>> good morning from bloomberg's european headquarters. i am anna edwards. nejra: these are today's top stories. >> the leaders of north korea and south korea hold their much-anticipated cross-border summit, but can they strike a deal to end pyongyang's nuclear ambitions? nejra: the bank of japan steps back from its target as it leaves policy unchanged. the new deputy governor votes with the majority. amazon delivers. stocks gain from the u.s. teixeira, and big tech eats on earnings. amazon trades above its record, and microsoft gains.

good morning, everybody. welcome to "bloomberg daybreak: europe." earnings,t a host of as is the tendency. we will get straight to those. waiting for numbers from the spanish banking sector, we are getting numbers from renault. this is first-quarter numbers coming through from the french carmaker. it confirms its 2018 guidance. first-quarter revenue, 13th 2 13.2 billion -- euros. tot looks like when it comes the guidance, the numbers we were expecting from this carmaker. big news has been the ability of carmakers around the likelihood that china will reduce its tariff on imports of cars. we are looking for emerging markets.

in particular, russia and latin america. guess what we are seeing from the spanish banking sector? it's been a big week. bbva first-quarter net interest income, just a shade below the 4.3 2 billion that had been anticipated from analyst. at is 1.3 billion. the headlines really going into this from the spanish lender, to what extent they would have turbulence from mexico to turkey. the emerging markets exposure, of course, of this spanish business, very beneficial. how much has it held them back in the recent quarter? the bottom line seems to have beaten very nicely. the political risk will be part of the conversation. a.m.is coming up at 7:30 london time.

the breaking news comes fast. nejra: i am waiting for numbers to come through from sanofi. i will bring the messiness we get them. let's get to the chart i am focusing on today. it's the bloomberg dollar index, which has had its best weeks since december. it has gained against all of its g10 peers. it is pretty much unchanged today. wentcorrelation, which above 3% this week, has come back this week. that is part of the reason we have seen this lift in the dollar, perhaps because we have seen weakness in the euro and pound on some level. i am showing the 200 day moving average. the dollar is sort of approaching it depending on which way you are looking at it. you could say it is not coming close. it has not gone above the 200 day moving average in about one year. u.s. gdp later today as well as eci data could be key in moving

the dollar. keeping an eye on politics as well and a fair decision next week. anna: plenty on the risk radar. let's have a look at the asian equity session. it is up by .4 percent. technology, a big part of that, whether it is baidu, amazon, intel, microsoft. a host of tech names. comforting to have been shaken by negative news flow and concerns around chips, in particular, in the technology sector. we see a divergence between the we couldhich suggests be higher. the rest of the futures picture is more muted. u.s. 10 year yields, we are consolidating a little bit below that 3% level. 2.97% of course. appetite for stocks and bonds right now in the overnight trade . next week, a lot more information about supply of u.s. treasuries in the second quarter.

that will be interesting. the politics i referenced really to do with the korean won. as aorean won on the rise result of that momentous moment. it only happened a few times mete the 1950's where moon kim, the south met the north, over the bridge between the two. we focus on the geopolitics. here is juliette saly. thank you. the bank of japan has left its monetary stimulus program unchanged as governor kuroda started his sixth year at the helm. the decision to maintain the program and asset purchases -- the central bank removed previous wording on reaching 2% inflation around fiscal 2019 while leaving its inflation forecast largely unchanged.

the u.s. senate has confirmed cia director mike pompeo should be secretary of state. the 57-42 vote came after weeks of heated debate over growing discord over the trump administration's handling of this policy -- diplomacy. it held a confirmation with a tweet. the european union's chief brexit negotiator has said u.k. banks will face similar restrictions to u.s. institutions after the divorce. shall barnier issued a stark warning that markets should prepare for a messy no deal breakup. loadomments deal a fresh to the british government which is fighting for far better marketto europe's single for its bank. malaysia's prime minister said his country will let financial markets decide the direction of the ringgit and he focuses on improving the economy and his reform agenda. in his first interview in more he outlinedears,

his plan to increase liquidity in the equity market and promise more income and corporate tax cuts over the next half decade. >> the markets think it is about, you know, 370 is a fair value. in tryingnot believe to force the issue. we would strengthen the fundamentals. juliette: global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. more stories on the bloomberg at top . sessioneeing a positive in asia to round out the trading week, but we have the regional index down about .8% over the course of the week. the nikkei in late trade up by around .5%, but it the focus on korean stocks and the won today. the south and north have the

dialogue talks for the first time in 11 years. hong kong stocks. large caps under pressure. china under pressure in the last couple of hours of trade. in terms of stocks we are watching, i mentioned the rise we are seeing in seoul stocks on the back of the summit between moon and kim. we have seen the defense stock up by 7.6%. .hey make railroad equipment softbank in focus on the back of the text. -- tech stock. it could be close to a merger. sources telling us that could merger could come as early as next week. a machinery manufacturer in tokyo is the worst performer in the region in terms of member ranked returns. number of lowering -- nomura lowering its price target. the company itself came through with weaker first-quarter guidance. thanks so much, juliette

saly, in singapore. kim jong-un has become the first north korean leader to enter south korea. he was greeted at the border by moon jae-in ahead of a historic nuclear summit. talks got underway in the demilitarized zone. a new history of peace and prosperity. >> there are a lot of people hoping for the best results. i am worried we will disappoint them if we don't follow-up on good agreements from past meetings and do not make this meeting the opportunity to improve our relationship. anna: stephen engle an watching the drama unfold from unification bridge. give us the context here. this is historic for many angles. this only happened a few times since the 1950's, hasn't it? third timeis is the the leaders have met. the first time in 11 years, but this is the first time north

