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 right strategy. they got it wrong this month.

we are up for the s&p. lost a bit of ground yesterday. david: and now for the first take, we are joined by brooke and vince, who does our live blog on foreign exchange and all things markets. a lot of news about north korea yesterday. president trump sent a letter to kim jong-un, saying we are not doing the summit, but then overnight they said we are not very angry, we would like to meet with you. let's put up a chart. it shows what the s&p has done. you see the yellow circle. paula deen -- plummeting on the news. but this is not lower than when the president announced auto shares. it has been up and down. so a reaction, but not a huge one. vince: the initial reaction was the selloff.

you get a lot of machine driven selling off of this. he walked up back later on saying, we might be ready to speak with them at a later date. he left the door open, markets react positively. and in balance, people think this will happen, it is just a matter of time. david: the markets are breathing a sigh of relief, it feels like. brooke: the funny thing is, a year ago it was said that north korea would take a more measured approach to these negotiations. i do not know if i would've believed it. but that is what you are seeing. julia: what about the situation now with china as well. and negotiations and lack of understanding about where this takes us, whether it is trade, north korea. vince: the sticking point is when china got involved in negotiations, they were try to press for something along the lines of the iran deal. and korea went along with that,

basically drawn a line in the sand, saying that the president is against the nuclear deal. that was the sticking point. of course then john bolton and mike pence mentioning that would be a arrangement, that put a little bit of anxiety into kim jong-un. he does not want to fall like a docketed. -- like gaddafi did. so the president realized we are maybe not ready yet. so they need to come together on that first issue, then i think we will go forward. julia: some country having issues right now as well is turkey. action in the central bank. they had to rates three hedge a basis points, now opening up other options, the prospect of repaying loans and turkish lira. that is a challenge. weakness in turkey is still a problem. vince: a big problem. reacted to bank

market pressure, finally stepping aside from the political pressure, after erdogan's speech last week. we see a situation where the markets do not believe the central bank will respond again unless the pressure builds up significantly. the lira depreciated 15% and the central bank reacted. the potential that erdogan gets reelected and the steps back in and lowers rates again, we could see it weaken dramatically. david: what influence will he have over the central bank? we had an interview overnight, this is what christine lagarde had to say about the subject. >> in terms of monetary policies, it is always better for all political leaders to let the central bank governors do the job they have to do, and to preserve and to secure the -- some of the comments made alerted the investors to the

fact that suddenly the central bank of turkey could be under directions, instructions, influence. that has created a sense of uncertainty, lack of confidence, which has found its way into the markets. david: so that is encouraging, but what influence would christine lagarde have over erdogan? that is the question. brooke: you have a lingering uncertainty of how is he going to treat the central bank. will he respect its independence, tried to exert some political control over here? we think that he thinks interest rates are low, that this is the path they should be taking. most economists disagree, but when you have this pressure given the political environment in turkey, investors are not sure how this will play out. you will see the ongoing pressure until we get more details. julia: i think that was very

diplomatic. absolutely nothing, quite frankly. in europe, italy is a problem right now. spain, also the prospect of a no-confidence vote this morning. vince: they are considered the periphery, but the core of the periphery. italy and spain are the backbone of the eu, everybody knows what france's story is, everybody knows about how well the economy is doing in germany, we not talking about portugal or greece, this is major. you have eurosceptics being elected into the italian government, now we are not sure where spanish politics is going to go if low high has to call snap elections -- if the spanish leader has to call snap elections. they are looking at 0.47 on the german ten year bond -- bund.

if anxiety gets it to rally further, we could go back to 3/10 of 1%. so a massive rally in poor yields, which would put a lot of pressure on ecb's. david: over to st. petersburg, the economic forum going on right now and we will be looking for do a panel shortly with president putin, macron, and vice president -- and shinzo abe. sayingaking headlines, that they have to count on investment, it will be difficult to achieve growth goals. at the same time, he said he had constructive discussions already with president macron on this. he says this is the mh-17, the airline investigation, he says it will take time to digest those results, which points directly to russian influence in

shooting down the airliner. julia: it is a challenging relationship and increasingly challenging compared to last year, the deterioration of the relationship with the united states, but also with the west. it will be fascinating. david: what are you looking forward to? brooke: the key thing to watch is how the europeans will interact with the russians. you have an escalating tension between the u.s., but when you look at the iran deal and european leaders actually really like that deal and their companies have invested in iran, they want to maintain this business relationships if they can, but a lot of the deals are denominated to the dollar, so it will be interesting to see how they talk about that, potentially building a relationship. putin and macron and suspended four hours yesterday talking. david: we will discuss that. we were just watching. that

panel. john coming up shortly with his panel. in the meantime, thank you both very much for being with us. command, now that the president has scrapped the summit on june 12, can talks be salvaged? we will speak with the george mitchell. coming up next. this is bloomberg. ♪

>> this is "bloomberg daybreak" opec and allied likely to boost oil supplies in the second half of the year, that comes from the energy minister who met with russian counterparts at the st. petersburg conference. cutbacks now at a 3.5 year high.

and shares higher today for the athletic apparel chain. higher than analysts' estimates. they fell not as much as expected for foot locker. and declaring victory in the final stages of the battle with samsung. a jury in san jose, california has awarded apple money in the trial. apple says they should've only pay $28 million. it was already established. and that is your bloomberg business flash. david: thank you. geopolitics dominates the news. president trump canceling a summit yesterday with kim on the, saying, "based open hostility displayed in your most recent statement, i feel it is inappropriate at this time to have a long planned meeting." welcome now a man at the center of negotiations, such as the one

contemplated now with north korea, george mitchell served as a special envoy under president clinton, train peace negotiations that led to the belfast agreement. this came after he served in the senate, including as majority leader. we welcome senator mitchell back to bloomberg. >> thank you. david: what went wrong? we thought we were going toward the summit, but now it is all off. >> i think the president's team reached the conclusion that there is not sufficient preparation to have even that first meeting with the north koreans. a provenhat this is step. and that this will likely continue. president trump has already made concessions the kim jong-un to get them to come to the meeting. the first is the meeting itself. every north korean leader has wanted to meet with an american president, no president has ever agreed before negotiations, for

the obvious reasons that we do not want to reward dictators by giving them the most prominent stage in the world, the white house. and the president has reversed his own policy, that of his predecessors, who wanted kim to agree to denuclearize as a precondition to getting into talks. that has become the objective of talks. that is significant from their standpoint. let's all hope they resume, but my preference would be to have a prior negotiation, and then the presidents come in at the end to seal it. david: it is interesting, the response from north korea after the president's letter. we will quote the number two minister. meeting "the first would not solve all, but even solving one would help negotiations get better. once again, we had the intent to sit with the united states side to solve problems."

