and see how you could save $400 or more a year. xfinity mobile. it's a new kind of network designed to save you money. click, call, or visit an xfinity store today. >> gd rning from bloomberg's european headquarters in the city of london. i am anna edwards. this is daybreak europe, and neither today's top stories. wti hits $70. u.s. crude hits the highest level since 2014. traders brace for donald trump's decision on iran. the opec nation speaks out against higher prices. customs union compromise. moderates look to revive an argument over keeping close ties after brexit. lebanon votes. results are expected soon as the nation wants its first parliamentary election in nine years. we are in beirut and will hear

from the central bank governor. good morning, everybody. this is "bloomberg daybreak: europe." manus is joining us shortly. let's talk about what's going on in this market. this is a picture in the asian session. .1%.e up by we have been fairly mixed in the asian session. theaw holidays purveyed in calendar last week, and we are back from those, so we have a full complement of markets in play, and this is the response we are seeing in the asian session. , u.s. conversations did not seem to be conclusive. big story for us today is in terms of the oil price. we will ignore that one. the oil price is entirely irrelevant to the conversation. $70 per barrel is where we trade on wti.

we are above that level. is the date we need to watch out for of course because president trump is going to decide by that date want to do about iran, and the bloomberg u.s. dollar index. we had to put that in because it's such a big talking point with the strength in the dollar. today, a little bit of respite for the emerging markets from turkey, to argentina, as we see the dollar flat morning. pretty flat. we will talk about these elements a little bit more as we go to the program. this is a picture on the futures, up quite decisively on the u.s. futures. you are expecting it to go higher at the start of trade. u.s. stocks posted the biggest increased to nearly four weeks. unemployment at an 18 year low. despite that lackluster topline number, that did not seem to distract too much. inconclusive talks over in china is certainly something we are focusing in on.

we will talk about the italian political story later. story, very relevant as well. we are marking anniversary in terms of the bailout. ministereek finance will be joining us at 11:00 in new york. 4:00 p.m. london time. terms oflk about in the debt burden in greece and whether that burden is going to be maintained or sustainable. that's get the first word is up date here is juliette saly. juliette: thank you. donald trump's lawyer has said he is leaning against making the president available for an interview with special counsel robert mueller. "abc's this week, rudy giuliani said trump would not have to supply with it if one is issued. if asked whether he was if you would take the fifth amendment, giuliani said "how can i ever be confident of that?" >> we don't have to.

he is the president of the united states. we can assert the same privileges other presidents have. he negotiated a deal. juliette: the u.k.'s foreign secretary had said abandoning the iran nuclear deal would be in it. boris johnson's comments came in a new york times opinion piece as he embarks on a mission to convince the trump administration cannot walk away from the historic agreement. meanwhile, iran's president, thean rouhani, has warned u.s. would quickly come to regret its decision if it chooses to pull out of the deal. u.k., conservative party tensions over brexit have erupted. the senior minister fueled speculation that the prime minister may be planning to revive a customs proposal rejected by eurosceptic members of the government. in an interview, gregg cohen clark saidthe -- red it remains on the table. theresa may is facing a choice between staying in the customs

union or leaving without a deal. either could see rebels destroy her government. vote counting is underway after the country's first parliamentary elections in nine years. the main battle is between western and saudi-backed coalition headed by sayed hariri and has below. the incoming the -- and hezbollah. the incoming government would receive 11 billion dollars. >> there is hope from the market formed toity will be implement the resolution of the paris conference. juliette: global news, 24 hours a day on air, powered by more than 2700 journalists and analysts in 120 countries.

a fairly positive session in asia to kickstart the week as we see wti crude above $70 for the first time in three years, supporting the energy sector. we see a positive pickup in u.s. futures as well. we have the and fairly strong with the 109 handle. the nikkei down by around .1%. very strongly of coming through from chinese large-cap companies as they come back online after the golden week holiday. you korea out of action today for a public holiday. in terms of sauce we are watching, i mentioned the energy players. cnooc at its highest level since october, 2015. with 4.2 5 billion aussie dollars. the housing market in australia is in good shape. we are also watching yamaha in tokyo. it has risen to a record, numerous thing its top position

on the company is solid. it raised its earnings estimates on revised company-specific assumptions and sees pretty solid growth coming from the china market for yamaha there. anna. very much, you juliette. juliette saly in singapore. manus, we have breaking news. very relevant to the next story. great news coming through from nestle and starbucks. seven to pay starbucks $.15 billion as part of a global coffee pack. nestle agrees to market starbucks products globally and starbucks pays a chunk of money -- nestle paying a chunk of money to starbucks in the process. that's a lot of money in coffee. manus: $7.1 billion. if you think about the features of what's going on, last week, we focused on walmart. we focused on some of the other big deals that have gone through. the question for markets is where are we in the growth story? is this the cycle equity market

behavior that is coming through? nestle agrees to market starbucks products globally. i suppose this is about the momentum in all of those growth markets. one of the markets on the move is crude oil, $70. $70 per barrel and rising. the highest since november 2014. this comes as traders brace themselves for u.s. sanctions to be reimpose on neuron. may 12 is the deadline for president trump. he says he will decide whether or not america will statement 2015 iran nuclear deal. for more, let's bring in andrew bardin in dubai. he is our government editor. to may 12nting down command you. good to see you this morning. it's been well flagged that trump is probably more likely to withdraw from this than to remain in it. is that a fair assessment as we go towards mel 12 -- may 12? andrew: he likes to keep them guessing. he loves the theatrics.

