francine: president trump pulls out of his meeting and markets barely blink. in italy, investors are fretting about banks as public parties push their proposals. we are live from st. petersburg international economic forum at midday, our presidential plan leaders.ral world ♪ good morning, and welcome to

bloomberg surveillance. these are your markets. we are getting some figures out oneermany, that index at .2. you can see stocks are pretty mixed, some up and some down. investors now navigating a slew of political concerns from north korea as president cancels that summit in singapore, to what is happening in spain and to the euro-dollar. can see that 10-year of italian yield at 2.14. this is the big thing at the italian banks when they figure out exactly who will be the finance minister, and you can see some pressure for the two main banks also on the lower side. coming up, an exclusive interview with the imf's managing director discussing

their world outlook and turkey's recent crisis. we will also bring you our conversation with the russian central bank governor, and later on, live at the riksbank anniversary of event where we withan exclusive interview the bank for international settlements. let's get straight to our first news. >> north korea has said they were surprised by trumps decision to cancel the summit. a statement by the state run that cited their vice foreign minister saying they are willing to meet with the u.s.. also bound to continue to pursue peace, had signaled they would give washington more time. u.s. commerce secretary wilbur ross is scheduled to visit china. that is as he continues trade discussions with the vice premier.

china's official news agency spoke about plans to negotiate about trade issues during the visit. imf managing director has urged the turkish government to preserve the independence of their central bank after confusion sent the lira sliding. christine lagarde made the comments at an exclusive interview. policy,rms of monetary it is always better for all political leaders to let central bank governors do the job they have and to preserve their i think some of the comments made a large and the international community and particularly in esters to the fact that the central bank of could be under influence and that has created a sense of uncertainty which has found their way into the markets. and the european union has

dismissed many of their plans for the post-brexit little ship as a fantasy, according to an official. brusselss of talks in wrapped up with little headway on the most important issues. has still notu.k. come to grips with all of the steps needed to avoid. checks on the island of ireland, a condition for the entire brexit deal and has not formally pitched their plan. the disgraced harvey weinstein is expected to surrender to police on charges he raped a one-woman and forced another. that is according to law officials. these charges followed numerous accusations against him, that left women around the world coming forward with accounts of being sexually harassed and assaulted by powerful men. his lawyer has declined to

comment, but in the past has said his client denies any allegations of nonconsensual sex. day,l news, 24 hours a powered by more than 127 journalists, in more than 120 countries, i am taylor riggs, this is bloomberg. francine: think you so much. our top story, the u.s. has scrapped their nuclear summit with north korea. our editor in chief set down with christine lagarde, and asked for her reaction. i am concerned about any decision or reverse decision that continues to undermine trump. i am really pleased to see where the global economy is. 3.9% is a must back to where we were before the financial crisis. we have done a lot of strengthening, restructuring,

recapitalizing, you name its. and the economy is much stronger now. investments,ing up and anything that undermines those fundamental assets of is putting that's at risk. would be a pullback also be part of that? it does undermine confidence. >> world trade. you have always been a defender of globalization. you have all of these tensions, especially between the u.s. and china. take us through how you see that going. i think the fundamental view is that trade is good.

many perspectives, whether it applies to lifting people out of poverty, reducing the cost of consumers, and opening routes that were unknown , including in political terms. but trade has had their downside as well, which we have ignored. the complete reconstruction of supply chains around the world has led lyrical sectors and many regions in many countries damaged. and there have been inflicted wounds that we have not focused on healing. i think that is one of deficit of international trade. that was the imf managing director christine lagarde. joining us now to continue the

conversation is the director of g10 asset strategy. and the director of cls. it does seem when it comes to risks and trade tensions, the markets are cool. i know there is a bit of deterrence when it comes to currency, but is it because the algorithms don't know how to deal with it, or because you don't know how to price it? >> a bit of both. savvys have become more in trading political risk. and il wait and see, think that's how markets have started to trade. we have gone through a number of iterations. ,talian and french elections and the markets want to see what the bottom-line implications are.

volatility remains anchored, at the moment. david, i know you follow the dollar dynamics closely. but, are you closer to a recession or trade skirmishes? it is too difficult to handicap at this moment. when you look at the number of potential issues you have today, whether it is the auto tariff, the tariff on steel, after negotiations installing, what we ,re doing with china, with iran all of those things have the potential to disrupt the economy and the dollar. but i would agree, we need to see this play out. are 140 characters away from something of blowing up. francine: ok, but what does that mean? growth, hasor world peaked?

david: looking at the different indicators, respondents are discussing the potential for tariffs impeding spending, trade. we still see a continuation of the global expansion cycle. this has been a headwind to our view. i would be more concerned about the more idiosyncratic issues, obviously italy in this neighborhood, and you've got indonesia, india, account deficit coming under pressure. francine: what does that mean for dollar? david: we are still constructing on that scene. think we need another iteration of just a macro economic divergence. we think that will be dollar repatriation. we've had this going for a

that the months corporate holdings of non-dollar owning's health by u.s. corporations under sees will start to come back, and we expect that to happen in the next 6-8 weeks which will be significant flow. i think it is hard to argue against the dollar at this time. the rest of the world will largely continue to leave long-term support to the dollar. francine: what does that mean for emerging markets? the biggest risk must be emerging markets that ball or -- borrow. what the markets are doing now, cherry picking the weak spots, e.m. flows being challenged, we are still constructive but we think that positioning has been an issue and we continue to suspect a further squeeze could continue to weigh on the complex.

is not necessarily the crisis, they were very specific drivers, most noticeably they were pegged to the dollar. the imbalances in those economies were recalibrated. thank you both for joining us. both stay with us. coming up from the ritz brink -- conference,sary their chairman will be speaking with the bank of england governor. watch that live on bloomberg tv a little bit later this afternoon. stay with us, plenty more coming up, including revamping russia as their central bank governors says putin's plan to boost the economy is ambitious achievable.

spain's main opposition party is set to push for a no-confidence vote against the prime minister. what does that mean? we discuss that next, this is bloomberg.

francine: this is bloomberg surveillance. let's get straight to the business flash in new york. the nonexecutive director has resigned, and follows most of the board as the russian aluminum giant convinces washington to remove sanctions. they may not be able to continue

past the u.s. deadline for business partners to end their deadline. ofle has one of millions dollars from samsung in the final throes of their u.s. court struggle over smartphone technology. the iphone maker sox $1 billion in a retrial of the case that originally produced a verdict. samsung argued it should pay only $28 million this time. the ruling comes seven years after the start of a global back. amazon has set a series of miscues picked up by its voice activated echo speakers during an oregon couples private conversation resulted in the chest being recorded and sent to an acquaintance. the company responded to local .ews reports the report, the

couple use amazon's voice activated devices throughout their home to control heat, light, and security. that's your bloomberg business flash. francine: thanks so much. europe, as spain's opposition parties plan a vote of no-confidence. the government has come under fire after former officials were found guilty of operating a multimillion dollar -- euro corruption reckitt. in italy, populist parties are spreading jitters of the puzzles roll back years of attempts to strengthen bank balance sheets. joining us now is our european government after. then, great to have you with us. i know you're in brussels, and that's actually a great viewpoint. but how serious are the problems

. ben: the problems have been growing for a long time. ever since 2018 when the spanish papers were placid -- plastered with the details. they have managed to keep a lid seen, but they have also his parliamentary majority wiped out. he got his budget through just before this ruling came which gives them a degree of stability , but if you look at the spanish papers, they are calling it the zombie government and it looks like a dead man walking. 2020. live on until francine: is it difficult to see what comes after roy -- rajoy? within the key -- pp,

there are second ranked leaders emerging with them in the northwest. he may come to more prominence, and we are probably going to see the start of some kind of transition before 2020. so long as they can maintain stability over the next year or so. francine: what is being said in brussels? are they worried about who the italians put in place as finance minister, a lot of the nordic countries don't want to integrate further. ben: there is definitely a lot of concern about italy. some of the ministers and tried to put a brave face with their comments picking up on the prime ministers commitment to european rules. but there are other concerns. the concern is not so much the

reform process, that has its own problems. nordic countries are already resilient to french banks. but it is the coalition package in italy could cost more than 100 billion euros and italy's of finances are not in a position to support that sort of thing. francine: thank you so much. so, what does the return of political risk mean for the markets? still with us, david and come all -- kamal. i want to show you the 200 basis point spread. get?gly can this euro swiss has obviously for the bellwether here

uptick in regional politics. is we areon here coming towards the end of the ecb qe, and there is a? overgrowth. far thisno call on how could widen, but the situation remains a volatile. if you want a reason that the euro could come under further pressure against the dollar, then the weakness here is certainly a strong correlation. francine: writes, but are we talking depths of the greek crisis? i don't think that will be the case. one of the reasons is if you go back to the greek crisis, there were a lot of soundbites ahead of that election, when super us came in with big proclamations. when they got into power, their ability and constraints weren't