this is saying, we are still open to talking. a principalestates position, that this will be done in a phase way over many years. the american position has been, it must be done right away. it was a statement by our national security adviser talking about libya and a one-time deal that friend of them a little bit, for obvious reasons, given what happened to gaddafi. have enough sides at stake debate will continue the process. what is happening now is a negotiation, just not in person. julia: it is entertain you mentioned gaddafi, the suggestion from john bolton that this could be a libya type model, which upset the north koreans, clearly. presentation to put on and rhetoric to provide back home, i just think the comments made by president trump this weekend might of china's

role in the negotiation is interesting. listen to what he said this week when he was meeting with a south korean leader. president trump: i will say i am a little disappointed, because when kim jong-un had the meeting with president xi, the second meeting. the first meeting we knew about. i think there was a change in attitude from kim jong-un. julia: what do you think happened as far as the chinese and north korean relationship, the advice that president xi was giving kim jong-un? george: i think president trump in his predecessors have placed too much hope in the belief that china will do this for us. the has been the america mantra for many years. in fat, while china's short-term interest in the region is identical to ours, the long-term is very opposite of ours. we want a reunified korea, a democratic unified korea, and that is opposite of the

long-term interests of china, they do not want a democratic regime with american military forces on their border. we have to recognize that, they will not carry our water, they will carry their water. david: we cannot get it done relying on china, can we get it done without them? what is the chance is that we did not include the chinese enough in this? they may have wanted in the summit and president trump may be said to xi, cool it down? george: he may have said, "and do not do anything without consulting with us first. china is the large power in the region and a do not think any agreement will be made that is opposite to china's interests. but china has an interest in keeping kim jong-un in office, just not being unstable. and president trump not going on record saying, we will protect kim jong-un. julia: protect the regime. george: it is a huge plus for china, it is contrary to

american and the democratic values that we are somehow going to protect a brutal dictator, not sure how that will actually operate, but that certainly is one of china's objectives and one of kim's. julia: what happens now? we have background negotiations? the president has put himself out on a limb, suggesting he would meet kim jong-un. he would like to victory koreaated with north engaging in some sort of disarmament here. george: i think there will be background negotiations. i think one of the problems is the united states has publicized the background negotiations and i think the north koreans would prefer to the contrary. i think you will see an effort to bring them together, but i repeat my hope, this is a personal hope, is that we revert to the traditional diplomacy of the negotiations occur at a lower level than the presidency,

and when there is promise of bringing them together, then the presidents come together. that is much more likely to produce a realistic, enforceable agreement that is starting off with the president's meeting. david: what about the role of south korea? moon, it looks like he brought this to pass. it looks like we pulled the rug out from under him. how much do we need to enlist his help? george: along with japan, just like north korea will talk with china, we need to keep the south koreans anti-japanese fully informed in feeling as though they are fully a part of this discussion. julia: what about the whiplash being created here in some sense by the president's actions? he is tweeting, the negotiations are going on or not going on, on a lower level initially. in terms of trust, you suggested the chinese had to kim jong-un,

be careful about what you give up or what you say. george: i think there are two contradictory feelings flowing through the world. the first is, president trump is unpredictable and it changes his mind from day to day, makes contradictory statements all the time. there is a concern about that. on the other hand, he is the american president, and will be for three more years, and they have to deal with it. president moon of south korea believes obviously the formula is flattering. he has talked about his flattery of the president. i think that is one of the issues they will have to deal with. david: and do we need all of us to give president trump credit, because many regimes in the united states have tried to deal with north korea without much affect? there has been change in north korea by this tough sanctions approach that they got the u.n. to go along with. has he made more progress?

george: i disagree. we have reached agreements with north korea before, the problem is they did not keep them. when he gets to the point of reaching an agreement with north korea, he will then have reached the point that to prior presidents already reached. then the question will be, this time, will they keep their word? julia: can i push back and say this is different. the north koreans are are going now that they are in nuclear power. so is their justification on both sides to make this different from the prior two situations where the north koreans did not follow through, one because they think they are in a more powerful position, also because they were backed into a corner over sanctions. george: it is the case that they are insubstantial nuclear power now, but -- a substantial nuclear power now, but if you think that is the basis to trust them, i disagree. david: coming back to approach, whether it is phases or one

bite, is it possible to do a negotiation saying you have to give us everything before we give you anything. like john bolton said. george: he went further, he published an article suggesting military action against north korea and military action against iran. and i think both of those were wrong. and i think that is one of the reasons why you have this glitch. not the only reason, but one of the reasons. i think they are frightened about that policy being adopted by the united states. julia: the president threatened that this week, when he retracted and said, we won a have this meeting. he said the military stands ready. he echoed the john bolton line on this. george: i think he wanted, understandably, he wants it both ways. he disavowed john bolton, but also said we are ready to go militarily. david: assuming this moves forward, even to an agreement, how do you verify it?

how do you possibly know for sure? you said it was done twice before and it did not work out well. george: one president -- one thing the presidents will have, a problem, he has denounced the iranian agreement as -- that dealgoing to top in north korea is going to be interesting to see in a very difficult question to resolve. julia: who is critical now, to push this forward? is it the chinese relationship now with the united states, because you pointed out that the sequencing is critical here. we have tensions between china and the u.s. over trade, that seems to have deteriorated, in fact at the same time as the talks behind the scenes with north korea and china. the strategy with china and the u.s. feels pivotal.

george: it has never been as a simple as the u.s. dealing with north korea alone. obviously, both sides have regional alliances, and allies, with whom they must produce a great in preparation -- must participate in preparation, and strategy. for north korea, it is china. for the united states, it is south korea, japan and others in the region. we have to do a better job of listening to and trying to incorporate and accommodate the concerns of our allies in the region, just as kim is obviously doing with the chinese president. the rolled are reversed -- roles are reversed, china is more powerful and we are the dominant force on our side, but that does not mean we cannot take into account the needs and concerns of south korea and japan. david: and where is japan in this? are they rooting for the agreement, are they concerned?

