone predicted. that could have an impact on inflation expectations and rate hiking expectations, those are the main things our clients are looking at. francine: we talked about

treasury yields and volatility, what is pricing you the most? is it having dollar reacted to trade tension? is it anything in the market that is mismatched? is there anything it doesn't feel right right now? paul: the book -- positive surprise is the way the market has responded to this new volatility. january was a wake-up call. people were moving along as if we were in a very lull environment. there are two sides to the trading views. the surprises how well liquidity has moved up. i think we've played an important role in that. it's a good sign that investors are getting back to action, able to put trade ideas on. u.s. banks recovered exceptionally well under this

new regulatory framework. regulation has impacted them. we have seen them perform very well, providing liquidity in these markets. that's a very good story in terms of liquidity. francine: the volatility that we saw tested the engine. it's working. that will go back to how markets are functioning. paul: in the u.s., that liquidity did stand out well. unclear how it's going to work and how the market is going to function. it has responded well and that's a good sign. thank you so much. paul is staying with us. managing mifid ii. we will discuss that next.

the u.s. softened this position. this is bloomberg. ♪ ♪ tom: this morning, suddenly a strong dollar. does it change the dollar calculus for chairman powell? we have vincent reinhart. we have a guess who's coming to dinner? the french, so it better be good. there are details from mrs. low morale bush and mrs. clinton -- mrs. bush and mrs. clinton. good morning. this is "bloomberg surveillance." we are live in new york. gaiam tom keene.

in london, francine lacqua. what a spirited conversation about productivity. give us a brexit update. we have not done enough brexit. hasek on silent? francine: there is a lot of talk about a customs union yesterday projectedad the proposal by theresa may, but i have to say a lot of the focus is here for the u.k. about the royal baby. we still don't have a name. it is a sideshow. i guess it gives the u.k. something to focus on. tom: jonathan ferro and i will a hamper, ahe baby $1300 basket with a bunch of little boys definite. francine: i never got sent anything. [laughter] tom: we will give you surveillance breaking headlines

if we have a name for the issue during the show. right now, first word news. taylor: president trump and france's president get down to business today. the trumps greeted the macrons in washington. after the welcoming ceremony today, macron will try to convince president trump to remain in the iran nuclear agreement and say unilateral moves on trade would be destructive. the president's choice for francine: good morning, everyone. let's talk mifid ii, the secretary of state is getting closer to becoming approved that is legislation by the senate. moving into more fixed income hisn the rand paul reversed trading. it's been a fact for more than earlier opposition under pressure from fellow republicans -- senator rand paul reversed four months. there are big changes for the industry. his earlier opposition under pressure from fellow how has it affected trading republicans. globally? still with us is paul hamill. they are not willing anything out yet. i remember you come in a year 10 people were killed when they ago, telling us about the

concerns. van rammed into pedestrians on a the rules were not set in stone yet. crowded sidewalk and 50 were injured. a suspect was arrested after a for months and, what we learned? paul: there are some very dramatic standoff with the police officer. theresa may has been positive things we've seen. clients, we lot of .anded her third loss on brexit have 20 new investors in the the amended proposal that would first couple of months take ensure the bulk of eu rolls on advantage of this new framework. economic rights are written into british law after brexit. the lords will have four other in basic terms, that similar to what we happening u.s. sessions to amend may's legislation. customers can see prices for global news 24 hours a day, powered by more than 2700 swaps, they can trade and it journalists and analysts in more than 120 countries. goes directly to the clearinghouse. that civil fines a lot of the i am taylor riggs. this is bloomberg. arcane infrastructure that tom: thank you. existed before. that's a really strong equities, bonds and commodities. development. we see a big opportunity to grow let's get through this. there. another area i would highlight dow futures up 109. the dollar stronger. is there were some issues with we will touch on that in a the rules. moment. oil with a bid is a note. it wasn't all correct. i do not think i put brent crude there was clarification's around -- there it is.

package trades. there is that dollar elevation, euro beating out yet over the we see good things working well at this point. last few days. francine: this is what i am francine: was working badly? paul: the transparency regime, looking at. the bonds are where the focus it's important to remember one is. of the core foundational reasons u.s. treasuries edging higher than most european government bonds. investors seemingly handing a was to increase transparency in the market. francine: that was the goal. paul: huge part of the goal. problem, a selloff benchmark rates. stocks in europe are climbing. we also had games in the asian what should come with the expanse is some kind of benefit. markets. transparency is a key benefit. tom: very good. i want to show this quickly, a famous chart from decades ago. this is oil adjusted for inflation and rising incomes it's very important to investors. what we talked about the last worldwide. time was the transparency framework had been poorly it is really squishy math. designed. i have always called this an approximation. here is opec, pre-opec, opec one complete the virgins there, that's very disappointing. and two, persian gulf, persian that issue has been recognized and will be resolved. gulf one, china boom, and there is that smallly is a kickoff to get this back in the vicinity of 1962 or 1964