korean leaders ever set foot in south korea. front of then railway bridge that goes into the demilitarized zone and the shuttered gates of the industrial complex. off-camera is the unification bridge where moon jae-in and his motorcade went in this morning. they are still in the piece house on the south korean side. the south koreans both separated for lunch right now. we are hearing it will be another 2.5 hours, separate powerhouse, getting more strategy ahead of the afternoon session, which will resume in 2.5 hours local time. banquety will have a this evening between kim jong-un and moon jae-in. ais was a very historic -- very interesting meeting. i have been to many of these government type occasions, but

they are usually stiff. the thing that struck me was how at ease these two gentlemen seem to be in each other's company even though kim jong-un said he had a flood of emotion. it was very interesting to see the men's dynamic between them. >> it's interesting you say that because of terms of likening the mood somewhat, we did see kim moonun actually pull jae-in over the border to the north. is there anything that we can read into that in terms of kim's intentions or how he might approach these discussions? stephen: i think you have hit on the most interesting part of that meeting. i was watching it on my smart phone. did he pull him into north korea? when they were talking, the south korean president asked kim jong-un when can i come to pyongyang? kim jong-un said why not right now?

pulledbed his hand and him across the threshold and into north korea for 10 seconds. unscriptedike an moment in what is otherwise an extremely choreographed summit. there seemed to be a lot of handholding in international geopolitics. in terms of the bigger picture and denuclearization, this sets us up for the conversation between north korea and trump, doesn't it? stephen: absolutely. when i wass ago, here standing on unification bridge, when the junior level officials first started having face-to-face talks, the south koreans brought up denuclearization fairly quickly in the negotiations. the mood in the room turned sour that the north koreans thought they were coming with a good that the south koreans hammered them hard on

the denuclearization issue. today's summit is probably more about relationship building between the two leaders and the optics of peace. then, behind-the-scenes is how far will the south koreans decide to push the north koreans on denuclearization? kim jong-un has said he will dismantle his testing site, halt missile tests, halt nuclear tests, but he has not said he will get rid of the 60 warheads he already has in his possession. nejra: stephen engle, thank you so much. joining us on set is the ceo of hermes. great to have you with us. >> good morning. nejra: interesting points from steven. it does seem that politically, optically, this is a very important moment. what do the markets need to see from this meeting? >> it is an interesting one for the markets. the tensions we saw in the region are beginning to ebb away. the markets which might have

theycynical, and kim's -- might be taking some comfort. don't let's get to carry it away. they talk about denuclearization. all north korea said is that it has considered not conducting anymore tests at the same time as the chinese, who have been leaning on the north koreans, has said the main testing site completely collapsed. it might be that acn opportunity and they think they can do business with president trump. the point is that attention has seeped out of the region. the risk premium in that region is dissipating. not 100%. that is something we will talk about later. but as far as the piece dividend is concerned for markets, clearly, you can see this is already impacting south korea's currency. we will talk about it in that context of japan. in terms of your allocation and

emerging markets, this is significant? saker: it reduces the risk premium on the entire region. south korea is interesting. it opens the possibility of a longer-term, less risky atmosphere in japan and korea. it's a very important move and indeed in china because that is on the board as well. one pressingn the down on the north koreans to do something with koreans. they have been ignoring geopolitical risk not just here but elsewhere in the world. it looks as if things -- this short while back, generally. it looks better now. nejra: does it mean the market was right at ignoring geopolitical risk or could we see other risks ahead? where could investors be caught wrongfooted? >> i think not -- let's not get too excited. the korean affairs should be led by the koreans.

they have to negotiate with president trump. we have the iranian nuclear deal . that is a source of other attention. nobody saw the problem of the middle east and syria. we have to be careful. it is seeping up. fear is going out of the system now. we can concentrate on economics. that opens the door for better pricing. nejra: it adds another interesting layer to the are we entering a bond bear market conversation, doesn't it? we have not talked about the bond market this week in terms of geopolitics. that is part of the conversation. i have a chart here with the treasuries because we had issuance yesterday that shows investors climbing over themselves to get access to this. waiting until next week when we get more details on issuance. are you very concerned about the level of issuance that could make the debt profile of america look like italy? saker: there is a difference. .es, we are concerned

the united states does have strong economic backing. we are reasonably comfortable with that. we have said for a long time now that the united states of america had better growth. investors have developed markets. we know we will see further tightening. the attraction of treasuries as a safe haven is no longer there. anna: we will see the u.s. data later on. it might feed into treasuries. with us. coming up on the program, status update on stimulus. we will look at the bank of japan's latest statement on this future of the purchase program. nejra: the german chancellor heads to the white house today. can she help persuade the u.s. president to uphold the iran nuclear deal? we will discuss. this is bloomberg. ♪

>> it is 6:20 a.m. in london.