they would be the closest in some ways after south korea. george: obviously, they would like an agreement that would result in the full denuclearization of north korea. that would be a huge positive step for their security. given their bitter history between the two peoples, and the two countries, they will be very concerned about making sure that any agreement is fully implemented and verified, as i think we should be concerned, given the history of our relationship with north korea. david: george, great to have you. george mitchell, great to have him here. command, how the markets are reacting to the north korean uncertainty. tzfusstole this -- stol will join us. and coming up, talking about europe with bart mcdonagh. and our colleague john

micklethwait will be in st. petersburg, where we are seeing macron now speaking on this panel. john will be speaking with president macron, putin, in addition to abe. shinzo bring -- abe. julia: and features right now unchanged. and looking at listening the restrictions on output from opec. europe managing to make gains, despite those concerns. from new york, this is bloomberg. ♪

david: welcome back to "bloomberg daybreak." i'm david westin with julia chatterly. this is a live shot of st. petersburg.

we have seen president putin, president macron, we are waiting for john micklethwait who will panel witharkable cpa the vice president of china, president putin, president macron and shinzo abe. we will bring it here live while it happens. david: if i was in st. petersburg and president putin cracked a joke my would smile -- joke, i would smile. julia: relief after modest losses yesterday. oil, we will continue to watch that, going down in further 2% after 1.5% losses yesterday and the russian industry -- energy minister confirming that they are talking to the saudis about relaxing restrictions in light of the situation in iran and venezuela. something to watch. energy stocks under pressure yesterday. we have lost a bit of ground. but now relatively unchanged.

10 year back in no man's land, 2.96. europe, we are watching what is going on. the italian markets, 7/10 of a percent and it is spreading widely with bunds. and the party leading in the polls, confirming they are willing to push ahead with a no-confidence vote in spain. is the president on his way out? it is creating waves. and the european meeting of a possible brexit talks, saying that they are near fantasy as far as the u.k. is concerned. and philip hammond saying that was not helpful quote, get it together. weaker, further measures overnight from turkey to stem losses in the currency, but

credibility is a problem for this central bank. david: covering everything in the markets, boy, a lot to go. outside of the business world, we turn to taylor riggs for first word news. taylor: north korea still open to the idea of a summit with president trump at any time. the regime says it was surprised by the decision to cancel next month's meeting. north korea's foreign minister says he hopes the trump formula will lead to a deal between the two countries. iran trying to get the crisis from getting worse. according to a top official, to ron want to europe to come up with economic guarantees by next month. among them, continued access to international finance and keeping oil exports at current levels. and harvey weinstein will be charged with rape. according to law enforcement officials, he will surrender to police today in manhattan. a number of women from around the world have accused him of

sexual assault, and those of stories spawned the global me to movement -- too movement. global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. julia: thank you. investors accustomed to years of ups and downs between north korea and the united states shrugged off the news on the decision to cancel the summit with kim jong-un. you can see the chart, we did see a pullback in u.s. stocks yesterday, but almost immediately going, ok, not sure if we thought it would happen anyway. north korea says it is still open to a meeting with united states. ,oining us is john stoltzfus from oppenheim are, chief investment officer. great to have you with us. tough to fight this risk on and risk off. john: one gets accustomed to it over the last 8.5 years, since the recovery process began.

we have had so much of it. we keep her eyes on the fundamentals. we see no deterioration in the fundamentals. even outside the u.s., looking very normal after the significant uptick in economies abroad to roll back a little bit. and concern is natural. there is always trouble. wherever there is risk, there is opportunity and that is what investors are feeling. the fact that things are still getting better, even as things worsen. julia: what happens if we get negative headlines on nafta or the chinese trade talks? is the prospect of continuing negotiations fine it is only if we turn around and go,, we have a big problem, that is what investors worry. john: if the parties involved would go away from the table and not talk, that would be a problem, but the idea is progress, not perfection. even traders understand that trade is intricate, and it is

very entangled. nobody would benefit from a trade war. things have changed. today the united states finds its competitors around the world and powered by technology and globalization. of that, thelt competitive landscape has been a flattened, the barriers to competition lowered, and everybody needs to play on a fair playing field. david: at what point do the geopolitics and noise turn into fundamentals? i will pull up a chart on german exports, they have turned it down since 2012. is in is said that it part because of trade concerns, just the talk about trade, just the possibility of curtailing is leading to that. john: we think it would have a near-term affect, and i believe the gdp is dependent upon exports in germany, so any kind of a, not just a blip but if you

hit a roadblock or day tour, it will be -- detour, it will be reflected in the data gathered. julia: what about the outperformance in the small caps, focused less on the stocks in the united states. if you look at the past year to date, the outperformance is incredibly marked here. does that continue? john: we believe it is. as a result, we for now several years have been market cap agnostic. capsu look at 2017, large outperformed small caps. at the start of the year, large was outperforming, but small is catching up. if you look at earnings, the earnings in the latest report, those are comparable to the large caps around 23% higher for both small and mid's. it is well deserved, we think.

david: central banks have to figure out what to do with all of this. i do not envy jay powell right now. john: no doubt about it. david: at the top of the hour, we will speak with a central banker. michael mckee will interview robert kaplan. today is a big day for another reason, that is because the general data protection regulation, gdpr, goes into effect in europe, placing new limits on companies that collect and use data on individuals. to take us through the regulation, we welcome bart mcdonough, and sarah, who is our bloomberg intelligence senior analyst in london. we will put up a chart that indicates that outlines in the gdpr, take us to the important new restrictions. is wouldally, th

apply to companies in you are in the world, if they process data in the european union. its impact is not insignificant. andrules on data processing storage come into effect today, and it is a huge challenge for companies, especially in the financial services sector, which may have been focusing on. we're talking about the average cost of 66 million pounds, compared to 15 million for 5100 companies. david: you are for the financial services. we tend to think of this in terms of google or facebook, but the fact is financial services companies are subject to this. bart: before we drive into the negatives of it, i think we have to step back and look at the aim of gdpr. the overarching aim is to give individuals more rights and controls over their data. so this is something like, like

the right to be forgotten, the right to be notified if your data has been breached, which i think is a significant right into something that u.s. citizens might be a little jealous of. david: let's go to your point, we spoke with tim armstrong, he just recently made the point that there could be an upside to this. this is what he is doing. >> you are seeing the formation of the future of the way that data will be used in my personal viewpoint on it is that data will end up in the hands of the consumer, they will manage it. the dashboard we're launching this week allows the consumer to essentially have access and control on all of their data that we use. and really put the consumer in power. if you go forward five years, i think you will start to see a larger reversal of what sat on everybody else's servers. david: so, tim is making the point you are making, we may be

giving consumers more power and it may give them an advantage. bart: i think it certainly will. i think that the regulation will -- we will say how it will impact u.s. companies. there are two things to focus on, one is understanding where their data is, and two, really adding cybersecurity governance over it. the other thing that is important to note, a lot of people have sprinted to today thinking it is a deadline, but it is a starting point. it goes into effect today, so on the governance and oversight goes into effect today. julia: can you be fined by not complying? from today? bart: pressure. -- for sure. 2%-4% of global revenue. david: we are jumping onto a shot where they are having a family photo, as it is called, in st. petersburg. insident putin and macron