we saw that in the run-up to the g7 last year when he pulled out of the climate accord. he loves to keep everybody guessing, but i think your assessment is probably right at this point. certainly, he surrounded himself with people who are more hawkish than perhaps others were. i think if you look at some of the activity that has been taking place, we had merkel go there, we had johnson go there. i mean, you would not have all of this activity taking place if trump had signaled he was going to stay in the deal. they are either trying to keep him in our, with some sort of compromise solution, but it's not clear what that is going to be, and it's not clear if he will want to play ball. anna: andrew, good morning to you. is sending the oil price above $70 per barrel. there are varying opinions within opec on how high that oil price should go. saudi and iran seem to be on opposite sides. why is iran resisting a push for

higher oil prices? andrew: i don't think saudi arabia and iran can agree on the color of the sky. they seem to be on the opposite side of almost everything. its strategic on the iranian side. iran has a very diversified economy, cut off from the global theymy for a decade, but have no problem operating in this environment. the iranian breakeven price for oil is somewhere in the mid 60's. the saudi arabian breakeven is up in the 80's. they are trying to convince people that aramco is worth $2 trillion. they really need higher prices. iran pokes saudi arabia, it's going to do that. that's why this is playing out in the oil price. iran is trying to sit back and watch saudi suffer a little bit. iran is to be locked

out, that's nearly 700,000 barrels of oil per day. say inwhat they had to the story the team wrote up this morning. we strongly believe the oil market -- i mean, you have got to start. here you go. we strongly believe the oil market should not be political. political interference would disrupt the process of development in the market. cannot agree on the color of the sky. that's irony. the oil market is the personification of politics. andrew: i think it's very political. you have this coming. for him to save political, we will have to security iran is also looking long-term. to make sure everybody has not moved away to renewables. they need to make sure the oil demand stays there. they keep the price down and keep that going. at the end of the day, all these considerations, the iran deal, the tensions in saudi arabia, all this is playing out and

feeding into the oil price from this region and pushing it up. anna: thanks so much, andrew. andrew barden joining us from dubai with manus. lots to talk about when it comes to the oil price. the broader ramifications of the higher oil price, crucial to many market disciplines. joining us now, the chief economist at commerce bank. a good morning to you. thank you very much for joining us this morning. i have a chart which shows oil positioning recently coming off record longs. many people have been positioned for a higher oil prices we see a higher oil prices morning around iran and the politics story. what does a higher oil price mean to you? how is this changing your thinking as the pace of these games seems -- gains seems to be wrapping up? follow thets inflation rate. the increase in the oil price is an argument that headlines inflation for the eurozone. before aroundust

summer. july or august. manus: we are going to see more and more of these stories written up. oil will have the headline in the marketplace. the question is, what happens between opec and non-opec in whether they continue their agreement to take supply out of the market. just how tight is the market and the consequence for inflation? i would say, from a fundamental point of view, we think the oil price will decline at the end of the year. the main reason is not u.s. oil production has increased a lot -- is that u.s. oil production has increased a lot. u. will soon be the world's largest oil producer.

this is the main reason why the oil price should in medium-term go down again. however, as far as inflation, we are likely to see 2% during summer. this may influence the ecb to some degree. the core inflation figure continues to fluctuate around the near 1%, and it's going to stay there because the unemployment rate in the eurozone is more than 7%. you have mass unemployment, wage increases of a near 1.25%, and core inflation is likely to fluctuate around the mere 1%, and it is unlikely to rise as expected by the ecb. anna: you are suggesting the ecb actually change the inflation target they look at, focus on a long-term inflation target rather than a very short-term one, and you are suggesting inflation will not reached the ecb's target for years to come.

how far out into the future, even with oil prices on the rise, is achievement of that kind of target? joerg: well, we have seen over the past couple of years that the influence of eurozone indicators such as unemployment, etc., on the core inflation, has been declining. the phillips curve is quite flat. this has a lot to do with globalization. inflation than penang impact of globalization will vanish, however, the next dampener is already there. this is digitization. the dampening impact may last five years or so, and therefore, sensek it makes no longer to concentrate on short-term inflation target, looking three years in advance because given digitization, the ecb five inevitably low inflation, and

the collateral damage of this is that core inflation will not rise, but it's loose monetary policy will only produce inflation in the end. i am wondering, then, if we take that five-year horizon you have answered anna's question was, what does that do to your view for the ecb? we thought the bank of england would be getting ready to tighten this week. we thought the ecb's language would be no one stand changing by the summer. i am presuming a must delay -- i must delay. i would say, when core inflation does not really increase, this of course means , very latel be very to deliver the first rate hike. i expect the first rate hike to come in on a more even later,