2:20 p.m. in tokyo with a nice picture of the empress palace. dollar-yen struggling for direction. the boj maintained its stimulus. the dollar had a good week generally against all its g10 peers. here is juliette saly. juliette: thank you. we saw amazon shares jump in extended trade after delivering bigger than expected profits in the first quarter and forecasting more of the fame. it sees operating income this quarter of up to $1.9 billion. amazon showed strengthen its cloud computing, subscription, and advertising businesses. it added $12 billion to the wealth of founder jeff bezos. microsoft has beaten expectations for third-quarter sales and profit, lifted by strong corporate demand for cloud computing. 7.4 $2 billion as sales rose by 16%. demandiding a wave of

which let customers run and store applications in the company's data centers. the company has agreed to sell pieces of its business for as much as 1.7 billion euros. it says the move fulfills requirements set by the european union and other regulatory authorities for it take over of monsanto. er's herbicides. airbus has handed over the fewest in a quarter since 2011 as delays held up deliveries of its narrowbody a320 claim. according to bloomberg calculations, the european manufacturing giant handed over 121 jets in the first three months. that is the fewest since the third quarter of 2011. the companies stuck with

plans while cautioning the requires an improved performance from engine manufacturers, and that is your bloomberg business flash. nejra: thanks so much, juliette. the bank of japan kept its asset purchase policy unchanged. while that was in line with expectations, the decision to cut the inflation target was not. votedw deputy governor with the majority, keeping its 10 year bond yield target at 0%, something some people have questions about. the ceo of hermes is still with us. i have a chart that shows various measures of japanese inflation. many are available. of them showing that inflation is stubbornly below that target. this remains six years in for kuroda. saker: that is the big challenge. normally, they say we will achieve the 2% target within two years. it is around the horizon.

they dropped it. they are basically saying we cannot do it. we will keep interest rates effectively at zero for are saying and they we need to stimulate the economy. it's ok. it's almost like inflation is stubborn. anna: what do you think of inflation? there was a good chart showing the widening gap between the 10 year jgb yield with the diverging policy. i want to bring it to the u.s. because we get this data later today. the eci data. some people saying this could steal the show from u.s. gdp. it was inflation expectations that triggered the bond selloff in the equity selloff back in february. when it comes to the fed, we are not expecting much out of the meeting. are they going to look through inflation? saker: they will look at inflation rather than look through inflation. they are expecting some inflation pressure to come through and they are expecting it to --

three or four hikes in interest rates going forward. i don't think you will get a whole lot at this stage because they will be cautious. what's clear is that if inflation is making a comeback in the united states, that's a sign of a better economic situation. they have had this problem for so many years. anna: the problem has been there for a long time. the growth story is more positive. the global central banking, the ecb is at least talking about exits, even if they did not this week. how much do you put the boj in the same camp? they are all moving in the same direction. they are just doing it at different paces. do you put the boj in that same camp? saker: the europeans are barely in the same camp anyway. the u.s. is in the lead of moving away from qe. the europeans are talking about

an easy policy for the time being. they are worried about how strong the economy is. the economy still needs to be stimulated. i am not so sure. anna: you think they will be boring this year? saker: i think they will be boring. nejra: he stays with us. anna: we have plenty of earnings to get through this morning. numbers out of airbus, numbers out of bbva, so focusing on the banking sector. nejra: amtech of course. anna: and technology. nejra: it might be safe to get back into tech stocks, anna. we will be talking more about that with some of our reporters. in somebig move higher of these tech names in the united states after hours. amazon coming out with numbers that pleased the market. it was not just amazon. over in the chinese session. we have gone from a period of worrying about chips to

being less concerned. nejra: this is bloomberg. ♪

anna: good morning. "bloomberg daybreak: europe." , fairly misty looking scene soggy looking seen across singapore. hazy. 6:30 in london. 1:30 in the afternoon in singapore. isn't equities on the front foot. technology is one of the things we are watching this morning. technology stocks overnight in the united states doing pretty nicely. we have got breaking news coming once again. nejra: this is french gdp we have got here. quite a bit of gdp data, quarter forarter on france, 0.3%. that is a slight miss on the survey.

we look at gdp year on year, 2.1 percent. a bit of a miss on the estimate of 2.3% and a slowdown from the prior reading of 2.5 or sent. anna: let's get into the micro story. daimler. theirre giving us revenue numbers. that's probably a mine was the 40 billion also estimated. shade off of the estimate. i'm analyses 2018 mercedes-benz cars even up slightly. it's coming through from the business as the ebit number looks a touch light. broadly in line. nejra: these earnings coming through. sanofi starting at 1.5 billion euros share buyback program. that is a red headline coming through on the bloomberg. we were expecting some update on some of the drugs.

impact tothe diminish. that is specificity. first quarter business net income coming in at 1.6 billion .uros that be the estimate first-quarter sales coming in at 7.9 billion euros. pretty much in line with what analysts expected. the ceo seeing a new period of growth starting in the second half. he also sees huge potential in disorder business in one of the big things with sanofi is the focus on deals. we hear anymore about that as the day goes on. we will be speaking. this will be one of the questions to the cfo that is later in london. anna: more breaking news coming through on the summit taking place between north korea and south korea. lots of pictures continue to come to us from the meeting, which is taking place this hour. and north korea

meeting for the first time in 11 years, and this only happened a handful of times. three times. moon and kim to make a statement. stephen engle is on the ground for us. nejra: let's check in on the markets. here is -- climbing outside of china. a lot of this comes from the momentum out of the u.s.. the technology sector really giving a boost. nasdaq futures boosted with the likes of amazon, intel, baidu. the analyst estimates. as you were saying, we are watching the historic meeting taking place. the kospi climbing as well as the korean won. the two leaders meet face-to-face. a big meeting out of the bank of japan. theirecided to keep interest rates unchanged. monetary stimulus program unchanged.