the front row as they take a picture of the people attending the st. petersburg international economic forum. julia: it seems intimate, that photo. david: you have been there. you have experience. julia: it is challenging. again, where is angela merkel? macron flying the flag for europe, it seems. italy, although the russian relationship is very typical for them, but they are lacking in prime minister. if they had one, he would have been there. david: as they are talking, we will keep monitoring this. let's come back to sarah. to what extent are companies prepared for this? sarah: i think companies are underprepared. it is my view that the impact has not really been exercised as the impact hass, been underestimated. there was a survey done a month

ago, only 50% said they were ready for the gdpr. i think because of that, initially the regulators are going to be policing in enforcing the rules, at least for the first few months, with immediacy. and they do not expect companies to sign the negotiate entrance into the agreement by the 25th of may. david: i want to give bart credit, the survey shows how companies are not prepared. sarah and bart, thank you both very much for being with us. coming up, deutsche bank gets it wrong again. how the german bank cannot catch a break. that is next. and as you commute, tune into our colleagues from 7:00 until nine a clock a.m. on the radio -- 9:00 on the radio. pimm fox was joined lisa at

10:00 a.m. tune in, you will find out who is on. julia: it is a surprise. david: this is bloomberg. ♪

taylor: this is "bloomberg daybreak." coming up, robert kaplan, the dallas fed president. ♪ now to your bloomberg business flash. what could be the biggest ip likely -- ipo likely is to take place next year. the saudi minister says he is waiting for the markets to be ready before saudi aramco goes public.

the shares are expected to be listed in saudi arabia and on at least one international exchange. andate equity firm kkr apollo global management are interested in possibly buying johnson control power solutions business. according to people familiar with the matter, a deal could fetch $12 billion. johnson controls is expected to decide could -- to decide shortly. and a new drug has proven survival and lung cancer patients. the drug achieved its main goal in an advanced study. many are racing to develop life-saving therapies for lung cancer. julia: thank you. now we turn to the wall street beat, where we cover three things wall street is buzzing about. friend,ne buys a purchasing a chunk of the debt a complex one.

and difficulties for deutsche bank. accidentally transferring $35 billion to the wrong account, while the chairman and ounces the run dividends to shareholders -- wrong dividends to shareholders. and spurring a 2000% profit. not bad. david: that is pretty good. jason kelly is joining us, executive editor for global television at bloomberg. we covered this story before at a momentous lunch. let's kiss and makeup, did not a great but it looks like it is ok now. >> if you get into the mechanics of the cbs trade, your eyes will cross and he will go down a rabbit hole that you cannot get out of. what he comes down to is the complexity of the cbs market, and candidly, some of the gamesmanship that goes on there. but also, maybe more

importantly, life is long on wall street. you have to figure out how to get along. david: life is long and business is a small. >> exactly right. it is interesting, what we saw at the center of this, the other investment firm sued gso, which is part of blackstone. it was interesting reading this. gso and solace are actually on another deal. so, this is show business. [laughter] david: exactly. julia: speaking of messy business, deutsche bank. you have to get your dollars and yen right, those are two big figures that are really messy. >> $35 billion, 28 billion euro went to the wrong place it is somebody hit the wrong button. the errors. david: we knew that there was one in march, but there is also

14 years ago that they thought they had fixed. the one in march was after already a huge one. >> it is literally about that they did not have two pairs of eyes on something. in one case a but he said it is yen? it should actually be euros. david: and how big whether dividend the --b be? the chairman, who is under siege, goes into the shareholders meeting and announced we will have an 11 euro dividend. says, didapplauds, he i say euros? i met $.11. >> he just cannot get it right. the gang that cannot shoot straight here. on a more serious note, they are announcing job cuts, and they are in an existential crisis. you get the sense nothing is going right. david: this must make the regulators feel good about how things are going pretty he got a nearly right -- going.

he got a nearly right. 2000%, going toward the euro -- is that what the trade was? >> we talked about yesterday. you put 2000% in a headline, people click on it. what a comes down to is this is a bond trader, we do not know who it was and what he or she really did was listen to the fed, and essentially believe what they were going to do in terms of interest rates. david: the fed said, we will raise, and everybody was betting the other way. somebody thought, they are telling the truth. julia: the market was saying two, they were saying three, and if somebody said they would pick of the extra hike and it went perfectly well. >> interesting to look at this in the context of learning about the jay powell effect. that is one of the big questions wall street is trying to ascertain. the minutes came out two days ago and you are starting to get,

the readers we employed here at bloomberg and bloomberg economics -- david: it raises the question whether you could make the trade under the jay powell fed, because they are not giving us much guidance. we have people on this side, that side, we're not sure. it could be harder. >> they could be. and that is a good point. the market has to break in a new fed chair, or vice versa. david: exactly right. jason kelly, thank you. we are waiting on a panel discussion with john micklethwait at the st. petersburg international economic forum, including president putin, president macron, prime minister abe, the vice president of china, and many others. it will be very fascinating and we will bring it to you live right here on bloomberg. ♪

david: ok, this is what i am watching. st. petersburg, the economic forum we are looking at right now. we are waiting on john micklethwait to have a panel with president putin, president macron, the vice president of china, and we are eager to hear what they have to say. it is interesting to me that president putin is saying we are having a tough time meeting our goals, we do not want more boundaries. it is taking the anti-trump version, we want trade, he is open to the world. julia: this is their moment to showcase what russia provides in light of what has been in the past year an increasing ratcheting above tensions with the united states. it will be interesting for europe. i always thought the european leaders, when i was there, that they were hesitant to go on the record. so it will be interesting with a panel brings up.

oil, iran, you name it. david: they already had president putin and president macron in a very long meeting. you remember -- saying, please do not go against iran. and president trump did that. perhaps president putin gluing macron a little bit. julia: they have said the deal needs to hold and we will do it we can to facilitate that, but investment in iran is a problem for both of these countries, in light of what the u.s. has done and what they are potentially looking at doing. david: in the meantime, prime minister abe, right on the front lines with north korea. we know president putin has already said he is disappointed the summit will not go for it between president trump and kim jong-un, so it will be interesting to hear what they say about this situation. julia: i think it was a delicate. macron is the interesting one here for me.

