♪ the deal,mixing of president trump pulls out of the iranian nuclear deal. oil surges. the u.s. reimpose a sanctions on iran. the new trump trade. deutsche's downsizing the bank. cutting as much as 27% of its stock as a sweeping overhaul plan. the company denies the report. ♪ francine: "bloomberg

surveillance good morning. welcome to "bloomberg i am francine lacqua here in london. i am looking at a lot of earnings. some of the telecom stocks, liberty global being bought by vodafone. left, right, and center because of the iranian deal, and sanctions were imposed quickly, and that should boost the price of oil. it should be higher. let me bring vodafone up for you. the share price, you can see it , the company will buy that european unit for $22 billion to be at it is down 10% this year. the read across, this asset

grabbing by vodafone, they will challenge deutsche, in their home market. matt miller brings us that exclusive story later on. coming up on "bloomberg surveillance," we will hear from the biggest long-haul carrier from the europe -- arab emirates. frome next hour, we hear deutsche telekom chief executive. getre we get to that, let's to the bloomberg first word news with nejra cehic. nejra: vodafone has agreed to .uy units from liberty global the u.k.-based telecom giant will by the cable network in germany, as well as the check and hungarian. the move shakes up the region and signals a retreat by u.s. millionaire john malone. deutsche telekom has raised its

forecast on growth in america. afterrman carrier, t-mobile added more than a million customers for the 20th consecutive quarter. t-mobile todeal for take control of sprint remains in focus. we will bring you an exclusive interview with deutsche telekom's interview at 10:30 a.m. u.k. time. " black panther" has generated more than $1.3 billion. both by of were disney's theme park helped business that declines. the company's ceo remains confident he can clinch up $50 billion deal for 20th century a biddingts, despite

war against comcast. a 60% jump in profits on middle east travel demands. --increased to >> we have a tough business. i am happy to report the last few years we have managed to see profits every year. nejra: global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. am nejra cehic. this is bloomberg. francine: let's get to our top story on the germany and the u.k.. they regret don trump's decision to pull america out of the 2015 j's nuclearb iran deal. the move was negotiated in the obama presidency. at the pointmp:

when united states had maximum leverage, this disastrous deal gave this regime, and it is a regime of great terror, many billions of dollars, some of it in actual cash, a great embarrassment to me as a citizen, and to all citizens of the united states. that was the president making his highly anticipated announcement yesterday. here is how global leaders reacted. implementation of this decision, we will wait for some weeks and hold talks with our friends and allies, and other signatories of the nuclear deal. those who will remain loyal to the deal will talk. israel was opposed to the nuclear deal from the start, the we said rather than blocking iran's path to a bomb, it paves their path to an arsenal of nuclear bombs, and within a few years time. >> the nuclear deal of iran is

crucial to the security of the region of europe and the world. >> we encourage all ties to continue to comply with the deal, and we certainly will do everything we can to support that. francine: let's get to our team of reporters to cover this story. our editor is in dubai. he is are managing editor for global business, and he is covering what this means for european companies. he is based in berlin. the reaction have we seen from global leaders, and we are expecting five countries to keep their agreement with iran. how does that work? earlierave mentioned it two reactions.ing you have israel and saudi arabia supporting trump's decision. they have been opposed to the

deal for quite some time. roleare critical of iran's in the region, they see them encroaching on saudi arabia's own interests. and israel has been opposed from the beginning because they are concerned about the nuclear program because they think iran wants to weaponize. there have been a string of european leaders who have gone to the u.s. trying to convince donald trump not to go ahead with this decision. they did not succeed. now, they are saying they regret the decision. they are going to stick to the agreement. the iranians want to stick to the agreement. benedict, what does it mean for european companies -- european countries that have business with iran. >> there is a corporate dimension, a political debate. the question is, where do we go

from here? 's business really started taking off. order -- what happens to these contracts? do they have to mothball them? will they be about to fulfill them? how do they unwind that position in that market. we have only had a couple of companies appealing to the european leaders saying, we need your support and europe needs to step up to the plate area we want to continue to do business. at the same time, we do not want to endure the wrath of the u.s. that would find we are not in compliance. the tricky situation for companies in that market, we had earnings from siemens, and the ceo has talked about this. , weoeing around the issue will have to see how it plays

out in the next couple of weeks. francine: the response from to will- tehran, they continue enriching uranium in the couple with -- in the next couple weeks. is there anything they can do to get on the right side? riad: i don't know if it is getting on the better side of iran, for them they felt it would benefit them economically. it is about the economy for iran . what the iranians will be looking for is a commitment from the europeans and the rest of the world saying, if you stick to the agreement, you will continue to see business coming your way. it has to be said, there are european companies that have invested, chinese companies that have invested, but it has not been the flood of deals that the iranians and europeans had hoped for. some factions had a hesitation

in the financial system to allow money to flow to iran, and now with this, it comes to a complete halt. it will turn into blockage. anduropean companies countries want to encourage deals, without a financial system allowing money to flow, it will be blocked. francine: thank you both. our managing editor for global business, and our executive editor in the middle east. oil is at the highest level since 2014. what does this mean for markets? thank you for joining us. geopolitics, they are in uncharted territory. this could have an effect on

south korea. there could be a rubber -- reverberation in the talks with north korea. we are in uncharted territory because of the breakdown because of diplomatic channels between ,llies, you talk about the u.k. australia, germany, and the inability to get an advanced therefrom the u.s. regarding pull outns whether to of the deal or remain in. what is interesting is the two schools of thought. one is to make the threat credible to a ron. the u.s. needs to appear like they will follow through, and not telling their allies in a way, it is fine ramping up rhetoric. it ensures there is no leakage in the credibility of that. the flipside is there a breakdown of traditional unity which one of the countries we have not heard from yet, very

silent on this issue, breakdown the alliance in this situation. it makes to your question, an unprecedented set of geopolitics. francine: the raa saying russia will respect the arabian nuclear deal. what does this mean for markets? way i see this event is an increasing geopolitical risk. it is increasing not only because of the tension between iran and saudi arabia. the increase risk of military action in the middle east. -- all this geopolitical risk, more inflation.

in the case of the oil price going up, and possibly more inflation is a squeeze for real wages, and drive on consumption. and it can be a drive on growth. . goldilocks last year was extremely sick rise growth global trade, -- synchronized trade,, to give you an example last year, the dollar depreciated 10%, which is good for liquidity in the u.s. dollar. on top of that, we have the g4 , as the central bank balance sheets increasing by 2.7 billion last year. which means for the market growth is higher than inflation

also equity markets. this is a game changer. francine: does it mean you have to change a forecast on the price of oil? simon: yes. a lot of the oil price appreciation has been a result of venezuelan capacity being taken out of the market. that is causing a quicker rebalancing. from our perspective, that has been the key driver so far. i would agree, what we are getting is a secondary wave of disruption in countries where demand, supply has been growing. million to 4.5 million barrels a day from the iranians. barrels is million taken off the market, we are

back to sanction conditions. oil can kick on material from here, and the said -- the same headwinds we spoke about earlier come into sharp focus. not as quickly as we assume, the going into 2019. francine: thank you. simon french, chief economist, panmure gordon and antonio del favero, senior portfolio strategist, rubrics asset management stay with us. according to people briefed on close.ter, a decision is the plans would follow the move to retreat from businesses it deems less competitive. germans bank reporter is with us. , or wes this report understand from sources they may cut 20% of staff, something deutsche bank has denied. >> yes, that is right.

the interesting part, if you look at the business unit globally, they go to the bank unit by unit and decide how much to cut it. those cuts could add up to 20% of the u.s. workforce in the maximum scenario. that could be a drastic cutback for the u.s. operations. what is happening at deutsche bank, and how does it change their future in the u.s.? at the looking operations they have singled out a few units to cut. for example, prime brokerage. u.s. finance. they will close the houston office which was the coverage location.

that will go away. all of those businesses will be affected. it will mean they are reducing the operations. it is difficult to anticipate how many side effects this will have on other parts of the business. if client say, if you pull out of that area, then you don't want to do business with us cutting tieswe are with you. it is difficult to anticipate that. they're trying to figure out that the side effects can be minimized. francine: thank you, steven arons, our banking reporter. vladimir putin is said to have sent to donald trump's lawyer last year. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." i am francine lacqua here in london. we are hearing from -- this is a meeting called by the president mr. erdogan. 2:00 p.m.y, i think local time. this is to discuss the slide of the lira against the dollar. two officials who refused to be on, andold us earlier we are getting affirmation now that central bank governor will show up at that economy summons.