i am looking at the correlation between the u.s. treasuries and the dollar yen exchange rate. we saw it breakdown but it looks like they are moving back in direction, and this close relationship has returned. bank of japan governor have kuroda kicks off his sixth year at the home. he is expected to reiterate this intention. a former official and economist was saying that this is an opportune time for kuroda to emphasize the stimulus for the rise of the u.s. yields. the bank of japan wants to play a part of that. you can check out that chart at g tv as well. we have another central-bank meeting. russia, expected to keep rates unchanged. this would be the first time they don't make a move since july of last year. the bigger question is what will the governor say about easing in the month ahead? this chart shows it, the depreciation of the ruble helping to push inflation up. we could see that above their

target for the year-end. it has been under so much pressure as well. inflation moving higher. our economists are saying this will discourage further cuts in 2018. >> thanks so much, and marie. beatpredicted revenue that expectations. it delivered by its growing army of subscribers in cloud computing. are among the most viable companies in the world and show that perhaps, just perhaps, concerns over technology are using. joining us now with more, alex is still ceo of hermes with us. we will contact is on, the specifics, in a moment. in terms of the big picture, it seems investors got nervous around technology on a number of fronts. nervousness around chips. another was nervousness around regulation in the wake of the

facebook scandal. have we really learned anything in this quarter's results that tell us anything about whether we should be nervous? it seems too soon. got to separate things into broader areas. one being software and the other being hardware. we have seen software companies report. the amazon, google, facebook. they seem to be doing pretty well. the levels at which they were trading at the start of the year were slightly mind-boggling. that's going to change a little bit because the earnings are quite good. intel doing seeing quite well. nejra: on amazon specifically, investors, are they convinced that it could grow profitably? alex: i think so. if you look at the fastest-growing part of the business, it most profitable. insaneervices, they post growth margins of 80%, and that's where the profit is

coming from. that means amazon can invest in gaining market share and other parts of the business and will help drive growth in those industries. anna: your thoughts on the tech sector? i have a chart that shows the wobble we had at the start of this year. overdone? how excited are you about the tech story? saker: reasonably excited. services are very strong. this is partly a story of consolidating market dominance. with amazon, fears of tax regulation, which is what president trump was thinking about. they are saying they can get it. use the money to to invest in studios because they want to expand. wobble i think has something to do with the fact that if anything hits, the pricing is unusual.

230 times. i grew up thinking 15 times is overpaying for a stock. [laughter] saker: i am way too old. the wobble tells you that any negative news is bad news, and that links to the thing we saw about facebook that you wanted to bring up. it's the worry. these valuations are easy to knock off. >> in terms of the wobble in facebook, it has broken above its longtime support level as the earnings outweighed the privacy crisis. in the depth of that cambridge analytica scandal, we saw some efg funds start to sell off facebook. terms of theg, in perspective, how interesting and attractive a proposition are tech stocks? saker: they are very interesting. there are two aspects. one is a general one. any company. how do you treat your client base?

do you lose your social license? is an example. we saw the visceral reaction in the united states to that incident in one of their coffee shops the same with facebook. people are uncomfortable about the way that, perhaps, facebook handled the issue of privacy. what's interesting about that one is that it's extraordinary that most young people and .dults have not worked out i give you all my data for free, and i use this incredibly complex engine to say hello to my friends. the main point here is companies have to be worried about how they are perceived by society. otherwise, they can be hit. i think tech gives an impetus for people who think about the stability of the long-term, the ethical standards that tech companies -- anna: they liked them for the lack of carbon footprint. now, they are coming into focus. saker: the ethics.

if amazon is so much about it, there is an ethical element of what does it do with the data? same with facebook and so on. as ai develops, there is an ethical dimension as well. this is a lot of power that apparently these businesses have. anna: we all have to learn to read the terms and conditions. thank you very much. alex, thank you to you as well. on thebb had a busy week technology beat of courts. earnings from rbs at the top of this next hour which will round off the week for european bank earnings. here is what the management of some of the biggest lenders had to say about the banking sector's performance. operatings of profitability, we are strong across the board. from a geographic standpoint of of in asia and india -- view in asia and the americas. performingomy is

relatively well. we and the rest of the u.k. banks our bit more conservative in terms of marginal risks to our balance sheet. >> we are turning over markets into a machine to support the wealth management. we created this between global markets and wealth management. >> doubling the dividend is a good sign that we are on our way to returning excess capital to our shareholders and producing one of the most profitable quarters in the history of the bank for the first quarter. >> we aim to be a corporate led global investment bank based in europe with global reach. there is a rescaling of our ambitions, particularly internationally. if you like, discipline in terms of the focus. a host of voices from the banking sector. big names talking to bloomberg. somebody else had a busy week.

still with us. amber, good morning. give us the path of the various european banks and what they have taken. we will see how europe stood up to the u.s. competition. amber: the large european banks over the past week or so have taken wildly divergent paths in terms of strategy and reporting the results. deutsche bank yesterday announcing a radical shakeup of the investment bank, and that may involve job cuts and a retreat from wall street, whereas with other banks such as areclays, they saying they are strong enough to take on the competitors. on the other hand, in switzerland, we have the two biggest banks reporting different results. at ubs, the investment bank doing very well. the wealth management unit taking a hit. with credit suisse, completely different again. the investment bank did not do so well. the wealth management -- >> the share price reaction was very different.