fascinating will be to see what happens. if that was not enough, we will hear from the dallas fed president, a live interview with robert kaplan and mike mckee. that will be coming up. julia: the market will be listening. a look at right now, the futures, modest moves. pointing to the downside. keep an eye on crude. that was down yesterday. below $70 a barrel. below the 3% in the 10 year. plenty more to come. this is bloomberg. ♪

♪ we are looking right now at a live shot from st.

petersburg, russia. we are awaiting a very special panel with john mickelthwait come our colleague, with president putin, prime minister ,be come up president macron and vice president wang qishan of china. julia: we are letting for the forts, -- we are waiting the lights, camera, action moment on that one. we are tilting to the downside, as you can see, for the futures. we have lost further ground in afterst 10 or 15 minutes some softness in the session yesterday, continuing to focus on what we are seeing. energy stocks lost ground in the session yesterday. you can see a flight to safety bid in u.s. treasuries right now

, significantly below that 3% level. let's have a quick look at what is going on in the rest of the world. europe under pressure as well. let's get some context now. bloomberg's mike mckee is joined dallas fed president. reporter: good morning, everybody. thank you, mr. president. don't you like being called mr. president? guest: welcome to texas. glad to have you. you see growth picking up, unemployment going down, and two more rate moves this year. is that right? guest: yes, we should be gradually moving toward neutral. the other caution i repeated various times as well, this year's growth will be strong. next year will be somewhat weaker. by 20 20, 2021, we are going to head back down to potential, closer to 2%.

that is on my mind when i think about the shape of the fed. reporter: what went take to get you to support a fourth move this year? thet: continued strength in economy, but more than that, i would like to see some actions that suggested to me that sustainable gdp growth was improved. that would be things that improve growth in the workforce, show some policy moves that might suggest we are going to improve skill levels of our workforce, education levels, some of the fundamental drivers would need to change for me to be more aggressive. reporter: the open market committee, and its last statement, but symmetrical higher up there. what are you trying to tell the markets, that inflation may run a little bit above 2%, or you are going to tolerate it for a while? guest: it is the former, that inflation may run a little bit above 2%. our job is to try to keep

inflation so that it doesn't persistently run above or persistently below. , i would tolerate some moves above 2%, but if i thought it would be persistently staying above 2%, i would take more policy action. reporter: the forecast you mentioned, in june you have to make another one. tax cuts, trade tariffs, budget deficits, all the things going on in the world right now, how confident are you in what you think is going to happen? guest: this is part of the job. you always have these variables changing, which makes the job interesting. it is not a static thing. it is a dynamic thing. you mentioned debt. flipside, while it is a stimulus now, it may create a headwind because we need to moderate debt growth. we are already at unsustainably high levels of debt growth.

, ithe trade tariffs threat said consistently trade is an opportunity for the united states, particularly in north america. i would be concerned if we don't ultimately get this trade agreement updated and agreed to with mexico and canada because it is an intermediate goods relationship. , supply logistics chains, as jobs, and makes us -- more potent in negotiating with china. still the biggest threats are the things staring us in the face. our workforce growth is slowing because we are aging and not yet making policy decisions to address that. our skill levels in the united states are lighting the rest of the world. we rank 25th out of 35. our skills aren't keeping up with disruption. we are very highly leveraged, and we just leveraged up late in the economic cycle. i am going to worry that that is

going to create a headwind. be things thate ultimately matter the most and worry me the most. financial corporate debt is at a record, speaking of leverage. that can be a trigger for the next financial crisis. have you see it? guest: i don't see that. corporate debt to gdp is higher, but the financials part of that is the leveraged. what i am looking for is systemic risk. ,f a company fails or defaults it is not a good thing, but it is not going to or shouldn't pull down the rest of the economy. corporate debt to gdp is something to watch, but i don't see a red flag on that at this point. reporter: another thing you didn't mention his oil. you are the guy in the oil patch here for the fed. what you see happening with oil prices, and how much of a danger is it to the economy? guest: it is not a danger. we are in a fragile equilibrium right now.

we are a relative supply-demand balance globally. part of that is based on opec and other oil producing countries agreeing to cut 1.8 million barrels a day. there is some talk they are going to revisit that. we think some of the next three to five years you will see a volatile a been down in oil prices, with shale being the supplier. my concern is in the out years, we think we may well likely get into a global undersupply situation because as prolific as shale is, it is not going to be enough to keep up with global demand, and we are not spending on long life projects. that would worry me because if we are growing slowly and these out years and then you get an oil increase or gasoline increase, it will tax consumers. i think we are in pretty good shape for the next few years. reporter: there's always the

question of when people think recession might be coming. i assume you are of the view that recessions don't die of old age. there's a feeling in the markets that maybe we are seeing the yield curve start to tell us something. some: well, there's always not immaterial probability of recession, as you know. what i'm worried about is sustainable economic growth. we are going to have recessions. my job is to make sure an , we've got cycle maximum sustainable employment and price stability. what i'm worried about right now is not the short-term cyclical questions, but worried are we doing the right things to grow gdp. gdp is made up of growth of the workforce and growth to productivity. i don't see us making policy steps to address either. both of them look like they are

going to be sluggish in the out years. we just don't notice it because we've got a very large fiscal stimulus, and up till now the fed has been accommodating. reporter: how do you get to the point where we are going to start tightening policy? is theneutral theoretical fed funds rate where we are no longer accommodated. i think that level is probably in the neighborhood of 2.5%, 2.75%. 1.5% to 1.75%. reporter: you said you would not intentionally vote for a policy that would invert the yield curve. the real question is can you avoid a policy accident by raising the federal funds rate too far but not realizing it. guest: that could happen because we don't control the curve.

we just control the fed funds rate. said and others have said every day i am going to be watching very carefully the shape of the yield curve. what the shape of the yield curve tells me his prospects for future growth come out your growth, are sluggish. i think it is worth paying attention to that. .et's just keep the base case i'm not looking to increase that because i've got the shape of the yield curve and out your growth in my mind what would your outlook for rate moves in 2019 -- in my mind. reporter: what would your outlook for rate moves in 2019 be? guest: it is just a question of pace, but we should begrudgingly moving to 2.5%, 2.75%, but watching these other factors.