, it is a threea standard deviation. we will talk over and over on "bloomberg surveillance." now to accompany tied to a russian oligarch with ties to -- letr putin, according was given to000 .rump's attorney it is the latest twist. daniels, let's get the stephanie baker for a whole round of this story. this is a company tied to a russian oligarch. it is also tied to vladimir putin that would have sent $500,000 last year to an end to

the that trump's lawyer also used for the hush money paid to stormy daniels. do we know what was behind this? >> no. it was once described as a u.s. affiliate, this russian oligarch was sanctioned in the recent round of sanctions. by the u.s. administration. since then, he has tried to distance himself. . the response to this payment is had nothing toch do with this payment, no control over the money, he does not own the company. x overted to distance -- vekselberg from this. he has extensive holdings in russia.

he also attended the inauguration. 'sney was given to trump inauguration committee. they are saying this company is controlled by u.s. citizens, and this is legal. officially, this payment to cohen's company was to scope out real estate deals. they say they ended that because it did not result in interesting investments. know how theye obtained the bank information? is it involving the president or a nondisclosure agreement? the most: this is interesting thing. you really see these brain transfer details -- bank transfer details. has notavenatti revealed how he got this information. one has to assume it was part of

the litigation that he somehow got them through a subpoena or disclosures. it is unusual to have this kind of detail. i do not think this came from molars camp. camp.ller's it is astonishing because the paymentsany received from major u.s. global corporations, at&t, novartis, and others. there are a lot of questions to be asked. francine: what happens next? the special counsel digging deeper? stephanie: i think in the stormy daniels case, they are expecting a hearing in two weeks. we may find out further details there. there may be further disclosures. i still think there are other questions to be asked about

companies like at&t and novartis who gave money, if there is a further explanation they will offer. francine: thank you, stephanie baker. we are getting breaking news out of deutsche telekom. this is on the back of vodafone europeanto buy eastern . the deutsche telecom executive is saying that deal would distort competition. he said he will fight for fair competition, and that vodafone deal is wrong. we speak to him an hour from now. coming up next, we talk u.s. markets. this is bloomberg. ♪

♪ francine: economics, finance, and politics. this is "bloomberg surveillanc , ." president trump withdrawing from

the iranian deal. we are looking at that impact. opec,'s kick it off with you can see iran represents the third-largest producer in the pie chart there in the blue. 3.75 millionpumped oils -- barrels of oil a day. you can see the capacity of all the opec countries. 11di arabia meeting with point 5 million barrels a day. in april they pumped 9.9. they have the capacity, as well uae, kuwait, and iraq. you can see here, iran was able to gain back market share. the saudi's have been cutting, this shows they have the

capacity, but some analysts are saying they are not going to answer. they want to keep prices tight. they are talking $80 per barrel, so they have the capacity, but will they? one thing we need to keep in mind, is not just iran we see a deficit from, there is venezuela, even angola, which could be a risk to these production numbers. on the consumer side of the china, india,,, turkey, italy are the top five. the u.s. said they would go after any other nations doing business with iran. looking to other places to buy crude, saudi could be one. india at one point was buying a raining crude -- iranian crude.

the last time around, china and india express disapproval for the sanctions. now what the global sanctions from that trump administration, those approvals will be stronger against the u.s. administration. francine: we are talking about the impact of the u.s. mixing -- nixin the iranian deal. g america will reinstate sanctions on the islamic republic, it will open an uncertain chapter for the middle east. trump called the deal horrible and one-sided. president trump: at the point when united states had maximum leverage, this disastrous deal and it is agime regime of great terror, many billions of dollars some of it in actual cash, a great

embarrassment to me as a citizen, and to all citizens of the united states. i ordered the iranian atomic energy to be ready for action if needed, so that if necessary we can begin our enrichment without limitations. until implementation of this decision, we will wait for some weeks and hold talks with friends and allies and signatories of the nuclear deal. those who remain loyal will talk. u.s., a company tied to a russian oligarch sent $500,000 to an entity that donald trump's lawyer used to pay hush money to one actress stormy daniels. it is the latest twist in litigation brought by daniels centered around a 130 that -- $130,000 payment to secure her

encounter withn trump. the u.s. secretary of state has arrived in north korea to prepare for donald trump's historic meeting with kim jong-un. mike pompeo said he is hoping to establish a framework for a successful summit. one symbolic gesture would be the release of three american detainees, something trump hinted would behind on pompeo's to do list. the world's biggest airline long-haul increased to $1.1 billion for the end of march. >> we are in a tough business. over they to report last 20 years we have managed to see profits every year. nejra: global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries.

this is bloomberg. francine: italy is set for a new caretaker government after months of wrangling between the two biggest parties failure to reach a coalition deal. unelected prime minister despite criticism. one of them must back the new government. german ten-year yields rose on the prospect of fresh elections. widening, should are simon-- with me french, chief economist, panmure ,ordon and antonio del favero senior portfolio strategist, rubrics asset management. it is nothing compared to 2007

before mario draghi said he would do whatever it takes. what needs to happen? simon: the sign that growth has to where growth would deteriorate. points, is not just activism, but as the economy grows, 1.4% does not sound great, but after 10 years of flattening growth, but in the first quarter and second quarter, the italian economy is seeing unemployment about 11% flat lining. challenge is the longer he puts in a technocratic government at a time when the economy may be deteriorating, then more support will shift back to the league and the five-star movement if people do not feel an economic recovery

company -- economic recovery coming. antonio: i agree. i would like to add that last year we had synchronized growth, one of the main things coming now, the growth is less synchronized. we see europe that is slowing down, but versus the u.s. it is growing at a healthy 2.3% for the first quarter. that divergence is due mainly to the fact that in europe we have a nonperforming loans problem, about one trillion euros. and the money is not flowing to the system. crisis we were at 10%. in europe it was growing at 12% before the crisis, now is that 4%. it is not a surprise.

inflation is starting to disappoint. there is room for an inflation spike. back,ope, core inflation is in line with money not flowing to the system. francine: we are getting breaking news the retail space. some of these companies are changing hands, example vodafone. the softbankg from chief executive. let's see if she says walmart will buy flipkart. it provides books, movies, and the likes to a lot of consumers that want to buy them. it is like the amazon of india if i understand it correctly. does e-commerce merging have an

impact on how you model economics because prices go down? it too far-fetched. simon: it is a huge part of what we have seen the last decade. e-commerce, you could have geographical price monopolies. what does that mean in reality? it means you can have prices that could rise because of local economic factors. e-commerce makes that less tenable. price arbitrage disrupts prices coming down or the ability to raise prices. it is front and center why we have been in a deflationary decade, and why we will get another decade to come of that. francine: that has huge implications for monetary policy.

in terms ofed economic strength. antonio: it is not clear at the moment. the data is not coming strong. we latest inflation data, cannot confirm strength of the european economy. it is confirming a slowdown. we do not know if it is a slowdown or contraction. 1.i want to make, at the moment itis more of a slowdown, could be just the first quarter, we need to see. gdp is always revise later. gdp is to remind that revise later. 25,he u.s., on november 2008, it was not known yet the gdp in the first quarter was dropping. just to give you an example.

maycine: on brexit, theresa , still don't know what to do with northern ireland, are we more likely to have a soft exit or a hard brexit? simon: defeats are stacking up. defeats think the lords really send a huge message. to those unfamiliar with the parliamentary system in the u k, what really matters is the autumn vote on the final brexit deal. the question is what the house of common mps take their cue from the lords, pushing for a softer brexit. if that emboldens enough to vote against government. the government will try to make this an issue of no-confidence and forced through their preferred measure. if it is soft or hard, i think it favors a softer brexit. francine: thank you so much for

joining us. simon french, chief economist, panmure gordon and antonio del favero, senior portfolio strategist, rubrics asset management. cigarette makers are reporting a profit below analyst estimates. companies investing in tobacco -- we spoke exclusively this morning. smokers converting to beijing's will be a driver of growth in the second half. >> if you operate in the right way, you can drive growth in this space. we are disciplined with our investments in next-generation products. we are looking to grow in that space. as a tobacco player, we have 14% of the tobacco market globally. -- it tobacco consumers says to me there is an

opportunity. we've got an opportunity and a number of markets across the world to drive additive growth. yourread recently introducing a vapor in russia. ?nd russia are you concerned >> i don't think so. .ussia will be interesting cigarettes are affordable and .ussia we are looking to build at the moment. you are not worried about what that can meet for trading? >> i do not think so, no. >> how're your heated tobacco trials going at the moment?

and where are they taking place? have europe and japan we good feedback from consumers. we are conducting further trials in the next few months. we see opportunities going forward. our prime focus is on the thing. we have a standout brand, and our prime vocus for investors is driving the leading business. we will look for opportunities. in the patch business we have innovations. it is very exciting. >> when do you expect to have a product? >> we have not committed to that. our prime focus is on the dating business. -- vaping business. to moveaid, you want from being a manufactured to a

consumer goods company. what more needs to be done, and where are the challenges to become more of a consumer goods company? >> we put the consumer at the heart of what we do. that is why when we look at the next generation of products, it has been on vaping because we think that is where we can deliver an excellent consumer experience. to consumer does need to sit drive that forward. we have strides in how we manage our tobacco business, and as we move forward that will continue to drive the future and future growth of the business, with the key brands essential to our success. francine: that was an exclusive interview with imperial brands. the latest episode of leaders of lacqua airs later tonight. i spoke about doing business in

spain, and the future of energy. we need 60% more energy than today. we put the money or the system will stop. the money is going to flow. we make that attractive. we are seeing in many countries, attractinguntries, capital to move in their direction. refurbishingry for . , we areit will require ready to do what is necessary to make that happen. francine: in five years, how much revenue will come from renewables? >> yesterday we presented our fortegic plan, which is