working for anyone else. italians will find it difficult to push through with some of the more extreme policy plan. as you said, the finance minister will be key. but the markets have learned their lessons, that what populist say in the run-up and what they do after, are two different things. francine: what does that mean? if you look at the german example,and see for tariffs against cars, it is automatically the strongest economy in europe that will get hit. is the u.s. aware? i think they are operating on a u.s. centric program and are not considering europe. if one looks at what's happening in italy, i would concur that this is probably more of a social issue and then political at this point in time. , theng refugees offshore

living wage for italians, these are things that make good social headlines but i am not sure they will affect the economy. all of this continues to feed the idea that there will be a strong dollar for the near-term. francine: in terms of other parents, what's on your mind? 2018, dollar into swiss was key. haveour flow indicators shown is that that was a crowded trade up until the beginning of this month. ultimately, further stress in italy and withdrawal of demand btp's, they are vulnerable to further gains. francine: even if they talk about how they deal with the banks, if they ask for debt forgiveness, without be taken as a stress point? at the moment, i think

the market will treat this with caution. what is more important is not what italy says, it is what the eu comes back with. if they say their rules are there to stay, i think the greeks, wille the learn there is not much they can do. francine: when you look at the world and investment flows from china to the united states, for china, if they get mad with the united states, would they put money in europe? david: i think they will continue with the dollar as a reserve currency not being as strong. to findthey are trying common ground and i think money will continue to flow into the u.s.. francine: what would it take for that to stop? i think it would take an out and out trade war. i know we had a positive the

trade war as secretary mnuchin announced this week, but a trade would cause the flows to stop moving. francine: what did we learn from the fed minute? i think there are some interesting changes on reserves. dovish, the overall view is that the fed will continue their policy. the question remains of three or four, with a high risk of four. but the data does not signify any significant shift in either direction. inflation remains relatively contained, and we think that policy divergence would be a strong positive for the dollar. not only for the dollar but continuous flows into the u.s. markets. numbers, twoion

.3% gdp forecast, you've got a good rosy scenario for the united states. francine: thank you for joining us. they stay with us. it's been a busy week for emerging-market investors. to turnt putin's aim russia into one of the world's biggest economies is very ambitious, but achievable. that is the view of the central bank in russia. we need to carry out structural reforms and will increase productivity of all economic influence, including labor productivity. this means we need to create favorable conditions for investment, becoming more predictable, compliance with the rules of the game and should be improved, and regulatory barriers should be lowered.

we need to encourage innovation and competition, so that the strongest businesses can prevent. andreforms are quite broad the government is preparing to undertake appropriate measures, however the tasks are quite ambitious, and required decisive action. the central bank is not just a monitor, we are a regulator and are responsible for the development of these sectors. to increase competitiveness, we need to carry out structural reform so the financial sector can provide resources required for growth. this is our task, and we know what needs to be done. we should come back to the financial sector in a second, but one obvious question is that russias impossible for

to become the fifth biggest economy by 2024. have you explained to vladimir putin that it is a unrealistic goal? it is very ambitious that requires decisive action, but it is possible. there are times where art economy was growing at a rate of 7%. of course, that growth was largely based on a long. of growth in oil prices. the growth should be insured by other factors. russia has the necessary potential for growth. we are capable of improving productivity in spite of the problems we face. the population of russia is well educated, we have vast natural resources, major market institutions are working well, and the same applies to financial infrastructure. all of the preconditions are in

place, we just need to tap this potential. this is an ambitious but realistic goal. bank of: that was the russia governor speaking to bloomberg in st. petersburg. let's check in on what's trending across the bloomberg. end of a tock, the saga, as apple wins 539 alien 300 -- 539m sands -- million dollars from samsung. and our most read stories on the place, then third yen dips as north korea offers a measured response to trumps decision to cancel the summit. alexa,ond, don't tell amazon explains why their voice activated speaker system recorded and shared a personal conversation. , our most read

story, still geopolitics as north korea says they are still open to summits with the united states. we will get reactions from korea on that story very shortly. in the meantime, we are a little bit of u.k. news. a response from the eu to some of the demands from the u.k. saying getting gdp 1.2% back in line with estimates. think private consumption is actually a little bit higher for the first quarter and government spending higher than expected as well. 1.3348.see the pound listen to whatto they will do next, and she gave a speech yesterday which went through what happened with the miscommunication with the markets in the last two months. absolutely, i think the

intervention was a big surprise. think the key here is that the communication for the bank of england was a warning against a slowdown in economic growth. orthat is transitory permanence, they suggest it is transitory. saw some signs that they were on the strong are sides of expectations, but inflation continues to decline. it is the ability and strength that we could see economies rebound into the second quarter, which would determine whether they hike. will be ak there november rate hike, but not the done deal. francine: much more on the pound and others. president trump canceled next month meeting in singapore with kim jong-un and the foreign minister says they are still willing to sit with the united states. here is how our guests reacted. >> the story is not so much that the summit was postponed.

i actually think it would have failed, and that is the big issue. we don't yet have the basis for anything like an agreement. thinken the rhetoric, i they need to see a strong message from the president. want to go to singapore and have this open dialogue and move on toward the objective. >> i think part of it is that they were not prepared. i don't think that president trump got mad because somebody else used harsh language and he suddenly canceled the summits. >> i think in his letter he still left the door open. president moon would be disappointed because he had a lot in state in trying to turn north korea around. >> right now, we are witnessing the pressure of this summit was too much for kim jong-un and president trump. these are sensitive diplomatic talks.

for decades, they have been looking at each other through a variety of threats and engaging in rhetoric that is very damaging. >> the basics have not changed. they have not walked back to their statements of wanting to denuclearize the peninsula and that is what started all of this. this whole thing is in north korea's hands. francine: let's get more from our korean analyst and poussin's -- and professor in korea. i was talking to a couple of weeks ago when we had that summits, and the deal was that they would meet in singapore. what happened over the last 24 hours or the u.s. to pull out? >> to be honest, i think he got cold feet. know they were playing some games, did not sense that to singapore, but i think the complexity was becoming apparent.

they were not going to give up all of their nuclear weapons, it was going to be a major negotiation. to be honest, the president has not put in the work to do this. he has admitted that publicly, which means this thing would not be photo op, it be a serious negotiation. don't know if we can look at it and breakdown percentage, but how much is it a lack of patience with north korea, and how much is it that it is in the u.s. interest to postpone? >> the north koreans did not make it easy, but we know this. their negotiating behavior is genetic and's and hijinks. that's actually well-established , i am surprised the trump administration reference to that in ending this. we have seen this before. you have got to be prepared for them to say this kind of things. to do this, it is probably best to not do this in the glare of the global

media. it would have been better all along if this thing has started at the staff level first, diplomats and engineers sitting down and hammering out a consensus. then it would have been easier when it got to the summit level. the media would not have played such a big role. francine: where is china in all of this? did they want the meeting to go ahead or did they have more to gain with it being canceled? >> i'm surprised people think china has something to gain. they have wanted north korea and america to talk for years. korea tohey want north have a stable and mildly functional relationship. it is in china's interest that they meet. if you notice, they have not said much in the past couple of weeks. they just wanted to make sure everything was on the rails and to push him a little bit. i am surprised people are suggesting that china wanted

this to fail. i think it is blame shifting, this collapsed because north korea and the united states cannot work it out. you surprised that north korea said they were still open to a summit? >> no i am not. i think they want negotiations have ahead, because they nuclear weapons and it allows them to come with a position of strength. to find a deal, a way to catch these things out and get some sanctions relief. some kind of basic framework with the americans. weapons give them space to push for that, and i think that is one of the reasons they wanted this. i am surprised the north koreans were so over the top with the rhetoric. know that trump also likes to counterpunch, so if they had held their fire, it might not have left. are we going to see

more discussion about military options, or do you expect a another summit to be put together? >> i don't think we will slide back to fire and fury. . there are still some options. the south korean government is he hasmmitted to this, said that donald trump and kim jong-un need to meet. i think that is the real lesson. we can't just wing this. president trump to this six weeks ago. nine weeks are not enough to been to the massive divisions between north and south korea. have negotiations, this is not a catastrophe, but it needs to get kicked down to the working level, where people who know this stuff can start mapping out a framework for concessions. this cannot be done at the media level where it is all very dramatic. that's just not going to work,

it raises the stakes so high. francine: they you so much, robert kelly. stay with surveillance, plenty coming up, including our exclusive interview with christine lagarde in st. petersburg. she told our editor-in-chief that turkey needs to ensure central bank independence. today, she also joins a panel at a presidential panel. the russian president, the his french counterpart, the chinese prime minister, and shinzo abe. this is bloomberg.