withter: we are talking robert kaplan, president of the dallas federal reserve. has inflation dynamics changed when you look at what you need to do? guest: i think they have. we are at a conference here we are hosting on technology. i think one of the reasons it technology enables disruptions is technology replacing people, but more importantly consumers having at their disposal computing power that most companies didn't have 25 years ago. the power of what consumers can , sodo has shifted businesses have much less pricey power. , is arelates to inflation business wants to increase prices really aren't is able to do it, and technology is grinding that down. globalization is a part of it too. i think that is part of the

reason, in my view, why the phillips curve is flatter in view that i think the economy of a structure that has changed. reporter: we have companies managing the bottom line rather than trying to grow the top line. has that changed now that the up?omy has come guest: companies would love to grow the top line. i worked with companies my entire career, and that hasn't changed. they want to grow, but i think it is not easy, so what you're seeing companies do is try to get more scale, in part by merging. that is why you see so much merger activity. it is due to disruption of the lack of pricing power. the other thing is continuing to invest aggressively and technology. when you see all this merger technology, people should probably connect that with a lack of pushing power.

businesses are trying to protect their margins, so that is having a pretty profound effect on workers. if you get a college education, all the data has shown you can probably adapt to this. not that it won't be traumatic. as you are high school educated or less, you are probably seeing your child disrupted or eliminated. unless you get retrained, which is easier to say, harder to do, you're likely going to see your productivity and income decline. that is the grinding and discomfort we are seeing in the economy. reporter: all these wonderful and theyiness ceos going to be increasing investment because of the tax cuts -- ceos, are they going to becauseasing investing of the tax cuts? guest: businesses i don't think

are going to fundamentally increase the capex over the medium-term unless they see -- greaterand >> demand because of sluggish workforce growth and out your gdp growth. i think they are still in a cautious stance right now >> they are focusing a lot more on cost and trying to maintain margins and not break away demands. deske fixed income trading , what do you think of the drift upward in the federal feds -- federal feds trading? guest: i think the market is paying attention to what the fed is saying. we have strong gdp growth, so i think people are probably putting a little more weight on our for the -- on our forward guidance and dot plot. but that is on the short end.

end, you're seeing the drift up, but not very rapid. that is creating the flattening. reporter: the minutes show the open market committee discussed er by only 20 io basis points to compromise. guest: i would support that. this is a bit of a technical areer, flow of funds that -- funds matter. i think a little bit of recalibration is not surprising and probably appropriate. reporter: do you think that is likely for june? is there a general feeling? guest: i am going to stay away from that and leave those discussions within the fomc because we will see what they decide when there out in the fall.

you came to texas from massachusetts and lived for a long time in new york. two high tax, high regulation states. anyone who comes here talks about the success of the texas economy being based on low rates and low taxes. have you become a convert? do you think they are right? guest: i think there's a lot of advantages to texas. one of the things that has helped over the last 15 years is migration of people and firms. 10 years ago the population of texas was 22.5 million. today it is 29 million. we think we are going to see 40 million. the reason i mention this, we don't talk about it enough in the united states, population growth is a key of gdp growth. texas has got that. this is a challenge for 30 to 35 states in the united states. the population and workforce growth is flat to down. texas has got more latitude to

protect property taxes, asset taxes. we don't have an income tax either of the corporate or individual level, and you've got a very business friendly can-do environment. it has been a virtuous cycle. the more people that moved here and businesses, the more businesses that want to come. texas prospects are very bright. i thinkers do its -- others can do it in a different way, but every governor i talked to have the same challenge. how do we attract workers and people and grow the workforce? that involves their education, pension funds. we're letting the population --wth in this country fly country slide. we had it before in this country, improving immigration to be skills-based or to create aed,

problem in many states in the country. reporter: thank you for joining us, live in the heart of texas. we will send it back to you. julia: thank you --david: thank you very much. at the st. petersburg economic john, our colleague mickelthwait is talking right now. the first person but ouris the host conference come up president vladimir putin -- conference, president vladimir putin. [applause] john: thank you mr. mccrone macron, mr.

lagarde.m these meetings in st. petersburg have become a good tradition, and we highly value this attitude of openness and trust at the forum. just recently we have been tohanging our impressions as how the forum works. madame lagarde noted she was surprised by the atmosphere. the conditions for conducting business for investment, the very day-to-day lives is changing dynamically. , the nature, and the speed of global economic growth is defined to create greener days by new confidence and

skills. up until recently, it has been hard. those who can't officially use those -- can't efficiently use those growth factors will help to boost the quality of life. we have marked these goals as national priorities. the newly formed a government in russia will transform into the specific programs of action. national projects and illegal incentives. we need to allocate the required resources as well. no development will proceed from our creative and human resources castle. we are ready to learn and to adapt the best practices around the globe and use our own successful experience, often involving the most complex structure. we will proceed from our national interest.

this is natural for any state. but our interest can be advanced to differently around the globe. you can ignore others or respect the position of your partners. we understand the modern world is very much interconnected and countries are interdependent. each state, including the , as parteading power of the global economy. we are also a major influence on energy, food, and other markets. our country and companies are deeply involved in international trade finance. that is why we are following attentively what economic, technological, social growth strategies are to be of limited in other countries. we are not impartial as to what global trends will pan out in long-term.

up until recently, the global development was based on two pillars. first, that the freedom of entrepreneurship, trade, and should be enshrined in the rules adopted by the players on the international arena. the unpredictability is a legal mechanism. a global economy, despite the recognized problems, has managed .o achieve impressive results however, today we don't see the erosion. regrettably we see the true demolition of those principles. -- thetions build over

new world nowadays is to break the rules. openness and honest competitiveness is pushed out by withdrawal, restrictions, and sanctions. you can apply different terms, but the essence is the same. they are now an official pool of trade policy for many countries. -- other states have to respond to that. i would like to try your attention to one very poignant fact. just recently, every meeting of the members of the g20 and it in a joint statement on the non-introduction of new tech fest barriers. -- new protectionist barriers. indeed, this statement did not have any legal force, but new barriers in trade are still being erected. onay we cannot even decide

such symbolic steps to be taken. another example, the increasing speed of new agreements on free trade. wto notified such agreements. i have a feeling they are going to keep falling in numbers. previously, protectionism was import duties,s technical requirements, or hidden subsidies. today we are talking about a new edition of protectionism. this section and restrictions spiral is only worsening.