and i do not expect a real rate hike cycle. they have to because we do not look at the issue with a little core inflation, and i will never forget the root cause of the summer debt crisis has not yet been solved. all this means that the ecb is in a kind of trap, and they are unlikely to deliver a classical rate hike process. it has been pricing in too much regarding the ecb. anna: thank you very much. interesting thought so far. he stays with us on the program. headlines crossing from hanover. first quartecombined ratio reaffirming group net income guidance for 2018. confirmation of those numbers is one of the headlines coming through from hanover read this morning. hiss to be sworn in for fourth term as russian president today. we will take a look at what that means for the russian economy. this is bloomberg. ♪

anna: it is 6:20 in london. ms yet pacific making headway, and a mixed session in asia. of thingshole host going on. geopolitics will be front and center. weterms of the week that have had, russian president vladimir putin will have the pomp and ceremony. it's his inauguration for his fourth term, held in moscow. who is in, who is out, who is hot. manus: absolutely. watching for key appointments is one of the key focus is. we will have an marine to tell us through what to expect. it is super thursday for the bank of england.

the inflation report. manus, this is supposed to be the month of the rate hike, wasn't it, until mark carney gave an interview here domestically in the u k what changed expectations in the market which have been confirmed by pretty weak data? manus: absolutely, and between that and brexit debate, the customs union debate, you are looking at sterling dropping all the way back. 135.35. terrible turmoil in cable. president trump has said he will decide whether the u.s. stays in or pulls out of the iran nuclear accord. the iranians have one in mind versus the saudi's. they cannot agree about the difference in the color of the sky. that is our very own juliette saly in our

singapore studio. blue here,lways manus. warren buffett warned about the "nightmare" tied to new accounting world changes. hathawayes berkshire to report unrealized gains or losses in equity investment in that income which helped fuel a $1.14 billion loss in the first quarter. that marked the companies third net loss since 2009. talks between softbank and switch three are reported -- swiss re are reportedly close to collapsing. enthusiasm has waned in recent weeks. the japanese company has been in talks to buy a stake in the swiss group. the french finance minister has warned strikes and excessive salary demand by unions could largest airline. the pay claims are unjustified, according to bruno le maire. resigned.'s ceo

shares dropped for the most in six months after a warning that full-year results may fall short of 2017 levels. nestle has agreed to enter partnership with starbucks to market the coffee chain's consumer and food service products globally in a first kia of major rivals in the java market. sales ofess has annual $2 billion. nestle expects the deal to contribute positively to its earnings per share and organic growth targets from 2019. and that is your bloomberg business flash. anna, manus. manus: thank you very much for the roundup. u.s. stocks logged their biggest advance on friday in almost four weeks after the country's 3.9ess rate hit a low, percent, as the american trade delegation came back from

washington. very little to show, some would say, for two days of talks. , good to see you again. when we look at the flow of data from the united dates of america, pc above 2%. unemployment rate, the lowest since 2000. growth which is an evil for some -- enviable for some nations. of thee in the recovery united states of america are we? joerg: of course, you are right. this is a very old upswing if you want. this is the second oldest upswing since the end of the second world war. this says nothing, because in the end, it all depends on whether we have exaggerations. do we have inflation? i cannot see this, and therefore, my forecast is that this upswing will continue. ina: that is your forecast terms of the strength of the

economy. what does that do to the dollar? we have been watching the strength of the dollar over the last week or so, but it was last week. your expectations for where the dollar has and what that does to your universe? the dollarave seen index weakening starting in the middle of december last year. and this slight in the dollar index that we cannot really explain this, because in this period, markets have priced in additional rate hikes for the federal research more than for the ecb. this should have been dollar positive. we said thego, dollar will recover because we are not able to explain its weakness since the middle of december. this is what we are currently seeing. the dollar is recovering. this will continue. is 116.re euro-dollar manus: thank you so much, joerg

kraemer. your enthusiasm for the dollar, anna, according to img. we are going to talk about lebanon next. elections are on. nine years since we had one. we are live to beirut. this is the number. ♪

anna: good morning, everybody. "bloomberg daybreak: europe."" 6:30 here in london. 09.18 for dollar-yen. those are the headlines this morning. let's check in on the markets. good morning to nejra cehic. nejra: good morning. as you say, a bit of a mixed session in asia. strength in china and australia. weakness in south korea. japan flat overhead. they were closed on thursday and friday in japan. the msci asia-pacific index up just .1% overall. a little bit of a bias towards

risk appetite. let's move onto the next chart because one of the key stories is what's happening with oil. we are seeing wti above -- it trades at 7032. we are up 1% in the session. brent is above $75 per barrel. a lot of this is driven by geopolitical tensions and the concern around possible geopolitical tensions with the may 12 deadline approaching and the risk that we see the u.s. pull out of the iran nuclear deal. fresh sanctions are imposed. the premium seems to be priced into the geopolitical risk premium which seems to be coming into these markets over the now.mentals for looking at the fx space, we saw dollar strength last week. the dollar had its best week since the u.s. election. we have also seen hedge funds covering some of the shorts. when you look at the cftc data, dollar-yen, we were seeing dollar weakness earlier. a bit of a bid for the safe