handful of swaps which are being reported. price valuations. oil is cheap on an a stork there are two major trading basis. venues customers use. anncine: i am looking -- that disappearing historic basis. francine: anytime in the past . if has been an under investment four years, this chart matters in the technology and that's -- and we will put it out for investors. three reasons -- first, we are it renders the data useless. looking how markets react to be resolved.will rates, so correlation with equities, corporate credits, fx, it's incredibly important customers get the benefits for and collateral damage that could the expenditure and what they happen when treasury yields hit expect. francine: how quickly can this 3%. get resolved. tom: very good. there has been a shift and we you have to go in and change it. the big issue will take have two wonderful guests. cap realist santos with jpmorgan -- gabriela santos with longer to resolve, we think about a year. the more immediate issue could be fixed tomorrow in our view. jpmorgan. vincent reinhart with the federal reserve system and after we need clear guidance on what tour duty with chairman needs to happen and the trading greenspan is that bny mellon. platforms can perform with the thrilled to have both of you spirit of the rules. francine: is it too soon to tell here from different worlds. his winning and losing? paul: i would say so. i have to defer to the august

it's only a few months in. vincent reinhart. do we finally have a strong it's a large and complex set of regulations. dollar? we have to have a strong dollar there does not appear to be any but it has been weak, is this losers of this point. the big shift? customers are winning in many ways, some of which is vincent: not particularly. i think this is more tactical. highlighted and presents an opportunity for growth in our the medium-term case for a weak business. francine: thank you so much for dollar is strong. we have big budget deficits. joining us for the hour. we are eroding our safe haven up next, metals are on the move. asset values. , people areterm the u.s. says it's not pushing summing up to the idea that the federal reserve will tighten a 2018 andfour times in for collapse. we will talk commodities next. this is bloomberg. ♪ the ecb will be slow in terms of removing policy accommodation and governor kuroda is on hold for a long time. tom: is it an ambiguous dollar? vincent: yes. tom: you have to mix that in investment. a systolic good or bad for u.s. multinationals? gabriela: we sure the view that we believe in a weaker dollar,

notwithstanding the next few weeks. to us, that means a good opportunity for international investment. you will get a boost from the currency there. and number two, yes, we are u.s. multinationals. we are tying them from earnings this week from technology companies, where a lot of revenues come from abroad, that should be a nice boost from the dollar component. francine: when you look at your investments and earnings, how much is a means and how much is it concerns over trade, therefore, on for costs that chief executives have? gabriela: this year, our view on growth has not changed. we still see a good global environment and accelerating u.s. economy. as a result, earnings should be solid around the world. what has changed is worth the risk. last year, we talked about risk to the upside. these could only get better.

this year, we are focused two-sided risk. there is something that could harm this positive narrative. we are talking about one which is trade. however, nothing has changed on the base case but we have more two-sided risk at this point. francine: vince? vincent: -- francine: if you look at world growth, we were at the imf on thursday through saturday, and it was clear they were longer-term optimistic and shorter term concerned about trade tensions. what is your take?vincent : they have reasons to be worried in the near-term and long-term. seem to couple of years be well entrenched. momentum is there. the near-term reasons to be concerned is the world's a risky place. lots could happen in terms of trade or geopolitical tensions. leading to longer term, budget, budget.

we have aging population across advanced economies, and we have to deal with that overtime. in between, there is a window in which we will get above trend growth associated with financial accommodation and fiscal stimulus. francine: on the budget, tom was focusing on it on thursday, but the u.s. can afford it couple of years, so i know we need to keep an eye on it but doesn't have real impact in the shorter term? areent: shorter term, we francine: this is bloomberg talking about a 10 year treasury heading to 3%/ that could also be about surveillance. issuance in the next. couple of years. towardook a major step meanwhile, the fed is getting out of the game. i hope you noticed the most opening the largest car market last week when they announced makerso let foreign car interesting fact out of the imf world economic outlook forecast, and that is in 2018, they're take full ownership in the forecasting for the first time country. since 2008 that the dollar value companies set to of euro nominal gdp recovers the

benefit our bmw. 2008 level. this is how they will take if you are thinking about the weakness in oil prices, a advantage of the change. commodity denominated in >> we are well set up in china. dollars, you have to think about european. they had not had it the last 11 we have a long relationship with our partners, over 30 years now. years. tom: i need to steal a chart our success is partners. from you on that. nowdollar ambiguity right plan any change. comes to the nominal rate versus >> you wouldn't rule out what real rates are at. selling? we are investing in mobility. do you just assume that it breaks move up, inflation comes up with it, and the real rate doesn't lift, like we perceive nominal rates lifting? we are investing in startups here. we will remain. vincent: they have to raise real rates. tom: this is critical, can a central banker raise real rates? >> with segments of the market provide the greatest growth opportunity for vw? vincent: paul volcker talked about to do it. >> 4s, a letter cars will be important. tom: this is incredibly is investing heavily in important, folks. vincent reinhart worked with a electrification. it makes a lot of sense to

number of people at the fed decades ago. improve the pollution in the paul volcker told us how to do cities. it under emergency double-digit the chinese government is very committed to electric cars. conditions. we are not in the land of paul volcker. they are investing heavily in battery production and the core vincent: the problem for fed officials is inflation brands in china. expectations are stubborn. that means they will be raising real rates if they raise nominal rates. they can do it if they want >> what would you say your three priorities for restructuring as to. a global business? tom: did you like this in your we foresee change in our industry. textbooks? i did not learn this. they can drag up real rates? the question is to be fast and i do not buy it. do you that central bankers can get out front and raise up inflation adjusted rates? adapt to the other areas. the key is to acquire new gabriela: i think so. we are talking inflation skills, software and deal with returning to target this year. if we think about inflation the customer. fouraining a 2%-ish pace, this will be a new challenge for core cpi, they will increase the us. real rate probably towards the this is the most important task. end of next year. tom: it is surveillance math, three takeaway. >> are you starting to see any you get the real rates, as well. impact from the trade tensions