>> francine, north korea has said they were surprised by donald trump's decision to cancel a summit on june 12. a statement by the state run agency said the country remains willing to meet with the united states. vowed they would pursue peace and signaled they would give time to reconsider talks. u.s. commerce secretary wilbur ross is scheduled to visit china as he continues trade discussions with the vice premier. china's official new agency reported that officials spoke today about plans to negotiate economic and trade issue. in vienna, senior diplomats are meeting today in a bid to prevent their 2015 nuclear deal from collapsing.

the meeting is the first since donald trump abandoned the agreement earlier this month. the u.s. government criticized the pact, arguing it could not stop the country from getting atomic warheads and that he did nothing to check their regional ambitions. the european union has dismissed the uk's plans for their post-brexit relationship as fantasy. according to an eu official, three days of talks in brussels wrapped up with little headway on the most important issues, in particular how to prevent a hard irish border. they said they have still not come to grips with all the steps needed to avoid a check on the frontier of ireland, a condition for the entire brexit deal. global news, 24 hours a day. this is bloomberg. francine: thanks so much.

leave it to the experts, that the expired that the advice from ims managing director in lagarde. speaking to bloomberg, she urged resident erdogan to preserve the independence of turkey's central bank. this is the case because of what has been perceived as in what leaders are .aying are doing >> do you mean president erdogan? is always better to allow bankers to secure their independent. i think some of the comments alerted to the international community, particularly investors, to the fact that the central bank of turkey could be under influence.

has created a sense of uncertainty, lack of confidence, which has found its way into the markets. so would your message be to please stay away and let the central bank run it? think everybody should do their job. goodal bank managers are at their job and they should be it. to do it is best to let it be handled by the experts. raisede: the lira has today's losses after turkey's central bank said they would allow exporters to repay loans in the local currency, but will it be enough to stem the plunge. i know you are at g10, so you always look at lira, but such a big move.

what does president heard one need to convey to investors that this is still a goodbye -- good buy? ultimately, there is a bigger dynamic going on here. if you look at turkey, that is the obvious focal point. e.m.t to talk about how investors are looking at idiosyncratic situations in the likes of indonesia and india, we are he highlighted their account deficit issue. obviously, the politics in turkey are not helping. if the dollar continues to rally, that these emerging-market currencies will remain under pressure. francine: this is the lira regression chart and we have been watching it all week i want to point our viewers and listeners to that. kamal: that is the age old

question. the issue here is that the fed has to continue to normalize policy because they have a strong domestic reason to do so. some central banks can afford to , start makingt announcements in july. fed will probably be more concerned if we start to see a deterioration in natural conditions. at the moment, u.s. financial conditions remained relatively easy. the economy continues to grow strongly, and that justifies its current policy stance. but the spillover effects are something no central bank can't ignore. francine: what happens to the yet -- yen? is it still a haven? think you can't ignore

one of the largest account surpluses in the world. the question is are those outflows from japan going to continue? a significant escalation, obviously, is a risk factor to that view. andre relatively relaxed think trade war disputes dissipates and that should push the yen longer in that scenario. francine: what about domestic concerns regarding shinzo abe? kamal: that is a concern. if that continues to escalate, we have key political events coming up in september. we actually think domestic politics are bullish rather than bearish, but the question is how that impacts on the yield curve control. francine: thank you so much. next, amazon is listening.

about the alexa owners whose private conversation got more exposure that they wanted. that story up next, this is bloomberg.

francine: this is bloomberg surveillance. let's talk tech, amazon is responding to a miss you picked up by one of their voice activated echo speakers during a couples private conversation. the conversation was sent to an acquaintance without their knowledge. joining us for motor is bloomberg opinions alex went who writes about tech. first of all, how does happen? >> essentially, if you have an , my name is alex, and it happens quite regularly they say my name, and it gets alerted. somebody said a word that sounded similar to alexa, then they said to do something else, ,lexa thought it was a command,

and so alexa sent all of these recordings to one of their friends and it was a huge a series of errors. i think it highlights the limitations to machine learning that amazon is using. aim yet, thato means it doesn't yet know what it is saying. francine: does this hurt sales? >> probably not. the number of people hearing the story is very small. a lot of this buying is spontaneous, it is so cheap. if this happens again and again, it could build up a swell of energy. francine: do they do things differently? they have to do a lot of homework to ensure this does not happen again. there are other incidents which haven't made the press which amazon is aware of, and they can feed that data back into machine learning and the neural networks they use. francine: how big is this kind

of problem for amazon? how much potential to grow is there? amazon does not make any money from alexa or echo speakers. it sells at cost. to onboard into things like prime and buying stuff from alexa, a way of getting people accustomed to using amazon, and it works. francine: talk to me about apple. >> apple has been engaged for years in a series of lawsuits with samsung. finaljobs, one of his wishes, was taking samsung to the cleaners for copying the iphone. copy, sound they did the question was how big the fine should be. samsung appealed it hoping the amount they had to pay it would go down, and in fact it went up. that's $539 million,

is this a huge deal? >> not really. francine: it's a message, right? >> exactly. and it sets a precedent where if there are further incidents of this case this is how much they will be on the hook for. these instances in tech where there is a legal threat, what it does is it make these companies think twice. is so important, to be able to respond to market demand and bring innovation quickly. any time there is a kernel put in the way, that is potentially problematic. francine: wonderful, thank you so much. plenty more on tech throughout the day. in the meantime, we understand the spanish socialist have registered a no-confidence motion against rajoy. correspondent was briefing

us when he figures out what that means for europe now that we have populist in italy and this no-confidence vote against the prime minister in spain. also, a bit of friday fun, check out our new function. if you are a bloomberg customer, and check out how much attention you have been paying to this event. you can compete against colleagues and the rest of the bloomberg universe. i know tom keene will be on it, and i still haven't made up my mind. willberg surveillance continue in the next hour, and we will be talking to the chief executive for the bank for international settlements, he will have a thing or two to say about treasuries, monetary policy, and the one question people want to know, trade tensions and the fact that donald trump has now said he will not attend that singapore summit with north korea. what that means for trade tensions.

the lira staying volatile, and we speak to christine lagarde. lira swinging between gains and losses after the central bank said they would allow exporters to repay dollar denominated loans in the local currency. at italian bond yields, very focused on emerging market. the euro seems to be in a bright spot. again, that's italy and spain. a full roundup of the day's top news stories, this is bloomberg. ♪

francine: president trump pulls out of his meeting with kim

jong-un. north korea expresses surprise. markets barely blinked. oppositions party pushing for a no-confidence vote in prime minister law and we are live from the st. petersburg national forum. good morning. this is "bloomberg surveillance." i am pressing the law with guy johnson in london. tom keene has the morning off once again. we are focusing on turkish lira. guy: it has been quite the morning. export credits our being repaid. a shuffling of the deck chairs. it is a small move. interesting to see what next week brings. francine: we had an interesting conversation with christine lagarde st. lucia the central

bank policymaking to the experts. there is taylor riggs. taylor: north korea still open to the idea of a summit with president trump at any time. wasjong-un's regime says it surprised by the president's decision to cancel next month's meeting. the vice foreign minister north korea says he helped the trump formula with the killer deal between the countries. christine lagarde is urging turkey to maintain the independence of its central bank. the president of turkey said he would maintain power over the central bank if he was reelected. the turkish lira plunging. >> in terms of monetary policy, it is always better for all political leaders to let central bank governors do the job they have to do and secure their independence. i think some of the comments may a limited the international community and investors to the

fact that suddenly the central bank of turkey could be under instructions, directions, influence. that has created a sense of uncertainty, lack of confidence, which has found its way in the markets. aylor: erdogan has pledged to follow global principles on monetary policy. suggests theunion u.k. is living in a dream world when it comes to brexit. most u.k.dismissing plans for a post-brexit world as fantasy. that is including a so-called hard irish border. 29 nine dollars of cash from a jewelry, and handbags linked to the foreign prime minister of malaysia, wrapping up its investigation into the former prime minister. allegations of corruption led to

his shocking election defeat earlier this month. 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. francine: thank you so much. these are your markets. there is quite a lot going on, especially given the week so far. i have a little pressure on the stocks we are watching. what else i'm looking at, what is happening with italian yields. we still don't have a finance minister in italy being named. euro-dollar 1.72. -- ou look at it kind of feels like the little bit of a squeeze. this is what we are looking at

when it comes to the turkish lira. we have been watching very carefully to see what is going on. reaction in little iran as the central bank came out and announced it would allow export credits to come in at a favorable rate. we mentioned the spanish story, the possible vote of no confidence. i highlight what is happening with the korean won. francine nailed it, the market barely blinking. francine: let's get to north korea even if the market is fairly blinking. president trump cancel the meeting next month in singapore. kevin cirilli joins us. we got him out of that much earlier than usual. -- bed much earlier than usual. we hear from analysts and insiders that maybe the president was not ready for the

summer. what are you hearing on the ground? kevin: democrats are saying this was because the president was not ready at the lack of strategy on the part of republicans. republicans are saying this was the right move to back out of denuclearization talks with a leader who has not shown any sign of full commitment to denuclearization. expectationo an that the meeting could still take place at a later date, but the's the north -- once north koreans suggest they are really ready to talk about denuclearization. francine: what was the issue the u.s. at the present had with north korea? it was a lot of rhetoric, and rhetoric they were not expecting so soon. the u.s. is top diplomat calling north korea a dummy did

not help. you really has not. that viceso note president mike pence heading to capitol hill yesterday to brief inmakers as well as hawks the senate and house praising the president. this comes as the national security adviser, john bolton, he is someone much in line with what those hawks are saying on the hill. this seems to be cohesiveness amongst the hawks this morning. guy: good morning. when do you think the decision was made or how long has it taken to make the decision? this morning, moon jae-in, the south korean leader, said he was surprised that this decision. i'm surprised that he is surprised. kevin: he was at the white house a few days back. his top foreign minister saying to reporters that there was a