haven for the fourth day in a row. we are trailing pretty flat. the decline in dollar-yen might find some support. that seems to be at around 108, and really, some other technicals are showing that 108 does seem to be a little bit of a support level. looking at another technical with sterling, we have seen sterling drop around 2% last week. it hitp around 6% since the post brexit high back in april. it has now dropped below the 200 day moving average support. we trade at 13536. the bad how much of news is priced in a to continue to see theresa may under pressure from both sides of the brexit divide? we have the boe meeting this week. the probability of that rate hike has dropped from over 80% to around 10% now. we could still see a little bit of a gain in the pound if what we get from mark carney and his

colleagues is a hawkish hold. anna, manus. yous: a hawkish hold, there go. let's hope he doesn't flip flop. to know.all like let's talk about emerging. cut you little markets. we saw some moves there punctuated by selloffs. the argentinian peso getting battered. the u.s. dollar had its best week since 2018 all a myth the prospects of higher u.s. rates. for more on how emerging markets and currencies are going to perform, let's bring in dana. if we look at the ruckus that took place at the end of last week, the first question that comes to my mind, i look at the etf flows in equities. the outflows from equities last week, $870 million, the most since donald trump took to the seat in the white house. how much more rockets could there -- ruckus could there come for em? >> even though we have seen a

lot of selling across the board, so far, there are some investors out there that think that actually, it could get a lot worse. you still have a lot of central banks that have not shown that they are willing to do with necessary in order to protect the currency. that's one thing. the second thing is we have a report from j.p. morgan saying that so far, only hedge funds are the ones that are responsible for the selloff. that means that the real money has not actually sold off yet. if people are convinced that the central banks are not doing enough in order to protect the market, then really, they can start to jump in, and this could get a lot worse. manus: ok. anna, jump in here. anna: the sense is that things can get worse. i read a couple of different styles of editorial over the weekend. on the one hand, there are those who say emerging-market crises, they start with a stronger dollar. look, that's what we've got, and

that's what's to come. others suggest there is a lot less dollar borrowing in emerging markets than at the heart of other -- height of other crises. there seems to be a lot of mixed thinking. joerg: -- dana: you are absolutely right. there are two very different camps here. and bear in mind, as we went into this -- i don't want to call it a crisis gesture -- but as -- just yet, but as we went into the selloff, there was a feeling that emerging markets were stronger than they were the last time we had a selloff of this magnitude. however, at this point, we still do not really know what the central banks are going to do in order to protect our currencies. that's a very important thing to keep your mind on. the second thing is that we do not know where the dollar is actually headed. manus: i think you put it very simply. what frightens me more is if the hedge funds are the only ones getting out through the gate, it

the real money has to flow out as well. by the way, the debate in the market is going to be whether the argentinians have just stymied a massive eruption or whether they have done enough to stop it. you talk about the flow of money and say the selloff in em will deliver like whack-a-mole. put their money somewhere. where is the protection mechanism? we have seen assets that held up quite well. egypt has held up quite well. not the stocks, but the bond. nigeria has actually held up quite well. even though we have seen a selloff in the rand, the rand has not been the volatile currency we all expect it to be. also, south african bonds have done relatively well. furthermore, last week, we saw research notes saying some investors are quite happy with the ruble.

there are some safe havens out there. we start to see more and more people say exactly what they are comfortable with. bear in mind people still think that emerging markets have and they are in a much better position than they were last time. manus: i am waiting for justin to say but it different this time. thanks very much. let's broaden things and consider where the emerging-market turmoil does to other assets and the global growth outlet. good to have you on the program. we have been talking about higher oil prices and emerging-market turmoil. in tact is the global growth story for you with those headwinds in play? well, to tie in with the

emerging-market story, with interesting is the key question. it's really a global phenomenon related to the dollar strength, more the combination of what you could call idiosyncratic events with respect to individual countries. there are just so many of them. to what hasback been discussed earlier in the program. you have a strong dollar. inis related to the growth the u.s., which admittedly was a bit softer in the first quarter, but still looks great, and we have the fed, which is keen to tighten. we are left with the key problem as economist. -- economists. it gives you the temperature today and what it will look like within two months. if you look at the fundamental u.s.,s, you look in the you look in japan to take these three.

they are pretty good. growth in the main reasons in the world will continue to be quiet enough of potential for the several quarters to come. a very good morning to you. have strong growth for the several quarters to come. error or let policy prudence to put some more rate hikes on the table? prudent for them to get out in terms of the language and the nuance? william: that is of course the balancing act. the u.s. was fairly fascinating on theek to have that symmetric goal. it gives me some uncomfortable feeling. what i mean by that is in the short run, there is relief.

a means they will not be in hurry to tighten, but eventually, it can put us in an areronment where markets even more sensitive to inflation on the upside. in six months, within an environment that core pce would be at 2.3, and then you have two or three inflation numbers above expectations. you can imagine sensitivity and reaction this would create in the bond market. the fact will become significantly more aggressive. on that one, the trickier territory behind the symmetric objective. on the one hand, it's a good idea to have inflation as an instrument. inflation tight over the objective of 2%. run, it caused more of a headache.