nejra: it does seem one of the big things to come through was the divergence between barclays and deutsche bank in terms of the investment banking. , whatg ahead to rbs today will they be looking for in the next week and when it comes to the u.k. banks? amber: with rbs, it's all about the department of justice. without them, the mortgage bond probe, we have everything else on hold. we have the dividends, which are on hold until the doj says something about the fine, and without that, the government cannot exit its stake. pretty much, it's all frozen until the doj battle it out. anna: the timing of that is uncertain. the timing is uncertain. your thoughts on the investment banking story in europe? how important is it that europe has a big investment banking house that can stand up to the u.s. competition? we have barclays now.

deutsche bank is still there, but they are backing away. saker: deutsche bank is backing away from a lot of parts of it. it shows europe does not have as many strong contenders. let's wait and see how that goes. i'm not sure if it matters. and the americans have weathered the storm slightly better. the european banks are at a slight disadvantage. they remain the center of power and the american government seems to be harsher on american banks when it comes to fines, but we will wait and see if that is the case. nejra: we did see despite some of the good numbers out of the u.s. banks, those stocks drop. we have seen a mixed picture. first quarter tends to be the strongest in terms of banks. if this is as good as it gets, how bad could it get for the rest of the year? saker: that's a good question. part of it is the month of lending that banks have been able to do is slightly more muted than people expected.

they are still struggling with a business model. listening to the clips you have shown us. it's interesting how lots of other banks years are pointing to things within the universal bank rather than investment banking. be it other parts of the investment stored. the americans are doing better than the europeans is the best way can put it. nejra: the u.s. outperforming europe on the banks. thank you so much. the hermes ceo stays with us. amber chowdhury, thank you very much as well. bloomberg users can interact with the chart we have shown during the program on g tv , browse recent charts featured on bloomberg tv, catch up on key analysis. you can save your charts for future reference. anna: put them in your own research. pretend you came up with the idea. the german chancellor is the latest international into the

white house. can she swayed president trump on any of her grievances? this is bloomberg. ♪

nejra: breaking news crossing the bloomberg. any first quarter adjusted net coming in at 970 8 million euros versus an estimate of 1.1 billion euros. first quarter adjusting -- adjusted operating profit coming in at 2.38 billion euros. the net number is the key one to look at, and that came in at a miss. anna: plenty of corporate news this morning. juliette saly. juliette. amazon jumped an extended trade after delivering bigger than expected profits in the first quarter and forecasting more of the same. it sees operating income this quarter of up to $1.9 billion. amazon showed strength in its

cloud computing and advertising businesses. share spike added $12 billion to the wealth of jeff bezos. microsoft has beaten expectations for third-quarter sales and profit, lifted by strong corporate demand for cloud computing. profit rose to $7.42 billion. sales increased by 16%. ae software maker is riding wave of demand for its cloud services which let customers store applications in the companies data centers. former hsbc trader marc johnson has been sentenced to two years in prison and immediately taken into custody. his lawyers appeared stunned as district judge rejected his request to surrender at a later date. he is the first person to be convicted in a global crackdown on currency rating. that is your bloomberg business flash. thank you, juliette saly with the business flash.

be followed byll more candid exchange today when german chancellor angela merkel visit the white house. expectations that she can swayed trump are close to zero. joining us from berlin, matt miller. good morning to you. stage set. expectations low as to how merkel can change trump's mind on what is on the agenda. as toit's almost unclear why angela merkel is even going. officials in her own government have said they do not expect her to achieve her goals. getmain stated goal is to the tariffs that are going to start on may 1 that the u.s. plans to place on steel and aluminum out of europe, pushed back. it's unlikely that she will be able to do that. the macron government did not make any headway. she is also not expected to make any headway on the iran push. she wants to help keep donald trump in the iran accord.

germany and the french both worked on with the u.s.. that's unlikely as well according to officials from her administration. the problem is that donald trump seemingly wants more things for merkel then the germans want from him. he has more concerns. tradeconcerned about the deficit with germany. the u.s. has a massive trade deficit with germany. obviously, germany is a much bigger exporting country. he is concerned about the fact that the russians have helped vladimir putin sell his gas by .pproving this pipeline he would prefer to sell his gas to germany command of course, there are issues with allowing the russians to sell their goods here since they have got the sanctions. and then, he has got other issues with europeans that they just do not seem to be able to bridge their differences.

macron could not do it in three days. merkel has two hours to meet with the president today. nejra: from three days to two hours. thank you so much, matt miller in berlin. the ceo of hermes is still with us. we begin with geopolitical risk. we are rounding off with it. using the iran nuclear deal as a 65% probability of collapsing during trump's first term. what does this mean for markets and oil? saker: it moves higher. president trump -- it's not so black and white. president trump wants to change it. and south korea is anything to go by, he moving closer to a kind of deal. i think the reason chancellor merkel went to see him is they need to talk about that and they need to talk about the geopolitical situation with the russians. that is what they are discussing. it discusses the oil price.