99.9% chance of the meeting between president trump at kim jong-un -- and kim jong-un taking place. this caught everyone off guard in washington and around the world. south korean president moon jae-in convening a meeting with top officials in south korea to discuss what this would mean on the path forward. a lot of folks were caught off guard. everyone in the u.s. intelligence committee says talking about denuclearization ought to be done with caution. that is something we heard from republicans and democrats alike. guy: join some dots for me. a few days back, secretary mnuchin said the trade war was off.

many assumed that was because they would clear a little space for this north korea meeting. the chinese are an important piece in this puzzle. that there is talk that the north korean leadership is in beijing today. what does the venn diagram look like in these stories? kevin: i am hearing different things from republicans and democrats on this. senator reid says he thinks the chinese are playing with the north korea summit with the politics of trade war. a republican senator says he doesn't think that is the case. the review we heard around the world was interesting yesterday from the chinese, japanese, south koreans who about to create a special task force of their own based on president trump's use of section 232 to raise international auto exports. republicans are divided on this

as well. yesterday at the white house, the president had a group of republicans at the white house to walk back dodd-frank. i asked them about section 232, and they said in directors, i don't know how a honda accord is a threat to national security. i think there is this pushback coming from republicans against the administration that these supply chains of international automakers could be negatively impacted should these tariffs be imposed. thank you so much. kevin cirilli, bloomberg's chief washington correspondent. blackrock's chief -- the conditions on how foreign policy is made in the u.s. and on trade tensions.

>> i think there have been tensions between the u.s. and north korea for as far as people can remember. we have an indicator of market attention to geopolitical risk, which measures current attention to the last 15 years. right now, we are just about at long-term average for u.s.-north korea tensions. marketsthat is why have not jumped up or down. there is no immediate impact on the global economic outlook unlike the trade tensions. you could tell a story, and china is an important piece of the puzzle, but it is an important connection. in terms of the economy, there are much more directly relevant issues. francine: is there a danger that markets become complacent? that there is significant foreign-policy intimated by president trump that the market

is missing. >> i'm not sure that is the case. the markets are paying attention. something that would impact the economy over a long time, this is not something you would expect markets to react to on a day-to-day basis. this is an ongoing story. i think markets are sitting back and waiting to see where this goes. link what is happening with the north korean story to the trade story? >> i think the clear connection is china. it is not completely straightforward. yes, the u.s. needs china's help on north korea, but that doesn't mean the u.s. is going to be willing to compromise on the objectives it is pursuing on the trade front, china opening its market, buying more from the u.s., or opening access to u.s. technology. this latter one is a core objective of u.s. administration from an economic and security standpoint. i'm not sure there is even a

trade-off there. you don't want to close any doors. the u.s. is going to need china to keep the conversation going on both fronts. guy: we look forward to talking with you. thank you very much. isabel will stay with us. let's bring in another voice into the conversation. i am going to miss pronounce this name. asia analyst running us out of beijing. good morning. -- joining us out of beijing. good morning. termsportant is china in of this story we are watching? there are stories circulating that the north korean leadership is in beijing this morning. someone was picked up off of a plane earlier on. what do think the chinese are saying if that conversation is happening? >> certainly, china will play a key role in any step that

ultimately does get reached. i think there can be no permanent solution to the north korea issue without beijing's consent. that is clear. hile we cannot know for sure, and there is much upset about what president xi and kim discussed in their meeting, it is clear that the countries and traditional allies are enjoying an improvement in ties recently. this cancellation by president trump only increases the sense of north korea to pursue closer ties with china and for china to work more closely with north korea and to use the kim regime as leverage when it comes to the

trade dispute with the u.s. francine: miha, is this a cancellation or a postponement? do we expect another summit to be put on the cards by the end of the summer? miha: we can see in the wording of president trump's letter and coming out of north korea this morning that both sides have left a tiny bit of room for compromise in the future and a return to dialogue. we don't see a return to the kind of tensions, the fire and fury area we saw last summer. the time right now is not right for dialogue. we don't really see the negotiations on another summit in called anytime soon. fore is just enough room both sides to find a face-saving way to return to the negotiating table later.

our assumption is any negotiations for a little while will be quiet, done at a more technical level, and that we will see a summit as the result of more preparatory dialogues rather than having a summit announced and then both sides scrambling to find something to talk about. guy: can i ask you, can i anticipate that we are going to see the language, the insults flying again? that would take us back to where we were before we started down this road to the summit. what does the interim period look like? how are we going to read this phase? n the have already see rhetoric was heating up again. there were a lot of missteps,

particularly by the white house. we know to expect from north korea. dealing with the north that you haven't talked of goodwill one day and then -- have a talk of goodwill one day and then insults the next. the comments from john bolton created a lot of that will in pyongyang. is that we will not go back to the height of tensions we saw lost year, particularly because some of the rhetoric shows both sides are still circling around each other and leaving a little room for compromise down the road. monthsly, the next few will be fairly unproductive, and we will likely see a return to some of the twitter warfare we saw last year. francine: thank you very much.

of blackrockeus institute stays with us. russia's president speaks with this french counterpart, china's vice president, and all that moderated by our bloomberg editor in chief, john mickelthwait. watch that on bloomberg radio and on live go. this is bloomberg. ♪ bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. saudi arabia and russia are now singling they are discussing easing -- signaling they are discussing easing production

cuts. cutting back the cuts is on the table. cut the supply glut that led to the crash four years ago. apple is declaring victory in a global patent battle with samsung. apple $539awarded million in damages. samsung had argued it should only have to pay $28 million. it was already established samsung had infringed on several of apples patents. and -- equity firms kkr global management are interested in buying johnson controls. johnson controls is expected to move ahead shortly with an auction. that is your bloomberg business flash. francine: planes of the italian populist parties continue to

spread jitters among investors. the italian spread widens. the pressure on your does not stop -- europe does not stop it the spanish opposition party has registered a vote of no-confidence on president le j oy. eurosceptic play out in the markets. how can this be contained? >> that is the question. i'm not sure italy turned eurosceptic. it has not elected a government that wants to shake up europe at a minimum. what is going to be important is how aggressive do they get in confronting europe. we have been hearing different things. sayave been hearing them

don't worry, we will be consistent with european roles. and then they are full of promises that if implemented will clearly violate european fiscal rules. we will have to see. how can it be contained? one has to hope that some accommodation can be found between the european fiscal rules that are quite flexible. there is space if the italians want to do something sensible that will boost growth over the long-term. some accommodation can be found. if they just want to spend, spend, spend and boost growth, that is not going to work. in the near term, it is easier goingagine spreads up rather than down. francine: first of all, you guys have a referendum on euro in italy. -- cannot have a referendum on euro in italy. it is unclear how the two parties can even get along long-term.

can this last? people in the market are hoping for an early crash in this very unusual and strange alliance between the two parties. maybe that would be the safest outcome. however, these parties to get a mandate. opinion polls suggest that if you had another election tomorrow, support for the lega would be stronger, and they are the more eurosceptic of the two parties. that would delay things a little bit. we are not on the verge of crisis. absence strange was the of any market reaction in the aftermath of the accounting election. fell evennd yields though populist parties won. we are now back to more understandable levels. very important will be the choice of the finance minister. is this a more orthodox

type? guy: one of the biggest buyers of the ecb is ecb. do they worry about credit risk in italy? >> they are a rules-based organization. what is the ratings agencies going to do? if italy passes a budget with a fiscal deficit of 6% or 7%, that will move the ratings agencies, and the ecb will not have a choice and will not want to have a choice anyway. guy: do you think conditionality gets put into it? >> i'm not talking about conditionality. i am just saying that right now the ecb can only buy the bonds that have a sufficiently high rating. if italy falls below that threshold, and this is not going to happen tomorrow, then the ecb has to stop buying. guy: keep an eye on what happens in terms of how much they are going to spend and who is pulling the trigger on that

spending. isabelle will stay with us. the biggest event today is the presidential forum happening in russia, the russian president speaking alongside his french counterpart and the head of the imf. russia's central bank governor has called for structural reforms to accelerate sluggish --wth, stop of calling stopping short of calling the move unachievable. >> it is an ambitious goal, but it is possible. there are times when our economy has grown at the rate of 7% per year, in the early 2000's for example. in that time, the growth was growing based on

oil prices. russia's economy has the necessary potential for growth. we are capable of improving label productivity -- labor productivity. the population of russia is well-educated. we have vast natural resources. arer market institutions working well. the same applies to the financial infrastructure. we have a rather big domestic market. all the preconditions are in place. we just need to have this potential. this is an ambitious but realistic goal. oal.