on your business? prancing? francine: we will be back with >> we are concerned for sure. our esteemed guests. having yourt both will stay with us. coming up, we have a global products. we need trade in areas. asset management chief executive .t 10:00 a.m. in new york for us, it's a concern. china has higher volume. and we will be asking him about treasuries. this is not so much a concern. this is bloomberg. ♪ we have our premium brands. higher tariffs would be a concern. that was the vw chief executive. now from cars to commodities, they jumped the most ever in hong kong. after washington softened its position on sanctions. the u.s. treasury is discussing relief. clear whether the move

will automatically allow international companies to resume deals. joining us is the bloomberg executive editor for energy and commodities. thank you for coming on. this is a big deal and for the market. this is a softening of the stats, but there are an army of lawyers out there trying to figure out what it means. u.s. knew exactly what was going to happen and understood how integrated the market was and the suppliers were on resale. they sent a warning shot which was dialed back quickly. they have no idea how interconnected all this was. they didn't realize it was going to lead to the shutdown. they had an enormous amount of lobbying from governments and companies and their own consumers. were not sure which one it is. i know which one they would publicly say it is, we have our

doubts. francine: who with the u.s. listen to? stewart: our assumption is it's going to be the german government and the irish government and huge consumers. out:, is great for me. the reality is i'm relying on a huge global supply change to get the materials i need. if i don't get them, i shut my plant stem. -- plants down. tom: what happens to the irish plant now? stewart: i'm sure if you asked people the area they would say no. , that is what is ♪ francine:francine: good morning. going on. tom and francine from london and new york. tom, we are keeping an eye on a there are people making great deals of money today trying to commons,the house of figure out what this means. and we have a cambridge university researcher facing i'm not sure we have definitive answers yet. arerumblings we are hearing

lawmakers in the house of commons, an inquiry into cambridge analytica. that is linked to facebook. that things of improved. a lot of companies will get back kogan is under scrutiny for to something resembling normal influencing the vote unfairly. business. give them a little bit of breathing space until they can figure out how to change the supply chain. will happen? thes get straight to bloomberg business flash with taylor riggs. taylor: japan's pharmaceutical stewart: that something we are discussing, how does he company is said to be near an extricate himself from this company? agreement to buy shyer. it boosted the component to 45%. they would be within their rights to say we have benefited. it would launch decayed into the ranks of the world's top drugmakers. deutsche bank's is considering him withoutct cuts to its cache equity paying him for that state? business in the u.s. -- cash equity business in the u.s., part of the widening of he technically has a minority stake. he has 48%. restructuring its investment banks. he's not the majority shareholder. trading regular stocks has from the qualify him become less comfortable in recent years. volvo is struggling to meet clarification we got from treasury yesterday? rising demand for t-rex in the it's hard to tell. u.s. francine: thank you very much. they said north american demand

will rise more than expected, 23%. bloomberg surveillance continues in the next hour. production bottleneck hurt their tom keene joins me in new york. first quarter profit, but the swedish company says it was offset by brisk sales of its we will be talking about construction equipment. treasuries. bought banco popular that's coming up on bloomberg surveillance. last year for one euro, money was spent. popular boosted first-quarter profit by 10%. we will discuss that more with tom keene. the increase in spanish profit helped offset a 23% decline in santander's u.k. operation. bloomberg spoke to the cfo of mike pompeo and what this means for foreign policy of united states. this is bloomberg. santander. >> clearly, there is uncertainty ♪ welcome to the xfinity store. about the process, but the economy is performing relatively well. we and the rest of the u.k. banks probably are a bit more conservative about the risks to our balance sheet, particularly in the consumer area, but in general terms, thinking activities remain active. taylor: that is your bloomberg business flash. tom: thank you. it was 58 years ago that mrs.

kennedy greeted charles de gaulle at the state dinner, almost to the day, 50 years ago. the backdrop tonight is something we don't talk all that much about the we will focus this morning on it with kevin cirilli in washington. it is iran. let's bring up a morning must-read from a brilliant academic. trump has forfeited the opportunity to help shape syria's future, reinforcing a widespread perception which has taken among friends and those of my, that u.s. global leadership is in retreat. iran is now the most influential regional power in syria, as it is in iraq and lebanon. over the next part and dessert tonight, are they going to talk about iran? have front and center is it in the trip of the french president? kevin: huge, the biggest topic of discussion. france and the united states

agreed that iran ought to not have a nuclear weapon. that said, how they want to get the gold accomplished is different. there are many folks in the republican party of capitol hill privately agree c in thsident sense thatm now might not be the best timeacro to pull out of the iran dealn because why would you go into talks with north korea if you are going to break a deal with iran? why wouldds to syria, i can tell you about... streaming the most free tv shows and movies on the go. you pull out of a deal when you are trying to sort through the assad regime? yeah, and... tom: how far apart are secretary xfinity internet. it's so fast! of state kerry and secretary of and you can save by... by getting up to 5 mobile lines included. whoa, you're good. state pompeo? kevin: night and day. i'm just getting started. ♪ simple. easy. awesome. come see how you could save $400 or more a year pompeo is going through that confirmation process on capitol hill to be confirmed as with xfinity mobile. plus ask how to keep your current phone. secretary of state. which mcconnell will likely have visit your local xfinity store today. mcconnell will likely have