it has more and more countries and companies, including those who were sure they would be immune to this regime of trade that such problems would pass them by -- that such timeems would pass them by and time again, left and right come on in the occasion -- pass them by. time and time again, left and right, in any occasion. here we have many .epresentatives of business this is the axiom of global business practice. on the global scope, such behavior of states might lead to

most negative and disruptive consequences. even now, the loss of mutual trust might be exacerbated by the unpredictability and turbulence of the colossal technological changes. such events might lead to systematic crisis, which the world has not yet seen. it is going to affect all of the players on the world economic arena. it puts into question the prospect of global growth. the process -- that might throw the global economy back to the far past come into the times when people lived off the land and had to produce everything themselves. this undeniably leads to the fall of global economy, the loss

of labor productivity to wasting the advances of science and technology which could have changed peoples lives for the better. is a trend we are observing the stability of business ties is being undermined. the multilateral corporation is being depreciated, as well as international cooperation agreement. the most important universal for forging dialogue on issues which concern all of the economic players. perfect, andr from yet there are no intractable it --ms to discard problems. to discard it and not create anything in turn means to

disrupt the balance pres. macron: -- the balance. are not talking about freezing the existing make dogmatic something that is practically lifeless. the world is changing, and thus the institutions change as well. shouldng is clear, this be transparent and common for everyone. they should be observed by all participants of international economic relationships. we need to develop and implement a legitimate change mechanism within the framework the international community will be able to discuss the outdated and --efficient norms and inefficient norms. in this vein, for global trade

area, for example, e-commerce, access to information interference the as well, the transportation of intellectual technology and consumer rights, as well as new digital services. negotiations on the degree -- on the majority of these topics have been launched. further work.duct we need patience and insistence. there is noerate alternative. it is simply nonexistent. , and not need trade war's not even temporary truces in trade wars. we need a full-time trade piece. the model of this forum is building a trust-based economy. it speaks of the need to make trust at the center for development.

just take a look at the in scienceompanies and innovative areas that are corporations the and the work of partners that are based on mutual trust. this topic was raised many times. we are not trying to idealize the situation. rivalry and conflict of interest has always been present, but we need to respect each other. our ability to resolve our disputes in fair competition and not in limiting the competition defined further growth. this is the basis for firm and robust development of each and every country for implementation of the colossal potential accumulated in the world.

russia supports free trade and economic integration area we support constructive partner dialogue -- integration. we support constructive partner dialogue. we moved together towards any limitation -- towards implementation. i have talking about overcoming ,he inequality of opportunities keeping national cultures and identities to boost the -- allity of our people faced this problem, but we are unique in the fact that we face the whole gamut of those issues at once. in order to be ourselves, we need to resolve those simultaneously as well.

we need to make a major league mongevelopment to be a the world's leaders in life expectancy and quality of life. the -- first, we need to build our policy around human beings on their prosperity, interests, and demands. i'm convinced such a country can be strong and successful, that tap into people to their potential. we need to modernize the economy and create jobs. we need for citizens' incomes to go up. we need to make health care and education the best in the world. we will build cities and villages in organizing

comfortable spaces for life, for work, and for leisure. we need to boost the volume of construction and solve the problem of accessibility. first of all for middle income families are for families with children. another important area is to improve the environment. that would be a contribution made by russia into the resolution of global environmental problems. each person needs to have an opportunity to realize their in industry and business. they need to have social mobility. . the link between the generation can guarantee sustainable development. we have lost a whole series of projects on promotion of an peopled, ambitious young or recognize professionals.

this also seeks to provide counsel and guidance to them. we have created the organization whose relative degree has been structures.other we will coordinate this worked when the organizations. we will broaden freedom space. we talked about this often. this is not the time -- the first time i or my colleagues mentioned that. however, this is highly important -- david: we are listening live to president vladimir putin of russia give remarks at a panel in st. petersburg for the international economic forum pres. macron: it is being -- for a. forum.eing -- four on --

by johning emceed mickelthwait. they could have begun "dear mr. trump," because it felt like it was almost all directed at mr. trump. he has specifically invoked the g20, saying they used to come out was joint statements against protectionism. he decried a new protectionism based on national security concerns, clearly referring to proceedings in the united states. he called it far-fetched, a connivance, and said there were be disruptive consequences. he mentioned specifically how it is forcing some companies to pull out of contracts. for me, the quote was, "we don't need trade wars or even temporary trade truces. we need permanent trade peace."

it was not very subtle. julia: it was a letter to president trump. lecturing the president, i would say, if we can go so far as using that word. let's give you a look at what is going on as far as the market reaction is concerned. obviously oil prices were already up more than 2%. we continue to track that, part of the risks we saw in equity markets yesterday. now further losses, some 2.8% for crude, down to $69 a barrel. the question is at what point do we get some form of response from president trump when we know the russians are very angry about not being able to negotiate over the aluminum and steel tariffs and even talked about the wto and that that situation is being undermined. david: of course, russia has

been subject to sanctions for a long time, from europe as well. he certainly resents its deeply. we would expect the president to respond at some point. julia, you have been there. he's now in front of president macron and prime minister abe. he gets to take what others might say is the high ground. i am the globalist. i am for openness and trade. there is someone else who isn't here today who seems to be going the other way. he really emphasizes what that does to the people. that doesn't make the people's lives better. julia: absolutely. he is posturing to an audience here, and he does have the world watching him. for ourin that discussion he had with emmanuel macron, i am hoping that election interference came up. as far as lecturing leaders of other countries, i think there are certain concerns that those leaders also have a letter put himself. david: we are still watching

president putin continue his opening remarks. we are going to hear from primeent macron, minister abe, administer -- and mr. lagarde. will they side with president clinton in this? will they just -- president putin in this? will they distance themselves? i think they are concerned about these issues. we can guess what christine lagarde will say about rising protectionism, obviously in europe as well. particular, the exporting nation is a real concern that is having an impact. i think emmanuel macron will only echo that. just twomanuel macron weeks ago came to washington, almost pleading with president trump not to reimpose sanctionss on iran.

president trump waited about 24 hours before saying thanks very much, we are out. david: --julia: the other aspect is north korea. david: since you brought that incoming president trump has not been responding yet to president putin because he's been addressing north korea. he tweeted out, "very good news to receive the warm and productive statement from north korea. we will soon see where it will lead. hopefully too long and enduring prosperity and peace. only time and talent will tell." we know yesterday president trump wrote a fairly harsh letter to kim jong-un, saying we are out. then the foreign ministry of

north korea came out with a very soft letter saying we are still very open to talking. now president trump coming back in a fairly accommodative way, saying we appreciate that warm note. beia: so much face to established here and be careful about how you are posturing at home and on the world stage. koreanse, the north seemingly making a step in front of the world. david: the good guys, so to speak. julia: whiplash as far as this subject is concerned. june 12 is not a long way off. let's give you a look of the -- look at the markets. futuresofter as far as are concerned, tilting to the downside some 3/10 of 1% from s&p futures, adding to the modest losses we saw in thursday sessions. the epicenter of that in the current session is what is going on in the oil markets and the

suggestion from the russian energy minister and the saudi's that they are in talks of reducing those supply restrictions. further this office, as you can see, and u.s. 10 years. should we take a quick look at what is going on elsewhere in the world? we don't want to leave europe standing. you can see the ftse italian market. the spanish market also under pressure, just shy of 2%, in light of a possible no-confidence vote. president macron now beginning his opening remarks at the singular bird for a. we will review the test at the st. petersburg forum. we will bring you -- the st. petersburg forum. we will bring you the highlights. this is bloomberg. ♪ bloomberg television's