guy: guy johnson in london. francine lacqua in london. tom keene has the morning off in new york. he may not be in new york. let's talk about the oil market.

brent coming under renewed pressure in the last couple minutes. talking about the opec deal being a great success, talking in the past tense. he is not talking about the anxiety of consumers is now of concern. high oil prices may be starting to generate some demand destruction. he is talking about the fact that there is likely to be a gradual will supply boost in the second half -- oil supply boost in the second half with what is happening with iran. one of the big factors is venezuela as well. that story is coming in with opec and russia. likely to be a gradual supply boost in the second half. brent is trading now at 77.73. we are seeing one of the factors that is impacting these emerging markets now. turkey is an oil story.

francine: after the proposal, if we cast our eyes back to how long they have been reducing output, this is been for a long time. at the time, they specified in the original agreement that this could go on as much as a couple of years. they preserve the political and economic life between moscow and riyadh. on what is in trending across the bloomberg universe. apple wins $539 million from samsung in the final throes of the court struggle on patents. bankers may have moved $13 billion to a baltic laundromat. yen dips asce, the president trump cancels a summit. it's speakerns why

system just to share a very personal conversation. and pyongyang says it remains open to a summit with the u.s. we will get reaction on that story shortly. let's get straight to number first word news. taylor: sticking with geopolitics, north korea appears to be tragic if the canceled summit with president trump back on track. kim jong-un's regime says it was surprised by the decision to cancel next month's meeting and says it is willing to meet with the u.s. anytime. trump cited what he called "still the from pyongyang. -- what he called open hostility from pyongyang. severe weather in the u is blamed for keeping shoppers at home and delaying construction projects. disgraced movie mogul harvey weinstein will be charged with

rape. according to officials, he will surrender to police today in new york. assaultof sexual spot the global me too movement. maduro saidcolas his country is not doing well. oil production has fallen in half from a few years ago. is suffering from hyperinflation and economic distortions that hard for people to feed themselves. 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. bloomberg. -- this is bloomberg. francine: policymakers are gathering in stockholm to discuss the past, present, and

future of central banking. the world'sebrating oldest central bank, riksbank. stephanie flanders is joint for an exclusive interview by the former bank of mexico governor and current general manager of the bis. >> we are here where it all started. withoutld any of us do central banks? riksbank was the first one 350 years ago. thank you joining us. >> a pleasure to be with you. >> obviously, we're thinking about the strength of the global economy now in the face of all of this uncertainty, particularly around trade in the different statements coming out of the u.s. administration. how worried are you about the impact on the global economy? >> we are starting this year

from a strong position. -- we have not had such a synchronizedth -- growth in most regions of the world. what we also have are some risks. they are pretty much what you said. trade disputes can be very disruptive. also your little events. i would also say the complication of how to normalize monetary policy in the face of low interest rates and the possibility of stability in the market. afternoon, central banks being discussed.

we have seen this soft patch as it was called in the u.s. and eurozone. we saw data suggested it is not so temporary. you think it will last? >> in the margin, there could be something about it, but i don't think it is that obvious in the case of the eu. it isly in the u.k. causing more of an uncertainty e ffect. impact on growth in canada and mexico. continent,the probably not so strong. in the u.k., yes. stephanie: in the past, when we have had a move to more normal monetary policy in the u.s., it has caused trouble for emerging

market economies. in previous races around emerging market economies, i know you don't want to talk about individual countries, but are you concerned some emerging market economies may not be able to cope with this new volatility? >> there has been a very prolonged period of low interest rates, very unconventional monetary policies, this major prompted ayield has lot of capital to emerging markets. some assets are overpriced. adjusted.ns get i think there will be portfolio adjustments, too. when it combines with idiosyncratic issues, and i could mention some names.

i'm not completely opposed to talk about some countries. you know the cases that are very turkey,wn of argentina, indonesia. it is important for them to have mechanisms to cope with the external shocks but also to strengthen their local economies. stephanie: we have seen a lot of different ages. dimension argentina in turkey, who have had different approaches to communicating with the markets. what you think in the last few weeks in the world of central bank governors? >> in both cases, what they have in common is that governments are tinkering with central-bank independence. argentina, the fact that some months ago the government sort

increased inflation in argentina. that was read by the markets as a factor that was not positive. in the case of turkey, the president being very outspoken about how monetary policy is conducted and how much influence he wants to have on the central bank. i think both of these examples talk about the necessity to leave central banks alone. stephanie: today, she wanted to stand by the central bank governor of turkey and give him his freedom. you would agree with that. >> absolutely. stephanie: we have had a local disagreement here on the view of the exchange rate do you think it's strange rate policy --

exchange rate. do you think exchange rate policy should be the role of the central bank? >> i think probably the central bank should have the last word, but it should be a shared responsibility. stephanie: what if they really disagree on which direction? >> i would leave it to central banks. stephanie: i'm sure your colleagues here would be pleased with that. you mentioned the new phase of monetary policy we are seeing. what risk do you see? he banker international sentiment identified four factors. what do you think people should ne most interested in now i emerging markets? >> we have not found a way to study it in a comprehensive way.

price stability and financial stability? it has been done many times, but when there are these major adjustments that it did place in some of the policies, there is a risk that now that we need to increase interest rates, financial stability might suffer. we need to be careful. it is not obvious that is the issue. it requires a lot of skill. all the central banks are thinking in this. i am very hopeful we will get it right. stephanie: communication is so important. >> it is the key. stephanie: do you think we should get used to the fact that central bankers will tell us yes. less? >> communication is important

for financial stability and price stability. formed based on guidance. stephanie: thank you very much. >> a pleasure. thank you. stephanie: for the moment, that is it from the riksbank. guy: for the moment as you say. there is plenty more coming up. fantastic event that stephanie is accurate there is plenty more still to come. we will hear from the outgoing think of finland governor coming up very soon. let's look at the markets now. we are watching an improvement driven by the russians and the saudi's. the russians talking about the fact we will see a supply push coming through in the second half. mr. novak talking about the fact that supply may be boosted in the third quarter if all agree.

from get a take on this lagos.e mateos y we have moved up aggressively in oil. up as the dollar is rising. that is making a tricky for a lot of countries. where do you think the saudis and russians would like to see oil prices stabilize? >> it is quite interesting. i think the $80 range is the sweet spot. it is making life great for the oil producers without causing too much of a negative drive on growth and global demand. i think they want to be very careful not to push it too far above that. what has happened is two things at the same time. you have had a very significant rebalancing. are at thentories

lowest levels they have been in years. at that point, opec could say mission accomplished. that is what they are trying to do. risklso have geopolitical in the mideast and -- middle the u.s. withdrawing from the summit with north korea has driven demand up. they know from history that this is a careful game. if this goes for too long, it will dampen demand from a cyclical standpoint and a structural one as people will ev's.to francine: what will the new deal look like with opec and russia? will they target price? >> i think it is too difficult to target price. they will manage expectations carefully. they don't want a persistent cap

gap to up between -- open up between demand and supply. in india, refiners are happy to keep buying iranian production. if that is the case, there is no shortfall to make up for. there is the continuing venezuela supply. what is going to happen there? they probably don't to call off the deal altogether, but it makes sense that they would not eunderwrite is one more time. the supply imbalance has been dealt with. to the turkish lira, which has remained volatile since the central banks emergency rate hike a couple days ago. the mickelthwait spoke to imf regulator at the st. petersburg forum and asked her

about the turkish move. >> turkey is clearly in a different phase. they are under pressure from the market as clearly the lira depreciated significantly over the course of the last few months. nows particularly the case because of what is perceived as inconsistencies on the part of political leaders and central bank governors. john: when you say political leaders from do you mean mr. erdogan? christine: i think it is always better for political leaders to let the central bank governors do the job they are selected to do. allow for independence. the of the comments alerted international investors to the fact that the turkish bank could

be under directions, instructions, influence, and that has created a sense of uncertainty, lack of confidence, which has found its way in the markets. john: would your message to mr. erdogan be, please stay away? christine: i think they have to do their job where they are best. i think central bank governors are good at their job. i think monetary decisions and currency decisions, their best to be handled by the experts. they have a good set of tools. they had some strong fundamentals. it would be much better to leave it to them. did anyone see turkey coming this way? was it a self-inflicted wound?