to bypass committee -- mitch mcconnell will likely have to bypass committee. mr. pompeo is in lockstep with president trump and his policies. francine: talk to me about president macro are peoplen excited about the first state visit? . if you were to coach president now, how would you reckon? kevin: there we had the moment, the first lady, said, come over here, come over here to stand together. they were really trying to show that they have a positive relationship, despite key twoferences between the presidents, despite representing different ideological constituencies. tom: this is deeply emotional 10 year yield is just below the for the french. key figure. for those of you on radio, there is little tree and people make how much does it matter for markets? the new chief executive will were, 10,000 americans

consider backing out of cash equities in the u.s. injured or killed at the bolo words at the end of world war i. in 1918, we were dragged into the war and we saved france with suppress support for pompeo. an attack across a small woo in they vote for the cia chief to be the next secretary of state. france, and mr.ds macron -- what does this mean for foreign policy? woods in france, and mr. macro this is bloomberg surveillance. is bringingn a small sampling tom keene is in new york. we have a lot to talk about today. from those wood is get the we will get to that in a second. jokes, but this is. hugely symbolic to the french treasuries, a little bit of a move when it comes to the softening of sanctions against people -- i get the jokes but this is hugely symbolic to the them. french people. we have a state dinner at kevin: he wants to bring the u.s. to the negotiation table the white house tonight. with regards to iran. maybe that is partly pageantry of the day. tour of therivate the dollar is ascendant, that's the real story. francine: i agree with that. national monuments before heading to mount vernon. let's get straight to the bloomberg with news. tomorrow, after the pomp and circumstance, and the gestures, taylor: we are starting with president macron will address a president trump and emmanuel joint session of congress.

macron getting down to business today. that symbolism is the most they were greeted at the white important part of the trip house and had dinner. because president macron is after welcoming ceremonies, he someone who represents the progressive wing in europe, and will try to convince president he speaks to the trump to remain in the iran republican-controlled congress nuclear agreement. as syria pushes to the forefront the unilateral moves on trade would be instructive. as for mentioning, president of the united states' foreign policy. in from theked trump's choice for secretary of state is one step closer to forks and spoons, like six winning confirmation from the senate. forks, you worked in, kevin, to a pompeo was backed by get to the neck during target divided committee. with the white house infused reverses position. honey dessert. hoagie. just want to tom: why don't i know that. thank you. there appears to be no national there will be a news conference. security connection in one of the worst mass killings ever. this will be something to see and listen to. they are not ruling anything out yet. killed when a van we will have complete coverage of the presidential rose garden news conference in the eleven o'clock hour. rammed into pedestrians on a this is bloomberg. ♪ ♪ crowded sidewalk. another 15 were injured. the suspect was arrested after a

dramatic standoff. the house of lords has handed theresa may her third loss on brexit in a week. it would ensure the bulk of eu wills -- rules are written into british law. the lords will have four other sessions to amend legislation. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. thank you so much. now, the dollar is ascendant and futures are up a snappy 13. dow futures are down 101 points. oil shows good chart in a moment. the dollar index, this is the old landed dax index. it was a 91 when i walked in the door. that gets your attention.

it really does. treasuries are rising. investors are heading cause on the benchmark rates. european stocks are up. they are following gains for most asian the companies. tom: this is oil, adjusted for inflation. this is an approximation of rising incomes. opec lifts to in 1986. the collapse, down we go to their cheap oil prices 15 years ago. the china boom is up. this is the little bit of lift we've seen the last two or three years in real oil. that is an approximation. francine: that's a good chart. this is what i'm looking at, a very simple chart. it just shows the 10 year yield

and what it's been doing and why traders are refocusing on the yield. i think we just need to ask ourselves how 3% yields good reshape the investing landscape. i would break it down to three categories. when it touches 3%, what does it mean for equity earnings? you can see the spread between the earnings yield any 10 year treasury is the lowest in eight years. that can have a huge impact on corporate credit and collateral damage. that correlates to the backup. playing the 10 year yield flirtation. it's great to have you on the program. let's look at 3%. what does that mean for equities? >> that's more psychological. if you were to look at the trend yield, then you

would see the importance of 3%. this is why the market is so fixated on the level. psychological hurdle. we have seen the yield curve flexing. let's not forget the implication of the 10 year and equity valuation. ♪ that's what markets will focus on. good morning. relateatility that could this is "bloomberg surveillance." tom and francine is more psychological. from london and new york. do we ever come back our guests.with to the pre-financial crisis world of how bonds and equities function? we talked about trade and asset sonja: not yet. valuations. this is a really long adjustment do you worry about the u.s. economy overheating? if you do, what is the value assess. we would really see central take away their influence play on it? gabriela: i would say, qualified that the little. on the bond market and the we expect the u.s. economy to equity market. grow around 3% for the next 18

we are moving toward the right direction. we are not there yet. tom: our stocks cheap? months and there we think we come back to more of the trend like growth, which is 2%. whether that is enough to in our politics, our central generate inflationary problems, banks, are interesting we don't agree with, but at the economics, are equities a good value? sonja: i have to answer it end of the horizon, there is a growth.o 2%-ish depends. is the kind ofay that means we cannot be overly concentrated in the u.s. tom: this is what i wanted to go. mr. macron will be here and the trade is less effective because we are struggling to see broadbase upside in the market. you definitely have pockets. on the metro and driving around you have very strong bias in markets. in washington. we have witnessed this over the he will look at a jpmorgan dividend.r a bmp last couple of quarters, it means there are pockets a look more attractive. it's interesting how you see in of americans, we the earnings season how the market reacts to that. don't look at the dividends we capture in europe? gabriela: that is part of the it all depends on the outlook of story. the underlying business model. i don't think whole story is searching for dividend yield but it is a piece of the puzzle. that's true for the u.s., where we have had so much excitement it is higher dividends, earlier