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♪ julia: this is "bloomberg daybreak." coming up in the next hour, former prime minister of australia. david: we are now going to go back to st. petersburg for the international economic forum. spokeent macron of france about the importance of russia's countries and world war ii. macrono now to president and listen in. uss. macron: -- have given the premises for building this

trust. let me get back to the notion of trust. process which is together.e by stage we were building the infrastructure of europe. we came together despite the difficult context, despite some sanctions. we persevered in developing our energy sectors, french enterprises remained in the russian market during the most difficult times of history. they did not quite russia. in other words, russia is one of the first foreign employers for we also employ 170,000 russian

citizens. the eu is the first trade partner and represents 47% far ahead ofts china. there are many other promising projects our companies have signed. agreementsigned 50 just from the visit today. some partnership agreements were signed during a difficult times of our history. we listening to president macrina france and he is gone from world war ii to the pulley olionic war. -- p he go straight to international goes straight to international trust. we go back to the opening statement as well as the panel as news develops rid let's go back to what happened 45 meant to go.

we had a chance to talk with bowlerkaplan, and matt with us here. luke, i will start with you. the thing i thought was most striking was robert kaplan's answers for long gdp growth as opposed to short gdp growth. he said i do see the long term growth. >> and he brought up how this was personally related to market pricing for the fed. it is steep upfront for the heights expected. that is a common theme of this cycle. it's really gets to the heart of, what is this tax plan designed to do. spur investment, boost long-term growth and raise the ceiling? i think that is what the designers of the plan had in mind. we have john williams saying we may get 25 more basis points over the next decade erin and

robert kaplan is saying, this is more demand side and i do not see this moving the needle on long-term growth. >> short-term juicing of the economy. inflation, itut was said if it was sustained above 2%, at that point, we would have a problem. symmetric. word how long can they accept inflation above 2%? >> i think the influx -- affects their view on inflation. they see it staying around 2%. say, iny are trying to this environment, we are not worried about inflation being too high. we are going at the pace of rate hikes because of inflation. couldt changes, maybe you see more aggressive policy, as he said. until then, there is not a reason to do so. >> one of the things they asked mr. kaplan about was the

recession. one of the yields we are getting, this is what robert kaplan had to say. >> every day i will be watching very carefully the shape of the yield curve and with the shape me,hat, and what it tells prospects for future growth out here are sluggish. i think it is worth paying attention to. that is the reason why i'm saying, let's keep the base case at this year for three percent -- 3%. i'm not looking to increase that. >> they are paying attention to the deal without a doubt. talking for, not three because i get a little nervous. >> they seem to be on the --ding edge there is a more vocal part coming on and it is not clear if any of the main three fall into this group. they say we don't want to be restricted.

i read the yield comments as kind of a low stone to show that this is something i could look to to show the long-term prospects aren't great and in the short term, growth is expected to cool. >> what about other risks? it's tough for investors right now to understand what the impact of the trade negotiations will be. you mentioned also the points related to this as well. >> there are always talking points until they affect the stock market. most aren't affecting the stock market right now so they aren't changing the narrative right now. that is what they look at to determine, are there things that gong to be -- there are things that are going to be serious. at the end of the day, as long as the stock market is not going down, it is not clear to officials widening to react to that. >> guys, thank you so much for that. we're going to head back out to

the panel of course. let's listen in to what is going on there. advanceve a chance to in that discussion. if we missed the opportunity that might be forever. i would very much like russia to stay part of the council of europe. defense, iues and would like our strategic dialect to regain new dialect. anyor trust, we can see door that is opening up, we are concerned by many phenomena such as climate change, energy transformation, digital .ransformation

there are a host and a multitude of new trends. there is a problem of economic if you want to continue watching that, you can go to live go on the bloomberg. hein's prime minister says aims to carry out his full four-year term despite concerns of an eminent no-confidence vote. at how the a look spanish assets are performing in the session today, weaker for the equity market. we continue to watch the spread as well between german bonds and spanish bonds. year yield in spain wider by some 11 basis points. we will discuss this in more detail. this is bloomberg.

julia: let's go to europe.

spain's prime minister said this morning he aims to complete his four-year term, but is not calling for snap elections. joining us now from brussels with more of the latest is ben of bloomberg news. we have the party suggesting there is going to be some kind of no-confidence vote. tois saying i'm determined stay. what happens next? reporter: we have a classic standoff going on in madrid. the whole situation in spain was upended this week with a dramatic corruption verdict. a whole host of officials were sentenced to more than 300 years in total for essentially running a racket. that prompted the main opposition party to demand either an election or a no-confidence vote if he refuses to do that. but he is holding his ground.

he's betting the three opposition parties will not be hee to vote him out and if gets his heels in, he will be able to survive. they've been put in a. spot pass it back prime minister rajoy. would you bet that these three parties can coordinate? reporter: i've that against r -- on fart against rajoy too many occasions and have been proven wrong. he always seems to hold on. he has no support, no majority, no moral authority, but i would not be surprised if he holds on. julia: the markets seem to think the same thing. thank you so much. david: we are going to go back now to st. petersburg. we have been watching all morning long as we had a fascinating set of opening remarks, first from vladimir putin calling up united states

and donald donald trump on protectionism and the dangers, reaching up to the europeans in that crowd. now we are watching president macron of france. he's come up and talked about building trust with russia and how important that is to them in the long-term. they want to be partners with russia. at least at this point, really it is not as good for the united states. in fact, he even called him vladimir. julia: united states out in the cold. david: that is how it feels. we will be watching more. for the entire thing, you can watch it on live go. the open is coming up next. this is bloomberg. retail.

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coming up, shaking up over trade and foreign-policy. wall street is becoming more desensitized. political risk from italy to spain. saudi arabia opening the door to boosting supply with crude falling further from multi-your highs. in new york city, 30 minutes away from the opening bell. futures a bit softer, down .33 and the dollar stronger. euro-dollar at 1.17 and 290 -- 2.94 on the 10 year yield. president trump canceled a anding with kim jong-un what it could mean for trade relations and the market. >> the u.s. needs china's help on north korea, but that does not mean the u.s. will be willing to