christine: we did say in our spring meeting and published. it was published. we did say that with dollar strengthened and monetary policy tightening in the u.s., we would most likely see if low back of capitals from those emerging markets that they had fled in the last couple years. this is what we are seeing, strengthening of the dollar in the last couple months, capital flows probably moving back, and 10-year treasuries are at 3%. there is a flow back we are seeing, which will upset some of those emerging markets that have not taken the necessary precautions were that are weak in their fundamentals. i think it was to be expected. it is to be expected.

many emerging market economies are in a much better shape today than they were at the time of the taper tantrum. that is managing director of the international monetary fund. we also heard that turkey's central bank allowed exporters to repay some of the turkish debt for the next few months. that helped support lira a little bit. what more can they do? >> i'm not sure there is much they can do. raising interest rates tends to work, but is often resisted for too long for understandable easons him fear of choking off growth. they don't have much to do. elections are coming up, which will not be supportive of the lira. people will want to wait and see what happens. i don't think there is a great deal of risk of surprised in terms of who is going to win. i think the market could see further turmoil.

i think investors are going to be cautious about going back into turkey. it will be interesting to see how a parliamentary vote goes. we have the oil price. i have the brent and turkish lira. it has gone up quite a bit. you happy structural reform story within turkey. -- have the and structural reform story within turkey. what needs to happen broadly? >> turkey has a large current accounts deficit and has been inge in foreign currencies, and now that means they need to rein that in. that means probably slowing growth. it is always good to do structural reforms, but that is not a structural reform crisis it is facing. markets have been a bit complacent with these countries,

turkey and argentina, that have tempt cannotficits drift rates are rising from the dollar is rising, and people are realizing, they are growing, but this is not sustainable. they have to change course. they will have to rein in this foreign borrowing if they want to build to repay it. francine: think you very much. coming up on "bloomberg surveillance," michael mckee speaks to the dallas fed president. he will talk treasuries and dollar. this is bloomberg. ♪ this is bloomberg. ♪

francine: this is "bloomberg surveillance." joining us now, bloomberg's opinion for technology analyst, let's talk about amazon. >> if your name is alex, you encounter this regularly. miss recognizes your name and lights up. what happens here is the extension of that. it heard a command, thought it heard something else, and

thought it heard a confirmation that this should be sent to someone. this displays the limitation of this technology. smart noto have very just understanding of the words themselves but the intention of the words. that is the bridge everyone is trying to cross now. there is a long way to go. guy: machine learning and all this stuff government we think we are further ahead than we really are. >> you know this if you have siri. learning about machine and what it is good at is understanding one thing. what is the weather like today? it is bad at understanding two things, what should i wear today? that is what everyone is toiling away at now. francine: will amazon change its algorithms? >> absolutely. they are constantly changing their algorithms. this highlights a neat of what

they need to change soon. they don't want this to repeat. if you see this become a trope, and we have seen this with uber last year and facebook this year, these things happen regularly, it becomes a news story. francine: coming up later, st. petersburg international economic forum. you can watch that on bloomberg tv and also on radio and on live . you can see christine lagarde in the chinese and french. this is bloomberg. ♪ what's a gig of data?

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pay for data one gig at a time. and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. francine: president pulls out of his meeting with kim jong-un. a expresses

surprise, but markets barely blink. likelyd its allies are to increase output in the second half of the year. we are live up from the st. petersburg international forum at midday. panele the presidential with vladimir putin and other presidents. i am francine lacqua with guy johnson in london. a lot of talk about what oil does on the back of that saudi minister. prices start creeping up, it also hurts demand. guy: the big question is going to be, how do the saudi's and russians get out of it? now they are getting to understand what that ultimately looks like. they are worried about demand destruction, they have indicated

that. it was interesting, in some ways, opec is acting almost as a central bank year. it is trying to moderate and manage that story. francine: it is interesting to see that the higher price of oil has not really had much of an impact on inflation, because that is a wage growth story. we see a little bit of pressure on the periphery countries like italy, where we can have a cabinet named as soon as today. we are also looking at some concern about spain. with understand there is a vote of confidence. spain it needs a strong and legitimate governance. that get straight to the bloomberg first word news. here is taylor riggs. taylor: north korea is still open to the idea of a summit with president trump at anytime. kim jong-un's regime says it was surprised by the president's decision to cancel next month's meeting. north korea's vice foreign minister says he hopes what he

calls the trump formula would lead to a deal between the countries. iff managing director christine lagarde is urging turkey to maintain the independence of its central bank. imf managing director kristen -- christine lagarde is urging turkey to maintain the independence of its central bank. in terms of monetary policy, it is always better for all political leaders to let the central bank governors do the job that they have to do, and to preserve the central bank independence. some of the concerns alerted the international community that suddenly the central bank of turkey could be under directions, instructions, influence, and i think that has created a sense of uncertainty, lack of confidence which has found its way in the markets. hasor: president erdogan not pledged to follow global

principles on monetary policy, and the central bank boosted interest rates. suggestedan union that the u.k. is driven in a dream world when it comes to brexit. the eu is dismissing many of the plans for a post-brexit relationship as fantasy. toks in brussels failed solve the key issues, including how to prevent a so-called hard irish border. in malaysia, police have seized of valuables from najib. allegations of corruption led to his shocking election defeat earlier this month. 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. we are just getting some

breaking news out of spain. he is willing to back in no-confidence vote. this is important, because spain's biggest opposition party, the socialist, registered in no-confidence vote against the prime minister after his former aides were convicted of running what we understand is a multimillion dollar corruption racket inside the party on his watch. with the number of ministers, udadanos a grin to the no-confidence vote, that increases the chance of rajoy being toppled. this is my data board and what i am looking at overall. there has been a lot more concern and inches this -- anxiousness coming from the periphery, not only from spain, but from italy, where we

still do not have the cabinet. crude extending a decline. this was after the saudi oil minister saying that they now could be adding a little bit more to the markets. on the back of that, the price of oil slumped. guy: i have more comments coming through right now. he says oil will be above $100 per barrel. he says he sees in moderation of that u.s. shale growth at some point. they are trying to manage that. that is out of their control. demand growth will moderate to current prices. demand growth will probably slow in 2019. part of that is down to what has been happening more broadly. nevertheless, it is interesting to see the saudi's trying to manage the story. much reaction in

the korean youan. there is the turkish lira, trading down. francine: onto geopolitics. north korea appears to be trying to get the canceled summit with president trump back on track. our correspondent joins us. it was not exactly expected for trump to unilaterally pull out of the meeting, and have the north koreans play good cop. does the trump administration actually want to meet them by the end of the year? there was a lot of skepticism that north korea was really serious about nuclear rising. -- denuclearizing. byt was greeted with praise republicans on capitol hill. people like marco rubio and paul

ryan all coming to the president's defense for backing out of the meeting. democrats also suggesting that the administration should continue to handle any talks with north korea with skepticism. they are making the argument that it was a disorganized policy that led to this meeting been canceled. canceled. guy: the president is accused of shooting from the hip, and how this could be somewhat positive. can i draw a line between what is happening with this cancellation, and the fact that we now have maybe the white house and state working better arm and arm -- in arm? >> i think that is a great point. people likek at nikki haley and mike pompeo, you see more cohesiveness. the national security adviser john bolton also mixing well into that mix. there are some reports, but i

don't know if i believe them, about the divide between the presidents foreign policy staff. i think the broader take away here is that there is a lot of concern amongst lawmakers in washington on the left and right that president trump would look to make a short-term deal with north korea. that no longer appears to be the case. the cancellation of this meeting, or postponement, whatever you want to call it, suggests that the president once you have a longer-term denuclearization deal. that suggest that there will be more ongoing discussions. francine: thank you so much, kevin cirilli, our bloomberg chief washington correspondent. looking at what it means for the koreahina-north relationship, we have jonathan fenby from ts lumbered joining us.- ts lombard joining jonathan: i think china is

playing quite a central role in this. edged out on the side, it felt like it was being marginalized, but now china is back there i think in a big way, and will play a much larger role going forward if there's further talk about talks. francine: why did the north koreansfrancine: say this? it is unclear why trump pulled out so quick. north korea played harder ball, let's say, over the last couple of weeks. that certainly came after kim jong-un's meeting with xi jinping. what is clear from this is the key phrase, denuclearization, mean something completely different to kim and the white house. for the white house in means a quick, six-month ideally these

stocking of nuclear arms -- de-stocking of nuclear arms. for kim it means the start of a long process. there are synchronized movements between north korea, and south korea, and the united states. this is a long process, which i don't think trump bargained for. guy: there are rumors that kim is in beijing today. we don't know who got off the plane and was picked up, etc., etc. nevertheless, it will be interesting to see what comes out of that. there was the offer of joint war games being which drawn -- withdrawn. is that an objective too far? jonathan: it is an objective too far for the time being.