ecb, theect to the problem there is that inflation -- that was also explained. months is four another conundrum for the emerging markets. stays withvijlder anna and myself. let's give it to lebanon because we have the first elementary elections in nine years. they are dispatching the results later today. parliamentary elections in nine years. they are expecting the results later today. theef gamal el-din is on ground in beirut. that surprises me. you do not have an election for nine years. there's 500 candidates. turnout at 50%. what's the latest? that's a pretty high turnout. it has been a little bit of questions being asked about

whether anything will really change despite the shift towards the complex proportional system. beirut.ere in downtown there is a glitzy reorganization under way, but we are a few steps from the memorial which reminds us of the assassination of him. there is a hotel riddled with gunshots and clear evidence of what happens when tensions get out of control. are up for grabs in this parliament and investors not to look at lebanon in isolation. this is a much bigger story in terms of the wider geopolitics, a proxy battleground under -- anna: and of course, the economic backdrop --

he spoke to the lebanese central bank governor. what did he have to say? he has actually been the central bank governor here for 25 years. if you think about the amount of crises we have to handle and the amount of geopolitical tensions in this part of the world, it's a remarkable achievement. he is the second longest achieving central-bank governor in the world. it's dependent on certain reforms being passed. he said he was confident that these different reforms are going to be tackled by the new administration. if only they have a choice. they have got to get down to it. it's crunch time. this is a country that is the third most indebted in the world. does expense 1.5% of economic growth in 2018. he disagrees with that as well. his position was that there would be a lot more upside in the immediate term, especially the how they conduct elections.

the turnout may tell a bit of a different story, guys. anna: thank you very much. joining usl el-din on the ground in lebanon. let's stick with the emerging markets theme. vladimir putin is to be sworn in for his fourth term as russian president today after his overwhelming victory in march's election as demonstrations across the country resulted in over 1000 arrests. joining us now, -- >> at take a look. president putin takes a final stage. a decisive breakthrough in living standards. is planning to spend as much as 10 trillion rubles on health care, education, infrastructure, the equivalent of $160 billion. spending really dropped in 2015. what he's proposing would be the highest increased since 2012.

the green line shows what the are for the highest expectations. if he does not come through, that is the red line. today's events, as russia struggles to get his economy back into high gear. the country is enslaved to the price of oil, still dealing with the fallout. shaken by the most painful round of u.s. sanctions which hit the ruble hard. you can see the correlation of will and oil have tracked each other over the past year or so. rublelue line is already versus usd. we inverted it to show you the freefall. that's the correlation on the bottom. we have the economy shaken by the ruble crisis. moving on to the final chart here, investors pulling out of russian equities with

geopolitical tensions in the list with the biggest russian etf's really falling. investors pulling out in droves here. really here is where you see western investors and companies pulling out of this etf track which tracks russian companies and how putin deals with the west. this will be a key question for investors as he moves forward into this term. manus: thank you very much, and hordern --n annmarie thank you very much, annmarie hordern. you can browse the chart. you can catch up with the analysis, save the charts, and you can do all of the referencing you need in our library, anna. anna: absolutely. five-star government leader signals he's willing to

give up his cuesta to be prime minister. eight years on from greece's bailout, we will speak with the finance minister at 1:00 p.m. u.k. time. are those debt levels ever going to be sustainable? this is bloomberg. ♪

anna: good morning, everybody. "bloomberg daybreak: europe." this is a shot of new york for you. 1:50 in the morning. futures suggesting we will be going higher. despite the fact we had a strong session, stocks posting the biggest increase in nearly four weeks. looks like we have more in the tank. equity markets could go higher.

bloomberg business flash. here is juliette saly from singapore. juliette: thank you. lastly has agreed to enter a partnership with starbucks to market the coffee chain's consumer and food service products globally. the swiss company will pay starbucks $7.15 billion up front in cash for a business that has annual sales of $2 billion. nestle expects the deal to contribute positively to its earnings-per-share and organic growth targets from 2019. swissbetween softbank and re are reportedly close to collapsing. according to the financial times, "enthusiasm has waned in recent weeks." the japanese company has been in talks to buy a stake in the swiss group. french finance minister has warned that strikes and excessive salary demands by

unions at air france klm could airline.pe's largest bruno le maire says the claims are unjustified. resigned aftero failing to reach a wage agreement with employees. shares dropped the most in six months after a warning that full-year results may fall short of 2017 levels. anna: juliette saly in singapore. italy may be at a turning point to end a deadlock after the said he iseader ready to give up his >> to be prime minister if that will make the difference between deal or no deal. begins a final round of meetings after the inconclusive general election in march. kevin costello joins us now from rome. kevin, a very good morning to you. it has been a flurry of activity over the weekend. what has been happening?

as you mentioned, the five-star movement has given up its claim to the premiership. that had been a major sticking point. there is another sticking point that the five-star has not given up on, and that's that five-star does not want anything to do with former premier silvio berlusconi, which is likely to be a major problem for the coalition talks. manus: what happens next? very good morning to you, it's medicine dubai. what happens next in terms of these talks with president sergio? began in atalks little over two hours. he will hear from all the different political parties, consider things, and then decide whether there is enough agreement among the parties postelection to form a stable government or whether he needs to step in and form some sort of compromise government. ok, kevin, let's see what

happens. the clock is ticking in italy. kevin costello, latest on much of a -- mattarella's decision-making. the truth of europe is that italy has never really dealt with its debt problem. that is the most prescient risk to the european recovery. is that a little bit too ?ggressive at take your take on that point. the problem is that when people arecalm sea, not so much concerned a what abouthat may be -- what may be looming on the horizon. there is a political concern about geopolitics.