ultimately, the stability in the middle east is to deal with a deal that has to be struck. that's all part of the same picture. anna: it's the e.u. level that holds the competency. it's not the nationstate. angela merkel will be very keenly watching the developments around the trade conversation. matt was talking about this u.s. trade deficit with germany. it's very easy to see why president trump has germany in its sights, i suppose, when it comes to trade. this is the kind of thing that preoccupies him, when it comes to china and germany. how much of this is a threat to the german export engine and the european growth story? saker: it is something of a threat to the entire world system if we go into tariffs without -- that's partly what she wants to talk to him about. he has a very simple view, which is it's not fair. we are selling to us more than

we are selling to you. we heard the story about the gas. it balances things out. it's not so simple. the reason that there are exports from germany to the united dates is german products are attractive. american consumers want to buy them. to some degree, it's a story of the way in which take in the u.s. has fallen behind and is struggling to compete in the export markets of the world. nejra: geopolitical risks seems like something that is concerning the ecb as well. we had that meeting yesterday. the decision. balanced? saker: balance from draghi hinting that eventually, they might start tightening, but they easy path for now. they want to make sure the recovery, which is not as strong as it should be, is nurtured. anna: were you surprised? we got the reporting this

morning that said the austrian governor, central bank governors, was pushing for a conversation on this, but he was denied. it was not discussed. is growth story in europe -- it moderation, loss of momentum? saker: that's what they are worried about. last time we spoke, the story in europe was slightly firmer. it's clear the ecb will stop talking up its interest-rate rate hikes. it seems to have lost momentum slightly. still stronger than it was in the past. they are worried. top of that. they have to watch carefully, which is why draghi wanted to talk a moderate game. nejra: there was a tweet saying they at least managed to change the date on the statement. thank you so much. ceo of hermes. high-stakes summit. kim jong-un crosses the border to meet his south korean counterpart for historic talks.

we will have the latest, next. this is bloomberg. ♪ this wi-fi is fast.

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♪ nejra: good morning, from bloomberg's european headquarters in london, i enable che pitch. anna: i am anna edwards. making history, the leaders of north and south korea hold their cross-border summit, but can they strike a deal to end pyongyang's nuclear ambitions? anna: the bank of japan steps back from its 2% target as it leaves policy unchanged. the new deputy governor votes with the majority. nejra: amazon delivers. beats gain as big tech on earnings and microsoft gains.

let's bring you some breaking news. first, out of japan. honda is to buy back up to 1% of shares for ¥70 billion. we also have it seeing full-year operated income at ¥100 billion. that is a miss on the full-year operating income. and while, it sees full-year net income at ¥570 billion. then, that is a miss on full-year operating income and net income. the full-year dividend is at ¥108. final dividend at ¥127. shares for ¥70 billion. the banking sector for us,

rbs saying they retained their 2018 guidance, dropping to the bottom line of the p&l. first-quarter net income at 792 million pounds, the -- that is nicely ahead of the company compiled estimate. this is the group of estimates compiled by the business. million was the estimate. that looks to be nicely ahead. questions going into this, what kind of momentum do we see in the trading business at rbs? thepretty well because of market. what positioning will we get around the rbs mortgage probing the united states? yet to settle with the boj, so what guidance will we get on further provisioning? the fact they are retaining their guidance -- they have already set aside 3 billion pounds for the settlement of that and the timing is unclear around this.

also looking at what they have to say about the dividends. they have yet to restore the dividend. the business is still 70% owned by the u.k. taxpayer. for commentary around that. anything on provisioning and the dividend. the report changing its structure. of the u.k.paration retail banking business from investment banking. we have seen this at barclays, and we see rbs making headlines on that front. let's get more japanese corporate earnings. nejra: sony, operating profit outlook coming in at ¥670 billion. that is a miss on the operating profit outlook. have for your operating income coming in at 734.8 billion yen, a miss on the estimate of 743.2 alien yen. -- billion yen.

quite a few misses for sony. we have -- in terms of equities, a strong session in the u.s. yesterday and asia has track tire. let's look at futures and how europe could open up in an hour. in terms of u.s. futures, we are down almost .2% but we could see a little bit of a strong start in europe. .2%,t gains, ftse 100 up cac 40 futures pushing higher, as a. we see tech stocks leading these global gains in equities. if we do see a gain at the european open, that will be a second day for the stoxx 600. anna: a few more headlines from rbs. pretax operating profit coming in at 1.2 billion. the point out the changes in terms of the structure, it seems

to be management changes, naming different people. keep an eye on that. , there hasa look been positive momentum in the asian equities session, the technology sector at the front of that. this is what we saw on the msci asia-pacific, a positive uptick. we will give you the u.s. futures picture in a moment but we have a pretty mixed future -- picture in the futures. be higher.esting to elsewhere, futures looking more tepid in the u.s. session. yield, 2.8 9%, dropping from the 3% we touched earlier on this week. we dropped from the 3% level. next week, more detail about issuance from the treasury in united states in the second quarter. dollar weakness against the korean won as we see the two leaders in korea making that fascinating meeting across the

unification bridge. depreciating against the korean won. let's see how european bond markets are trading. the cash open about now. let's look at the futures. bund future's pretty unchanged. same for o.a.t. futures. bondss we have european taking their cue from what the u.s. is doing. we didn't see much repricing in the european rates market based on the ecb decision and press conference yesterday. a study session in europe is what it looks like. we will keep an eye on the periphery, where we saw some more moves than in the bund after the ecb mood -- meeting. let's get the first word news with juliette saly. the bank of japan has left its monetary stimulus program unchanged as governor