what china wants -- what doesn't ant -- it doesn't want his agreement in north korea that buttresses the u.s. position in asia. china wants to be the dominant power in that region. it is starting all kinds of economic conversations with south korea, and helps with japan as well -- it hopes with japan as well. guy: we are back to talking about influences of power. it feels very cold war like in the language that is applied. how does that and for the united states -- end for the united states? is that what trump is thinking about as well? view will bell -- that it understands how to

manage that relationship. trump's: if you think campaign rhetoric, certainly, that would argue for getting out of east asia, making deals, coming home, and looking after the united states. i think when push comes to shove, he will not give up. francine: thank you so much. jonathan fenby there, chairman of china research at tia slumbered -- ts lombard. petersburgthe st. international forum. ,he imf managing director china's prime minister, and others will be there. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." open-ended's allies are likely to boost oil supplies in the second half of the year -- opec allies are likely to boost oil supplies in the second half of the year. put germancutbacks oil prices at a 3.5 year high. a jury in san jose, california 500 $39rded apple million in the damage phase of the trial. samsung had argued it should only have to pay $28 million. it was only established -- already established that samsung

had infringed several of apple's patents. that is your bloomberg business flash. francine: thank you so much. we have breaking news out of spain. i guess some of the markets are anxious about not only the populace in italy trying to form a government, but also in spain. party that holds the bounce of power in spain says it is ready to back in new confidence -- no-confidence vote against prime minister rajoy unless he calls in election. that has a whole host of implications. i have the italian-spanish 10 year yields. you can see the spread is significantly widening. joining us now is christian schulz, global director of european research at citigroup and antonio garcia pascual,

chief economist at barclays. antonio: i think you should worry more about italy. this is interesting, no doubt. that prided itself on bringing stability to the country, fighting corruption, and now it needs to choose. corruption seems to have blown up with this judiciary resolution. he has to choose. it seems that the days of the prime minister with that probably are not long. that means that either way we might be heading for an election sooner rather than later. the latest polls that i have seen suggest that there is three .ain parties around 70%together

of the vote. theoretically, if the polls are correct, it should be somewhat better than a minority government that you have now. guy: theoretically. so we have to price that in. things are beginning to stack up in europe now. you've got brexit, what is -- aning in central italy central europe, now you have spain. with as been generated lot of stimulus and not a lot of political tension. things are changing. christian: you are right, absolutely.

we have some evidence that some parts of the chinese economy are lowering the oil price. we have the euro bouncing around a little bit. i think there is a lot of resilience in the european economy. that comes from the stimulus from the monetary policy side, which remains in place. there is no risk at the moment of the fiscal tightening, so of a new wave of austerity. , think the risk that we get macro policy areas -- in the macro policy areas is quite low. more general political areas, italy turn out to be one. there are many scenarios in which italy could play out. at least one of them is quite negative. spain i think is a very different story. we have an economy that is performed extremely well, there is no real anti-european party there.

whatever the elections are going to throw up, i think in general that would still be constructive -- quite different on italy come actually. so far i see a lot of resilience so far. francine: thank you so much for joining us. coming up, from the riksbank's 350th anniversary conference, the vice chairman will be -- the bank's chairman will be speaking. all that is moderated by bloomberg's head of economics. you can watch that live on bloomberg tv, radio, and on the live goat a little bit later -- later. a little bit this is bloomberg. ♪

>> we may attempt a general to slow downariffs

world growth by more than 2%. business confidence be affected. ♪ welcome back, you're watching "bloomberg surveillance." let's get back to the story we have been watching. that is what is happening with the price of crude. --de coming unto pressure under pressure. the comments were made in st. petersburg by the saudi energy minister. he walked into the room and talk to our very own. what did he say? >> good morning, guy. i had a quick moment with him and was asking about what they're going to do with what is happening with the market right now. are they going to make up this supply gap? he said it is not about market share.

he says they need to do the right thing for the market. he stresses that they have this consumer angst, and they want to keep that to a minimum. already seen consumers have worry about what the prices are going, and where the market rebalancing is going. in in india, the imf the prime minister was saying that prices are way too high. in the u.s., we are on the verge of the biggest driving season. gasoline prices are at a three-year high. democrats are urging president trump to stand up to opec. istweeted, saying that opec artificially pushing prices higher. there is a lot of consumer angst, and that is what they seem to be addressing at petersburg. francine: we have news saying that the saudi aramco ipo will most likely be 2019. you know if they are worried if

consumption gets her if prices are too high? be asy want prices to high as they can as they look to ipo. they have been saying that 2019 is the likely time when they will be able to ipo. where the price will be when they ipo remains to be seen. it depends on what happens with thae supply-demand story. guy: we will continue the conversation and find out what it means for the global economy. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." i'm francine lacqua here in london. tom keene has the week off. antonio garcia has while a barclays -- antonio garcia

pascual a barclays is still with us. comments from the open head -- opec head. what are they afraid of? christian: you would have to ask them. you mentioned this problem of a higher oil prices means for demand. think there is a coal range of consideration for this range ofr -- whole these -- for these particular producers to consider. levelis some sort of peak that the oil price will not be exceeding. thatlying our forecast is it will not go much higher than where it is now, and will follow overtime -- fall overtime so

that we see peak impact on inflation in europe. after that, things will ease again. francine: antonio, where do you see the price of oil going? antonio: the link to inflation is key. you also need to bring to the question eurodollar behavior, especially from the european side, which has eased on the euro side. these things together will no doubt move up headline. we have already revised up --dline inflation 0.2 points 0.2%. that is meaningful. that would bring headline

to 1.6%, .7 1.7%. there is no fundamental reason to change the forecast. that would be driven more by other issues. how strong our domestic wages -- are domestic wages? that is only moving gradually. i think the forecast the ecb has with -- guy: prices are going up. we are in a situation where core is going to stay stable and headlines are going to move. is there going to be a second

run of effective that -- effect of that? >> consumption i think is the one you are alluding to. it is particularly fish. prices -- particularly --. prices are going up. unless they are driving halfway to work. the thing about consumption is that it really matters whether we are in a demand driven pressure or supply driven. driven -- pply guy: which one is it? >> i think we have had a recovery in the oil price which was demand driven. there is probably going to be some kind of negative impact on consumption. we also have to look at investment and trade. we saw a big drop in the oil price in 2014. the producers of oil were importing less from us, and that caused the overall picture in

2014-2015. some countries will invest a lot more because of the high oil prices. guy: how does this work with the dollar? the euro is an interesting factor in all of this. it was interesting to hear him say that oil would be $100 per barrel if it was not for u.s. crude. how different will this be for that u.s. economy going forward than the european economy? i think that euro dollar has been moving quite a bit in recent weeks and months. ofaresay that the last leg this euro-dollar, the strength of the dollar, has been a little bit of the news surprise on the growth differential. the data came weaker as a surprise. that is what put pressure on the

european side -- on the euro side of the eurodollar. forward, i think we need to go back to the fundamentals of what the central banks are doing. frankly, i see all reasons for the ecb to continue with a steady hand come a very gradual -- steady hand, there he gradual -- very gradual. the fed is looking at a pretty bullish economy. francine: thank you both. antonio garcia pascual of barclays and christian schulz of citigroup both stay with us. here is taylor riggs. taylor: north korea appears to be trying to get the canceled summit with president trump back on track. kim jong-un's regime said it was surprised by president's decision to cancel next month's meeting. it said it is wrong to meet with the u.s. at any time.

citedent trump's letter with he called tremendous anger and open hostility from john -- pyeongchang. total takes ceo says the company will keep investing in russia. >> we have invested more than $8 billion in russia successfully come and will continue. can continue to do that we will. taylor: he spoke at the st. petersburg economic forum. harvey weinstein will be charged with rape. he will surrender to police today in manhattan. and number of women from around the world have accused harvey weinstein of sexual assault.

those stories spawned the global me to movement -- me too movement. 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. flagged a makers have number of potential threats to the euro area. one of them is protectionism. concern about spain, where the prime minister faces a no-confidence vote. there are worries about italy's incoming populist government and its plans -- fiscal plans. joining us now is erkki antero liikanen. stephanie come over to you. >> back here at the riksbank.