2022, 30 billion euros. rededicated to renewables. in approximately 40% is rededicated to renewables. build in theng to range around 30,000 megawatts. toare going to reach close 39,000 megawatts. addressed. we will use it to bring electricity to the homes of our customers. francine: is it because the private sector wants it, or is it pushed by government? >> because the demand is there. a clear toesting

find stable framework of the government. the government, the best thing is they make clear planning and regulation for making that happen. coming toments are the private investor to do all this. for long-term planning, clear definition, a defined framework. the money is not in my pocket. i said the other day to one of your colleagues, there is money and talent. the money i have derive from somewhere else. the money is there. the money flows into my company. the framework is clear, transparent, and defined. we get talent. deliver.le to

francine: it was a pretty animated interview. catch the whole episode with -- formula e, the chief executive is looking to take his involvement up a deer. million -- 6 $6 million euro bid, saying he wants more influence in the future. tirela e has attracted top electric brands, like jaguar and porsche. joining us now is the chief executive. thank you for giving us a little bit of your time. wendy want to take full control of formula e? -- when do you want to take full control of formula e? i am an entrepreneur.

i like to run things and create things. size for has the buyout. i have a great relationship with my partners. i want to say, will you sell this back to me? francine: what have they said? >> i am speaking to them this week. francine: this is a small transaction worth 22 billion. you never know until you ask. i would like more control. to continue my vision. francine: where would you take it? let's say they give you full control, and i do not know if they will offer more money, but is it a different path you want to take? it is kind of the entrepreneurial way of doing things. it would not be very different.

think the industry is going to go electric. and i think this will be connected with that industry. i think the future is great for formula e, and i want more of it. francine: the ferrari chief dueutive said, with all respect to formula e, i think we have a long way to go before that becomes a substitute for formula one. is he wrong? all dueld say, with respect, he is our problem. they are far behind in electrification. the other big players have done their homework. he needs to get his act together. we do not compete with formula one. us, -- the better we do the better for everyone. he needs to go electric. francine: what is the audience

of formula e? are they traditional motor racing fans or is it a different demographic? >> it is a bit of everything. got the bracket between 13 and 17-year-olds, and that is great. 10 euros are explained to the adults around them. we can get the imagination of the kids, no other sport can do that. francine: is it a good way of selling electric cars? >> selling electric cars is still tough. we need to make them better. that happens like on a platform like formula e. it needs to be more popular with the public. the discussion of electric cars makes them more familiar. francine: we do a lot on electric cars, twice 21 is the next step in regulations. are you going to ramp up formula

e's marketing tools? >> yes. we are giving it a big push. it is time to push formula one out of the world. we need to cars to finish the race. next year, we go to one car. we double energy in the batteries every four years. we are ramping it up. francine: the technology in four years, it has meant you can do the track with no pit stops. >> exactly. has happened in motorsports, the teams want to win. now we have the biggest car manufacturers in the championship. , jaguar.bmw they compete against each other and improve the technology. francine: i'm trying to understand, they do it because it will replace formula one, or

because that 10-year-old kid years, a driver in eight and he will want to buy the electric car from mercedes or these guys? >> they do not do it because of the formula one competition. that is out of the equation. they want to sell their cars. if they win the electric car championship, they will be in a better position to sell electric cars. it is to promote their technology and show they are the best. francine: you are talking to environmentalists? >> we talk to everyone. people are not going to buy electric cars because they are environmentalists. carse will buy electric when the electric car is cheaper and better than a combustion car. that is what we need to achieve. francine: is there a group you want to be a part of formula e? >> i would like to have an

american brand. nissan is coming on next year. we have two chinese brands. we have four german brands. u.k. brand, jaguar. we do not have an american. francine: why not? >> americans are slower to adapt to electrification. francine: are you going to have a race in birmingham? >> we would love to have a race in birmingham. theresed to have a racing in the city about 10 years ago. we are talking to the mayor. the mayor came yesterday and saw my interesting quotes. we are talking. francine: when we you find out? is to getficult thing my partners and shareholders to sell. lets you come back on if it happens.

he is the founder and chief executive of formula e. nextberg continues in the hour. tom king joins me. we will have a conversation with deutsche telecom chief executive. against thetalking liberty vodafone deal. he said he will challenge it, and we will get more of his thoughts on that. the dollar is extending gains for a fourth day. that is complicated and the picture for emerging markets. commodities, up and down. traders trying to process trump 's decision to withdraw from the iranian deal. this is bloomberg. ♪ mom you called?

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european leaders criticize. to 214ges, crude climbs highs after sanctions on tehran. commodities, the new trump trade. deutsche's downsizing, the bank cutting as much as 20% of u.s. staff, as part of the overall plan. the company denies the report. good morning, this is "bloomberg surveillance," i'm francine lacqua in london. tom keene is in new york. terrific news. m&a deals, media, other companies merging. what i would focus on his turkey. hasturkish president, summoned economic decision-makers to the palace to discuss lira. lira plunged on the back. tom: giving financial support and intellectual support to mr. erdogan, it falls behind

argentina's announcement of support. imagine that. argentina asking matter lagarde or help. that is like an snl skit. it harkens back to mexico and thailand of another time. francine: argentina had a default 23 years ago. we need to keep a close eye on that. here is taylor riggs. taylor: two big deals in m&a. walmart in talks to become the largest investor in india's leading e-commerce company. walmart would spend $7 billion to buy a third of flip cart. vodafone has agreed to buy european units from liberty global. liberty global will focus on the u.k. and ireland, its biggest

market. the company is controlled by john malone. coming up, we speak with the ceo of one of vodafone's rivals. u.s. secretary of state mike pompeo has arrived in north korea to prepare for president trump's summit with kim jong-un. it is his second visit in recent weeks. pompeo will ask whether north korea will release three americans being held there. said ton oligarchs is have made a $500,000 payment to an entity controlled by president trump's lawyer, michael cohen. the payment was used to pay hush money to a born actress. actress, stormy daniels. imf fora has asked the a credit line to help keep the peso from plunging. they want $30 billion.

the president spoke to the nation. is going to permit us to strengthen our program of development and growth, giving a strong support to be able to face the new global scenario and avoid the type of crisis we have suffered in our history. central banktina's has raised interest times three times in 10 days to 40%. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thanks so much. a lot of data today with all going on in emerging markets. let's bring up the data check. equities, bonds, securities, futures, -- up curve steepening over the last two. euro weaker. american oil -- shocking number. 21.will get onto the vix, 14.

brent crude, 75.6. wild statistic. this is a big deal. there is the argentinian peso. yesterday, 10 a.m. new york time, the yen gave way. now 10976. that is what i'm watching the most. to see if the yen picks up. francine: i am looking at lira. overall, dollar extending gains for a fourth day, complicating pictures for emerging markets and commodities as traders trying to digest' trump's decision to walk away from the deal. bonds falling, the u.s. tenure at 3.004. earnings keep on rolling in. tom: a subtle chart with a rated

change. -- tradeghted u.s. weighted euro and trade weighted turkey. this is back to mr. erdogan. you have the stability of euro, the united states. there is the dollar rally from 2011. a percentage basis -- this is extraordinary. accelerationexity, of a weakening trade weighted lira -- the tension you see -- economy meetings this morning. francine: this is my lira regression chart. thank you to hillary clark for a great chart. that says it all in one glimpse. the turkish president, mr. erdogan has summoned decision-makers to the palace to discuss the plunge in lira. the longest losing streak in seven months. tom: great chart. of thee: that is part

iranian nuclear deal, sending prices surging. let's get the story. regret theaders decision to pull the u.s. out of the deal. the president did not mince words. presidentow iran's responded. >> i ordered the iranian atomic energy and organization to be if necessary we can begin our industrial enrichment without limitations. until implementation of the decision, we will wait for some weeks and hold talks with friends and allies and other signatories of the nuclear deal. those who remain loyal to the deal -- we will talk. francine: let's get to our team of reporters covering the story. in dubai, our executive editor for the middle east. for globalg editor

business is covering european companies in berlin. on the one hand, you have five countries wanting to keep the deal alive. on the other hand, the iranian president -- look, he is on standby if they need to enrich uranium. what happens next? bethe iranians are going to seeking talks with europeans to the out what it means if u.s. three imposes sanctions. what does that mean for european companies doing business in iran? a continuedans see benefit from europeans in staying in the deal and working with europeans, china and asian economies -- you might see them saying -- the benefits outweigh the disadvantages of staying in. they might stick. say,ey see -- the european we want you to stay with the deal but we cannot force companies to invest in you and

companies might hesitate, even more than they have now because they are afraid of u.s. secondary sanctions -- the iranians might say, well, what benefit do we have from that? what do we gain? back.ne: we will go if you look at industry groups in europe, who is the most impacted? this is a gamble for the european companies. what the risk, the roar? is it worth picking a fight with the u.s. over a business in iran? it is nice to have that does this but not necessarily the huge business it is worth fighting for. there are so many other markets that might be impacted if there are secondary sanctions.