corona started his sixth year at the helm, just as he did the other five. the decision to maintain the yield curve control program was forecast by all analysts surveyed by bloomberg. the central bank removed previous wording on 2% inflation around fiscal 2019 while leaving its inflation forecast largely unchanged. the u.s. senate has confirmed cia director mike pompeo to be secretary of state. after weeks of heated debate that was as much about growing discord over the administration's handling of diplomacy as was about the nominee himself. thewhite house marks nomination with eight tweet -- a tweet. donald trump has made one his strongest hints yet that he may intervene in the justice department's rustic investigation -- russia investigation. he said "i have taken a position

and don't have to take this position, and maybe i will change." this has the senate panel protected robert mueller from being fired without cause. the white house has confirmed donald trump will make a working visit to the u.k. on friday, july 13. the trip has been anticipated for more than a year after britain's prime minister was the first foreign leader to be hosted by the president at the white house after his inauguration. -- here, theresa may reclaimed the strength of the most special relationship between the countries and extended an invitation for a state visit as a gift of the queen. in the u.k., the billionaire owner of the nfl's jacksonville jaguar's has offered to buy the home to england international football team. he said a deal for the 90,000 feet wembley stadium would protect the jaguar's position in london, where his team has played for the past five seasons. the offer is worth about 600 million pounds.

the owner of the football association, which will keep the 300 million pounds a year from the program. global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . asia for the final trading day of the week. it is the best performance so far from asian equities this week, but regionally, we are on track for a loss. of about .6% over the course of the week. it is all about what has been happening between the koreas. accost be up by .8% and a strong showing from the won. byan's index opening higher 7.1 percent and australia had a good session. we are seeing chinese markets underperform, but fairly flat in late trade. in terms of stocks we have been watching, a lot of focus coming through today on these stocks in seoul as we see the korean

leaders meet. we have seen the manufacture of cement products up by 12% on the and softbank also rising on speculation you could have a tie up between its sprint unit and t-mobile. domino's pizza up by 7.7% in sydney, the most since august 2016 on the back of very strong first quarterly pizza sales from its parent in the u.s.. early in the morning to be thinking about pizza, but thank you. let's get on to the story in korea. kim jong-un has called for more meetings with his south korean counterpart after becoming the first north korean leader to cross the border to hold talks over his nuclear weapons program. he was greeted by south korean president moon jae-in ahead of the historical summit between the leaders. as talks got underway, kim

called for a new history of peace and prosperity. there are a lot of people hoping for the best results. i am worried we will disappoint them if we do not follow up on good agreements from past meetings and also, if we don't make this meeting an opportunity to improve our relationship. stephen engle has been watching the unification bridge. one of the things that has caught all of our attention is the fact that both leaders reflect step into the north. is there anything we can read into this? that is one thing i noticed when i was watching on my smartphone. the interaction between the two gentleman was quite congenial. it was very friendly and there was a moment when moon jae-in said to kim jong-un, when can i come to pyongyang? , in what seemed like

an unscripted moment, in a very scripted pump advocate circumstance ceremony -- pomp and circumstance ceremony said, why not now? they stepped over the bulkhead into north korea for about 10 seconds. the south korean press congregated all around me here thaticked up on that and was their headline most of the morning. we have now had that ceremony about five-and-a-half hours ago and we were waiting for a south korean presidential spokesman to give us the details of what they have been talking about behind closed doors. briefing.ery short the spokesman said the two gentleman had serious and frank discussions about denuclearization. ngey confirmed that denuki the peninsula was on the agenda, but there were no details. the briefing was pretty much over after they announced what he would eat at the banquet.

be two wives will also joining. not a lot of detail on what they talked about behind closed doors but in public, they were very friendly. the theater, the history, the pageantry on show here. fascinating to watch, but of course, the big picture for investors, for those watching the geopolitical situation on the peninsula, the big picture is how this lays the groundwork for trump's meeting with the north koreans. absolutely, because one of the main requirements of the trump administration is a commitment, firm commitment from the north koreans to denuclearize. right now, they have some 60 nuclear warheads and countless potential icbm missiles. we don't have any firm commitment they are going to get rid of those and denuclearize. they said they will halt testing

and dismantle the testing site, but have not said they will abandon their ambitions. quite the contrary. the news agency and other domestic news organizations in arenorth korean country saying, we are in nuclear state. to bes going to have something these two gentleman -- ins this afternoon and the session between them. before the united states can firmly commit and say yes, we are going to meet kim jong-un on equal terms with the summit with donald trump. nejra: stephen engle, thank you. joining us, the european head of global markets research at mufg. great to have you with us. given what we have heard from north and south korea, have markets been right to be fairly sanguine about geopolitical risk ?hus far >> when you consider where we were a year ago, none of us

would have an image of where we are today. there is a lot of unanswered questions, but markets are a little cautious. for sure, this is significant progress. as you know, there are so many different elements of geopolitical risks globally and definitely, there is a shift to the middle east in what is happening there. to be honest, what happened last year in korea, yes, it came and went from the market focus in geopolitics. it subsided a time ago and focus shifted elsewhere. anna: do you read this -- reduce the you increase your assessments of emerging markets in that region as a result of what we're seeing here? or would that be to overstate it? skeptical about what can happen here. there is very little we know about how far the process can go. does it materially change things yet? think itdon't