trade and so on. the waves get a bit higher and you start having questions about what's going to be the impact on the cycle. once you are in a more significant downturn, which as i mentioned earlier in the program is not really this in order that we have yet, but then, you will come back to the focus on the structural issues. that is why it is so important that in italy, the government does the right things to address the structural weaknesses of the country. anna: we have talked a little bit about eurozone inflation below target still. we talked about that in the last half-hour as well. we have seen data weakening a little bit on a number of fronts. how would you characterize that sluggishness in eurozone data? give us your thoughts on how much that matters. in a way, it was

unsurprising. when you beat record after record, as has been the case on quite a number of gauges in the fourth quarter of 2017, at some point, it happens all over. the real concern is that you look at history. ones that continue to go down, the historical strength is very diverse. what you have to avoid is to say be a ok, there is going to strong downtrend, as mentioned, when you have an environment of very low real interest rates, a global expansion. healthier structural parameters. thinking of banking, access to credit, etc. comfort.s me a lot of the concern i would have is you have shocks, and again, the trade is the key one, as everybody quite rightly is singling out. and the other concern i would it becomes acting as a

drag. anna: thank you very much. we will be continuing his conversation. that's it for this hour. we will talk more about oil. that's coming next. this is bloomberg. ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe." welcome to the show. our headlines, it's just on 7:00 a.m.. crude hits the highest level since 2014 as traders brace for donald trump's decision on iran. this as the opec nations speaks out against higher prices. customs union compromise. tensions flare in the tory cabinet as the u.k. moderates look to revive an argument over keeping closer ties after brexit. votes. the results are expected as soon as the end of the day as the

debt burdened nation holds its first parliamentary elections in 90 years. we are in beirut and we will be talking to the central bank governor. anna: good morning, everybody. this is "bloomberg daybreak: europe." manus has breaking news in terms of further m&a. it was a big talking point last week in europe and the united states. and the stock deal valued at $7.1 billion. they see the deal as double-digit cash etf in the second half of the year. they have about five point $3 billion in revenues on a pro forma basis. that's the two businesses combined. this is iff doing this deal, valued at $7.1 billion.

iff of course, international flavors and fragrances, supplies fragrances for food, beverage, personal care, and other industries. m&a continued pace. we'll see what that does for the future. manus: this is your favorite sector, isn't it, food and beverage? paynestle price to starbucks for global coffee pots and. another $7 billion deal. billion dollars worth of deals have come to the table on bank holiday money. tailwind coming through from the united states of america. you have the bank of england, you have got the iran crescendo into the end of the week. we will have the iran decision with the united states of america. the iranians $165 oil. $73 billion worth of paper coming to the auction type in the u.s..

euro stoxx 50 up 12 pips. london is on location. you are at work. that's what i like to see, productivity personified. [laughter] anna: london may be on vacation, but we are still here. let's talk about the german data storage. as we talked about, we have seen it rolling over and weakening in some of the data coming out of the eurozone, and many economists trying to work out what that means. the ecb trying to work out what that means. german factory orders looking weak this morning. german factory orders falling by increase that% had been anticipated. that's the german data storage. this is one month of data. we can get carried away with it here at it comes on the back of some weakening. but suck about the risk greater. msci asia-pacific up by .1%. we are back from holidays for this market. the japanese market back in

business in full force this week. over $70 per barrel. 70.46 is where we trade for the first time since november 2014. we are above $70 per barrel. may 12 is saturday of next weekend. president trump will decide before than on iran. the u.s. dollar index is flat this morning. flying upward bias. pretty flat, perhaps giving a welcome breather to emerging markets. turkey to argentina were hit as a result of the strong the dollar, manus. manus: just a little bit of data -- you are quite frankly the queen of german data. , .9%. factory orders anna likes a bit of german data. the estimate was for a rise of .5%. this goes to the heart of the european recovery story. soft data is rolling over. the hard data follows in succession.

the sentiment indicator is also perilously just tipping over. let's have a look at the bond markets. it's all about supply. we are talking about $73 billion worth of paper coming down the pike this week. that's where we trade on futures and change. $73 billion coming down. that's a $7 billion more than we had in the last one. the question is, how do you define failure? they great them in various numbers. i don't know what it is to be in the lower quartile numbers. failure can be determined in a number of ways. it's all about the bonds. oat's are up. france had an upgrade from one of the rating agencies in terms of the outlook. you are seeing a sentiment change in terms of the bond market. they have the credit outlook upgraded to positive from stable. moody's -- the wonder and ability to find the story you read on the bloomberg terminal.