in 2018. parts of the business cycle, you have to come up with a potential for pastor earnings stunning result to make your share price move. tom: with these rising yields, growth, and the currency play we talked about. tom: do you agree with the care about the top line summation for europe? can you belong on europe? vincent: yes, but we also buy nominal yield? back more than europeans do. do you care about the real tom: is that financial engineer? inflation-adjusted yield? sonja: if you think about equity finance is often about market risk premiums, the real yield is what is the driving engineering and ways of getting force. back to the ultimate owners of the farms. you can do it -- of the farms. there is a more psychological component to the fixation around the three-year and the 10 year. we make firms do it. tom: frankly, mr. jamie dimon is less and the precursor led his letter with a brilliant and this is why we should not ignore it. dissertation of buying back the real yield move, if you look shares low versus buying them at the big volatility movement, there is a much stronger wi back now. i do not want to to discuss handle. francine: we are trying to look jpmorgan thing keeping, but the market isn't where it was five at corporate credit and the years ago. do you assume more responsible european equities. corporations have less

this entails a move in german moving forward? bunds. gabriela: i think that is a function of the extra cash what kind of direct impact does this have on global equities? companies have. this is expected to be a record sonja: i think we should not year for buybacks, significantly forget the 10 year treasury is year.last the guiding market in terms of the fixed income. see that we are buybacks are still a big driver of the market. increasing dividends, as well. hopefully, the missing piece, expecting mario draghi to speak this week. more capital investment, which that will have an impact. is what we are trying to see in terms of long-term growth potential. vincent: the good news is we did oflook much more in terms lowered the marginal corporate tax rate. are there any warning signals coming out of the credit market tot creates a disincentive we should not ignore. int is the lesson we learned turn the dial away from 2008 when the signals were much financial engineering and more toward capital spending. i have not seen it yet, which is clearer early on. what burning reports are round, weis time important. tom: now, we will do a story where gabriela santos will not should have an eye on it. comment. the credit markets have been much calm her and equity francine: that has everyone's markets. attention. reassessment,ing

the weakening economic data in gabrielaeinhart and europe. that's telling us more than markets are discounting. francine: when you look at santos, deutsche bank is said to be rolling cuts in the u.s. -- to be thinking of pets in the earnings and you see the state of the company, to you look at u.s. forecast? could it trade tensions impact they could adjust the largest that? sonja: that's an interesting investment bank and deutsche one. bank is due to report on lagging they've been thursday. let's go to our german banking reporter steven arons. how much time the chief indicators. judge the try to executives have? does he need to be passed and remarks from ceos against what furious in the cuts and we actually see on the ground. the whole area around trade tensions and protectionism is reorganization some investors get that confidence and deutsche very complicated. bank? steven: i think so. europe would be the most he needs to be quick and show he exposed. 75% of earnings are derived from is decisive. overseas. -- logical tol the chairman of the bank said the settings for deficit was assume this is a negative impact. the impact varies greatly where good but he did not execute quickly enough. we see protectionist measures. and cost did not come down quickly enough.

the pressure is unsettling to do we have to look at the car industry and there would be the opposite and bring down costs quickly until the market measures hurting the car industry that would be the how he will do it. biggest negative impact. tom: we will be doing some real i think thursday will be the first opportunity for him to do that. yield charts in coming days. francine: how important is it? interesting across we are hearing they may be surveillance. retrenching in a significant later, from the ucl, market in the u.s. if that is confirmed after or before earnings, does it mean this is an interesting book. of your newscussion deutsche bank is giving up on the u.s.? teven: it will not give up productivity. we are looking forward to that. entirely on the u.s. it will always have a put in the worldwide, this is bloomberg. ♪ market. in leaves it there because -- the market.in it needs it there because it will continue to be the bang for german and european companies. companies to a lot of this in the u.s. and deutsche bank would want to accompany them there.

back from the u.s. and a very deutschems away from bank's former global ambitions. those ambitions have already been scaled down a lot over the past couple of years by john cryan and it's clear that christian something will continue that trajectory and retrench even further. francine: i know there were parallels drawn with barclays when bob diamond left. are people also asking deutsche bank to break up? so you have an investment unit and retail for deutsche bank? bank intoakup of the separate entities basically hasil and investment bank been discussed in investment bank circles for a long time. rumors pop up every now and then that this is something deutsche bank is discussing. interestingly enough it deutsche bank today came out with an

opinion included in its extension of its agm agenda where it rebuts a shareholder's most demanding just that. that the bank should split up. deutsche bank argued that would and itot in its own foot would mean destroying shareholder value and it said even if there was any strategic idea possiblethis at the moment because it would take too long and be too costly. tom: is the delusion that they exit new york, do they run the u.s. equity business from the desk in london -- a desk in london? or do you just exit the business? >> i don't want to be a consultant here. taylor: let's get the business flash. it's probably somewhat -- i

don't know for sure. i wouldn't be surprised if it is they are near april america one of the scenarios under consideration. and they are discussing quite agreement to buy shire. sincerely about it. they revise the offer, more than $60 billion. what it means for the presence in new york, you tell me. buying shire would launch them into the ranks of the top drugmakers. bolo is struggling to meet in tom: we are going to leave it there. the u.s.. truck makerlargest steven arons, thank you. said demand will rise more than we need a news briefing. expected, 23% this year. here's taylor riggs. >> the nuclear deal with iran the production bottleneck hurt profits. and trade will be top of the that was offset by construction agenda. will trump and emmanuel macron equipment. meet today? for -- it wasem the first part of his visit was devoted to ceremony. money well spent. today he will try to convince they help boost first-quarter president trump to keep the u.s. profits. the increase in the spanish in the iran agreement. he will also argue against u.s. profit offset a decline in u.k. operations. lateral positions on trade. we spoke to the cfo. white house is backing up support for scott pruitt.