materially changes things. there is an element there that is on the positive side that wasn't very year ago. that has to go into your assessment of risk reward in terms of the e.m. in asia, but bigger pictures at play. i mentioned the geopolitics, but it is not just the geopolitics. it is china, 3% yield in the , real yields have been moving higher in the u.s. that could be good for growth in the e.m. space, but if it is have sometentially reversal of positive inflows we had in 2017. anna: there is a stronger dollar, a bit of a thing. nejra: on that point, let me show you this chart showing emerging-market stocks. can talk across other asset classes, but when it comes to the e.m. space, if we see the lastsal from what we saw

year, what will be the biggest driver? is it geopolitical risk, the fed, oil? derek: i would say mainly it is the federal reserve. the fact that if rates at the long and continue to move higher, that kind of changes the risk reward balance in terms of taking additional exposure in the e.m. space. that would be the number one. a magic you have number? we talk about 3% on the 10 year. said wait for 3.5. is there a magic number for you or is it too simplistic? derek: it is difficult to give a magic number. at 3%, it was disruptive for equity markets. now we have to retrace the 10% correction we had in early february. we have had great earnings results from the united states, but the u.s. markets are still struggling. that is what i am looking at.

his 3% going to undermine equities going forward? if it does, there could have -- that could have reverberations. anna: thank you very much. derek halpenny stays with us. movingup on the program, -- moving the goalposts. the boj removes timing around its inflation goal. we will talk monetary policy. and the sanity's ceo joins us for an exclusive interview at 7:30 a.m. u.k. time . we will talk about the earnings today and probably about m&a. this is bloomberg. ♪

♪ anna: good morning, this is bloomberg daybreak friday morning. 30 minutes from the start of the final cache trading day of the week. where are we going on european markets? equity markets would focus a

little more on perhaps the geopolitics and historic events on the korean peninsula and the earnings story. we are expecting to go a little higher ahead of key data on the european equity market open. s&p pointing downward. let's get the first word news with juliette saly. manus: amazon jumped in extended trading after delivering bigger than expected profits in the first quarter and forecasting more of the same. up to $1.9ng income billion. amazon showed strengthen its cloud computing subscription and advertising businesses. it added $12 billion to the wealth of founder jeff basis. economic reemergence helped drive bbva's earnings the highest in three years. that income rose to 1.30 4 billion euros in the first three

months of 2018, exceeding estimates. the bank said it would have been 22% if it hadn't been for sharp currency declines in emerging markets. joins us for an exclusive interview after 7:30 a.m. u.k. time. has handed over the fewest planes and a quarter held up11 as delays deliveries amid the air -- narrowbody a320 planes. giantropean manufacturing handed over 2100 jets, the first -- fewest since 2011. the company stuck with plans to deliver 800 aircraft this year of improvedning performance from engine manufacturers. that is your bloomberg business flash. japan gavebank of its latest policy decision today, keeping stimulus unchanged. absent from the statement was mention of reaching its 2%

inflation goal around fiscal 2019. the core inflation target remained unchanged at 1.8% over the same period. globalopean head of markets research at mufg is still with us. this point about not mentioning reaching the 2% inflation goal, what can markets take from this? a danger thats markets will perceive this as the boj giving up on reaching that target. we are already in a situation where the bank of japan has been tapering its quantitative easing after it has shifted focus to yield curve control and this sits with the idea that we are seeing this slow unwind and reversal of monetary policy in boj. if they are giving up on their mandated goal, the target of their mandated goal, there could be a perception there in terms of shaping monetary policy expectations. anna: the press conference in a few minutes time -- it seems you

could make the argument that it takes them closer or further from quantitative easing. you put a hawkish spin on it and that enables us to tie the boj in with other central banks. derek: the fact they have been so far away from achieving it, the market reaction is fairly muted. it is quite obvious. investors have come to their conclusion a long time ago but in terms of longer-term expectations about the direction the monetary policy, there is internal debate going on within the boj about whether 2% is a credible inflation target. scopedjusts the potential going forward. beenese investors have quite active in hedging their foreign exposure and that means dollar-yen hasn't been moving higher as that nominal spread and u.s. rates moves wider

wider. a lot of people expect dollar-yen to go higher because of that bit we haven't forecast either way. part of the current account but also japanese investors continued to hedge actively, even though the cost of hedging is rising. nejra: also come at you are a little bearish on the dollar because of politics generally. derek: yes, i think we all know about president trump and his unpredictability, but we have midterm elections in november and every special election that has taken a place since trump's victory has seen a massive swing to the democrats, including the eighth district in arizona on tuesday, with a 20 percentage point swing. it though republicans won the seat, there was a swing to the democrats. the average we have had, democrats easily take back control of the house in november. anna: thank you, derek halpenny at mufg. he will continue his conversation with bloomberg on

bloomberg radio next. tuning in for that. nejra: that is it for daybreak, europe. "bloomberg markets: the european open" is next. this is bloomberg. ♪

♪ guy: good morning, welcome. you are watching "bloomberg markets: the european open." from london. i guy johnson, matt miller is in berlin. matt: asian stocks are higher as amazon, intel, and by do provide a earning boost to global equities. european futures are mixed. the cash trade is less than 30 minutes away. ♪ guy: kim jong-un becomes the first north korean leader to cross the border.