the bankero liikanen, of finland governor's joining us. we have been talking about a soft patch in the global recovery in the eurozone. this week it started to look a bit less temporary. we had some continued negative figures. are you starting to worry that this may last longer? erkki: we have collected all the information. it is slow growth, but it is still growth. >> do you expect at that meeting to be talking about the timetable for the cap out of path out ofe -- bond purchases? one is net purchases,

second is the stock assets, there is reinvestment, and forth is forward guidance. the ecb will move in the direction of forward guidance. we have had quite a few members of the governing council say recently that they would -- were quite keen to move ahead with the end of asset purchases. is that the feeling of the council? do think there will be movement on that and the near future? erkki: i leave my assessment to the governing council meeting. that is the proper way to do it. >> i guess what i am interested in is how it affects that judgment. if you seem to be really pushing for the end of qe, that there is the -- that the policy after that becomes less credible. erkki: and central banks of

course the commitment is important. in this kind of situation, we are coming out of very long recession, a difficult time in the economy. we must have patience when we follow the monetary policy into the economy. we must be persistent in our work. let's not rush. let's do it carefully. we have done the right monetary policy for the last year. that takes time. i am sure in time it will have an effect on core inflation. >> the timing is related to you personally, because you will be leaving your current office in july. will you be surprised if the council has not said anything about the timetable for quantitive easing by then? >> we will talk about the situation at my last policy meeting at the end of june.

let's work together carefully. it is very important that every turn is carefully thought of and very well controlled. recently thatid you were not encouraged by what was happening with the new government and italy. what is your best -- in italy. ow?t is your position n what do you see? erkki: foreign outsider it is impossible to comment at this time. i cannot say more. >> when you said they are not very encouraging, what was least encouraging to you? erkki: we still remember that surplus. a primary we have been able to finance their debt for a long time.

if that holds -- >> so the position was loose even before this government. erkki: the italian debt has been high all the time. the situation in italy affect any thinking around the end of quantitative easing and bond purchases? a lot of people feel that the ecb purchases are supported italian bonds now. erkki: i have been in the governing council for 10 years -- 14 years. there has not been a single case . it will be done for the entire euro area. tools --ou look at the

mario draghi has presided over the creation of tools for dealing with countries that might face a serious problem of confidence in the market. do think that the tools are there to support italy if there were an issue? erkki: i will not make any comment on specific countries right here. >> if you had a country with a lot of debt that has a challenging situation in the financial market, are you confident that the outright monetary transactions, in the tools that were put in place? erkki: we have one rule, we do not comment on hypothetical situations. >> do you think what is going on in italy has changed some of the debate about eurozone reform? you have argued very strongly for having collective the positive -- collective deposit insurers in the eurozone. --ki: we have concluded

[indiscernible] we have resolutions put in place at the european level. i think we should now conclude --. it would not lead to major growth. >> policymakers have shown no movement on this. they say they do not want to move to that kind of risk sharing without more effort from countries like italy to clean up the bad debt. it is clear that they have a very high rate of nongovernment once. it is not only negative for your area, but negative for the country.

to comey needs especially those who have a higher level npl's, need to calm that down. macron is going to the summit of leaders to the european union next month wanting to see change, and the completion of baking union. you think italy has changed the calculations for germany? erkki: my experience in europe is when we come to this kind of historical crisis, it is the country's job to take care of their responsibilities. they normally take the responsibilities. >> do you think there will be concrete progress on banking unions during the summit? erkki: blue we will see the detailserkki: -- we will see the details. we have had major progress with banking unions.

risk by private sectors. you do not need government. >> some people would say you changed your tone on the deposit insurance because you were about to acquire influent end -- in finland a significant financial institution. erkki: i have no change. national positions can change. >> we are just thinking now about the future. you will be free to do other things. if asked to replace mario draghi, would you be willing? at mario draghi is still in office, i think we should let him work, and postpone these mario draghi-- if is still in office, i think we

should let him work, and postpone these speculations. >> thank you. very noncommittal there on the future of the ecb. francine: very diplomatic. she oversees all of our economic coverage with erkki antero outgoing bank of finland governor. i have come up with this chart. we will talk about pound on the back of those carney comments yesterday. this is the ftse. you can see the difference in the ftse if we put it in euros, pounds, or u.s. dollars. if we go back to pound movement and market expectations about when the boe would hike, is the market complacent? is the market lazy? in d.c. mark carney had to talk it down, and they did not end up hiking. >> it is difficult.

it is difficult for the bank of england and difficult for markets. we have got this major change to britain's trade relations with the rest of the world ahead of us. what do you do in that context? how do you set monetary policy? as markets, how do you set the rightas markets, how do you sete right prices? i think for a long time we in markets have been thinking that brexit is far too big a risk, and far too short-term for the bank of england to do anything for a while. the bank of england said that the economy is doing relatively well, which growth is rising -- wage growth is rising. they convinced us that they are actually hiking. we certainly started pricing hikes regardless of what the economy is doing. now they are back to telling us -- i'm sorry, how is that i'm sorry, how is that possible? is there a communication problem

or just that the market does not do their homework? >> it is both sides. with the bank of england wants to tell us is that we set monetary policy in regards to how the economy is doing a moment and in regards to how we think it will evolve in the future. take brexit out of the equation is what they are saying to us. we cannot really take brexit out of the equation. brexit is a big risk. we have to kind of find a midway between pricing the data from month to month, and the looming big brexit risk in the future, and say what is the bank of england really going to do. it is a miscommunication from the bank of england on one side, brexit linning all over this in the middle. guy: you have taken out your aix -- rate hikes. when is the next one coming? on what basis are you making it? >> just to state the obvious, we

have taken it out. think about inflation as well. inflation after the hit of the pound, now sort of converges toward 2%. u.k. growth on average of around so .3%, 0.4%. you have the uncertainty and inflation going toward 2%. where theon't see data will have the need for further rate hikes on the horizon. unless the data proves us wrong. good outcome of brexit, then yes. if not, the no reason for a hike this year or next. francine: interesting. antonio garcia pascual, chief economist at barclays, and

christian schulz. taylor: what could be the world's biggest ipo could take place next year, according to saudi arabia's energy minister. he is waiting for the markets to be ready before it saudi aramco goes public. it is expected to be listed on at least one international exchange. a new drug from astrazeneca has improved survival in lung cancer patients. the drug achieved its goal in its advanced phase study. many companies are racing to develop life-saving therapies for lung cancer. and that is your bloomberg business flash. francine and guy? guy: thank you very much. let's talk about the turkish lira, a little volatile. bloomberg's editor in chief spoke to imf managing director christine lagarde at the st. petersburg forum.

he asked about the turkish central bank rate decision. turkey is clearly in a different phase. they are under pressure from the market. clearly the little rough -- the lira has depreciated significantly. it is the case now because of what is perceived as inconsistencies on the part of , -- ical leaders erdoganu mean president by any chance? >> in terms of monetary policy, it is always better for all political leaders to let central-bank leaders do the job that they need to do.

i think some of the comments i think some of the comments made alerted the international community, and particularly the investors, to the fact that suddenly the central bank of turkey could be under directions, instructions, influence. i think that has created a sense of uncertainty, lack of confidence, which has found its way in the markets. >> would your message to erdogan be too pleased stay awake on the awayal banks -- oh wait -- ? >> i think the central bank governors are good at their job and they should be left to monetary policy. let it be handled by the experts. i think they have a good set of tools. they have some really strong fundamentals. it would be much better to leave it to them. >> does anyone see turkey -- did anyone see took a coming in this way? was the imf worried about turkey, or is it a

self-inflicted wound? meetingsn our spring that withwe did say dollar strengthening, with monetary policy tightening in the u.s., we would most likely back blowback of -- flow of capitals from emergency mark -- emerging markets. see.is exactly what we strengthening of the dollar in the last couple of months, capital flows moving back, the 10 year treasuries at 3%, so there is a flow back that we see, which is going to -- some of those emerging markets that have not taken the necessary precautions, or are we can there theirentals -- weak in

fundamentals. many of the emerging-market economies are in much better shape today than at the time of the taper tantrum. guy: that was imf managing director christine lagarde speaking to bloomberg. the story from christine lagarde , leave it to the central bank. the central bank has been pulling a few more levers this morning, but the lira remains volatile. how many more levers do they have to pull? >> we have traders coming out saying that they think the central bank may have to go again in the next months. there is also talk about the central bank coming out with the -- of its monetary policies. turkey has this unorthodox monetary policy.

i think a lot of investors and people in the market are hoping that the central bank will come out and say we are going to go to a more orthodox monetary policy, and formalize in essence what they have already been doing. francine: thank you so much, as always. we are short on time, we will have you back very soon. that is our bloomberg executive editor for the middle east and africa. turned into radio. a little bit later on, the st. petersburg international economic forum's presidential panel. the japan prime minister, vladimir putin, china's vice president, and the imf managing director moderated by the bloomberg editor-in-chief. this is bloomberg. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. david: who says i am angry?

kim jong-un says he is ready to meet with president trump, even if he says no. we speak with a peace negotiator, george mitchell. stability,ghts for reacting to efforts by the central bank to strengthen the currency, but the fundamentals are the issue. and we are at an economic forum where john is getting ready to moderate a panel with three heads of government, president france and abef of japan. ."lcome to "bloomberg daybreak julia chatterley is here. you have done the st. petersburg forum twice now. julia: really excited that we have this. david: special program today. >> was give you a look at the markets. who ever said that this is the