>> clearly there is uncertainty about the process. -- backing up support for scott pruitt. the economy is performing well. cautioned tog the rest of the u.k. banks, we are a bit more conservative in temper their defense of him. he is being fired for ethical hiding risks to the balance sheets. lapses. the banking activity the suspect in the should be very active. murder of four people waffle house restaurant is not talking. police arrested him about a mile taylor: that's your bloomberg business flash. francine: thank you so much. away from the shooting site. let's talk about deutsche bank. authorities say he has shown they are thinking about broad signs of mental instability and has had extensive run-ins with cuts in the u.s. the law. appointede newly george h.w. bush is being treated for a blood infection. chief executive. they could unveil sweeping cuts. he was hospitalized in houston just after attending the funeral of his wife barbara. deutsche bank is due to report he is 93 and has a form of on thursday. we are joined by the managing parkinson's disease. editor. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. thank you so much for coming in. if you look at deutsche bank, how much do we know about cuts i'm taylor riggs. this is bloomberg. this morning bloomberg

has been hosting changemakers to the u.s. branch? is this just an acceleration? is this a new tactic? here at our european headquarters in london. the event focuses on the need >> one would think this was for businesses to act as catalysts for positive change well-planned. and the vital road -- role he's only been on the job for a few weeks. quite a significant played by campaigning in corporate and public life. strategic shift. we are joined by james chen, a hong kong-based philanthropist specifically with regards to the u.s., we hear it's a significant and businessman behind a global campaign to enable access to glasses for everyone in the retrenchment in cash equities. world. because that'sc joining him on set is alastair campbell, former communications a very prominent market. for the u.k. label -- the numbers are quite large for communications director for the them. u.k. labour party. this points to one third of the equity revenue coming from the it is actually genius because i american business. never thought about this. when the pitch came through to that's a large chunk. get this on-air -- why are you francine: how quickly does a new focusing on given glasses to chief executive have to move? people? poor to not have does he have to move the results thursday? glasses and you cannot see, you can't work. we will have a big announcement >> yes.

to show he's in charge and things will get better. there's 2.5 billion people in elisa: i think there is pressure the world today with uncorrected to move quickly. for vision and 90% all it takes is a pair of glasses to get clear vision. they have had strategic plans that were reviewed. there have been management them would befor changes. that is aoncerned in terms of improvement in productivity education outcomes threat and we don't see what's next. or gender equality would be enormous for the world economy. i think he is under pressure to come through quickly with a great swathesee decisive that his predecessor had started. just a quick chart to show of world leaders backtracking from helping the poor country -- you where we are on the recovery of deutsche bank. it is a recovery. poor countries of the world. >> last week at the commonwealth summit all 53 liters signed on there was a horrific move over the last 12 months. here's a little bit of a leg up. if you give up geography, you to a pledge for quality eye care for all in the commonwealth. give up revenue. that's 900 million people which and the question of what to do with new york, the question is will be affected by that and we are very excited the first step are you managing toward a in the commitment -- it's a smaller revenue bank? how much smaller is that revenue productivity and education bank? that's the question outcome issue. it's not about health. francine: how are you involved

in this? >> i went to an event with james pointing today from the analysts we spoke to. if you give up that revenue, how are you going to replace it? through a friend who tom: you never do. are they managing to be a wanted me to work with him on smaller back? strategy. that's what it seems like it was an issue i knew absolutely nothing about. come across my they may not have much choice, given the numbers and the radar and that includes a decade economics analysts have crunched working in and around on the u.s. equities business. government. that's not sustainable. tom: let me steal a question i think it's one of those things where there is so much to gettion now from francine. what are they waiting for in germany? governments focused, philanthropist focused and this does strike me -- so many of when do they put them out of their misery and create some be --ould synergy and a german giant bank to compete with them? francine: our governments elisa: that is something that distracted? -- are governments distracted? that is something that had been toyed with in 2016. it seems that governments are there's a lot of talk about a common bank being in play. butying good growth

for now, deutsche bank's stopping with the internal model. when you look at actually i distracted by a multitude of rising populism -- deutsche bank, how significantly >> we were saying when we did the presentation downstairs that can it cut in the u.s. without hurting? governments have an awful lot of things to deal with and i think our government with focus on you cut the fat, not the muscle. symbolically, you would brexit there's nothing much else they can do. to get the commitment and get the heads of government to commit to saying they then have potentially impact other businesses as clients the longer to go away and get somebody else see you as a competitor to wall to think about it. i'm not pretending theresa may street. francine: how much of this is a is going to be sitting there deutsche bank problem? today thinking this is my number one issue. she's not. they have to decide if it's a viable option to have u.s. brexit is her number one issue. but she will kind of have to do units. it's a very good something. question. i would like to pick up on the the job of people like james and me is to persuade them. issue. it's not just deutsche bank, they're doing it in their it's a question rally german interest because they can get retail market. their economy strengthened by doing it. tom: alastair campbell, good one reason they haven't moved so morning from new york. i would be irresponsible if i far as they are still competing against the corporate banks that didn't speak about the birth of