juliette saly is never that discombobulated. she is on top of first word news. julia. [laughter] juliette: manus, thank you. donald trump's lawyer has said he is leaning against making the president available for an interview with special counsel robert mueller. speaking on abc's this week, rudy giuliani said trump would not have to comply with the subpoena by mueller if one is issued. when asked if he was confident that the president would not take the fifth amendment against self-incrimination in the russia probe, giuliani said "how can i ever be confident of that?" >> well, we don't have to. he is the president of the united days. president clinton negotiated a deal. juliette: the u.k.'s foreign secretary said abandoning the iran nuclear deal would be a mistake. anis and comments came in opinion piece as he in berks on a two day mission to convince the trump administration to not

walk away from the historic agreement. the mile, iran's president, the u.s.uhani, warned would regret its decision to pull out of the deal. in the u k, conservative party tensions have erupted as a senior minister fueled speculation that prime minister may be planning to read by the customs proposal rejected by euro of the government. clark, interview, greg said the so-called customs partnership remained "on the table." he appears to leave theresa may facing a choice between staying in the customs union or leaving without a deal. either could see rebels destroy her government. lebanon, vote counting is underway after the country's first parliamentary elections in 90 years. the battle is between a western and saudi-backed coalition headed by sayed hariri and hezbollah. the incoming government will have to take steps to control the world's third biggest debt

burden to receive $11 billion pledged at an april conference in france. markete is hope from the formedmajority will be ofimplement the resolution the paris conference. news, 24 hoursl a day, on air and at tech talk on twitter, powered by more than 27 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . a slightly higher session here in asia for the first trading day of the week has got japan closing out the session. stronger yen with a handle a 109. the chinese market powering the regional drive as easy china come back after the golden week holiday. the csi 300 up by 1.3%. south korea out of action for a public holiday. we have seen the rise in energy

producers lift australia's market, helping out the indian market, up by around .3%. looking at some of the players in detail, touching the $70 per barrel mark for the first time since 2014. cnooc in hong kong leading the gains in the region, at its highest level since october 2014, so the downside in hong kong -- the health care, good doctor, which debuted on friday, down by 7.5%, trading below its price. this is the weakest tech ipo in hong kong since 2014. westpac looking good on the close in sydney which came through with a cash profit of 4.2 5 billion australian dollars. the ceo saying the housing market down under remains in good shape as its profit came through, topping estimates. manus. you very much. juliette saly with the latest on the market. crude oil is popping, hopping, rising $70 per barrel for the

2014.time since november they brace themselves for u.s. sanctions being reimposed on iran. donald trump has said he will decide by saturday whether or not america will stay in the 2015 iran nuclear accord. for more on the story, let's bring in andrew barden, our editor in dubai. andrew, good to see you this morning. mliv's hopping with this story, talking about actual real position of u.s. sanctions for the market. talk to us about the politics of oil, because if america steps back, rights, and that's what we have possibly been guided two, could europe step in and go "don't worry about america, we are in the deal?" andrew: we have seen that before the iran deal. i was talking to someone on the oil desk before coming here. his point was uncle sam has a very long arm. if the u.s. pulls out -- if you

are a european company and you decide to stay in iran or invest more in iran, you are taking on a lot of risk. the u.s. could come after you on the finance side. it seems like a situation that no european company would want to find themselves in a we had that when the u.s. had the sanctions on. they were very reluctant to go in there. there was too much uncertainty. i think it is unlikely. the unknown is whether india, china, the far east, whether they might be willing to take on more risk. they might be less reluctant to get into some sort of showdown on the issue. anna: the risks are there for european corporate. we see this yuan story, and the buildup to make off raising the oil price. we see the higher oil price. i cannot think you agree on where the oil price should head next. andrew: that's right.

there is no love lost between those two. i think, you know, we have seen many points of conflict between the two, whether it is on the battlefield in syria, whether it and sending the ballistic missiles into saudi arabia, which saudi lames iran four. and now, on oil, whenever there is a point that he will take opposite sides, they will. iran would appeared to feel strongly. it is much more painful for saudi arabia that it is for them. they have weathered low prices for a long time. i think they are fine for saudi arabia to feel a little bit of heat on that front that saudi arabia is trying to reboot its economy. ultimately, the two are obsessed with each other in a certain sense, and wherever they can find ground to disagree, they will disagree. manus: they cannot agree on the color of the sky. good day.a thank you so much for being with

us. andrew barden is our government and political all editor based out of dubai. he is very global. let's get to our guest. thank you so much for being with and i and myself this morning. good to have you with us. the you listen to conversation about oil, immediately, i am drawn to this chart on the gtd library, which is about oil taking flight. the question for markets is of course the positioning. the positioning i think is already all in there. is oil fully priced for a u.s. withdrawal from the iran agreement? manus. morning, indeed, i think already in the oil price, a lot of it discounted that the sanction will be reestablished by the united states, and it is such a heavy weights to have the unit even on the oil market, so thehe sanction is put back,

oil price could see a profit taking. if the market is really long on that front, a must we have other elements hitting the supply, coming from libya or venezuela -- from the iron deal, it is already priced in. positive surprise would put the price on profit taking as well, meaning a positive surprise there is you know, sanctions, but there is the opportunity for new negotiation, friends and. manus: good morning to you. how do you play the inflation story? you have the oil price going that can be inflationary as we have seen in the past, but wages are not on a tear in the u.s., are they? concerns of the payrolls not suggesting we would see a big spike up in wages. how do you play inflation in the united bates -- states? , we do notabn amro

