manus: good morning from dubai. this is "bloomberg daybreak: europe." these are today's top stories. italy sinks deeper into political uncertainty after the populist picked for leader fails to form a government. the euro rallies. back on track. donald trump appears to confirm the north korea summit will go ahead after a surprise meeting between kim jong-un and moon jae-in. crude crunch. oil extends its losses as opec and its allies say the market has rebalanced. is it time to reopen the taps?

a warm welcome to "daybreak europe" live in dubai. my cohort as a day away from the office. this is the state of the markets. the president of italy challenging the elected incumbents who are there to form a government, saying, i will not accept your finance minister. the euro likes it. we have got a good rebound from the six-month low. every cliche in the world will be used. is it too soon? the bottom line is moody's are warning on italian government debt. do you want to see the president impeached? do you want another election? will another election be emboldened?

we are there. the five-year average has been hit. that is what we are being told by opec. will saudi arabia and russia open the taps to make up for the loss of production in venezuela. goldman sachs stick to their call on the oil market. they like it. movement on the dollar-indonesian rupee. we had a rate hike just a few days ago. what you are seeing is dollar weakness. as theiah has gone big new bank of indonesia governor is wasting no time. those are your markets. let's talk about political turmoil causing a little bit of angst to say the least. we will move on briskly past

that. we were going to talk about italy and there you go. there's the funds flowing into brazil. you are seeing perhaps one of the strongest inflows into brazil, certainly in a number of years. the question is, can that maintain? we can talk about anything. you just created the charts. i'm channeling anna. juliette saly standing by. italy has sunk deeper into political uncertainty as populist leaders called the plug on their attempt to form a government after the president rejected their choice of a eurosceptic as finance minister. the anti-establishment five-star movement said it was considering proposing impeachment. the anti-immigrant leader hinted at a conspiracy and made a thinly valid call for fresh elections.

the euro has rallied against the dollar. u.s. president donald trump is appeared -- has appeared to say that his summit with kim jong-un is back on. he tweeted, our team has arrived in north korea to make arrangements for the summit. i believe north korea has brilliant potential and will be a great nation one day. kim jong-un agrees with me on this. this came after south korean president moon jae-in held a surprise meeting on saturday with kim in a bid to keep the summit on track. u.s. traded oil has extended losses to around $66 a barrel after saudi arabia and russia proposed easing output curbs after eliminating an inventory surplus. futures in new york fell as much as 3.1% after dropping the most in almost 11 months in the previous session. interested in an

overheated market. there are many factors affecting that now. juliette: the u.k.'s foreign secretary has repeated his call for britain to make a clean break from the european union when it leaves the block. boris johnson warned the prime minister that the country won't be able to take full advantage of the split unless it does. writing in the telegraph, he set out why theresa may must resist growing calls for the u.k. to remain in the trading regime. global news, 24 hours a day, on-air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . here in asia, we are seeing a mixed session coming through. talking about that rally in indonesian stocks.

vietnam now in a bear market. that market down around 2%. we have seen a little movement coming through in japan. the topix steadying after five sessions of losses. index isasia-pacific looking a little mixed. let's have a look at some of the stocks. petrochina very much seen as a winner in a plan by china to revamp its gas prices. they are going to start charging residents the same as they charge the commercial businesses. kongchina up 4% in hong despite a downturn in energy stocks elsewhere. a lot of the south korean stocks that do business with north korea looking very well today. we are seeing some weakness coming through from the carmakers in tokyo. manus? manus: ok, thank you very much.

breaking headlines coming through from swiss rate. softbank and swiss rate have been trying to do a deal. it looks as if that is off. the talks have ended. this started off at the start of the year as some sort of big deal. we heard just a couple months ago that it was going to be no more than -- less than 10%. juncture, swiss terminatedbank have their discussions in switzerland. we are going to see how that stock opens later on this morning. potential minority stake, that is the end of that. the question is what happens next for swiss re. softbank wanted to replicate the kind of moves you saw from warren buffett. in the risk radar, we told you