are privately held. and your incredible contribution over the years to the royal family including arguably you coining the phrase ss i believe.prince can you give us an update within your heritage and contribution through mr. blair of the state of the royal family? everybody would love to know what you think about this new royal family. [laughter] >> that has come right out of left field. francine: welcome to surveillance. >> i thought we were going to talk about brexit. tom: they've got a brand-new baby. >> yes. people have a brand-new baby. tom: you were hugely influential with the death of diana. >> you make me sound like i killed her. tom: i don't mean that. tell me about this new royal family from where you sit and this service to the nation.

>> francine mentioned that i have published a book a few years ago about winners. you may guess i'm not the biggest monarchist in the world. i wrote a chapter about the queen as one of the great british winners. in an era where most institutions have seen a decline in respect whether that's politicians not least one you've got in america at the moment, , health careitary professionals. most people have seen a decline in the kind of natural automatic respect that people give to them. there's no doubt about it. i do a lot of work campaigning on mental health and mental illness. have beenroyals

amazing in terms of the campaigning they've done on that. therek maybe they got really bad years out of the way early whether that was the time around diana's death -- there's no doubt at all the british monarchy is in a very strong state. tom: does labour party have their bad years out of the way? what do you want to see your labour party become? do they have to go on to the nostalgia of blair brown? >> i don't think that anybody gets success by going down the nostalgia route. going toy brexit is disappoint a lot of its supporters if it goes ahead and i hope it doesn't. the labour party are kidding ourselves if we think we are in a strong state. we are up against a divided government that is pretty incompetent on most of the big things government has to do and even on a good day the labour party is only two or three points ahead in the polls and we have this big problem around

anti-semitism. i for one as somebody who has always been on the left of policies i cannot even get my head around the idea that a party of the left becomes the one that is even remotely associated with anti-semitism. i don't think it's about nostalgia. it's about facing up to the big challenges of the future. what i see on both sides of our politics at the moment is very little debate around the real challenge is that the country is facing. francine: let me go back to james. you should have watched "the crown." queen."ched "the francine: you would have been prepared for the baby question. how do you choose a spokesperson? is it important to be associated with someone famous? it definitely is very helpful to have well-known people be endorsing this because there's a

lot of noise out there. lots of issues trying to break through and it does help to have people who can get the attention and ultimately it's getting the understanding of the importance of the issue. francine: i want to get you on the customs union. should the u.k. stay in? to give asa may need strong message of staying and just because it's easier? >> it's really complicated. you had a referendum and underestimated the difficulty of that. ofs a very rare situation most of parliament thinking the public got it wrong. most of parliament now prepared to do something they still think is wrong. the house voted in favor of staying in the customs unit. -- union. i don't think we really know what theresa may wants out of this. i think if we stay in the customs union which i think we

should we might as well stay in the single market and we might as well say to the people do you want to have another vote on this because the brexit you were promised is not the brexit you are getting. francine: does another referendum mean the election? will jeremy corbyn become prime minister? >> i don't know. part of the labour party strategies for the government to fall. they could lose lots of votes on brexit without the conservative party pressing the button that leads to an election. mess at thes a moment. it's a complete mess and to my mind it is brexit that is causing the mess and what's more is the fact that both of the main parties are not actually being honest about what they think about brexit which is making the mess even worse. francine: alastair campbell, thank you very much. james chen, hong kong-based philanthropist. for tony blairn

and former communications director for the u.k. labour party. thank you both. here's taylor riggs. >> struggling to meet rising demand for volvo trucks in the u.s. american demand will rise 23% this year. the swedish company says it was offset by brisk sales of construction equipment. volkswagen is happy with the way things are when it comes to partnering with local carmakers in china. beijing will ease rules that have required automakers to link up with local partners before building a factory. >> we have a long-lasting relationship with their chinese partners. over 30 years now. of bothess is a success parties. so we don't plan any change. expects to grow

faster than the chinese market this year. saudi arabia is delaying the ipo of its stock exchange. the exchange is hoping the upgradel of grade -- could boost its value. that's your bloomberg business flash. a great and the good of international finance gathered in london for city week. now with brexit looming the future of london at the financial center. anna edwards is here. over to you. great to have you with us. thank you for joining us. last time you spoke to bloomberg television i think was in davos.

you said you hadn't felt so good since 2007 and that was a worry. and then things changed in february. you were pressing them. precedent prescient then. just the feeling that europe was on the verge of an upswing in the cycle. today we have probably a more balanced view of the market. positive with be economy growth around the world. rising earnings growth. people who want to be positive continue to be so. rates notably in europe. elevated valuation. probably a fear of inflation. we had a more balanced debate today. >> do you fear rising interest rates?

is this something you worry about? some'll want to believe at point in time there will be normalization of monetary policy. that started a couple years ago in the u.s. and it is progressing in europe. the debate is how and when will the ecb be able to normalize its monetary policy. in then start rising rates 2019. it will take time and there is a fair amount of debate as to what ecb will actually be able to do. there is no sign of the target inflation. .> that is the backdrop let's talk about how you run your business. consolidation in european asset management spaces is a big theme. update us on your plans for consolidation. >> we continue to be having many dialogs. the number of our colleagues in the asset management space feel they hit a glass ceiling.