believe we will see a big wave of inflation, you know? there are significant structural factors pushing the inflation down, and the temporary a look ats and oil of the temporary factor. the central banks are looking at that. the federal reserve, for instance. we don't believe in really the ergencergency of -- rem of inflation. we believe the u.s. curve is good to buy. it also means all the supply coming in, which should be well absorbed by the market, we are at a touch of the 2% on the 10 year it should remain for quite some months. it represents a good lev to buy for u.s. based investors as well as for, let's say, a european or other investors. debate is great

whether the dollar will run higher. relationship on the bloomberg dollar index in the library. is of my favorite pieces from ing. curb your enthusiasm. for anybody young enough to remember, or old enough, there david's curbarry your enthusiasm versus larry kudlow. a short covering spike in the dollar. divergence?hed peak divergence peak between the u.s. and the rest of the world? the realndeed, that is question. you know, already, we are seeing them reflecting the past in europe. interpretation of the strong dollar story is only temporary.

for that reason, we might have seen, you know, the largest economic divergence between the u.s. and europe. for us, the u.s. dollar should rally seven, you know, 1.2. but it could be short-lived. we do not believe in a massive dollar rally in the direction of 110. it would create a lot of cows into emerging markets. it would change totally the game. the volatility game will change also as well. we don't believe in that. alreadyseen a lot of short covering on the short positions. the dollar to find a basis between 115 and 118. you know, the dollar remains weak. we have to remember that. we do not see a turning point. still --l equation is

we have a lot of stimulus already, but it's already baked in the cake for the dollar. for us, it's more or less looking at the stabilization element. stays withr duret us here on daybreak europe. coming up, eight years on from greece's bailout, we will be speaking with the former finance minister at 4:00 p.m. u.k. time. this is bloomberg. ♪

>> this is world class. usually important issues. >> that is a conversation you don't want to miss. manus: 10:21 a.m. in downtown dubai. 7:21 a.m. in london. markets up and running. .2%. up we went into a bear market last week. a nice carry through from some of the u.s. terrell owens coming through into the middle east this morning. oil is rocking it out above $70 per barrel. that's not bad for the region.

juliette saly rocks it every day with a business flash. juliette. thank you. nestle has agreed to enter a partnership with starbucks to market the coffee chain's consumer and food service products globally in a first type of major rivals in the java market. this was company will pay starbucks $7.15 billion up front in cash for a business with annual sales of $2 billion. nestle expects the sales to contribute positively towards organic growth from as early as 2019. warren buffett had warned about the "nightmare" tied to new accounting will changes, and now , it's beginning. the rules which require berkshire hathaway to report unrealized losses in equity investments in net income helped fuel a loss in the first quarter. that marked the company's first net loss since 2009. nissan. stop sales of diesel cars in

europe as th region looks to toughen the emissions standards after volkswagen's emissions test scandal. the carmaker will stop offering diesel versions in the coming years. the automaker will instead concentrate on pushing sales of election fight vehicles. that is your bloomberg business fied vehicles. that is your bloomberg business flash. anna: our guest is with us. , you mentioned something about bond supply. i have a chart which shows the yields rising on u.s. treasuries. yields, we rise in see those coming off a little bit. theconfident are you that market can withstand the level of supply we are going to see this week, and if you are confident, why so? all, we have af

regular pattern. there is always a little bit of tension on the curve. that is a phenomenon that is in place for already 20 years. although the quantitative tightening we see from the federal resee is something, you know, there is no immediate, let's say, buying from the federal reserve. the curvethere is that is very satisfactory for the bond investor, because it is a flat curve. you have a positive real yield on the u.s.. you know, buying u.s. treasuries represents the good deal. insurancents buying in the portfolio in case the

economy starts to slow down. there is still a lot of utilities from the portfolio management perspective to add on on our u.s. treasury. manus: the other big fran and i this morning are the deals we announced. nestle to market starbucks products globally. that's a $7 billion composition. a company for $7 billion. $15 billion worth of deals on the table. booming m&a business. is that a sell signal in late cycle? citigroup would say that you are seeing about 3%, 3.2%, of the global market cap coming in the form of m&a, but it's below the level that they said was unsustainable. for didier duret, are we heading

for unsustainable levels of m&a? is it a flashing in the can for you? -- indicator for you? there is acourse, lot of bargaining going on and on the m&a side, but for us, it's really companies looking positioning,c looking at the value chain, looking at the portfolio of products, looking at the market that they want to get in. a sign of total maturity for m&a. the huge number of deals we see. there is a lot of cash in the 's coffers. it's one dimension for using the cash. the other is by back. for us, it is not the end of it. manus: thank you very much. didier duret, chief investment officer at abn amro private banker -- banking. that is it for this edition of daybreak europe.

european market open is up next. it's all about the oil as anybody in this newsroom is concerned. anna: everybody in dubai is focused on the oil story. we continue to watch that will price. is where we trade. good morning. this is bloomberg. ♪

guy: good morning. this is the european open. i'm guy johnson alongside matt miller in berlin. asia stocks mixed overnight and it's a bank holiday in london. you are still at work and the rest of europe is open. cash trade is less than 30 minutes away. ♪ guy: wti crew