about the euro. it rallied this morning. the italian president rejected the populist leader's choice as a eurosceptic as finance minister. he said the move was for the good of the country. rising bond spreads were a concern. the five-star movement and the league party expressed their dismay and pulled the plug on the attempt to form a government. joining us now is kevin costelloe. good to see you this morning. bring us up-to-date on the latest. the league and five-star have pulled the plug. where are we now? >> right now, the italian president has called former imf executive director carlo to his office. obviously, he may be asked to form an interim government that would lead the country until new elections that could be held as

early as this autumn. head tos italy going to new elections? the threats from the two sides, one was impeachment, but there's also the prospect of elections. >> exactly. the impeachment may have been more the result of slightly angry reactions to these talks collapsing. the prospect of new elections is very real. it could be held as early as this autumn. manus: ok. let's see what happens. kevin costelloe is our european economy editor in rome. let's take the conversation to our guest host, chief economist at danske bank. good to see you this morning. how disconcerting is this, the prospect of the fourth-largest

economy in europe, no government, talk of impeachment -- assess the risk for me. great, soertainly not of course everybody was concerned about the cost of the new government that we thought was going to happen. is there going to be relief? sure, because there's a huge range of outcomes that could happen now. we are heading into new elections. will the situation be any different? maybe not. maybe economic problems will be deeper. we will be closer to the end of qe once we get this new election happening. could easily be

concerned. that is also quite negative. there's a solution from a market perspective. certainly-- manus: not over yet. let me briefly tell you what it is. -- they are bid, they are strong. the market is talking about and hedging in a way that is reminiscent of the bunco monte paschi debacle. the market is trying to price redenomination risk. how dangerous is that to the european recovery story? problem because the european recovery is so

fragmented, so uneven. we have a lot of recovery in northern europe. have countries like that needs a lot more stimulus. financial stress there. it makes the situation worse. so this is working against what we actually needed at this moment. it is a bad situation. we need stability and reforms in italy. that is not what we are getting. we get inflation data this week for the european central bank. we expect the headline and the core to see a bit of a boost.

that is more about rebasing affect. that -- how do you interpret the inflation data, the momentum within europe? how do you look at it? las: i completely agree that we will see a rebound in headline and core, so that is good. andgy prices for one thing so on. underlying momentum is still pretty weak. the wage growth in the euro area is clearly still not sufficient to create 2% inflation. you could see some momentum gaining in germany. we have seen agreements moving upwards. it is going in the right direction for the ecb, but it is going really slowly.

one thing we've learned from this whole crisis and recovery period is that inflation momentum is just really slow. once you get to the equilibrium of low inflation and low wage growth, it is hard to get out. i think it will eventually work and we will get higher inflation , but it is going to take a long while yet, especially now that you also see momentum is easing a bit. a crisis like italy doesn't help. hike is farrate away still. end of next year. manus: you've got to have a little bit more faith. look at opec. las olsen, chief economist at danske bank, stays with me. we're going to talk about president trump, who suggested

there will be a meeting with kim jong-un and it could be back on the cards. that is just days after canceling. we discuss geopolitical risk. and a little later, we are speaking to jim norris, vanguard group managing director. he will be joining the team on "surveillance." stay with bloomberg. ♪

live shot of singapore there, little bit of a gray day, but asian stocks rallying. two big heavy duty stories going on. jong-unthe trump-kim

summit said to be back on the agenda. that is a monumental change from friday. the moment asian stocks are looking at, dollar is lower, yields are lower, we will take a bid from anywhere. talking about north korea, the summit might be back on. president trump appeared to confirm that the meeting will happen, saying the u.s. team is on the ground in north korea. bloomberg's chief north asia correspondent, stephen engle. we are at the behest of tweeting. where are we? clarity or confusion? >> absolutely both. we still have 15 days to go before that june 12 proposed summit in singapore between kim jong-un and donald trump. we might have more gyrations tomorrow and the next day. , it is an tell you is

positive step from late last week towards the end game that would be a summit. lost in all this is, over the weekend, kim jong-un and moon jae-in met again, only the fourth time these leaders have met since the war ended in 1953. that is monumental in itself. it aong-un maybe want little bit more than donald trump. manus: i suppose the question is this. there is a lovely story which talks about the romance between north korea and south korea, oft that does to the bravado the leader of the united states. what happens next? you say we've got 15 days. theatera sense of the

that will prove the case that it is really happening. >> the theater is a good way to put it. again, if moon jae-in and kim jong-un keep on showing this br omance, as some people say, does that impact the maximum pressure the donald trump wants to exert on pyongyang along with south korea? also, does it play into the hands of she jim king and beijing? does it lessen trump's pressure on beijing? there's lots of dynamics going on here that we really don't know what is going to be the result other than the fact that officials from the white house are in north korea right now as an advance team. they are working towards an eventual summit. we are hearing from the white house that another in hansteen,

perhaps the same team, will go to singapore. right now we are not canceling our hotel reservations or flight , but there is a lot of uncertainty. manus: ok. we will make sure we are on the ground when it happens, if it happens. stephen engle with the very latest machinations on geopolitics. joining me as my guest host is las olsen, chief economist at danske bank. when you listen to that kind of reporting, when you read the tweets from last thursday, it's , these levels of political machinations, you as a chief economist, how do you talk about these to your clients and to the team? las: you just kind of go with the flow.

you cannot choose economic models to predict what donald trump is going to tweet tomorrow. you can only say, now this happened and we have to respond to that, and maybe try to look at what happened in the past and what will be in the interest of the parties concerned. clear now that we've seen this twitter politics going , your more than a year that there will be harsh statements and retractions and new harsh statements. it is sort of a cycle. then try to see what is the end game. compared to where we were maybe half a year ago, political risk

from the situation with north korea and everything else, it is at a better place now. that with theike trade war fears between the u.s. and china. it started out very badly. now we are moving in this direction of maybe there will be a solution. that seems to be the pattern. realize there's a lot of volatility. i guess volatility is kind of the point. volatility is to a certain extent what the markets are trying to grapple with. interview, want to get your take on where we are with the global interest rate story. we spoke to robert kaplan over the weekend. he spoke of around 2.5%. as you look at the world economy, politics will come and go and global growth remains

firm. christine lagarde warned against central bankers who get involved in markets and try to interfere. what is more important for the momentum of world growth? is it that the fed doesn't have a policy mistake? las: of course, that is way more important, unless there is some kind of disaster. in the bigger picture, look at monetary policy more than geopolitics. sometimes it is more fun to look at the geopolitics and everything. keep an eye on that. this discussion is very interesting.

how high can interest rates really go, can bond yields really go? we are at these levels that some people see as the neutral rate for the bond yields in the u.s. do you think 1.75% is the neutral rate? that would be a considerable distance away. i've met him. he's quite a market friendly president. a short ratesaying is at the usual level. that is a little bit of a way to go. but the long yields are not so far away. now they come down a little bit, but some of the increases we saw in the last few weeks -- i agree that there's definitely still room, but the thing about neutral rate is you are supposed to once in a while. manus: ok.

run it hot. las olsen, chief economist at danske bank. thank you for being with us. up next, we going to talk about oil. ♪ retail.

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tokyo -- in tokyo. the dollar in itself is lower, in that we have this good news in the fairy. heory.tjepr the americans are on the ground as they work out logistics. 09.45 is where we are on dollar-yen area we give you tokyo, we give you new york, and we bring them to you from new york. a great interview with novak, which we well play -- which we

will play in a moment. good morning, how are you? >> good morning. speaking of novak and oil, we have energy shares in age of being the biggest -- in asia being the biggest the client. it is the biggest decline we have seen in a year. as you were talking about the trump summit, we have the cost on the rise kospi with optimism that president trump will meet kim jong-un. markets here in the u.k. and u.s. are closed for bank holidays. moving on one market that is open this morning is italy. risk therelitical this morning, uncertainty following what is happening in the italian market. let me give you a bit of what i am looking at. i am looking at the 10 year spread between german and italian bonds. this is friday's close.

this is when the finance populace who the wanted for a finance minister, was brought to the president's attention. he has rejected him. now the five-star movement is saying it is considering closing impeachment of the president, and the league is saying they want to possibly call for a fresh election. we cannot talk about markets without talking about oil. it is down again today, but this year, this yellow line is opec production, but i am looking at the spread between the red line and the white line. they are diverting more than $25, that spread. that is seen in about three years. this makes each american grade cheaper, especially when you are buying from asia.

oil continued to fall today following the comments on friday from saudi and russian officials saying they are considering easing output curbs. it will be a contentious opec meeting. believe they will find compromise, but it does not look like all opec numbers are on board yet. manus: annemarie, thank you very much. she is back from her travels to think petersburg. the discussion is around oil. opec and the allied producers including russia have concluded that the crude market has rebalance last month. -- willre are big cuts the big cuts achieve the goals? russia and the saudi's are not proposing to raise production to make up for the losses. russian energy minister alexander novak said no one in opec is interested in seeing an overloaded market.

he spoke of the international economic forum. >> first of all, when we discussed the declaration, we have always assumed that the possibility to review it in june would exist. based on market conditions that would be there at that time. of course, we released -- we reached preliminary agreements. but i want to stress that no decision has been made. we just discussed the possibilities that were always on the table. reporter: there are some members like iran and venezuela that will not see any benefit from increasing production. how will you persuade them to support this proposal that you guys talked about in the petersburg? -- and st. petersburg? >> we are going to want to look into the numbers in detail. before the discussion.

i believe no one in the group is interested in seeing an overheated market. that is pushing the oil prices up and losing deficits from declines or geopolitical factors. we know that these factors significantly affect the price. when the price is very high, it could hit differently. that is what impacts demand. that is why we are aiming to restore supply and demand supply and demand balance. could ease or strengthen depending on what the market needs. manus: that was the russian and busy minister -- the russian energy minister. our guest this morning is onset here in dubai.

many facets in the market. listening to novak, there are a lot of options on the table. the new topline is whether the five-year average has been breached, and this is probably the additional momentum in the market this morning. guest: the fact that opec says the job is on in that saudi and russia, the two biggest members of the oil cutting group, have said they want to bring some production on this year as early as june. they will discuss it when opec meets. they might not even need to unravel that agreement completely as it stands at the moment, because opec has been over cutting. too much been in production, so they could make an effort to roll back the cuts, get to 100% of wyatt. -- 100% compliance. over cuttingn themselves and they need to produce more to compensate for

countries like venezuela, which is really suffering, and potentially for iran, which will be facing sanctions from the u.s.. manus: goldman sachs is sticking to $82.50 dollars by the third quarter. would more or less take us $145 -- 145% compliance to 100%. world.ll not rock the do you think we will get that kind of information at this opec meeting in june? guest: i think they have to get some clarity could because the numbers are over the place. we have seen numbers from 300,000 barrels to one million barrels that could be brought back into the market, or that some of the opec producers could add back. we need to see clarity on that. it really depends, as you said, the compliance is all over the place. periods ofrtain

time,. the russians, there was a wonderful piece put out. the russians haven't exactly covered themselves in lori of -- haveus, have tbhey they? anthony: they were slow, but they are complying now. they have the capacity to ramp up and they may want to do that. their companies were chomping at the bit, and that is why they were slow to get darted in meeting their target because -- started in meeting their targets. saudi arabia, we keep coming back to that one. it is a country with the biggest capacity and the biggest influence in which way this deal goes. manus: thank you for putting it into context for us. ipaola. d pil

joining us is the chief parabas. at pb we are looking at this glorious chart, which is what opec had been trying to achieve. rebalancing the oil market back to a five-year level. talk to us about oil and how you are talking about it this morning. we were talking about $100 oil. now we are watching the oil market unpick. guest: i think there is a feeling in front of this mission accomplished chart, a feeling of relief amongst the economists, analysts, and many other people, because it takes out the concern, the kind of clout that oil would continue to rise. it is always very difficult to understand how much of an increase is event by political risk by demand and supply factor. the fact there is this new

decision takes away that concern. it would mean that we avoid that in the world economy would be hit with a short curve as a headwind. manus: we have interviewed a variety of people. we have had several ceos on. they were talking about the potential for companies to go under as a result of this rise of the price of oil. when you hear putin saying that is not what we want, when you hear the indian minister talking about that is not what we want, how important oil is as an undermining of global growth -- underpinning of global growth. it on theking at screen. keeping the cap around $80. guest: it is very difficult to identify where the threshold is. the concern i have is at some

wherethings reach a level is it continue to go up, you reach a level where it is starting to suffer. plans.e holding back on all these things, and another important part is how financial markets cope with that inflation expectation to how central banks would react, and also the volatility in the stock market. all these elements together means you have an element of relief here that is a kind of perspective that it would continue to power ahead. manus: to what extent -- i know we covered it earlier with nordic guest, you were at the heart of europe.

how disconcerting could it be that italy goes back to the polls, impeaches their president? to what extent are you looking at what is happening in europe as potentially flaring up into a new form of a crisis? we need toink differentiate between a number of things. on the one hand, they should think about a eurocrisis that was rooted in major economic challenges. not to say problems that were shared among several people, several countries. but what we are experiencing is that we have an ongoing political crisis in italy where -- where we now are entering into a new chapter. the husband some of fact. i think that affect has been

rooted in the fact that people felt that the spread has moved up to such an extent that it would justify moving positions from portugal to italy. that is an element of contagion. however, when you look at the domestic environment, economic environment in countries like portugal, it looks line. -- it looks fine. there is a fundamental difference between what we are experiencing today, which is country specific, compared to what you were seeing back in 2010-2011. manus: when does it become more of an issue? i was reading a piece this ceo saying the reason -- it is about preserving trust. italy's capacity for borrowing money, its ability to

ourow is about safeguarding real economy, the wealth of our families and italian firms. it is about trust. that is the risk, that markets lose trust in europe's fourth-largest economy to stay the course with the euro. what you saw last week and over the weekend as well is a fundamental questioning by in on howout the buy torun a fiscal policy, how play by the rules that have been set in the context of the eurozone. where are we on that? when you create uncertainty is --that at point, that even if things slightly normalized, it will still be in

the back of the minds of investors. it is important that you are very consistent over time. you should not play with that. that is really at the heart of that concern. it is not so much what are they going to do tomorrow, but what will the government do at some in future. manus: absolutely. that goes to the heart of what mussina was saying. it is based on a relationship with global financial markets understanding stability. that is at the heart of the continuity story in italy. william, stay with us. he is joining us this morning from paris. if you are a bloomberg user, you can track all the chart on gtb. you can browse the recent ones or catch up on the interviews east" andreak: middle

beyond. is that em blip? we bring you the very latest. and later, we are live to rome and madrid as european political risk ways in the euro. this is bloomberg. ♪

manus: a live shot at new york, just gone 1:49 a.m. you are looking at s&p futures up, oil is under pressure. you have seen everybody take a trump-kim off with summit being on. in the asian session, they are taking a battering. will that happen in this market? flash.et to business juliette saly is standing by.

juliette: china energy reserve and chemicals group has confirmed it has not paid a bond that richard earlier this month. it has triggered cross defaults on other notes. plans tony has set up suspend this year's interest payments on other bonds until 2022 as it considers asset sales. china energy has started a tightening in credit conditions in china for the nonpayment. ctetential bill to prohibit and other chinese -- zte and other chinese companies from operating in the u.s. gained a majority support in congress. that is according to senator marco rubio. he was responding to the -- the proposal to allow the smartphone maker to remain in business fine paying a $1.3 billion

, changing its management, and providing high-level security guarantees. the president has adjusted the deal is a favor to chinese president xi jinping. what a bill like the one the senator is proposing threatens to derail any agreement struck with beijing. bombardierhis -- lombardi plans to meet growing needs for growing demands. it will have customized wings and an engine. it will have a range of 606 -- 6600 nautical miles. their biggest business jet is to launch this year. force was weak for disney's latest star wars offering. it's $83 million take in north

america was well short of forecasts and the worst opening of the four rebooted star wars films. changed its estimates from $150 million to between a hundred $15 million and $105 million. manus: thank you very much. closedh markets will be later on because it is memorial day. it is a holiday at home in the london. you should be getting up and having your copy and checking out s&p futures, 0.4%. let's move the agenda along on the markets. 2018, it has been an emotional year for equity. that is depending on where you are in the long and short game. the question for investors is what is next? bloomberg spoke exclusively to the ceo of the world's biggest publicly traded hedge fund.

this is what he sees for the second half of the year >>. >> rates are gradually drifting higher in the u.s.. equities are gradually drifting higher based on decent growth. as long as you have decent growth, equities can perform. the concern everybody has is when we get a change in the environment, when the rates get high enough to cause something to collapse in growth. most investors spend too much time expecting tomorrow to be different than yesterday. most of the time, it is more of the same thing. december in clearly january, we got ahead of ourselves. in february, there was a weird technical thing that set it off. people would say you could argue on friday, that the bond market had a reasonably sharp selloff in treasuries because so many people were short.

the trend is still heading higher in rates and gradually higher in equities until we get significant inflation. reporter: do you think we are toward the back end of that process? when you look at the fed and its tightening cycle, is there any sense we might be closer to the end because there is no inflation because we are in the the business cycle? >> we are closer than we were at the beginning of this cycle. is more likely this environment goes on for another 12 months then we suddenly get something different. the fed will keep raising rates until they see a change in the environment. u.s. growth is pretty good. the second quarter is clearly weaker in europe and there has been a few disappointments to the people who got caught up in the idea that european growth would be very strong. u.s. growth is pretty good. asian and chinese growth is pretty good. that provides a decent backdrop for equity markets. manus: there you go.

that is a fairly good take in this second half of the year. man group ceo luke ellis. our chief economist at pnb paribas is still with us. i know we all have to sell something and he is selling the dream of stock leverage. when you look at the emerging markets story, that is not so dreamy. the hubris around turkey, does it stay in turkey? the situation is very complex because we have had last year amazingly strong growth. that has eventually turned into creating major inflation challenges. questioning following statements that have been made

whether the bank would have the necessary independence to react to that. then we see where we are. that has had some spend over inover as well -- spen effects as well. people refer to the fragile five. i think it is important to keep in mind there has been a number of emerging market currencies that started from political uncertainty. think of brazil and mexico.but for instance not improve -- it has stopped the south african currency from suffering as well. there is a very strong dollar rally that has hit the emerging markets. the fundamental background for the global economy as echoed by the prettiest speaker -- by the previous speaker as well is a support for emerging markets. manus: thank you for sharing

your thoughts with us. the chief economist at pnb paribas. we will talk about the euro and italy. the populists have an issue on their hands.

>> good morning from dubai. these are the top stores. a crisis as italy's sinks into political uncertainty after the populist pick for leader does not form a government. the north korean summit will go er a surprise meeting between kim and moon. opec allies say that the market has rebalanced. s? it time to reopen the tap

a warm welcome to you. newy is cascading into na dimension of political crisis. how is that interpreted the markets? the president says i do not a ccept this. are warming to the geopolitics and the global political story and what you are seeing in the euro. umps drives markets as tro and kim are set to meet. r europebe a big week fo and it is jobs week in america and you will get the beige book

and brexit. and it is50 memorial day. let's have a look at the bond market, where the action will be. there is a no-confidence vote going through today. we go. also -- there it is amazing. we managed to deliver. they are down and the question is this. the president of italy is challenging 5 star and they are not accepting the finance minister. i say this is about protecting people and making sure that italy is open to the world and that the world will buy the bo nds. bonddrives the italian market. are they wrong-footing

themselves and does this embolden the populists? eye of the futures in the united states of america because it is memorial day and you will see liquidity. down and thedre as. has jobs day in mind and barnstorming number could break 3%. those of the markets. let's have a look at the risk radar. . just got too excited anna is having the day off and they don't normally let me do this. this is liquidity. what will be ecb do? that is the question. oil is down and the question is opec and non-opec.

does saudi arabia and russia return the supplied to the market to make up for venezuela, iran, and any other outages? the indonesian mp is new to this have acould be that you nd theres point hike a would be a repeat and the dollar would be weaker. pressure, in terms of politics and we will stay with the emerging markets. l they stay up? we have the latest with the business headlines. >> thank you. italy has sank into political uncertainty as the populist leaders pull the plug after the president rejected the judge of the euro-skeptic

germany-bashing judge. der said there was a conspiracy and made a only-failed's call for fresh elections. the euro rally. kimld trump's summit with is back on. he says, i believe north korea has brilliant potential and will be a great financial nation one day. kim agrees with me on this. it will happen! a surprise 2-hour meeting was held with kim ticket this -- to keep this summit on track. saudi arabia and russia proposed

futuresurves and the fell 3.15%. >> i believe that nobody in the to seeass group wants the overheated market and there are many things that push the oil prices up. includes production declines and geopolitical factors. ign secretary has called for britain to make a clean break and boris johnson said that the country will not take full advantage unless it does. may musthat teresa resist the calls to remain in the e.u. regime. thanl news powered in more

120. a mixed bag in markets in asia because we have seen the energy story playing to the oil producers. the resource-heavy close lower and the japanese market steadied after the losses. we have the yen to thank on that. ine a look at the green here indonesia. a boost tobank gave assets and we look for them to intervene to support the rupiah. northe stocks tied to korean businesses jumping after the news that the summit could be on in singapore. there has been a rebound to the chinese gas prices and they say benefitro china will

the mostydney, falling in three years and saying that they are losing a major company. they are saying that woolworth's is a supermarket sheep an -- to keep an eye on. ichi will not ask you wh you prefer to shop in. uro has rallied as the hisian president has had choice for finance minister rejected. the five-star party expressed dismay. in spain, you the prime minister singh that he aims -- saying after thems to remain

vote of no-confidence. local press in italy say that italy could have elections that are set for september 9. that is the latest coming through. we will run these prices. you have the 10 year government bonds rising and it is interesting to see the various perspectives with political risk. it is a good thing for the euro as the president gets to grips by rejecting the will of the people. let's move the agenda along. we go to the reporters on the ground. our economy editor is there. we have the raking line of the elections that could be september 9. are you surprised by that?

the talk collapsed and it became clear that italy would go to new elections and the timeline of september 9 is not much of a surprise because the elections will have to be held fairly soon. >> what happens next? impeachment and elections are the threats, but tell me what happens for the markets to anchor their attention. but the president has summoned carlo to his office and he is known as a no-nonsense budget new name ofe has a nicknamesors -- a of "mr. scissors." >> thank you.

in the chambers of politics, a vote of no-confidence confidence has been called or threatened. what is the latest? >> hello. it has been a dramatic 72 hours in madrid. socialist party held a vote of no-confidence and this is what we know, in terms of their agenda. they want to form a government and take the country to new elections. we do not know how long they want to stay in power. meanwhile, the liberals socialie of no-confidence and this is what we say catalonia is where they are out and they are saying, "not so fast." if they hold the vote of no-confidence, they want immediate elections. this is when we will get clarity on dates. when do they want to hold the hypothetical election? ourse, you have the

classic response of the leaders saying, i will see out my four years. could rajoy resign? hand?ould force his the sake of the party? he said he would stay here until 2020 and that this was an overreaction to what has happened is up what had happened was the verdict came out and it invicted people to 300 prison for corruption and rajoy says that this is an overreaction and he's is that he is the right person was up if he leaves office, he says there will be an economic meltdown. there is a lot of pressure on rajoy. the papers in spain have been calling on him to resign and to

get a new election going as soon as possible. there is a stance that time is u p for rajoy. that is a stance in madrid this might be the end of the journey and it was very nasty for them and showed the pb losing half of their seats in parliament. our european economy editor. we are all over the story to dissect this story. the president of the diw institute for research. thank you for seeing here. -- being here. how do you interpret this situation? deepin aitalu

crisis and the economy has shrunk since 2008. italy is not doing well, in terms of the economy. the positive reaction of the euro is a clear indication that the financial markets trust that the italian president has done for right things in calling new elections that protect the pro-european stance and the klearest to italy -- clear ris for italy is large and financial market will be this -- believe prevail and it isn't good for the italian or the european economy. >> no. no, it is not. over germany and we are seeing a nice bounce

rally in italian government bonds, but i liked what was said about the markets was up it is a global bargain and the bargain is that you trust the political system. isis mattarella handing a popult everything they want? want? back in fuel a populist backlash -- that can fuel a populist backlash. >> you could put it that way, but the italian citizens have uropean and the populist parties say they want a different course. it is not all clear that there will be a stronger vote for the populist parties and my concern is that we get back to a

situation where we were in 2012. you remember that the spreads were widening and italy and spain were under attack. cb had to step in and promise to do whatever it takes. mayoncern is that draghi not give that promise this time around. then, it would be a different situation. i am not pessimistic but the risks are enormous. w do you think the life of -- situation, etcs the th the political and that stifle the ability to backstop rome?

1.5 inhi has another in office and i'm convinced that whoever is the next ecb president will do whatever is needed to stabilize euro, but we have to remember that italy might drop without theuro political implications. now, they have the political question of the euro and whatever the next government looks like, the ecb is in no position to say whatever the next government looks that we will not allow the a time government to aestion the euro and that is problem icna hope that the next

-- irnment is more pro- i - see and i hope that the next government is more pro-european, or it could be worse than 2012. quick flash of the bond markets. this is what we have for you. are10 year government bonds on the move and the italian move is what you are seeing ais morning and i see significant pro-market rec eption of the pulling of the plug by 5 star and spanish government bond yields are dropping as you see the concerns the prime and

minister says he will see his years out and there is a early elections. so, the bond markets get receptive to that news flow. julia has the business flash. >> thank you. [ft bank has ended indiscernible] havetion of that would given them access to city cash -- steady cash flows. people with knowledge of the matter say that those who disagreed over the size of the stake and how much management control be handed over. there have been concerns that china has not paid in energy bond that matured this month and that sent insurgents about the credit crunch and the company

said they plan to suspend payments on bonds during 2021 and 2022. china energy started a tightening in credit conditions for the non-payment. the box office open for solo weak, earning $148 million in total. the take in north america was short of the forecast and the worst opening of the reboot. to ey has slashed estimates million. >> thank you. might beea's summit moon couldesident

travel to singapore for a summit with kim jung-un. correspondent has been covering this. what have you heard from the president -- south korean president? >> those in seoul are trying to get moon on the podium in the singapore summit, if it happens on june 12. we're hearing that the 3-way summit would not transpire or would only transpire if the kim trump summit was successful. this leads to what trump says. he says, if we get the summit on

track, we are open to extending june 13. june 12 to donald trump and the white house would not want moon, who has now had 2 high profile meetings with kim and the next one is about optics for donald trump and kim moonybe not hug like and kim did, but perhaps shake hands. handshakes get interpreted for a long time. this is from south korea where moon instruct preparedness for frequent talks with north korea. i suppose the key word is frequent. this is a seminal moment, no

matter what happens between the united states and kim. this is about rapprochement. oment.s about moon's mn absolutely and he has expended the political capital to have this around the world. he campaigned to have the north korea. with some say that donald trump, for all of the criticism he gets, he plays the bad guy to bring the they saygether and that could be the one way that happen. ans shakinge two kore hands before that would ever happen between the united states and north korea. any piece on the peninsula has

to start between the two koreas, "maximumweakens the pressure" campaign, if north and south korea start acting like others in arms. -- brothers in arms. >> thank you for joining us with the latest. we have the president of the institute for research and i put a chart together to let viewers know what this is and it tries to interpret the geopolitical heat with the credit default swaps from north korea -- south korea dropping a little bit. what do you think merkel is thinking about right now? radar is not on trump's and it isn't important. the nobel andn the glory of the peace deals. >> certainly.

if there was a solution for counting down in korea, that the worldood for economy, but we might still have a perfect storm for the economy because many risks come together and we have the problems in isly and we see that your still not recovering well and ande is a threat of brexit we have a conflict in the middle east and we have a pending trade war betwee. so, these conflicts are a problem because germany is an open economy and they depend on exports, which means every second job depends on exports and the risks to the global theomy are shaking europeans and open economies

pay the priceho for that. what's they pay a particularly high price for that. you look at the start of the year and we were talking about current sea wars and we are looking at the resurgent dollar and the euro coming back a little bit, which is good news for the european project, so long as it does not run away. >> absolutely. went through a roller coaster and has been as and the u.s. dollar is at a relatively-stable territory and i wouldn't overestimate the importance of the euro exchange rate. most of what we see is denominated in euro and changes are important. my concern is a lot of companies and investors that are highly

uncertain and worried about that part of the economy. >> our time has run out. i was the president of the german institute of research. lira is having a turn.

matt: the bloomberg markets, the european open. we are live in london. i'm matt miller. guy johnson is off this week. cash trade is less than 30 minutes away. ♪ matt: pulling the plug, the five-star movement threatens to impeach italy's president after he vetoes the finance minister. spain's socialist look to bring down mario a holy. we are live