morning,they said this they will look at this closely. they said we will always be in compliance. companies are taking a close look at risk and reward, is it worth picking this kind of a fight? do we have the backing from the european governments to go in there? tom: good morning. i would like to talk about the word of the united states. forget about the trite stuff we've heard. saudi arabia said what we would say -- said what we knew they would say. forget it. here is roger cohen in the new york times this morning with a scathing essay. there are different opinions. brad stevens, for the president. that is what diplomacy is all about. 101. arrived atolutions between enemies better than the alternatives. "america has made a mockery of

the value of its signature on an international agreement just the shredding of a singular diplomatic achievement." how good is the word of the united states in treaties this morning? is the issue of trust in the united states's role in the region. saudi arabia trusts americans because they say, we are doing exactly -- they are doing exactly what we want them to do. there is also the issue -- you under the obama administration, they was criticism that were not as attentive to the region or supportive of the governments as the governments wanted the u.s. administration to be. there is a? roleestion about the u.s. and, is the u.s. still the

dominant player in the middle east, the way it used to be? the trump administration seems to want to play that role again and is aligning it will closely with isreal and saudi arabia. francine: thank you so much. , morganus now, hans stanley had of global and professor paul de grauwe. professor, let me kick off with you. there anything that the europeans can do to keep the iranian deal alive? it is too late to get the u.s. inside the can they work on a second agreement? paul: it will be difficult. as the previous speaker said, companies will hesitate. they are so uncertainty about what the future will be and what the potential sanctions and the cost of all that could be. as a result, even without action

of governments, there will be an effect on business. this being said, something can be done. we have to start thinking about the long-term implications of actions like this. it is clear that the kind of sanctions the u.s. government is able to impose, is the result of the fact that the dollar is at the center of the financial system. that will mean in the long run, this dominant position of the dollar is put into question. the attractive business of an international currency is the fact that -- you can use it unhindered without restriction. if that dollar is being used as a weapon of international politics -- then of course, you undermine the attractiveness of the dollar. if the european nations are

forward-looking in the long run, they should do everything to undermine the position of the dollar in the international financial system and to push the euro as an alternative. it will not be easy. it is not the first time in history that a currency at the core disappeared. a country where that happened -- why not for the dollar? in the long run, american policy is a policy that -- thailand,or, mexico, indonesia. are we setting ourselves up for a correlated em collapse? terms ofill take it in yesterday, fed president powell, balance sheets. those emerging markets getting their balance sheets in order -- they have a problem when funding costs are going up. when you see that, the

environment for the u.s. dollar is turning in the short-term toward bullish. we sat down yesterday and looked, what is the driver in emerging markets? risk appetite? real rates? the u.s. dollar? selloff havemarket been mainly triggered by the evolution of the u.s. dollar. starting in february, gaining momentum in april, the dollar has gone up. when you have dollar liabilities, that matters. countries that have massive dollar liabilities came under selling pressure. this can have self enforcing powers. those in the past which got dollar inflows, banks using dollars as collaterals, pushing local money supply numbers

higher -- you had good funding conditions. it changes the topic. we have to think about what will happen with the u.s. dollar in the long-term. i completely agree with what you said before -- the u.s. dollar is in a secular bear market. it started last year in january. you have a correction within the bear market, today you cannot have twin deficits been trying to find that an environment where globally, funds are less available. it is less effective for the u.s. dollar. tom: we had a wonderful 25th anniversary, bloomberg radio party last night. ken darkened the door. greatgo to other international economic textbooks. a, a linkagerilemm

of markets in the economic system. what is paul watching? are you watching the balance sheets of nations? the currencies of nations? do you watch their bonds in a new international bond market? things.m watching these it is clear, what we're seeing now, is a repeat of things that have happened in the past. it is not the first time this happened. liabilitiesoves up, in dollar get hit, repeating itself. they are constrained by this trilemma. i will not be able to get out of it easily except by the kind of austerity measures that have been tried in the past and are punitive for these countries. this is sometimes called the original sin.

-- because ofons the past -- have not been able to develop their own domestic capital markets that allow governments to fund themselves and therefore have to go to foreign markets, to the dollar, they are very fragile as a result and have to accept the hit that comes from elsewhere. francine: thank you so much, professor. both of you are staying with us. tim ofup shortly, deutsche telekom, joins us for an exclusive interview from germany. he will have a lot to say about mergers in his space, including vodafone buying assets pay's. this is bloomberg. ♪

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tom: good morning. francine lacqua in london. terrific news. we are thrilled you are with us. more data checks on em currencies through the surveillance morning. a real treat. he is rarely in london. usually he is in paris eating at slick cafes. distinguished ability to win awards looking at scandals. he is our official scandal monger. he joins us now with news of oligarchs and mr. cohen. ofr reaction to this linkage russian elite and russian oligarchs and potentially into the president of the united states? >> the first thing we should says that columbus nova has

claimed it is american owned and not related. we have to give them their due in their statement in that. that said, my first reaction is, amazement. i'm consistently amazed by the revelations that come out about the trump administration. people around donald trump, michael cohen. the ways in which they managed politics --ess and in ways we have never seen before. truly extraordinary. tom: do you assume there is a paper trail? my knowledge goes back to watching reruns of perry mason. i'm old enough to have seen perry mason live. forget about amateurs like me. do you assume there is a paper trail? >> there often is. if you're making large financial transactions, it is virtually

impossible to do that without creating a paper trail. lawyer stormy daniels's get this paper? that is quite puzzling. you would think that might come up in discovery in a separate case they have about the agreement paid to stormy daniels to keep quiet that they are now contesting. it does not appear to be the case. there is almost always paper but how did he get it and why did he decide to make a public in such a way outside of the courtroom or legal proceeding? francine: you are spot on. this is crucial. is it possible they obtained the information as part of litigation involving trump and the nondisclosure agreement? >> it is possible that i was not aware that the discovery had begun in the case. it is possible. they caught me by surprise. i did not think they had discovery in the case. if that is the case, it could well be that they got the information through discovery, and that stormy daniels's lawyer

thought it was irrelevant, he might as well bring it out in public and embarrass them and try to make them make further missteps. it is entirely separate from russian collusion or influence on the campaign or anything like that. his case is about the nondisclosure agreement and wants to win that case. is just toelse, embarrass donald trump and his followers. francine: thank you so much. let's get to the bloomberg business flash. toyota forecasting better than expected annual profit. the world's most valuable automaker cutting costs to deal with a slowdown in the biggest market, the u.s. toyota announced a $2.7 billion stock buyback. the world's largest long-haul airline, emirates boosted profit 7%. lower margin flights benefited

from a revival in middle east travel. a pilot shortage hurt operations in the second half but the chairman says that is not a big issue. --somebody has reported that less than .2%. that is a very small number. still we have nearly 24,000 cabin crew within emirates. taylor: that is your bloomberg business flash. francine: thanks so much. deutsche bank considering restructuring of the u.s. unit. they could result in staff cuts, as much as 20% of the workforce in the region. the company nearing a decision but deutsche bank spokespersons have denied any such plans. stephen joins us from frankfurt. we have had sources speaking to us -- they are looking at cutting 20%. deutsche bank denying. where do we go from here? reporter: the question is, what

are they doing? there is a plan to cut 20%. bank --happening in the they're going through units, each unit, to keep it or cut it. those cuts they are considering -- if you add them up, you could potentially rich many percent of the workforce in the u.s. one in five in the u.s. francine: what else are we expecting from deutsche bank? we have a new chief executive. will he move quickly? reporter: that is what he wants to do. he was appointed at the beginning of april, succeeding john after a tussle. he wants to execute but he said, a strategy devised under john,

three weeks later -- he unveiled a restructuring of the investment bank affecting the u.s. operations. he has not given a lot of detail. people are waiting. --have numbers coming up august, for example. we are waiting for more diesel on the record. -- for more details on the record. tom: we will do much more of this through the week. how about emerging markets foreign-exchange? let's look at the important pairs. yen weaker, turkish lira doing better after the economy meeting. hey so, weaker. peso, weaker. this is bloomberg. ♪

♪ "om: "bloomberg surveillance worldwide. so please do with us. here's taylor riggs.

taylor: iran and the european union face an uphill battle to keep the nuclear deal alive. president trump's decision to withdraw from the agreement is likely to deter european businesses from doing business with iran. iran's president says he will keep working with other investments. for the first time in seven years, there's a three-way summit taking place between japan, sign a -- japan, china, south korea. the three countries disagree over the way to deal with north korea and its nuclear weapons program. choice to head's the cia is promising the spy agency won't resume waterboarding and other techniques that happened called torture. gina haspel once helped supervise those methods.

in west virginia, voters handed a victory to republican leaders. they nominated state attorney general patrick marcy as the party candidate for u.s. senate. president trump had urged them to reject the anti-establishment campaign of former: executive don blankenship. -- former coal executive don blankenship. global news 24 hours a day, on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much. we are advantaged at bloomberg to have a global reach, which really helps when emerging-market begin to fracture -- emerging markets begin to fracture. wonderful to have you with us.

what does this depreciation and higher inflation mean for the people on the street? know, the tech shares have been hitting record lows in the pastdollar months. inflation has been at several digits for the past nine months. economists are saying that the tokyo central bank is behind the curve and has do more to curb inflation and bolster the lira. that is exactly what the turkish government is hoping to do today . earlier today, president erdogan has called for an unscheduled .conomy meeting we are hearing the deputy prime minister will attend, as well as the turkish central bank governor. the circulation that authorities may make a move to stop this market route, and of course, as inflation accelerates

comfortable on the streets here in turkey are really feeling the pain. tom: let's bring up a chart right now if we can. we talked to paul about this earlier. it is not just about the currency and academics at 30,000 feet. this is core inflation in turkey moving from 4% out to 12% domestic core inflation right now. what do you see in the oil , day-to-day in istanbul? n: rising oil prices are hurting emerging markets across the board, and turkey is no exception. another thing hurting turkish markets is the possibility of further interest rate hikes in the u.s. as well. by not onlying hit domestic problems, but also international as well. tom: thank you so much. greatly appreciate it, a look at

the simple. hanse in london with rettig or. let me go to you on this trilemma we are experiencing today. now the same of em as it was in the time of ecuador, anytime of mexico, in the time of thailand and indonesia and the rest? or is it a different world now that sees these depreciations? >> many markets are calling on the lessons of the past. much of what we experienced in the 1980's and 1990's are no longer there. we have talked about argentina. with talked about turkey. those are economies which have liability positions.

when you see those funds becoming more expensive, then you are in a very problematic situation because it shoots up your domestic inflation that deflates real disposable income. at the same time you have domestic credit availability because the dollar flow is drying up. you have become a nation of declining domestic demand tied to funding conditions domestically. that is weakening the economies. this is a natural adjustment process because many dependent on foreign funding flows. you see that those are becoming less, and you need to adjust accordingly. you need to reduces capital import needs and the adjustment on domestic demand is how it works. this is a very painful process, but it is a clear reminder if

you're not getting your balance sheet in order, then you are suffering. that is not only a plan for turkey. we should not forget that. in countries like canada, a credit gap of about 35%. in the case of australia, the credit gap is about 22%. the list of those countries are significant. there is where you see the pressure. at thee: tom and i spoke world bank imf meetings in washington. is the central bank independence in turkey? hans: you would say there is political interference him about there is obviously political talk. the central bank has to provide the levels for equilibrium. when you reach the appropriate real rate level, you have fielded that approach.

you have to make that judgment according to that indicator. francine: and nothing will change. you study theul, relationship between the eu and turkey. president erdogan is consolidating power. paul: you referred to the prospects of future entry. francine: just how you view turkey and maybe the relationship with europe, or turkey as a standalone. ofl: think the process further discussions about access to the eu, it is clear that there was no political willingness in the eu to move forward there. the main players have decided that it is not worth doing, so i think i don't know what the future will bring. internal depend on the political situation in turkey, but i don't see any further movement towards access in turkey. francine: thank you both for

joining us. both stay with us. timng up, we speak to hoettges. interested in hearing his thoughts on this tie up in european assets. that interview is exclusive, and it is coming up next. in the meantime, japanese prime minister shinzo abe welcomes top leaders from china and south korea to tokyo for the first time in seven years. he was forced to tackle an awkward agenda item. that is north korea. we will get you anything that mr. abe is saying shortly. i will imagine they are also talking about iran. this is bloomberg.

francine: this is "bloomberg surveillance." raising itsekom is profit forecast on growth in america after the t-mobile u.s. unit adds customers for the 20th consecutive quarter. also the planned deal to take over sprint in the u.s. remains in focus. the deutsche telekom chief executive on this global tie up. let's head straight to germany, where bloomberg's matt miller has the exclusive interview. matt: so much internal and next journal and a day -- and an about.l m&a news to talk i have with us tim hoettges.

you raised your forecast for the full year. t-mobileely the takeover of sprint that makes a competent enough to do that? the first thing is we had a great quarter on both sides of the atlantic. the guidance increase is coming, but on the other side germany is growing and europe is growing as well. basis, butability even on a revenue basis. 90% of our business interplay markets are all growing. matt: how important is that u.s. slice of the business to you, your stake in t-mobile? tim: the environment in europe is very competitive. we have significantly more price pressure. the u.s. are getting more and more relevant for us going

forward. great strategy moving forward, today already let's say 50% of the profitability is in the u.s. with sprint that is going to increase. the number that always strikes me in the u.s. is the growth. cannot continue? is that -- can that continue? is that sustainable? tim: this is our dna. that is how we are ticking. it is what we are not going to change going forward. , we are the spectrum able to reach new customers. we have opened up $10,000 in the u.s. were customers can experience us, and we have the highest customer satisfaction of all carriers. it is not something which you can easily just copy. ikea's success in the

for mr. -- in the furniture industry for ages. i am very confident that the team in the u.s. with the aggressiveness is moving forward. matt: i have to ask about the mn day -- the m&a situation. lot that was subdued for a while. now it seems to be kidding -- now it seems to be taking up again. -- now it seems to be kicking up again. tim: i think this deal is totally unacceptable. there was a time where deutsche telekom was not allowed to sell their cable businesses in one piece. it was sold in three pieces. now all the three pieces are coming together in one under the roof of a vodafone. second, we are building rural

germany with fiber infrastructure. let's see where vodafone is now going. are they willing to invest in the world areas -- the world ral areas?he r is this good for the market? is this good for the media companies in the society? i question that. germany --houses in my last point, we have fully regulated deutsche telekom in billion market for 5.7 on an annual basis. vodafone's nonregulated and is claiming they are on eye level with us on their fiber cable infrastructure.

something has to change in the regulatory environment. if they are a giant in his environment as they are claiming today, what does that mean for the regulation? therefore we are asking now for more deregulation for door to telecom going forward, and dealing for a very fair for our customers. matt: what you specifically going to do about this? will you go to regulators with your complaints? are you going to ask to buy some of those assets? you were already purchasing some things from liberty global. what i will do -- tim: what i will do is to make sure that the politicians, the leaders, the authorities deciding on this deal, that they understand the situation created by this transaction. somethingsking for

specific for our company. i am only asking for fair competition, for the possibility that we are able to fight with the same weapons, with the same network infrastructure investment, as they are going to be able to do. merger that you are pursuing in the u.s. with sprint, a $27.5 billion acquisition, regulators in the past had an issue with this combination. why do you think it will go forward this time? matt: the market -- tim: the market has totally changed. arey all the cable costs announcing big mobile customer subscriptions. they are going into a market that has both a fixed and mobile culmination that shows that the market is not to take your mobile or fixed market. it is a converged market. the second one we see is there .s a need

gettingerica is competitive in installing five g infrastructure. we need scale. we need to your life this infrastructure. our commitment is clearly to build a 5g infrastructure not only for the big cities, but especially for rural america on top of that. the last thing is the competitiveness. we are the two small players, and there is this big duopoly of at&t and verizon on the other side. we are even more in the position to attack their huge profits. we are expecting not increasing prices, but reduce prices. we are expecting and even higher competition because our dna of competitiveness will be strengthened, will be supercharged as our team in the u.s. is claiming. matt: what kind and investment

can you expect to make -- what kind of investment can you expect to make in the u.s. with the power of deutsche telekom? bridge have built a huge and combination plan for the upcoming years. there is investment up to $15 ,illion just going to entities and we have huge investments planned for the 5g rollout. there will be a three-year time period where we are realizing $30 billion. a very sound business plan if we were allowed to merge, we can compete then with the two big players. matt: thanks so much for your of deutscheettges nnes.om in bo

back to you. tom: thank you so much. greatly appreciate that. we are watching e.m. right now, recentn near new weakness. indonesia not telling me much. turkish lira does better off of the economy meeting scheduled by mr. erdogan. move.inian on a 2.4% right now, taylor riggs. the world's largest beer maker posted first quarter as it get -- first quarter earnings that beat estimates. meanwhile, the brewer is ramping up its marketing campaign for soccer's world cup this summer, the most-watched sporting event around the world. boeing and airbus appeared to be the big losers after president

pulled out of the nuclear deal with iran, leaving little hope of the two will be able to complete $40 billion of air class deals -- of aircraft deals struck with the country. british cigarette maker imperial brands plans to raise up to $2.7 billion by divesting assets. the company will use the money to reduce debt and develop smoking alternatives such as vaping. bloomberg spoke with ceo allison cooper. >> we only have roughly 40% of the tobacco market globally. 86% of tobacco consumed is not ours currently. it really says to me vapor is a big opportunity for imperial. clearly we've got an opportunity and a number of markets around the world to drive conversion of smokers. taylor: that is your bloomberg business flash. francine: thank you so much.

as italy appears to be heading towards another election and the u.k.'s theresa may continues to suffer multiple defeats over her key brexit loss, the shape of the european union appears uncertain. --ll with us, hans timotheus redeker and paul de grauwe. how does this all and? if you can't have -- all end? italiansxt time the vote going to be a more democratic government? paul: it is a very important italians vote going toquestion. i think it was on the populists might gain. my interpretation is that the two populist parties, the northern league and the five-star movement, are really pushing towards a new election

because they sense that it might reinforce their position politically. ,hat could be an outcome whether they will be able to form a new government after the new election remaining a question. who knows? these things can go in many different directions. francine: overall, do you think going to see going to see a bag union or capital market union in our lifetime in europe? paul: in your lifetime maybe, but certainly not in mine. i think some elements of a banking union we already have. we have the supervisor, we have mechanism, but we need to insurance mechanism to make sure that it is done at the eop level. it is quite unclear whether this

will, in fact, fly. that there is a lot of opposition against a this, not only in germany. macron hassals that made against creating a fiscal space so that the eurozone level in essence a location that eurozone level could have some stabilization, that doesn't seem to be happening either. hans: i think i am a little bit more optimistic on the issue. you have to the about cash to think about that -- to think about that.

you are only exporting capital once you have exploded the last the -- exploited the last domestic investment opportunity. it is very difficult to see sustained selling in the italian bond market unless you are seeing the domestic audience to do that. at the same time, the european central bank is running to your interest rates that means from an italian investor perspective, you can make in the italian bond market if you are investing in the environment. what you have is a capital inflow into europe the results in crisis. i think draghi and others have no intention to change anytime soon. what is important when it comes to the euro is there's a lot of stuff in the equity market that is still under hedged.

we have penciled in against the u.s. dollar 1.15. is sok this italian thing far a reminder, as well, that we need to take care that mr. macron is going to be successful. when you talk about populism, you have to think about what is going to happen after macron. tom: thank you so much. you. we will drive forward the conversation. chandler will join us from brown brothers harriman. stay with us. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us."

that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. ankara, mr.rning in erdogan called an economy

meeting. in but is aries -- in buenos , -- president trump reneges on the iran deal. lose.electable let the midterms begin. good morning, everyone. this is "bloomberg surveillance ," live from new york, i am tom keene. francine lacqua, there is just no news flow. where do we begin? let's talk turkey. simin is istanbul with us. we have an economy meeting coming up. francine: right. this was called by the president.

this goes back to what we were quizzing the deputy prime minister in washington about, which is is the central bank really independent. it is quite a move. i am looking at a lot of m&a news, including the media landscape with liberty global selling their access to vodafone. tom: we have appreciation of the west virginia dollar. we will look at that coming up. right now, our first word news. here's taylor riggs. u.s. secretary of state mike pompeo has arrived in north korea to prepare for president trump's summit with kim jong-un. pompeo'speii a'-- second visit there in recent weeks. is said toligarch have met a $500,000 payment to an entity controlled by president trump's lawyer michael cohen. according to the lawyer for

stormy daniels, the payment was used to pay hush money to the foreign actress. a&t confirmed it paid cohen consulting fee to provide insight into the trump white house. argentina has asked the international monetary fund for a credit line to help keep the peso from plunging further. $30 billion.s want president mauricio macri spoke to the nation. this will give: us stronger support to be able to face this new global scenario and avoid the crises we have seen in our history. taylor: argentina's central bank has raised interest rates three times in 10 days to 40%. global news 24 hours a day, on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thanks so much. stability in the markets right now.

futures up 12, dow futures up 132, euro is weaker. 14.29, crude elevated. yen weakening since about 10:00 a.m. yesterday. there's the argentinian peso. francine: we are global, which is why we are looking at the turkish lira. it is a chart that matters for me today. overall of net european stocks, they are pretty much up and down. , butld collect zigzagging actually they are jumping around. crude rallying after trump's decision to walk away from the nuclear deal. looking at the 10 year treasury yield topping 3% ahead of the crucial bond auction. creditry quickly, three

rated securities, euro trade weighted, normalized back to the ascension of erdogan. this is the curvature of an ever , ther trade weighted lira acceleration of pain in turkey's tangible. francine: this is the chart that matters when you look at turkey. this is why my chart matters. this is lira depreciation that has brought it all the way back to 2012. you can see the regression levels. this is after erdogan has summoned the economic decision-makers to his palace to discuss the plunge in the lira. let's get to our top story in the u.k., regretting president trump's decision to pull out of the iran nuclear program. he did not mince words.

here's how iran's president responded. and ordered the irani atomic energy -- iranian atomic energy association to be ready if needed to begin our industrial enrichment without limitations. we will wait for some weeks and hold talks with our friends and allies and other signatories of the nuclear deal. those who will remain loyal to the deal will talk. francine: joining us now is bloomberg's chief washington , and our executive editor for the middle east. how is this being taken in iran? the president has said get ray to restart the nuclear program, basically. gethe same time, said ready. not that we are out of the deal. basically he was to talk to the

europeans, and find out if the europeans are able to give any beurances that they will able to stick to the deal, to come through with a commitment. basically what he means by that, allow european investment or chinese or russian investment into iran in spite of the u.s. sanctions coming now. francine: kevin, what will be president trump's next move? is that it? there's not going to be a second renegotiation phase, a second agreement? kevin: they say there is going to be. yesterday we saw the president during his remarks try to get out front in terms of criticism of what the next steps are. he announced during his address that the secretary of state mike pompeo was in route as he was speaking to north korea to continue talks is north korean dictator kim jong on -- kim jong-un. he also spoke directly to the iranian people and said they

feel that president rouhani will say they don't want to have continued negotiation talks, but that the president is willing whenever they are of that concern. will beina haspel undergoing her confirmation hearing in the senate for cia director. there's a lot of moving parts. the administration trying to put , cohesivefrontal message from yesterday's announcement. ade in dubairiah ham , kevin cirilli with us in washington. i want to bring in gregory valliere. why is america not buying the president? did he do this unilaterally because he cannot stand anything barack obama did as president? gregory: that is part of it. but here is the big bottom line. the israelis are starting to

move missile strikes into southern syria. i think the israelis now will feel unshackled. i am worrying about a looming conflict in the middle east. kevin, what will you watch today about the reaction of these iranian decisions? kevin: it is going to be interesting to see what gina haskell testifies today -- gina haspel testifies today. she will be questioned about the exact operation in the middle east, and i think there's a lot of questions on that. president trump yesterday had two phone calls. one with french president emmanuel macron, the other with chinese president xi jinping. there are questions about what exactly this means for the looming talks with north korea. francine: certainly one angle we need to follow very closely.

the europeans and other western countries want to stay in this accord with iran. can they do it? h: as you said, they want to. they want this accord to continue. theycome out and said that want it. the iranians have said the same thing. the problem is the reason iran is staying in this deal is to stay investment and to keep the economy out of trouble. they need the europeans not they want to stay a part of the deal, but they need to do business in iran and not be impacted by the direct sanctions the americans will impose, i.e. american components in european products, or even -- even secondary sanctions where it has been really tough for the iranians to get to the money to get investments in. tom: thank you so much.

morningne question this , do you anticipate any actions by mr. mueller given the heightened news flow we have seen of these linkages of mr. cohen to russian money? kevin: i think this is just a continuation of the developments why all of that salacious miss matters. follow the money, -- salacious salaciousness matters. follow the money. mr. mueller's team is about to go fishing. tom: we follow a huge news flow this morning as we look at all of these turmoils in foreign exchange. greg valliere with us on foreign investment. there's so many ways to go here. the midterm elections started yesterday.

who won? trump had a pretty good night. the west virginia seats could go to the republicans. i think trump had a pretty good night. unrests still voter against the swamp. it is still out there. within the swamp are these decisions president trump makes. does it play in the heartland? gregory: no. hear thishe stuff i morning, people in the center of the country don't care about michael cohen. they think it is fake news. they think it is exaggerated. tom: i want you to talk about the dollar strength we have seen. what is the character of the dollar strength when you look at this maelstrom? gregory: the politics in some

ways doesn't really matter. to february,k march, and april, the dollar index fell only one week in each month, said three weeks in each month the dollar is going up. the federal reserve can be more confident than any other central bank about reaching it's a check this -- reaching its objectives. you don't think it is making america great again, 3% gdp? gregory: no, i think they can be confident and that there is this huge pileup of fiscal policy in the pipeline. i think what the markets are trading on is there is further rate hikes that could lead to higher markets. that helps explain dollar-yen back near 110. francine: let me go back to ,omething that you said that people in the center of the

country don't care about michael cohen. what we found out overnight is that a company tied to russian payarchs loan 500 -- company for access to president trump, that was paid to stormy daniels. applications.ig the documents they got from michael cohen i think our explosive and will get leaked. faceel cohen can either bank fraud and jail time, or he could turn against trump. it is quite a choice coming for him. this is very unlikely that you get those documents in this part of the investigation. gregory: i think people are leaking like sieves right now. people who have seen these documents are starting to leak.

tom: within the elections last night, i was surprised at how subdued the coverage was. did conor lamb show up, the general and from southwest of pittsburgh? the democrats show another hint of a conor lamb to come? gregory: not yet, had the big fight there is policy. she further talked yesterday -- is the pelosi. she further talked yesterday about how we could remove the tax cuts. what do you look at next, pennsylvania? gregory: there is still a long way to go. if we have gdp growth at 3% on labor day with unemployment at three a half -- tom: and a strong dollar as well. gregory: the news is positive. i think it is a question of how that affects transitional voting

in the 2020 elections. it did not really help democrats in 2016 and in expansion mode. francine: when you talk about expansion mode, doesn't mean also the fed may have to raise interest rates more than expected? we had jamie dimon on yesterday of jpmorgan saying he has seen yields at 4%. the ideal would be that it is hard to see why the 10 year yield is going to go to 4%. what could drive the tenure that high is inflation expectations stimulus we have and then already growing economy. francine: do we need to make sure, first of all, that the bond option goes ok today, or is the trajectory of the 10 year yield going towards more? gregory: we've been in this

2.85% toe or less, the 3%. there is real value in the 10 year yield at 3%. i agree that we've had a lot of supply coming in. the yields have backed up, building into concession to make these options go a little better. i think the primary dealers are absorbing more than they have in the past. does thehe u.s. options with the primary dealerships is a lot different than in europe, where you can do syndication. you can't have failed auctions in europe -- you can have failed auctions a europe and the way you don't get them in united states. francine: have we figured out what president trump or the administration want, weak dollar or strong dollar? gregory: one thing they might not be able to control is treasury borrowing needs. the in normandy of the budget deficit is going to start to become an issue. tom: mike allen just published

at ask he is moments ago. is something in common with you, which is a linkage of all these events. washington,ink in iran, and the koreas? what is the linkage there for the president, and frankly for our foreign-policy establishment? gregory: i could even link it with the markets. the one word is volatility. that is the word of the year, and a think it is through on geopolitical things. if north korea really just going to run over -- to roll over and cut a deal after what happened with iran, if we see israelis going into iran? tom: i just got a memo, we need more news this morning. [laughter] a slow news day. we are thrilled to have greg valliere with us and marc

chandler. we will speak about emerging markets with james donald of lazard. stay with us. in a different washington this morning, this is bloomberg. stay with us. ♪

francine: -- taylor: this is "bloomberg surveillance." i'm taylor riggs. a new deal will shake up the tv and broadband market in europe. vodafone has agreed to buy german and eastern european units from liberty global for $22 billion. liberty global will focus on the

u.k. and ireland, its biggest market. one of vodafone's biggest rivals suggests regulators may take issue with the deal. >> i think the deal is totally unacceptable because there was a time when deutsche telekom was not allowed to sell their cable businesses in one piece. it was have traded a much bigger price. it was sold in three pieces, and now all three are coming together in one under the roof of vodafone. taylor: meanwhile, toyota is forecasting better-than-expected annual profit. the world's most valuable automaker has been cutting costs to deal with the slowdown in its biggest market, the u.s. mexico has offered a compromise on the key nafta issue of auto manufacturing. according to people familiar with the matter, it is not clear if it is enough to reach a deal with the u.s. and canada. the u.s. once north american auto content to be 75%.

mexico is said to be offering 70%. the world's largest long-haul airline emirates boosted for your profits 67% -- boosted for your profits -- boosted 67% after anfits increase in middle east travel. think -- [indiscernible] -- and that is a very small number considering we have nearly 24,000 cabins within emirates. taylor: that is your bloomberg business flash. francine: taylor, thanks so much. deutsche bank is said to be considering a major restructuring of its u.s. unit that could result in stock cuts as much as 20% of its workforce in the region. according to people briefed on the matter, the company is nearing a decision.

bloomberg'sow is finance and investing managing editor. always great to have you on the program. how fast of the new chief executive need to move in the u.s.? >> this is what we were expecting when he took over, that he would not have a whole lot of time to move forward with the restructuring because he came in, and little over two weeks later he announced a radical panel. the last couple of weeks we have been taking off those details, so we have been seeing structures in the u.s. which could lead to 20% of jobs getting cut, which gives a sense workforcele of the being allowed there. we are also getting a sense of the kind of industries that will be less focused on. we understand that will close , for houston office

example, while they say they are coverage ofntain the consumers in the tech sector, the financial services sector. we are getting a better feel for what he actually meant when he said he was going to be pulling out of business areas. francine: is it an opportunity for other european union banks to go into the u.s.? or is it just market share that the u.s. banks will take over. it is probably the latter, but what we have seen is some retrenching, trying to gain market share. the first quarter was quite interesting in that regard. you saw the europeans continue to struggle, particularly on the income trading side. let me show the chart here right now, deutsche bank inflation down to under 12 euros per share. what are they waiting for?

i am just baffled here. is it a tradition of germany to move this slow? what are they waiting for? got toi think you've take into account the context of the last few years. in 2015, the biggest priority was settling the legal cases. that talk went for most of a year. that was closed, it was difficult for any manager to put together a strategic plan, but that could only come after that. you have to implement the plan, -- they hadged in to clear the legacy issues before they could title of the model is actually going to look like. tom: thank you so much.

seems like a daily update. we are going to continue forward. marc chandler will join us on emerging markets. also, we are going to have a conversation with the former danielbassador to israel kurtzer. 22.48.nian peso we are opening in an hour. onkey does better, opening economy meeting and kara -- meeting in ankara. , thelondon, new york dreaded yankees won. ♪

francine: this is bloomberg "surveillance." tom and francine from new york and london. the leaders of italy's

antiestablishment five-star movement and a eurosceptic league are meeting in an attempt to form a government without the participation of silvio berlusconi's party. if they managed to form a government, it means we will not have some early elections that spooked the markets yesterday, spread between italian bonds and german bunds widening. theresa may suffered multiple defeats over her key brexit law as she demanded they keep the u.k. in the single market. let's get straight to the bloomberg first word news. taylor: iran and the european union face an uphill battle to keep the nuclear deal of iraq -- a live. president trump's decision is likely to do -- deter companies

from doing business with iran. he runs president rouhani says he will keep working with the other participants. for the first time in seven years, there is a three-way summit taking place between japan, china, and south korea. shinzo abe welcomed south korea's president and china's number two later. deciliter. -- leader. choice to lead's the cia as promising that to resume waterboarding and other techniques that were called torture. she testified desk testifies at the senate confirmation hearings today. in west virginia, voters handed a victory to republican leaders. they nominated patrick morrissey as the party's candidate for

u.s. senate. president trump urge them to reject the antiestablishment campaign of blankenship. morsi will face joe manchin in november. global news 24 hours a day on ,ir and on tick-tock on twitter this is bloomberg. i am taylor riggs. tom: we will get to greg valliere in a bit on the politics of washington. , and of james donald course mark chandler. , i want to bring up a chart from mark which shows what happened when bad things happen. this is our collective memory of

ecuador, the massive depreciation of the ecuador sucre. in 1999, it all falls apart to a fix. this is the big fear. can you see this coming? james: emerging markets in general are under pressure, partly because of rising u.s. interest rates. if you arepening is like a tiger chasing a gazelle, the first ones you catch are not the fastest. those are the emerging markets being picked on, companies that have fatal flaws. how is it going today? what do you do in em, in blue-chip america you go to cash. what do you do in em? james: try to invest in stocks that have some degree of protection in this type of market. that is the beauty of having

investments to go into. there are companies that have natural hedges and companies that have high capital barriers that can protect you to some degree. specific or do you have to go corporate granular to find companies that can avoid turkey, argentina, and the like? james: we believe you want to be in companies even in those countries, that protect against some of that weakness. an exporter in turkey may actually be doing reasonably well. francine: overall, what is the one thing we misunderstand about a lot of these emerging markets? period hasink this been dominated by dollar weakness up until very recently. periodit has been a

where in a lot of these countries, you have had current account deficits, very impressive economic growth. inflation has been relatively high. interest rates have not been held up enough, and i think you are seeing something of a confidence shakeout in many of these markets. this did not really start with turkey or argentina. i would say two to three months ago it began much more with the philippines and then indonesia. a situation is where it is changing over time and in another two to three months it may well be somewhere else. francine: if you look at a lot of the equities in emerging markets, how much do they have to do because of dollar moves, currencies and structural reforms, and how much do they have to do with chips,

artificial intelligence and technology stocks going out because markets produce components for the future of technology? james: technology is the biggest sector in emerging markets. we have not seen that since roughly 17 or 18 years ago. that is a big part of emerging markets today and it is much more like the u.s. than non-us markets. the emerging markets still have an important currency side to them, and we have seen some rapid movements in the course of the last month in currencies. tom: we love to do this on the bloomberg. mr. donald brings up the philippines. this is trade weighted duterte. this is a really ugly trade weighted philippines with greater convexity right now. how do you link in the politics of a given em with what you will

observe in the litmus paper of your fx system? marc: the question becomes one of confidence in a country's policies, to address the structural issues. the you have a weakened lyrical system it undermines their confidence, and that becomes a target. for politics, current account deficit and rising inflation fuels this negative spiral. do they respond to the imf news yesterday out of buenos aires? go along buenos aires. is that what you do? marc: that is not the way we usually react. tom: argentina, they called 1-800-madame lagarde and said load the boat. marc: it is potentially a good protection for argentina. types of fairly extreme situations, that is what

countries have to do. imf, do: if you look at we need to actually rethink the role of the imf? is the imf, what it has done with greece and other emerging markets, i'm not saying greece is an emerging market but you could probably argue that. does the imf have still a big role to play? james: i think the imf has a role to play, maybe not as big a role as it had to play or thought it had to play 20 years ago. as a stabilizer over short-term periods, it has a great role to play. dazzle you have to donald or chandler, go to tv and you can do long duterte to get through the day. as the equity feeling of when do i go into troubled em's? the books you have written and works you have done for decades,

how do you pull the trigger on em when you see these trilemma of issues? marc: the market is very long emerging markets because it had such a strong rise, so some of this is unwinding from long. the trajectory of fed policy and trajectory of the u.s. economy suggest the u.s. markets may stay under pressure as an asset class. , it might stayss under some pressure as movement goes back to the u.s. dollar. me a noteere just let -- just slipped me a note. em has done great recently. how much em exposure should valliere have? >> em has done well in the last two years, but in the last seven or eight, e.m. has not done that well.

i think this is an asset class that works much better over the longer term. moments like this, when they are under pressure, are probably in my opinion that are buying opportunities than selling opportunities. much boththank you so for joining us, james donald of lazard asset management and greg .alliere of horizon investments stay tuned later today. the latest episodes of "leaders " we talkat," -- lacqua about spain and renewable energy. he is in spain and in europe overall considered to be one of the best chief executives because the share price has been going so well over five years. that is 7:30 p.m. in london today. this is bloomberg. ♪

taylor: this is bloomberg "surveillance." let's get the bloomberg business flash. the world's largest beer maker posted earnings that the estimates. anheuser-busch had strong demand in europe and mexico. they are ramping up for their marketing campaign for the world cup, the most-watched sporting event. boeing and airbus are the big losers after president trump pulled out of the nuclear deal with the wrong. -- iran. it leaves little hope they will complete $40 million of aircraft deals. british cigarette maker imperial brands plans to raise up to $2.7

billion by devasting assets to reduce debt and develop smoking alternatives. bloomberg spoke with the ceo. we onlytobacco player, have roughly 40% of the tobacco market globally. 86% of tobacco consumers are not ours. it says vapor is a big additive opportunity for imperial. clearly we have an opportunity to drive conversions and additive growth. -- attitude growth. taylor: that is your bloomberg business flash. tom: single best chart, we will do it with greg valliere. talking about the politics and reality of the moment, the pink line is the presidential moving average. here we are above it, above it, and the first look last quarter,

a little soggy, nobody cares. make america great again is working, and you see it with a better trump paul lang. -- polling. greg: his numbers have gone up on handling the economy. all of this talk about iranians having to wait out trump because he will not get a full term, you will not get 67 votes to convict him. i do not see it. tom: so you get to 2020. why can't we have a guy that sustains above average gdp and has momentum going into the primary season of 2020? off andat is a long way we could get into a talk about productivity and the lack of workers. that will inhibit things. tom: you mean in the administration? greg: the shortage of labor is acute. i think it will only get worse.

you cannot find workers that want to pass a drug test. immigration.o curb i do not think that amounts to 3% growth. francine: where is the u.s. economy headed? are we concerned with the market overheating? greg: maybe by labor day, the market will be at 3.6%. how will have to raise rates, but overheating at 3.5% or 4%, that is a hard case to make. thecine: where do you see biggest fault line when it comes to u.s. growth? i do not know whether the taylor rule is back, the phillips curve is back, or what you are looking at. greg: the biggest fault line is a deepening trade dispute with china. more terrorists and retaliation that just affecting u.s. farmers in the midwest.

maybe we have oversold a north korean deal. another thing to worry about is this israeli incursion into syria. there's a lot of geopolitical stuff to worry about. the answer is politics usually comes down to domestic issues. what does brown brothers harriman think about the chronic trillion dollar deficit we will have? marc: this is a real challenge, but this year it is not such a big problem because there are negative yielding bonds in europe and japan. tom: that is an important point. there is no improvement in negative yields. supply ofe is more negative yielding bonds and that will keep a bit in for u.s. treasury's before it gets more positive next year. greg: nobody really cares about the deficit. billion.ht cut $18 that is tom keene money.

that is not a big number. i do not see a serious effort to reduce the deficit which will only get higher. republicans will provide support to mr. trump? we talked about ms. pelosi earlier, but where are the republican leadership with their president? greg: they are intimidated. last night outside of charlotte, north carolina a conservative republican lost his primary to someone who is even more conservative, who supports trump even more. you have the republicans intimidated by trump. they will not speak out. tom: what would you write about this morning? greg: the israeli incursion, that is a big story. documents, anden the election last night which was not a big's -- bad story for trump. tom: what is the e.m. pair you

want to follow? marc: i am watching dollar-argentina. it is a litmus test. tom: see if it gets a bit. marc: i am suspicious if it does not get this flexible line of credit, i do not think they might qualify. tom: argie is surveillance jargon for usds. greatly appreciate your attendance as the midterms begin, to say the least. francine, please. francine: we have some breaking news. this is the news we had from the spokesperson of the turkish president erdogan, speaking in ankara. he says the exchange rate will be discussed at the economy meeting. we knew that from people familiar with the story he wanted to keep it anonymous because it is sensitive. this is president are to one

erdogan talking about the regression, devaluation, depreciation of the turkish lira , the spokesperson also saying they will discuss iran, the sanctions, and the impact on turkish companies. this is bloomberg. ♪

"surveillance," tom and francine from london and new york. we speak with the goober chief ubeutive -- goober chief -- r chief executive at the summit in l.a. walt disney exceeded analyst expectations as well as showing epps -- substantial growth year-over-year. david westin set down with the chief executive. >> if you are shareholders of the company being bought, 20th century fox, you have to consider the total price and the value of the currency of the combined entity. the other thing to consider is what is the past to regulatory

approval -- pass to regulatory to regulatoryth approval? we are quite confident that we will gain that approval. francine: joining us now for more on disney and all things media is paul sweeney. let's not beat around the bush. it is basically "black panther" that gave a benefit to disney. paul: obviously that was the big driver. it seems like every single quarter, the disney film studio puts up big numbers because they have monster global hit after hit, whether it is marvel or "star wars" or pixar. upry single quarter they put double-digit growth in profits. the company continues to invest in themepark business. francine: do we care so much

about what earning say? there is a high-stakes contest between the world's largest media companies to buy the assets of fox. is it when her take all? paul: i think it is. i think the investment bankers on wall street will be busy because you have two major media players looking to get scale on a global basis to compete against not just other media companies, but against the facebook and google and amazon and apple of the world. comcast and walt disney company feel like they need scale, which is amazing because they are pretty large. francine: we see a reshaping of the european telecom industry with vodafone's bid for the liberty assets in europe. what does that mean? is a consolidation

that i think investors have been waiting for. you have vodafone in discussions with liberty global for years, for either certain assets or maybe a complete combination of the two companies. john malone of liberty global said, we are going to retrench and focus on the core markets in the u k and switzerland. tom: paul sweeney, thank you so much. let me show you our emerging-market board across all of bloomberg, bloomberg.com, and our foreign exchange team today. we will continue to monitor these events. the turkish lira improves. an economy meeting today. ♪

♪ >> the united states will withdraw from the iran nuclear

deal. alix: no deal, the u.s. pulls out of the iran nuclear deal, raising the possibility of new sanctions as oil hits a three-year high. treasury gets set to issue the most 10-year debt in yields desk in years with yields. walmart gets upstaged. david: welcome to bloomberg "daybreak." i am david westin here with alix steel. alix: i read the whole treasury statement and i found it really fascinating. we are seeing reverberations in the market. s&p futures up by 11 points. the dollar stronger, at one point the highest in four months. .he euro climbing up 1/10 of 1% still a lot of longs on the eu.