model withs centralized distribution does provide an answer to these challenges. we want to be careful and sensible about the way we allocate our capital. >> what's the benefit? what are you looking for in terms of acquisition? are trying to expand the scope of our strategy in the alternative space which continues to be in high demand from clients. we want to expand in the asia-pacific region. we want to be mindful of strategies where we've got capacity issues. we are the heart and acid active management -- active asset manager. we havedo here is when an important strategy that reaches capacity we try to see if other parts of the group can fulfill the need of clients and that is the duty of having a broad array of opinions.

in some cases we have holes that we want to plug and external growth would be a way to do that. >> will you may be need more money to do it? people are deciding if you want to list the asset management part to do some m&a. >> we have a very supportive shareholder. are part of the second-largest banking group in france. very supportive. significant tier one ratio. for the time being we have the support of our shareholders. there is no talk of listing the business. >> no need to go elsewhere to get any money. >> for the time being we have a very supportive shareholder. ii.alk to me about mifid what is the cost been like? is this something you have breezed through?

>> of course we have had to adapt and invest in our system. the latter point what's interesting is that once you start letting people pay for it you start to be a lot more discriminatory into what you buy and don't buy. that has been healthy for the business. there may be some upfront costs. in terms of how the business navigates the highs and lows of , the selloff we saw in february and the more recent performance. anything you can update us in terms of the inflows environment? >> our biggest risk is the market so we had a very strong beginning of the year. in the last couple of months but of course our business remains strong. we have an environment which is very conducive to active asset management and that's what we're focusing on. >> good to speak to you this morning, jean raby.

greatly appreciate that important conversation. let's go to single best chart with vincent reinhart and gabriela santos of jpmorgan. reinhart has this in his kitchen at home. this is been the free launch of equities and it really correlates with the great bull market. if reinhart gets his final real rate up here do you just as soon and a bull market? >> we are still a ways away from that point. tom: i'll say. >> we have negative real rates. it is still very much in accommodative environment for the economy and earnings growth and equities. ultimately we think we will settle at a lower point and we used to be in the past and we still think there's plenty of room in terms of the equity bull market. tom: i'm going to do this in

red. you mentioned earlier paul volcker. skyhigh real rates. how much of a real rate do we want? do we want a real rate like china, like a banana republic? >> in that chart what matters isn't a horizontal line. it's the equilibrium real rate. the financial crisis was an enormous hit to wealth. monetary policy has been accommodative because they have kept the real rate below that equilibrium. now they are closing the gap. as long as the gap is still there that's good for equity markets and fed tightening can be well-received if you are chasing up an equilibrium real rate that's rising because the economy has healed from the crisis. -- done: does that mean you think the economy actually has healed from the crisis? is that what you are saying? >> by and large.

we are talking the u.s. economy, not necessarily the european one. i think by and large it's far enough in the rearview mirror that we can get past that. banks are recapitalized. have betterrms balance sheets. we've got to get out of the mindset that the librium real rate is negative. it's positive. it's higher than the fed thanks. -- thinks. >> that's the conversation we are having with clients. a lot of people still think it is 0% pretty much real rate. that's what gets us stuck in this. three or four rate hikes mentality this year and that's it. it's still a cycle and we believe the real rate is closer to 1%. the key riskral to in the investment decision what happens to inflation.

inflation does rise, if the fed thinks the real rate is too low and stays a little too long and inflation picks up you're going to see rates rising for bad reasons. tom: how is chairman powell doing? >> he's doing very well in the sense that there is no reason to be dramatic. this is just so important. you ran all of research for alan greenspan. it was wonderful to speak to chairman greenspan in our trip to washington a few days ago. how does the research capabilities the fed shift with the new chairman? does everybody put on a new bowtie? what's the body language in the building? >> voelker was different than greenspan. bernanke was different than greenspan. and yellen is probably closer to bernanke in terms of mindset. you have to adapt to what your audience wants and you have an

audience in poorly of one, the chair. a lotk they are spending more time explaining themselves because think about chairman powell's press conferences. he was a lot more low key. you saw it speech he gave a while back where he may not be an economist but he was pretending to be one on tv. he wanted to show that he was in was making the case simpler and easier to understand. tom: that's what we do every day on surveillance. pretending where economists -- we are economists on tv. this has been a wonderful -- thank you so much. coca-cola out with a penny beat. we will have much more on that during the hour. bloomberg radio will drive forward the conversation. fox willferro and pimm be along in the morning. stay with us for our important washington coverage, the press

coverage of mr. macron and mr. trump later today. this is bloomberg. ♪ retail.

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stay with their families until their 40's. alix: scared of 3%? investors back away from a bond selloff but rethink their prelude -- there playbook. deutsche bank could make big cuts to its u.s. equities business. what business does the german bank want to be in? aogle spending soars without solid payoff. david: i'm david westin with alix steel. in washington the president of france is visiting president trump. yesterday we had a really big event. alix: they planted a tree.

thank goodness they planted that treat. jobd: they do a very good with those shovels. if you watch it long enough afterwards they try to pose for photos and the president realizes the tree is between him and the camera. alix: they should have their marks and where they are supposed to stand. they need you. you are a theater director. alix: