francine: the u.s. says it won't impose tariffs on china for now. sealing the deal in italy. the populist party agrees on a private minister. france warns them not to put european stability at risk. driving up prices. car will cost people millions of dollars. welcome to "bloomberg surveillance." these are your markets.

yields are edging higher. i'm also looking at the european 600.ks 600 -- stoxx there is a truce for now between the u.s. and china. i'm also looking at euro-dollar 1.17. maybe a little bit of domestic politics in the u.s. you can see euro-dollar is currently holding steady at 1.1720. was also take a look at how tesla shares are performing. the automaker back in the headlines after its latest model will set a buyer back around $78,000, more than doubled starting price. what that means for the masses is something we need to keep an eye on. on the back of this price adjustment to the upside, the share price has not really moved

that much. trade ap, we talk little bit later on. we also get a few on the dollar from mark. this evening, we are in conversation with timothy, the president and ceo of wells fargo. thes get straight to bloomberg first word news. taylor: u.s. president donald trump has ordered the justice department to probe possible infiltration of his campaign after suggesting that a special counsel's investigation is attempting to her republicans in this year's elections. he tweeted, i hereby demand and ,ill do officially tomorrow look into whether the fbi or doj infiltrated or surveilled the trump campaign for political purposes.

populist party has agreed on a prime minister. the legal boss and five-star to propose apected cabinet as early as today. france has warned that the new administration must respect italy's debt commitments. in venezuela, the president one another six-year term as millions of people boycotted the election. venezuela is ignoring calls from the u.s. and regional leaders to suspend the elections. the socialist regime continued with the presidential contest. in malaysia, the de facto leader of the country's new ruling coalition has said that the ousted prime minister must face justice. he made the comments in an exclusive interview with bloomberg. >> forgiven.

what he squandered from the people from the wealth of the nation, he has to answer. taylor: in the u.k., brexit supporters who fear the trail should trust the permit -- prime minister to deliver on our promises. the largest property advisory firm is recommending that investors reject two of teslas board members will also supporting the proposal to split the role of chairman and ceo, both jobs now held by elon musk.

institutional shareholder services is ramping up pressure on tesla. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. let's kick it off with our top story and that of course is trade. u.s. futures rising after the u.s. said it's spat with china is on hold for now. >> we are putting the trade war on hold. right now, we have agreed to put the tariffs on hold while we try to execute the framework. the president has been very clear since the first meeting with president xi in maryland oh that we are going to reduce the trade deficit. we have an agreement with china that they will substantially agree to. francine: that was the treasury

secretary speaking to the press over the weekend. president trump over the years chinese critical of policy. >> i have been saying what they are doing and china is a bubble waiting to explode. just a member something. when it is a bubble, we cannot be brought down by that bubble. they have done things that cause it. we cannot be brought down by that bubble. the nation of china is responsible for almost half of america's trade deficit. china is not a market economy. that is why we designate them as being a non-market economy. big thing. we have to do better because our deficit with china, as you know, $504 billion. that is a year. that is enough for a lifetime.

we have seen people come over from china for a trade deal, will that be successful? i doubt it because china has become very spoiled. the european union has become a very spoiled. other countries have become very ysoiled because they alwa got 100% of whatever they wanted from the united states. francine: first of all, it does not mean that the traits that is over. it just means it is in the freezer zone. a quickly, how quickly can a comeback? >> i think you are entirely right. it is a very powerful headline when you consider where we were only a few months ago. the u.s. and china were threatening tariffs on each other's imported goods. now, we have two sites talking and saying that negotiations are

heading toward framework agreement. that is fine, but when you look are so many broader structural issues here that that is unlikely to be resolved in the near term. for example, the u.s. is concerned about china's state sponsored and promised to create a very high-tech economy, which would be direct competitors to the u.s. agreement,re is an it is unlikely that we are going to see any kind of near-term breakthrough on the broader structural issues. that is the kind of thing that can flare at any point given that we are in a u.s. election cycle. francine: do we have any details on the offers on the table? we don't really have enough specific details. we had some commentary from the u.s. side that china would buy more agricultural goods.

they would buy more energy. china has sent from the start they are willing to buy more goods to read it is this question of whether or not these are new promises or new ones -- old ones being reheated. one of the details we had last week was that china had agreed to or offered to buy 250 billion more u.s. goods in short order. as the summer goes by, we might get more details on this. at the moment, i think we're flying blind. francine: thank you so much. we will try to figure out exactly what is going on for us as he always does. what is the trade deal mean for the markets?

thank you both for joining us. how much do we know that this truce can actually hold? what is pricing the markets? is it the temporary hold for any kind of trade were or are they pricing in just a generally more positive outcome? woodsare not out of the yet, but clearly this is a step in the right direction. surprisingly, markets have reacted positively to it. it is important to point out that we should not have been displaced to begin with. the fact that the u.s. secretary is talking about a trade war is quite shocking. from this point of view, a step in the right direction. clearly the u.s. does not want a trade deal. francine: a trade war. >> they want a trade deal.

the eu exceptional expire at the end of this month. could we be better off at the end of the day if we do get a deal from the u.s. and china where the trade balance of just gets a lot better for the u.s. does it mean that it is a trump when and they were right to enter these talks? >> there is an argument that the way the trade was conducted between the u.s. and china in the sense that it is easier for chinese companies to sell goods into the u.s. and u.s. companies to sell goods to china. i think one thing we are learning from the trump approach to negotiations is that he is much more focused on getting a right deal and getting a deal quickly. i think we are seeing this with u.s. trade, with north korea and we are seeing this with nafta. from market perspective, the uncertainty is being drawn out.

if you are corporate, you are thinking about what is going to happen with your trade relationship. that uncertainty is going to be higher for longer. it iss. policymakers, important to get the right deal. francine: are they aware of that? >> yes. francine: what does it mean for -- dollar?>'>> the latest logic at the end will prevail. this could allow the dollar to rally further. when you look at historic correlations of relative data in the eurozone against the u.s., this fully justifies the dollar and can justify an even weaker euro-dollar. both stay with us.

willy coming up including tesla executive elon musk unveiled details of the model three? we will talk electric vehicles next. populists agree on a prime minister. will they heat a warning from paris? we will discuss italy next. this is bloomberg. ♪

francine: economic finance politics. this is "bloomberg surveillance." the tesla chief executive has announced the details of a more

powerful version of the model three sedan. with enhanced features comes a heftier. tag it will set buyers back $75,000, more than double for the base model that was discussed before deliveries started last year. tesla and that leave its mission to deliver a mass-market vehicle? what is his price hike actually going to do to sales? say for sure,to but you have to look at the fact that tesla has already got half a million people have signed up to put down a $1000 deposit to get one of these new cars. that is for the cheaper version of it. you have to figure that it percentage of those will convert. hard to say how many. we do not know yet there will be any special terms for people who have already made a deposit, but there is huge demand for the tesla brand.

they have been able to sell faster than they can make them. that is some of what went behind this decision. if you're talking about people at the lower end that were looking forward to buying at the had not put on a price yet, that is going to affect their sales going ahead and the projection in terms of unit sales is going to be lower. the revenue they will be getting will be much higher. francine: what does it mean for tesla rivals? if you are a nissan or a toyota, this is really great news. they have to be patting themselves on the back or at least laughing a little bit saying we told you so. we knew that a competitor like tesla, new to the system talking about how they are going to have all of these vehicles at this price point, they knew it was going to be really hard to deliver on. yet another sign that tesla cannot really deliver on that price point, at least not in the quantities that people have signed up to sell. this is good for the toyotas and nissan's. for the bmw's and mercedes, this

is not so great because that is another credit will have to compete with. tesla is gearing up. tesla said there is a comparison to be made with the bmw m3. it is at that price point and a very nice car. the specs are very high for this car. it is not good for those competitors that would be in the same niche. francine: thank you so much. that is dave in tokyo who follows cars for us. we also need to point that some of the shareholders of tesla have been urging the company to separate the chairman's role from the elon musk role. italy has reached an agreement on who should be the country's next prime minister. the parties make a proposal to the prime -- president this evening.

joining us now. what do we know about this front runner? it is heavily confirmed that professor conte is the prime minister, but what do we know about him? hasn't been confirmed because they need to see the president today and tell him first. he is a law professor and teaches in florence and rome. he does not have political experience. becauseom the mild side he was chosen as one of the possible ministers when the five-star drafted a list of government for their ideal government. he is in the five-star camp and seems to be an experienced person with experience abroad. he is taught all over the world.

he is not a politician, so that makes it complicated to manage such a difficult and fractious coalition like the one we are seeing. francine: i was looking at some of the analyst notes and they are saying that the concerns there is a shortfall in the budget. is that something the president would look at or is he more broad? this he does look at the fact that the people wouldn't put italy in jeopardy? the president is a figurehead during normal times, but has these powers that sort of expand in times of need. you can interpret that to also mean treaties and he needs to ensure that the budget is balanced. he could say that he won't find anything that isn't covered properly and financially. that could make for a lot arguing and bickering every time there's a law that does not seem to be completely covered. on the other hand, we just don't

know what five-star legal will do. it is possible that they will follow the outline of their program, but perhaps not the mad spending that seems to be implicit in this program. they could phase it in slowly in that way the spending won't be as wild. francine: thank you so much for joining us. she is our rome bureau chief. markets?t mean for the i'm trying to get a chart down for you which is looking at the ftse rate. we could look at euro spending. -- at what point is this a specter for the european economy? how much of a risk is it? >> one thing i find really interesting when you look at the market, particularly the italian beent is what has happening with the earnings

expectations. since the italian election, the earnings expectation has risen 12%. this has helped provide a live support. the past few days has been much more driven by some of the political sentiment. if anything, that now is making italian stocks look very cheap. there's a point in the next few days we said set to get a lot more clarity in the situation. investors look for value opportunity, not just anti-in stock, but also the italian bond market as well. on earnings, is there a concern that some of the policies will change? we heard the head of the league saying the italians first. if you see a recovery with a earnings growing because of a broad shipping, export led, could they try to rephrase it? there are two main parts to

focus on, the banks and particularly if you have much more populist policies being put forward, could that potentially undermine bank stability? the other is the mark manufacturing export orientated industry which is driven more by a function of reasonably robust growth elsewhere in eurozone and the globe. tor isk the bank sec going to be more sensitive next few days. italy has always been a long-term risk for the euro. the fundamentals are week. there is lack for potential growth. the debt level is very high. no, you have a government actually wants to live in their own direction. the final agreement is not as scary as some of the earlier

draft we have seen. it is still in the wrong direction. this government is most likely to go in the opposite direction. they will basically be exiting policies.essive italy is definitely a negative risk at this point for europe. francine: did we not say about president trump when he came in power? spirit for theal u.s. being revived. kenny to the same about italy? in termsn argue that of fiscal policy, this could be in the short-term positive for but opposition, from the euros in institution and i think given the very high debt level for italy, it brings market concerns as well. i think these negative implications will dominate the market reaction. francine: talk to me about euro. i'm trying to get a chart up.

this is basically euro dollars and you can see, this is a chart that matters. overall, where you to the pressure points? >> europe is a little bit on a knife edge of the moment. more on the expectations from the ecb and when they will be ending. throughout most of the year, the market has been expecting the ecb to be ending. however, we have had the soft data. now is the key time because we need to see the data recover in order for it still to be on the cards. do you see a ending, to the italy situation force the ecb to be in the markets a bit longer, to postpone their qe normalization? >> very and likely. technically, it is very difficult for them to continue. given that inflation is well --ow not the target,

francine: thank you both for joining us. both stay with us. up next, is the death of the bond bull market finally upon us? treasuries. we will have a full roundup of what your stock market is doing now. also looking at oil. pretty interesting moves. we have those of venezuela headlines after the vote. this is bloomberg. ♪

francine: economic finance and politics, this is "bloomberg surveillance." let's check in on what is trending across the bloomberg universe on tick-tock.

i really like this story because he unveiled specifications for a faster, more powerful version, but it will cost you a lot more. on bloomberg.com, brings it continues to weigh on the takei housing market. london property is suffering as well. this is our most read story. if you are a bloomberg user, you can just type in read. that is the first thing me and the team a look at what may come in in the morning. u.s.-chinae, the trade truce. is it fleeting? i know a lot of the markets are reading into that. bloomberg users also want to what the new model three tesla means for the car they want to buy. we have our top three stories.

what is the market looking at? tesla givers want to know what trade means for their asset classes. out of all these stories, i think the one that has the most interesting in the most influencing the markets is the brexit story. it is interesting that it is one of the most read articles this morning. i think there is a lot of uncertainty in the city of london and people uncertainty about what the implications of brexit will be. we see that woman be look at the different asset valuations. do our models, there is very little risk in these markets. francine: are you buying a tesla or is it something to do with trade? >> i was i had a tesla. -- wish i had a tesla, it is such a nice car.

we can finally put this behind us and we are moving in the right direction. i agree that how brexit will involve is extremely important. clearly, the u.k. economy now is weakening and the housing market has been one of their strengths. forward, we see some copper mice is that could stop. clearly, there is still a lot of uncertainty. francine: i wonder whether the entire in election and governments will make it to our top right stories. could oran president seasonal obstacles. this comes from a state official. i'm as if he has been briefed or speaking with the president and that same state official is now saying that the italian president can name a new near tuesday. the way it happens is that the go to see the president

today and put a name forward the president says yes or no. from the latest, it sees the italian president sees no conteles to professor becoming premier. more with our guests next. taylor: u.s. stock index futures after the u.s. and china called an economic truce. that is us both parties agreed to put tariffs on hold as they were to execute a framework. statementsed a joint on saturday following two days of meetings in washington between senior officials including president hauled trump and the chinese vice premier. the u.s. president has asked the justice department to look into collusion into his

campaign. i hereby demand that the department of justice look into whether the fbi and the energy and full surveilled the truck campaign for political such theand of any man's or request or made by the people within the obama administration. president onethe another six-year term as millions of people boycotted the widely derided election. venezuela ignored calls from the u.s. and regional leaders to suspend the election. the socialist regime proceeded with the presidential context despite the threat of further isolation and sanctions on the crisis stricken nation's all-important oil industry.

global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you so much. let's talk treasuries and u.s. yields have soared. the 10 is now routinely above 3%. the next thing investors will be watching out for. what clues will they give to the rate hikes? what does this treasury above 3% mean? it took a while and then it touch 3% and went back down. is frequent 5% the next level? -- is frequent 5% the next

level? level?.5% the next >> supply is very high for a number of reasons. as long as the u.s. economy continues doing well, there is room for even higher yields. francine: at what point do they become, do you lose a correlation or go back to the correlation used to have between asset classes? >> as long as the u.s. economy is doing well, other markets can be somewhat interrelated from the rise in yields. we have been a lot of work in studies looking at how much of a headwind is high u.s. yields for risky assets. we think it is very much a manageable headwind. see theging markets, we emerging markets have a lot less external funding that they need. that again, reduces the

sensitivity. francine: let me bring you over to my chart. are we calling it the end of the 30 year bull market? at what point do these start hurting earnings. does it become dangerous? >> a lot of if it the earnings channel comes into how they had the debt structure. a lot of corporate are now financially happy. they are very used to managing their interest rate risk. is actually reduces some of the earnings exposure to the high-yield. to the point at which it starts to become more of a headwind to corporate earnings is when the growth goes down. then the combination of high yields and slow growth will make earnings very difficult. we have been looking at what an inverted u.s. yield

curve will look like. as long as u.s. treasury yields rise, is that yesterday's story? >> i think the market is focusing a lot on the stock. the market expects that the capability of the session is high and everybody is looking at the yield curve for the moment. i think historically, it has been a good indicator. it is driven by fundamentalist in the u.s. economy. is advancedovery and you get a shock. you automatically get a recession. the economy can continue growing for years of potential growth. the market can actually be a little pessimistic on the possibility and capacity of the u.s. economy to continue. >> for me, a lot of it comes down to the story.

the period of economic recovery can go on for longer. we look at the next round of data out later this week. francine: thank you so much. users canbloomberg interact with the charts. you can browse recent charts and features on liberty the to catch up. venezuela president wins another six-year term. will he pushed the socialist country into an even bigger economic crisis? we will bring you the latest on that. this is bloomberg. ♪

francine: this is "bloomberg surveillance." wonvenezuelan president has another six-year term as millions of venezuelans protested the election. this despite the deepening front of sanctions on the nation's critical oil industry. earlier, we spoke to the ia's executive director. we may see a freefall of oil production from venezuela both in terms of amount of oil and quality of oil. this is one of the major risks for oil markets to come. when you look at oil,

i know there is of course a correlation with inflation although a lot of the central banks will look at this. you have a lot of petrodollar currencies that will swing on the back of this. what is the strongest angle for oil does next? differenter of correlations. lower inflation at least compared to ecb expectations. unusually high oil prices, you might have the opposite effect right now. toe globally, it will lead higher inflation. this is not necessarily bad news. it would suggest that we are more towards monetary policy and normalization. oil prices are not too high to suggest a negative supply shock yet.

let me bring you over to my chart. this is my all-time favorite oil showsbecause actually brent and wti. you have these shale producers and you can see it creeping up as the price of oil goes up. willie reached $100 a barrel? >> what is interesting about the shale story is when we were down at $40 or $50, shale was considered to be the key producer. as price rose, there was hope the show production to than increase. now, you have the situation where the amount that can be taken from the u.s. field and producers an expert channels is a starting to reach capacity restraint. the ability for u.s. a shale producers to benefit from higher oil prices has become more limited.

this means that particularly with what was happening in risk.ela and iran, the more restraints francine: overall, what this central banks do with that? >> i think the feds are probably -- given that inflation is already above the target. they have introduced the metric target, but if inflation the start to rise further, it will have to respond with a more hawkish turn. the ecb, with inflation being a long way below the targets is much less to be responsive to the rise of the oil prices. francine: what does this mean for emerging markets? it also means that emerging markets that consumer a lot of oil will have to go back. becommodity prices should positive for emerging markets.

at this point, this is not what is driving emerging markets. we might see energy producers performing better, looking forward given increases and oil prices. francine: thank you very much. the uk's foreign secretary tells brexit supporters that theresa may will deliver on her promise to leave the customs union. canada prime minister really deliver? this is bloomberg. ♪

francine: economic finance and politics very this is "bloomberg surveillance." let's get straight to the bloomberg business flash. taylor: ryan air has said earnings are set to slump for the first time since 2014 after a pilot shortage. europe's biggest discount airline has aetna it come rose 10% in the year to end march. they will fall back to a range -- in the current 12 months.

that would represent a decline of as much as 14%. the russian billionaire owner of chelsea football club is unable to travel to the u.k. at the moment because of delays renewing his visa. according to people familiar with the situation, he was not and hasey stadium not been denied a visa, but renewal is taking longer than usual. britain's home office declined two,. the largest proxy advisory firm is recommending advisers reject tesla board members. those are jobs now held by elon musk, the public face of tesla. directors --

that is your bloomberg business flash. francine: thank you so much. brexit supporters fear of a trail over a new customs plan to trust theresa may to deliver on her promises according to the foreign secretary. he's of the prime minister needed time to pursue her plan. allowing britain to control immigration and strike free trade deals across the world. meanwhile, the brexit affect is being felt among the housing market. property prices in the u.k. capital are falling. david, boris johnson coming behind the prime minister. is this game theory? right. in there is a veiled warning.

as a figurehead, he was one of the most important people in the referendum campaign two years ago. he said the prime minister needs time and space to get this right. throughout all of this, we're getting the principles that the prime minister wants to take control of laws. the thing that changed last week confinedame up with a -- this is a proposal to keep a hold of the u.k.. the cabinet may have agreed that thingeek, but the biggest is getting that passed by parliament. the biggest the fight is yet to come to actually get enough mps to support that. francine: what is priced in the markets? she has it from all sides or is it a harsh exit and we will reevaluate?

-- currentlyly consider a soft brexit. if you look at eurosterling, is that what has been trading sideways? >> at this point, i think the market is in the middle. if we do get an agreement, it would be good news for the market. if we don't, it would be negative. this is not what has been driving it at this moment. positioning in over u.k. assets is still short. if we get any kind of compromise, there is room for u.k. assets. francine: snap election. that could spell disaster for the tories. >> there were reports over the weekend that some mps were preparing for an election. it is a bit of a nuclear option for the government. if it cannot get this legislation through, what

this theresa may do? divided, --icies so also, we had the fixed term policy act. they're going to have to vote. the latest poll so the tories about four point ahead of labor. it is even more of a tossup this time. whiskough mps willing to -- risk of their jobs? that remains to be seen. francine: is it alarming or kennedy seasonal? >> it seems to be two different stories here. leadingt tends to be a indicator here. it rises and falls before the rest of the country. this is a subject very dear to everyone's heart. always an of the most read stories. we are seeing continuing

weakness and that reflects the uncertainty that is still out there. nobody knows what deal is sort -- going to be struck with europe. because of that, no one is willing to invest. francine: i guess that is strange whenever you look at the pound dynamic because it is weaker than it used to be. >> when you look at the balance foreignnts data, sentiment seems to have picked up a little bit in the last six months. in contrast to 2017 when he saw very little info into the u.k.. francine: how should the bank of england look at house price? this was one of the concerns in the last -- elections of last time around. >> we do expect one hike this year. i think the bank of england is in a very positive position they cannot hide as the

economy is weakening. ideally, they would not have been at the starting point. francine: thank you all for joining us. bloomberg surveillance continues in the next hour. we will be talking to deutsche bank and looking at the spread italian bps. will look at that and euro-dollar. this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. francine: this is "bloomberg surveillance."

francine and tom from london and new york. trade truce. the u.s. says it will not impose tariffs on china for now as progress is made in trade talks. ceiling thetaly -- sealing the deal in italy. driving up prices, tesla's electric car for the masses will nearly $80,000. what does this mean for musk's vision? when we look through the week at some of the asset classes, we are looking at this trade truce, how long will it last, and when will it come back? this seems to be a little temporary relief. you look at european equities, and there is a lot of talk about the possible blessing of this new prime minister. tom: the story continues on

through from friday, a followthrough of a new strung out reality. mexico peso touching 20. i will do that chart in a minute. the philippine peso finally gives way. that is one of the last holdouts of dollar strength. francine: we also move venezuela and the possible new sanctions against president maduro. let's get straight to bloomberg first word news. taylor: president trump is threatening a dramatic escalation in his battle over the special counsel's investigation. he is now demanding the justice department investigate possible infiltration of his presidential campaign by the obama administration. the inspector general to look into whether politics came to the fbi's investigation into possible collusion between russia and the trump campaign.

according to property website prices in london fell at an annual 0.2%. brexit has caused by hit london the hardest. it is the only british region to show in annual decline. in venezuela, president maduro now has sole ownership of the country's crushing economic crisis. voters have handed him another six-year term in an that was widely seen as a sham. now venezuela faces more sanctions on the oil industry. the tesla model three, which was touted as the $35,000 electric car for the masses now can cost you about $78,000. elon musk unveiled a faster and

more powerful model three over the weekend. analysts say a model three with a $35,000 price will be close to the rarest of the rare. 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 am taylor riggs. this is bloomberg. yourthanks so much for equities, currencies, commodities now. up 2.25, getting us right near 20,000. story, the euro weaker. it is just extraordinary to see what foreign-exchange is doing. i guess we cannot bring that up right now. there it is. the vix. that yet number is big. number is big.

we had a big move on mexico. somed a 94 print and then on dxy an hour ago. the dollar climbing against major peers. i have a similar data board to what you have. i'm looking at treasury yields higher and european shares up. we have to look at italy tumbling to the lowest level this year as the two populist parties agree on a prime minister. tom: we haven't done this in a while with a trump election. this is a long-term chart, 30 years showing the great evaluation of mexico. it is a little deceptive as we go out 20 years. here is 1998. a massive valuation on a percentage basis. -- devaluation on a percentage

basis. what we have seen gradually over the last three years is another equivalent devaluation. slow-motiona devaluation for dollar mexico. that falls right into the next the discussion. francine: this is my chart. i know you will not like it because it is a bar chart. hillary and i love it. we also did it in "bloomberg surveillance" colors. top, read story on the bloomberg terminal. it is about the model three. it was once touted as the $35,000 car for the masses. almostwill set you back $80,000. what does it mean for the mass market? it is interesting as soon as you put it in with this free cash flow. rising after the white house said it's spat with china is on hold for now. >> we are putting the trade war

on hold for now. we have agreed to put the tariffs on hold while we try to execute the framework. the president has been very clear since the first meeting mar-a-lagoent xi in that we are going to reduce the trade deficit. we have an agreement with china that they will substantially agree to it. francine: that was the treasury secretary steve mnuchin speaking over the weekend. president trump has been critical of chinese trade policies, saying they are unfair for america. how long will this trade truce actually last? kevin cirilli is our chief washington correspondent, but first in the. -- emma. welcome both parties actually offer? emma: there is a lot of speculation. nobody regards this as an end to the trade war, but probably a

lot of moving in dealing in the background as to what china could buy more of. there is a very vague commitment in the statement. commodities is one of the things that is being bandied about strongly. we're talking soybeans. china already the biggest buyer of u.s. soybeans. tom: when i look at chinese written in the, when does it -- renminbi, when does it give way? give us an update on how they are managing the chinese currency. emma: the currency has been loosened over the past year. they are allowing market influences a little more. that was helped by the fact that it was strengthening quite strongly into last year with the dollar falling out of bed. now that the dollar is coming back, that is a test to the regime as the renminbi does

weaken. it is a test to make it a little more market reliant. it does seem as if they are allowing that to happen within their very tight framework with the fixing and that sort of stuff every day. kevin, what do we know from the u.s. administration side? is it going to be difficult for president trump to go back and say we have now sorted through our differences with china? kevin: what are the differences at all? in the very much a pause back and forth bilateral talks. i would note that the u.s. north korea summit in june might lay a role in this. the june 1 deadline that the president has said would be looming over for

regards of whether or not he wants to make permanent the steel and aluminum tariff increases for mexico and canada for nafta. they are hanging in the balance on one hand. use with have this pa the u.s. and china. tom: everything has changed since friday. i guess we have a trade war and all of that. i demand you explain to us what you will be looking for this morning. our global audience hereby demand that you tell us what we are going to see today from the president of the united states. have my eye on president trump at the swearing-in ceremony later this morning of his new cia director gina haspel because of the criticism donald trump has obbed at the intelligence community for having an informant on his campaign as the

house intelligence committee launches a new investigation. the president will be going full force ahead at the intelligence community. tom: kevin, cut to the chase. what is rosenstein and sessions going to do after the uproar in the last 13 hours? kevin: i will be blunt. they will keep moving forward. that provides a huge differentiation between where they are at and where the president is. tom, there is a speaker of the house race coming up, and the president has leveraged to put pressure on the intelligence community because of that. there is a lot of moving parts with regards to his tweets over the weekend. francine: thank you very much. joining us for the hour is jim reed. thank you for joining us. when you look at trade, whether this is a truce or temporary or anything good can come out of it, what are the markets

pricing? jim: the markets have recovered a bit in the last six weeks. is a is no doubt that this price value positive story for now. it probably lasts a few weeks because you have the north korean summit. after that, you head into the midterms. that will probably be a swing factor as for how the rhetoric goes. tom: help us with the linkage of your world of debt to foreign exchange. when you look at alan ruskin's work, folded into what you are doing. there has got to be a linkage. isn't there? jim: the house you on the dollar is relatively bearish. the reason we are there longer-term is because of the twin deficits the u.s. has and the this the deficit in the next

few years is mind-boggling. i don't think you should cite dollar strength of the moment because u.s. yields are going up more than european yields. we will go back to those twin deficits. francine: driving up the prices, tesla's electric car for the masses will now cost buyers nearly $80,000. what does that mean for elon musk's vision for his company? this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. it was a record quarter for shareholders in u.s. companies. they received $113 billion in

dividends in the first quarter, the most ever. almost 80% of companies increase their payouts from a year ago. ryanair predicts annual earnings will fall for the first time since 2014. a pilot shortage forced europe's largest discount airline to agree to unionization and increase wages. oilceo reports higher prices will impact the industry. >> i think that will lead to a significant shakeout of industry as early as this winter. some of those carmakers that could not make money when oil was $40 a barrel will not survive this winter when oil is $80 a barrel. the speed of that shakeout will determine future earnings. airor: he says norwegian bases bankruptcy in 12 months. they responded saying his comments have no root in

reality. that is your bloomberg business flash. francine: thank you so much. ga and italy's le five-star movement have reached an agreement as to who will be prime minister. professor giuseppe conte has emerged as the front runner. what do we know the president will look at? this is a largely ceremonial role that actually comes into its own when a new prime minister is proposed. will he say yes to the law professor or will he be looking at a budget shortfall? >> we don't know for sure, but it looks very likely. he is likely to say yes because

conte is a law professor. he speaks if you languages. he is experienced. he has no reason to refuse him if it is indeed conte. tomorrowens next is the president probably confirms and then they talk about the program and the ministers. the president has say over the ministers and the budget. those are issues he can discuss. that is where they can get into trouble because he can block. francine: do we know who the prime minister would surround himself with? do we already have names about the interior minister, the the state?nister, >> is this man going to be a puppet? that is a question. thehink we know so far that

leader of the five-star movement will probably have an expanded labor and economic development ministry. league which is anti-immigrant would probably have the interior ministry where they can pass measures that is important to them. this prime minister will have two powerful ministers breathing down his neck. francine: how much are they taking from president trump's populism? they want to be careful not to put the european union in jeopardy, but i think the head italy first. said >> they are very nationalistic. we will just have to see -- some analysts are saying their program is quite scary if they implement it totally. who knows, this is italy,

everything is congregated. everything moves slowly because you have tons of checks and balances. after fascism, we put so many checks and balances that things don't run sometimes. it is possible that things will run in a way that is not too harmful to the economy. tom: thank you. the continuing story out of room. dollar dynamics, oil is a little handleoff of that $80 this morning. we will get oil dynamics worldwide with bnp paribas. we will do that. stay with us. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. we were just briefed by the rome bureau chief about politics in italy. we understand the new prime minister could be the law professor giuseppe conte. we need to look at italian bonds extending the slide among increased borrowing. for more on the markets and the euro, we are back with jim reid of deutsche bank. how are you going to finance some of the things we understand the populists want? can they dial it back?

even if they find new rules, could it help with growth? bill: it is -- jim: it is an extraordinary sign of the times that someone no one has ever heard of could be the italian prime minister in 24 hours. if italy does try to spend old a little more money, it could be positive for italian growth in many ways, but that just piles up debt long-term. what italy has in its favor in the short term is that it has current accounts that have turned out a lot of its debt. the route to a crisis is a lot more difficult than it was a handful of years ago. tom: the chart of italy versus germany, it really tells folks the story of the european experiment. horrific italy in the early

middle 90's. the advent of the euro, and then this incredible piece of italy germanrely off the spreads, the festivities of the financial crisis. is italy a g7 credit, or is it something different? i think while you have the institutional backup of the ecb in 1990's europe, it should be a g7 credit. if that starts to wane, if italy goes on a spending spree and you get a recession, you have to talk about it is a non-g7 credit, quite clearly. tom: i look where euro is. what is the most optimum value of euro for italy? 1.17 handily on -- euro. on

it has to be weaker, right? jim: yes. i would have to say the euro is probably not optimally priced for any country. weaker euro would be better for italy. we don't think that happens. it goes up long-term. tom: good to be with us. you have a meeting with jim reid. your knees are shaking. go to g tv . you can grab a chart and bring it right over to your terminal. that would make for a good meeting. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. let's go to corporate news and elon musk has

announced a faster and more powerful version of the model three with a heftier price tag. it will set fires back $78,000, more than double the $35,000 for the base model. where does that leave tesla in its quest to deliver a mass-market electric vehicle? there are also talks of shareholders wanting to split the chairman and chief executive role. does that mean tesla will not be able to deliver what it has promised? >> that means delays in delivering that. this higher-priced model that they make quite a profit on, it may mean longer waits for anyone waiting for their $35,000 model. francine: does it mean they will have the mass market model at the end of the day? of to amoney to kind

more affordable car. >> that is the idea. that is what tesla is claiming. i think a lot of people are quite disappointed. elon musk again overpromising and under delivering. we expected this mass-market to be rolling off the assembly line by now, and it is now basically not going to happen anytime in the next six months. tom: this is a stunning chart. i did not expect this. this is a seven-year peace of tesla. this is one of the worst bond charts i have ever seen. it is a straight the noaa chart. -- vanilla chart. we are not down to 30 or 40 like a piece of junk. we are down to 87. this is ugly. have anymusk understanding of his financial realities? >> i think he does. i think the fact he has announced this higher cost me that is a nod to the fact

tesla is losing a ton of money. they burned through nearly $1 billion in cash in the first quarter. they need to get more cash coming in, which is why they decided to delay this more affordable car because that comes with a much lower profit margin. this higher-priced model is a not to the fact that he realizes there is a problem on the financial side. assumption het an can go out and find the next marginal billion dollars to burn through? >> i think that is exactly what they are betting. there were talks from goldman last week that they might need to raise $10 billion. that is a lot of money. he has found people willing to pay for it so far, and he is confident he will be able to do it again. i think at some point people lose patience. we will continue to follow

the financial details here at bloomberg and the technological givingnce of jeremy kahn us a view of an almost affordable tesla. you can listen to first word news in new york city. taylor: the justice department has vowed to pressure from president trump. the agency has asked its inspector general to determine whether politics has tainted the fbi investigation into possible collusion between russia and the trump campaign hours after the present demanded a justice department probe into whether the obama administration infiltrated his campaign. there is truth in the trade war between the u.s. and china. it is not clear how long it will last. proposed tariffs are on hold negotiations are going on. is not close to

reaching a deal with canada and mexico on a revised nafta. treasury secretary steve mnuchin tells fox news president trump is more focused on reaching a good deal rather than an immediate one. the administration had hoped to have an agreement in time for congress to approve it this year. mark zuckerberg meets tomorrow with european parliament officials over privacy concerns. the parliament president says zuckerberg has agreed to let the meeting be streamed. the committee wants to know how the data of millions of europeans could have ended up in the hands of cambridge analytical. 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. this is bloomberg. francine: thank you so much. poundle market move, sliding to this year's low.

there is a little brexit concern. there were reports over the weekend that we could see a conservative party preparing for another election this year. there is also an italian itlition drama angle as is converging in the next couple days, which could mean volatility with dollar has picked up and is impacting pound levels. we will have more on that after the hour. let's go back to oil. wonident nicolas maduro has another six-year term. the socialist regime ignored calls from the u.s. and others to suspend the contest. a,rlier, we spoke to the ie who said venezuela will be one of the major risks in the market. >> we may see a freefall of oil

production in venezuela, both in terms of amount of oil and quality may mean it is one of the major risks for the oil market in the months to come. isncine: joining us now harry tchilinguirian. harry, let me bring in a chart, which is my favorite all-time pits brent against wti. you can see u.s. oil rigs going back up. is oil going to touch 100? harry: that is the question. you cited venezuela. that is the wildcard. we don't know how long they can maintain production. the montreal market report indicated production could fall as low as one million barrels a day this year. that helps the price along.

sanctions on iran will help reduce supply out of that country. we will only get the real numbers and impact after november. this is in the context of global oil demand growth, and certainly there is pressure to push higher. francine: i guess the price goes up, and so shall producers have more incentive to turn on. shale producers, i think this year we will have strong growth in the u.s. for total crude output in 2018. even as the price goes higher, the u.s. faces bottlenecks in the sense that there are infrastructure constraints on pipelines. in terms of demand, we are not looking at demand destruction. in terms of emerging markets, you hit the nail on the head. a lot of these countries have

removed subsidies at the retail level during the price slump. they are now feeling the full effect as prices rise, and does the concerns that india shared with saudi arabia as brent hit 8 $80. arabia, iraq,audi and iran. bittyela is the little blue over here. will you give us oil as one price, is it globally one price, or is it less one price in 2018? harry: there are obviously multiple prices of oil, but we will be looking at brent as the key price and looking at differentials. in that context, the major three

will be impacting oil worldwide. we will look how brent and wti narrows and opening up export opportunities for u.s. shale. tom: you explain that beautifully. what are you doing now, what is the signal for you? harry: now, as iranian volumes come off the market, we will get tightening of brent dubai, and we are talking bottlenecks in ale pipelines. wti is discounting at its lowest levels relative to dubai. far as asia and china particular mix sense. we will be looking at the u.s. crude exports at a capacity of

roughly 2.5 million barrels a day to do so. we think we will see those numbers in the weeks to come. francine: you just want a number from perry. -- harry. >> it would be lovely to have other people do your work for you on these things all the time. if you look at the ecb over the last few years, they have been very sensitive about changing policy around turning points in oil. we think the market is underestimating ecb hawkishness because of the recent rise in oil price. francine: i remember two years ago we were looking at peak oil demand 2020. peaks the concepts of come and go. the first came in supply. then we had the innovation of shale. the next peak argument is around

demand as people are getting enthused about electric vehicles. when you look at the needs of emerging markets and the conventional car fleet, that is not going to go away anytime soon. tom: is the oil dollar correlation still there? harry: to some extent. it fluctuates. when we look at oil versus the value of dollar, we can look at it in a more prosaic way in the sense that whenever there is a debasement risk around the currency, people tend to go buy real assets denominated in dollars. that correlation is variable because there are a number of other financial factors that come into play. it is still there, maybe not as strong as it was in the past. francine: thank you very much. what a treat to have harry in

the studio. usually he is somewhere far and remote. , wells fargoay president and chief executive will be asked about mortgages and the strength of the u.s. economy. that is at 4:00 p.m. in new york, 9:00 p.m. in london. this is bloomberg. ♪

francine: i am francine lacqua in london. tom keene in new york. fear the trail --

boris johnson said the prime minister needed time to pursue her plan to leave the single market and customs union. the pound is hovering around yearly lows. the big event this week is the release of cpi figures for april on wednesday. jim reid is still with us. as for the pound this year. -- new lows for the pound this year. of course this has to do well the italy government and rumors of snap elections. story wasnap election really only over the weekend. the pound is slightly undervalued at the moment. towardheading slowly extending the customs union, which would be a positive financial aspect. francine: what does it mean -- what is priced in? is a soft brexit priced in at the moment because the market

doesn't know exactly how theresa may is going to deliver on both sides as she tries to keep everything together? jim: the bank of england we have to put into the next as well because they have been a little fickle. they are very dovish. they were slightly more hawkish in the mpc meeting. the wasted the last week was pretty good. i think the market has priced into much of a hard brexit in the pound at the moment. it is obviously a binary thing. if you get a hard brexit, the pound will go lower obviously. tom: how much of sterling ballets is the british and how much is strong dollar? jim: in the past, sterling has gone up with a strong dollar. these regimes change over time. it is probably a little bit of that at the moment.

eurosterling has not moved a lot in the last couple of months. francine: what will make it move? brexit talks with europe or more domestic concerns? jim: the big picture is probably the brexit story. mpc hike, and august would move it out a few more points, but the sign is brexit is most likely to push it up. thank you so much. jim reid with deutsche bank. we see the 115 handle on sterling reaching the 134 handle as well. coming up on bloomberg radio, lots to talk about to advance the conversation on this monday, lots of international economics and how it. into washington as well. hour, carln the 6:00 weinberg will join us from

high frequency economics. i am tom keene in new york. francine lacqua in london. this is bloomberg. ♪ this is bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. hyundai has back down under pressure from activist investor elliott management as it has scrapped a controversial $8.8 billion deal between two of its units. sony is turning away from the gadgets that made it famous. the new ceo will unveil a three-year plan tomorrow that mbraces sony's growing reliance on gaming subscriptions. deadpool 2 has taken down the avengers. with a weekend gross

of $125 million, slightly less than expected, but the second-highest opening ever for an r-rated movie and ended avengers three-week reign at the top of the box office. tom: thank you so much. it has been dollar, dollar, dollar, dollar. stronger dollar this morning. sterling printing a 1.33 handle. what is amazing is the 5% appreciation on the dollar since april. jim reid with deutsche bank looks at fixed income. what has been pushed aside is the u.s. deficit and all of those pesky options we will see -- auctions we will see out of the united states of america. be?pesky will those jim: we have lived in a world the last six years where

government supply has been qetremely low while has been high. after six years of positive technicals, we think the technicals in government bonds are negative now. tom: within the negative now is the jump condition in foreign exchange. will we see that brutal move in your that brutal move of higher notes and lower bond and prices? jim: i think the pressure is for yields to rise. in the u.s., the short-term pressure is for them to rise as well. i think you should not underestimate european years going up toward the end of the year and 2019. that is probably more mispriced then u.s. yields at the moment. francine: is the ecb worried about german bunds? jim: if the ecb is going to be reducing by hans partly because

in probably because of these concerns, they are more vulnerable. francine: what does it mean for the markets. could it take a rest of the market down with it? jim: i think the damage will be limited. there is no doubt that these conditions are more of a headwind to risk. headwind and more volatility because of it. tom: bring up this chart quickly. i just through this up. this is the german two-year. francine, you are absolutely on. 1, 2, 3, 4, 5, 6 sessions rolling over to a new record low. to me, the negative yield story of europe versus this craziness in the u.s. is once-in-a-lifetime. francine: is it

once-in-a-lifetime? jim: the last time 10 year treasury yields were at these levels was seven years ago, and the 10-year bund yield was 3%. 0.55. is we are once in a career. francine: where are we now? jim: in terms of optimism? francine: let's go optimism. jim: i think credit is going to be ok. i think it widens this year because of higher yield. i think while the economy is stronger, we are probably just about ok in risk. i think the rising yield environment is the star of the ticking clock for the end of the cycle. tom: thank you so much. we have been really focused on the markets. we have been remiss in discussing a modest wedding this weekend. francine, what did you think?

i know you watched every minute of it. i was forced to act on point. francine: i saw it. of the royal family in the u k is that you celebrate things that are nice instead of only focusing on heads of state -- badto say that news news such as attacks or military rates. i thought it was positive. tom: i enjoyed it as well. i will focus on the wedding follow up with jonathan ferro. i will do that later on bloomberg radio today. coming up, carl weinberg on international economics. stay with us this is bloomberg. ♪

this morning, strong dollar value.

mexican peso high. it is officially monday in washington. the president hereby demands of that the department of justice do what he wants it to do. and there was a wedding, did you know that? i hereby admit that at gunpoint i watched every minute of it, including this on my list. this is "bloomberg surveillance." i'm tom keene. recovering and bloomberg london, francine lacqua. at that it was absolutely great. i watched the bbc. francine: did you? tom: it was great because it was less gossipy. they they try -- francine: try to keep it neutral.

what about currency markets? pound weakness. tom: yes. francine: better for the american tourists flying home this week. will frame in the markets and a conversation on economics as well. here is first word news. president trump threatening a dramatic escalation in the battle over the special counsel's investigation. the president is demanding the justice department investigate possible infiltration of his by thential campaign obama administration. they responded by asking the inspector general to look into other politics tainted the election. the leading candidate for italy's prime minister is a law professor with no political experience and the country's main newspapers are reporting he is the front runner to head a new populist government. he apparently has the backing of

the leaders of the anti-establishment. the housing slump in london is getting worse, according to a property website. home prices fell at an annual rate of point 2%. prices were down 2.5% in the year ending in april. uncertainty caused by brexit has hit london the hardest. president reckless maduro has full ownership of the crushing -- nicolas maduro has ownership of the crushing economics. his government ignored calls from the u.s. and regional leaders to suspend the election. venezuela faces more sanctions on the oil industry. the tesla model three was once touted as the 35,000 dollars electric car for the masses. $78,000.s

it is faster and more powerful and he released it over the weekend. and analyst says a model three with a $35,000 price will be the rarest of the rarest. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much. interesting data check. strong dollar movement on friday. equity markets up. trade ballet in china up. features. weaker euro. other big moves. onto the next screen. the vick showed the good equity market down 25,000. yen was a weaker earlier. almost a half percent move there. many other e.m.'s moving to new weakness.

dxy it was at 94 when i walked in the door this morning. that is a wow statistic. francine: the dollar climbing is major. futures rallying from the trade war versus not trade war. treasury yields climbing. european shows climate. jason furman writes the u.s. should insist china move toward a fair market economy and exchange rate. the u.s. should continue to push china for fair trading of foreign investment. i like this. i imagine you have a chart on it. tom: i don't have a chart on it right now, but it is the morning must read. beijing and also mr. cerulean washington -- kevin cirilli in washington. at deals this morning writes a

ctios is writing sternly this morning. is that for beijing. >> outside observers would say china is rethinking the pacing on the talks. they pushed the pause button on tariffs and trade wars. they have it back to england normal, calm discussion where they would like to have it. we will see where it ends up. for now, the u.s. is saying they are pausing. francine: how can the differences be resolved? do we know what each side could offer? : the chinese have agreed to

buy substantially more u.s. product. that goes into categories like ,nergy, agriculture, tech health care products, finances. even if you go to double or triple some of the levels that are currently purchased, it is not get near the $200 billion reduction that the u.s. side has spent initially -- said initially they were looking for. there is a big gap to go. this is a pause. there are still many more sessions to go in this process. we don't know where it will end. probably between what the u.s. said they wanted to get and china has come to acknowledge that they need to do more to narrow that gap. kevin cirilli, let me come to you with what steve mnuchin said which that we agreed to put tariffs on hold

while we execute the framework. what is the framework he is talking about? kevin: he is talking about reducing the trade deficit. of leverageo points that president xi jinping has against president trump. that is agricultural and the june 12 summit in singapore with north korea. the chinese know that in terms of the upcoming midterm elections, president trump is facing intense pushback on his proposals from red state senators per look no further also isthe senators who the judiciary committee. the chinese lunch to purchase of the largest yet of russia grains as a result of this talk -- tough talk coming from washington. this is a pause, known -- nowhere near the end.

you did see the chinese get a win with the reversal of president trump on the trade restriction. tom: you just use the words major win. that written this morning they will exit. are they so removed from the discussion that they just say enough? kevin: i talked to sources. i am hearing that the policy difference between peter navarro and secretary mnuchin group personal or are secretary mnuchin's trip to beijing the other month. in greg's note he highlights something very important which is the intellectual property theft that many u.s. companies feel the chinese are taking advantage of, and that goes right to the heart of nafta negotiations ahead of the june 1 deadline for president trump to decide whether or not to make permanent the exemptions of steel and aluminum exports.

that is a very important deadline, and the chinese are using that. tom: thank you so much this morning. to onect person to speak the international economics is carl weinberg of high frequency economics. he has decades of experience in debt workout and excellent within his daily newsletter. newcore issue of the american standard is in a vacuum. that is everything you stand against. every thing i know about carl weinberg is the bouncing of nations and economies of of each other. what is the u.s. stumbling into if we don't take the weinberger approach? carl: the u.s. is losing dominance of world economy to china and faster than previously thought.

administration is moving back humans behind it and stepping out of conversations but not reintroducing new ideas. bad idea. was a but by walking away from tpp and not coming up with alternative, it left a vacuum that china stepped into. tom: is that a republican issue? what is it about america where we decided to go mercantile? carl: we have not been democratic under a clinton presidency. world be -- would be put in place. this particular day was a bad one. tom: this is a completely new chinese leadership we are dealing with. just the end -- administration

understand that they are dealing with something different? carl: i cannot speak for the administration. tom: look at their actions. carl: i can speak about the chinese who have a new brashness and new who they are -- and know who they are. there is a decade of bringing china into the world. china intoinging world trade. the third step is now to take leader in a global every field, finance, which we are seeing with innovation. also in trade and manufacturing. this is not a timid regime anymore. they are not afraid of the united states. francine: let me just jump in. breaking news. this refers to the case that the

arson that brokered the deal few years ago said that there was a capital raising issue. barclays says the court has now dismissed the u.k. charges over capital raising. the was at the time of financial crisis that barclays didn't get government intervention and it was concerned there were a capital raising exercises. barclays is saying the court has dismissed u.k. charges over its capital raising. i am looking at whether it is having an impact on the barclays share prices. bear with me on that and we will get back to what you are talking about. go back to what you are saying about trade, and the impact between trade and china. how can the two countries get along? a truce can be broken and can have pretty strong repercussions on the market. what does each side want from

each other? carl: i am not sure what the united states wants right now from china. what china wants, and what they have been trying to do for a decade is to reach out to the united states. been historical view has that the two largest nations on the planet have more in common than they have differences. that has been a consistent chinese position. what we need is an appropriate american response. we can have a much more peaceful coexistence between the two. analysis, bloomberg he mentions over the last 18 years china has gone from 4% of the global economy up to 50%, and that beck your is -- vector is going down. have we always been like this? do you detect something

different this time around? carl: we have been able to get our way. when i was an economist in the 1970's, america was 40%. tom: you told people what to do. america would sneeze, and the world would catch a cold. not so more -- not as much today. the united states is now one player among many in a down player. tom: jason furman really made the distinction i was hearing about which is that china is not good about intellectual copyright and technology appropriation. is that discrete from the rest of the debate, or can you conflate the two as the president would like to do? carl: intellectual property is really important. tom: agreed, but can you conflate it? isl: the right thing to do to make do with what you have rather than try to rip everything down and start over

again. we have a country that does not respect international -- intellectual property laws. how can we make money in that environment? we are seeing that intellectual property is not being protected in the way we want, a lot of of the spending money in china right now. francine: if the beef was with internet -- intellectual property, the u.s. could have focused and gotten europe on their side. but they went after more. carl: that is true. they have set goals for trade that one wonders where they come from and how they expect them to be met. china agreed they would import more from the u.s., but how does that happen? why doesn't the -- china import more from the united states already? one can question the way we are going about trying to get the result we want. we want to improve trade balance

with china, but we cannot do that without making changes on both sides of the ocean. francine: what do we know the chinese will give in? they have offered a rebalancing, but it can be over 40 or 50 years. would that be enough for the trump administration? so.: i don't think they have diffused the tengion by coming out with a strategy that says we will work on it -- tension i coming out and saying that it will work on it. they have given the trump administration a graceful way out. the united states threatened tariffs and so did china. they stopped buying soybeans from the united states. this was a powerful countermeasure, and one we don't have a solution to. a tariff on chinese imports would polarize u.s. consumers there. cutting of u.s. soybeans is a

big and bold move. tom: let's go to the chart in the bloomberg. it is a cool series. what i would focus is dollar off ofh of of april -- april. there is a new accelerating up. what is the weinberg on dollar strength? do we keep going and going? carl: i'm going to be humble and say i wish i knew. every theory i have had about the dollar fell apart in the last year. now the dollar is doing what i thought it should do over it the last year, but it is hard for me to have confidence when we have had a bad experience. we have seen short-term things that moved the dollar forward. the argument we are hearing is that interest rates is over the dollar. it spreads of will widen, but i am not convinced that is a

definitive forecast for the dollar. tom: there are compensating factors. we will continue here. marc chandler is scheduled to stop by here. we spoke to kevin cirilli on china. there is more going on in washington. bill schneider, you know him from years of commitment to cnn and a george mason professor. he is out with a new book. we will speak with him and about 12 minutes and 42 seconds. stay with us in london pick from new york, francine lacqua and tom keene. recovering from the wedding. this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get your bloomberg business flash. a final offer for australian gas. the company raise the bid to $10 billion. that amount could rise. expanding hedging programs. harbor has support. shareholders in u.s. companies hit a record. they received dividends in the first quarter, the most ever. 80% of companies increased payouts from a year ago. earnings may fall for the first time since 24 teen in the largest discount airline after agreeing to wage races.

fallir says profits could as much as 14%. the ceo protects higher oil prices will rock the industry. >> stock prices up to cody -- close to $80 a barrel. that will shake out in the industry this year. some companies couldn't make money when oil was $40 a barrel and they cannot survive at $80 a barrel. the rate and speed of that shakeout will determine future earnings. says no region air faces bankruptcy in 12 months. they have responded saying his comments have no root in reality. that is your "bloomberg business flash." hascine: italy's movement reached an agreement on who should be the next prime minister. the proposal will be made this evening with a law professor as a leading candidate.

our bureau chief what do we know about the new prime minister who is a law professor, and what do we know about the two parties? much.don't know that he is a law professor. his cv is long. he speaks several languages. he is very experienced. he initially looks good. i do not think the president will have anything to say. this man will have to work with two very important bosses breathing down his neck, and that is the leaders of the two big parties. they will be ministers and possibly telling him what to do. it is complicated in this

situation for him to be prime minister. francine: will kickstart the economy or make sure reforms are still in place, or will it be managing a coalition with the majority? , on onera: exactly hand, you have economic issues. this is a law professor. he does not have huge economic experience. he has political problems. it does not have huge political experience, and the majority is razor thin. there is history in italy. where it government number 65 with this new government. confidence could bring down the government. he does not have huge experience in managing background dealings and stressful machinations behind these politics. he has a tough job.

, ourine: thank you so much bureau chief. let's get back to carl weinberg. aguess i would point to what prize economist said is that they're not worried about italy. do you share his concern? carl: we have to worry about italy at this juncture. we have a government coming in with radical ideas to stimulate the economy. the debt was already the highest in europe. the question of finance ability and sustainability -- finance eability and stand ability could harm more pocketbooks. we have to keep on fiscal

situation and sustainable -- sustainability. tom: will talk about the political front coming up. whatever you are with your bloomberg terminal, it is a way to get smart and see a snapshot of the economic financial investment at the moment. dtv go. -- g tv , i cannot say enough about it. you can put on your bloomberg terminal and move on smarter in your number day. stay with us worldwide. this is bloomberg. ♪ 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. francine: this is "bloomberg surveillance.". executive hasf announced details of a faster

and more powerful version of the model three sedan. ath enhanced features comes higher price tag. it is more than double the $35,000 for the model discussed before delivery started last year. where does that leave tesla in its message to deliver a mass vehicle? we are joined by jeremy patheon offered and promised a mass-market car. will they get back on track in a couple of years if the model three is a success? jeremy: this is a further delay until they will wrap up production of the $35,000 cheaper model. people have doubts. this company is one that companies -- people have gotten used to elon musk overpromising. francine: what does it mean for shareholders? you think it is something he has promised but not coming through?

higher priced cars and tesla has a better profit margin on them. in terms of getting cash in the door, which is what shareholders want, having higher priced cars are good thing in the near term. , in muchng-term smaller market for higher priced cars compared to lower-priced cars. are they ever going to be able to deliver this mass electric vehicle? tom: what is the why here? why are they going from $40,000 up to $80,000 on a car? there has to be a backstory you are not telling me? jeremy: it is the profit margin. the higher priced cars, tesla makes more money on it. this company has led to a billion dollars -- led through -- bled to a billion dollars of cash. tom: thank you, jeremy. in new york, we say good

morning. we have foreign exchange on the move. we will continue to give you data checks and also on the radio. in new york on with first word news, here is taylor riggs. taylor: the justice department is feeling pressure from president trump. in agency has asked the specter general to determine whether politics has tainted the investigation into possible collusion into the trump campaign. that came hours after a justice department probe into whether the obama administration infiltrated his campaign. there is a truce and the trade war between the u.s. and china. it is not clear how long it will last. steve mnuchin says the u.s. set proposed tariffs on hold while negotiations are going on. a joint statement released makes vague commitments to rebalance trade. the u.s. is post reaching a deal toh canada -- not close

reaching a nafta deal. treasury secretary steve mnuchin tells fox news president trump is focused on reaching a good deal rather than an immediate one. the administration had hoped to have a proposal for congress to improve this year. mark zuckerberg meets tomorrow with european government officials over privacy concerns. the parliament president has said mark zuckerberg has agreed to web stream. the parliament is concerned --ut how information personal information came into cambridgeof analytical. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. tom: all of my work has been about driving history kicking and screaming into economic finances.

knew that the guy who invented this and the modern discourse was william schneider. he has taught in any number of schools, including harvard. he is out with a new blistering book that hit you over the head but the history of america and the standoff we are in. thrilled to have you with us today. if president trump read your book, what is the number-one thing the president should get? bill: that it is unlikely you can govern the united states right dividing the country. that is how he got elected. he is fighting a war. that is not the way government has been conducted. usually it is by compromise and negotiation. tom: in the book, i love the quote on page 11 "there are two things you must know to succeed

in public life, you must know yourself and know the times." what are the times of the president and the justice department? what would you advise the president on this relationship, standoff he has with his justice department? bill: he is at war with his own administration. demanding investigation into the obama administration. the country is bitterly divided. you cannot govern when it is bitterly divided. a student asked if this was the most divided we have ever been as a country. i said we did have the civil war wants. -- once. yet,'t think we are there but this is the most divided we have been. professor, this could be said about brexit and a

number of countries are divided. but economic growth is there and as long as the u.s. prospers economically, does it make a difference? will people converge back to something more united? bill: economic growth is necessary for good governance. i remember back in the 1960's that the economy was going quite nicely and the people were still angry. enormousa period of tension over civil rights, vietnam, student protests. economic growth does not solve all programs -- problems. feel that you need to keep the economy growing, but it does not solve all problems. it is not likely to in the trump administration. francine: is it just rhetoric? we see president trump and number of other leaders changing

the weight we do diplomacy. wayt only rhetoric, -- the we do diplomacy. is it only rhetoric? bill: the united states is the most populous country in the world. i say that next to the united states, the rest of the world is saudi arabia. populism works, but it tears the country apart. it includes isolationism, which is a strain in this foreign policy. on economic issues, fears to the left on trade and if the structure appeared on social issues, it bitterly targets tensiont and creates between minority groups. tom: i was thinking about a phrase from mr. agnew, the silent majority. is there a silent majority out there right now? who are they, and are they definitive for 2020? bill: there is a constituency.

he has a base. the base is the people who are with you when you are wrong, and they are there and with trump. they are not as big as they were during the period of the 1960's that agnew talked about. they may be put if i percent of the population. they are through him with that and thin. they are not growing. the demographics are to the advantage of democrats. the role of politics is that --ocratic is -- democratic demographics islam. tom: you and guys like al hunt and david gergen created discourse. how do you the media back to what you did? how do we get away from eight boxes and snip, snip, and back to the discourse we know a long time ago? bill: there are all kinds of thoughts.

tom: how do we get back to that? bill: roger ailes discovered there was an audience who wanted the news right point of view. they don't want to know what happened, they want to know what does bill o'reilly think about what happened. that audience is there and has always been there. we are hoping that there is an audience who wants trade objective explanations and analysis. it is not a huge audience. tom: you are george mason, everything is at the right of everybody. how do you distinguish between progressives and liberals? politerogressive is a term for liberal. liberal is not popular in the united states. generally speaking, the present therogressive movement was idea behind it was reform. what is happening is, people on

the left who have been on the defensive since the 1960's theuse of backlash of what liberals were doing in those days, they have adopted the term progressive, which is broadly acceptable. tom: thank you so much. the book standoff, how america became ungovernable. it is a history lesson on where we have been and where we are right now. georgeliam schneider, mason and also at cnn. we will continue with carl weinberg. lots to talk about. we will talk on the radio as well. stay with us. this is bloomberg. ♪

>> this is whom serve -- "bloomberg surveillance." barclays says fraud charges had been dismissed on capital raising. the bank was accused of conspiring with officers and employees to commit fraud. the court throughout charge of unlawful assistance link to barclays $3 billion loan. the office is likely to get the charges reinstated. elliotthas backed management. the south korean conglomerate has a controversial a $.8 billion deal between two units. elliott said the arrangement would change minority investors. sony is turning away from the gadgets that made it famous. the company's new ceo will unveil a three-year plan

tomorrow that embraces sony's growing reliance on income from gaming subscriptions and entertainment. in the last year, the company sold fewer televisions, cameras, and playstation consoles. wo open in north america with a gross of $125 million. less than expected, but the highest opening for the weekend ever for an r-rated movie. it ended avenge his infinity ein at thewar's top of the office. that is your flash. your "bloomberg business flash." tom: mexican peso at 20

philippines peso breaking out. yen went nicely to 111. at ana grind or are we important to point? >> this is a grind. the euro is up five weeks in a row coming into today. dollar-yen is up eight weeks coming into today. these are streaks are they coincide with a similar streak with rising oil prices and also rising european equities like the dax. the other side of this, emerging markets. tom: with this is mark chandler in transactions of hedging, are we at a tension point within commercial hedging to get business done? marc: i am not so sure yet.

typically, treasurer is very disciplined. , basically hedging selling euros and buying dollars. what we see is not so much corporate side, but fund managers trying to manage european and japanese over 300 basis points to sell the euro and by dollars. francine: if you look at the markets, what is priced in? is it positivity, trade, softer brexit? can things turn ugly? sides have positive things in the u.s. and the market is moving towards pricing year. rate hike this meanwhile, bad things happening elsewhere. look at japan. lower than expected gdp.

gdp contracted in q1, and we had softer cpi. eurozone gained soft economic data, flash economic data this week. there does seem to be a cyclical turn in the eurozone economy. francine: can the fed afford to hike? if the rest of the world can't afford it, should it think twice about hiking four times? that the fed is watching it is so close to its targets. it is a sickly added inflation targets. the federal reserve has little choice but to have a rate hike. maybe that is the tragedy. the federal reserve has to do what it has to do given the mandate and stimulus in the pipeline. the ecb has to do what it has to do and the same with the boj. there hikes will come later rather than sooner. tom: was the distinctive story

what is theic -- distinctive story you see in the pacific rim? today goespine peso up to new weakness. what is the currency you are focused on? marc: i have been looking at the currency. it has gone up twice now since the elections in early april. i have been watching malaysia because the run has been spectacular. tom: marc chandler, thank you so much. carl weinberg wants to dive into this. your observations? in what he spot on said. pmi has been telling the wrong story. hard data is telling a worse story. that might be a basis for consideration. tom: william inclined will say

they -- william klein will say there are reasons. what caused it? i don't have a theory on what will cause it to stop. if you look at economic fundamentals, spreads have been widening in the u.s. dollar. i think european bond yields are headed down. tom: we're seeing a two-year negative. carl: there was a shortage of supplies. it is going to go down instead of up. we will see spreads widen on the strength of the u.s. dollar. if that model works, that should give continued dollar strength. tom: carl weinberg, lovely to have you with us. so much going on. later today, look for greg davis, thereg

juggernaut for vanguard. stay with us worldwide. this is bloomberg. ♪

tom: futures up 16. futuresures 236 -- dow 236 points. it bears repeating. a really cool map of the april withh a new convexity dollar strength could what i would normally show, carl weinberg, is yen. audience why pros always settle on dollar-yen. safe haven for things affecting the united states. when things get that in the united states, they moved to yen. it does not seem safe to me. but short-term haven of the places they need to go. -- mr.. abbe is getting abe is getting it. is that true?

lead the yenard to to economic growth. higher interest rates in the u.s. have brought money out of the end. qualitative easing has gone so far and investors have no place to put their money. the money either goes overseas, and that makes the yen week. francine: overall, how problematic with the fed rises before emerging markets? i didn't hear that. francine: let me bring you breaking news out of china. china is going to scrap limits

for children. carl: on the human rights issue, it is important. that will be a change in the way they manage and control people. from economics, looking 20 years down the road, there we more people working in china. i have never been able to view that the population issue is a constraint on china. , i don't thinkrm it means anything, but as human rights, it is stunning. tom: going from 1979 at the advent of a one child policy -- and i remember the moment in 2015 when they announced the shift to one child and now the news that they plan to scrap the policy on one child and take it down to zero. some of this has been presumed

as a trend that we would see an would categorize it on the effect of population demographics. will have more on that. carl weinberg, thank you so much. this day of continued dollar strength, we will follow that. jonathan ferro and i will continue this this morning. it is always important to talk about the yen. the euro is south. please stay with us through this morning. this is bloomberg. ♪ retail.

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leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. toright now we have agreed

put the tariffs on hold while we try to execute the framework. alix: the worst case trade scenario is put on hold. can china nuy?b awaits,ng dollar dragon a stronger dollar crushes emerging-market fx. the big u.s. treasury options on deck. david: welcome to "bloomberg daybreak." maybe they made some progress? alix: may be. some in the administration think progress has been made. if you were a chinese ministry official, who would you talk to.