♪ francine: you're in stocks gain. -- europeancks stocks gain. european stocks continued their rally. the u.k. prime minister gives his latest speech in parliament. -- italy'sigate the prime minister gives his latest speech in parliament. -- tells theresa may to stop putting off key brexit decisions as they make contingency plans. ♪ welcome to "bloomberg surveillance." i'm francine lacqua here in london. these are your stock markets. the stoxx 600 is getting from

0.2%. we saw a record highs in the u.s. and gains in asia. that is giving a little bit of impetus here in europe. crude oil is above $65 and euro-dollar 1.169 we talk u.s. equities with sharon bell, then we bring you an exclusive interview with the ubs chief executive, sergio ermotti, later in the show. we will have a exclusive with the european commissioner, here moscow morsi -- pierre moscovoci. the white house has set a time for trump's first meeting with kim jong-un at 9:00 a.m. singapore time on june 12, although the venue has not been revealed. presse sarah rick perry -- press

secretary sarah huckabee sanders says there has been no change on the maximum pressure cap on the north korean regime. nafta talks have missed a key deadline and congress will probably not have a time to approve a new deal this year. paul ryan a said earlier best there-- last month that would be to be a notice by may of 17 if they were to vote before the current congress ends. there may be a couple weeks of wiggle room, placing the deadline at early june. qatar airways has been criticized over the lack of women in the airline industry. he attempted to clarify his statement in an interview with bloomberg. >> i was only referring to one individual. i was not referring to the staff

in general. females --e than 32% puaretter females -- that females. be my pto have male ceo after me. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine? francine: thank you so much, taylor. some pretty controversial comments from the qatar airways chief executive. the nasdaq hit a record high, driven by a resurgence in the tech sector. the rally is set to continue as u.s. futures in the u.s. .28 positive open. joining us now is it sharon bell, senior equity strategist at goldman sachs.

when you look at the u.s. equities and the rally that was fueled on the back of that come what drove it? -- istrong fundamentals it strong for the metals? is it the markets -- fundamentals? is it the markets been too complacent -- being too complacent? sharon: i think there is a few things. gs have still been a very good. pmi reports out of europe have been reasonably good. good data fromd the u.s., payrolls, etc. we had a strong set of data and that is what is driving these share prices. i think it is investors searching for growth and clearly what is still uncertain world -- in clearly what is still an uncertain world. francine: what is your favorite at the moment?

sharon: the thing with europe, if you are investing in german bunds, you are almost guaranteed a negative real return. inflation is about whese bond yields are at the moment. if you suddenly see a problem in a particular country, or you subtly see profits fall, your capital basis, but you're not going to make very much return, or indeed, any return. people are looking toward equities and to give them some profitability and some return. earnings for european companies have also been ok this year. there has been about 10% earnings growth, which is a pretty good year for europe. despite the political risk, companies are still getting on with it, as it were, making profit. the cash yield that you get on and so the -- on equity is starting -- is about 4%. that looks super attractive compared to other asset classes.

francine: i have it on paperfrancine: -- francine: i have it on paper. has world growth picked? -- peaked? sharon: yes, i think it probably has. therobably peaked at beginning of the year. the type of piece of growth that should -- in fact, in the bit of a slowdown is what will it want to see. that is exactly what we have had in the first quarter. you still have pretty good growth. pmi'sdescribed from those europe, they are still expanding. the idea that you kind of peak and plummet toward recession in the reshore order as well, and i think you could see a couple more years of this expansion at

least. francine: let me bring you a couple of charts that we have on the emerging markets. we have been trying to figure out if dollar rises what kind of impact it has on emerging markets. the emerging markets were sent into a bearish technical pattern, known as the death cross. do you worry about that? sharon: the death cross sounds stressful, doesn't it? i am not a technical analyst, so i cannot comment on the death cross, but it sounds pretty dead. we think a lot of fundamentals for emerging markets are still very good. the most important thing for markets is global growth. these are markets that are vulnerable, if you do see a ownturn. as long as you're getting growth, that is very attractive for the markets.

it is a reasonable entry point for many emerging markets. we are expecting relatively good global growth. francine: do you worry about the market rising too much for some of these markets? -- dollar rising too much for some of these markets? sharon: yes. it has been stronger this year and i think that strength has been related to other economies flowing a little bit. i think the dollar returns to being a little bit soggy versus other currencies. weaker a slightly dollar, which is more what we expect, rather than a very strong dollar. there are risks for the upside for dollar. u.s. interest rates are rising and it looks like we are going to get a rate rise in june and further the year. counter to that is the fact that the u.s. has quite a large current account deficit and global growth is relatively strong.

i think that will put down pressure on the dollar. francine: d worry about a trade were impacting disproportionately german exporters, especially carmakers, since there is an investigation in the u.s.? is that a key market you're unsure about? sharon: it is definitely unhelpful. what try those germany are manufacturers -- drives those germany car manufacturers? it is global growth, currency. i mentioned are probably reasonable. i think there are other fundamentals that are reasonably supported. this is another sector, but my comment on emerging markets, which is very inexpensive. the market is aware of some of these risks. francine: wonderful. sharon bell from goldman sachs stays with us.

closingses $65 after below 100 day moving average for the first time since september. we will talk about the supplydy. the itale minister makes maident today. can he satisfy the divergent populist party that brought him in? this is bloomberg. ♪

♪ francine: good morning, everyone. economics, finance, politics, this is "bloomberg surveillance." i'm francine lacqua here in london. we are getting some breaking news out of malaysia come or at least the east. --understand that the tycoon has agreed to a buyout for the

pay-tv firm astro. this has basically crossedhe bloomberg terminal. this is weighing the possibility of him taking over astro holdings. this is according to people faliar with the matter. will keep a very close eye on it. we understand that tycoon has revived deliberations about this by up of the astro. we will see whether that gets confirmed or not. that's get straight to the bloomberg business flash. taylor: the u.k. government has stake in the royal bank of scotland. it will be used to pay down national debt. for an injected more than $45 billion -- pounds into the rbs. starbucks dipped in late trading on news that the chairman is

stepping down. he took the companies from 11 outlets to more than 28000 and -- 77ntries this in 77 countries. this comes as sales have slowed and the scandal including -- the scandal involving to blackman in philadelphia. twitter and netflix are getting the lead up in the indices. twitter will replace monsanto in the s&p 500 will netflix will replace agricultural company in the s&p 100. that comes as buyers takeover of monsanto is due to close on thursday. bubble warnings about tech stocks may be getting louder, but goldman sachs is still bullish. most of the industry's current success can be explained by strong fundamentals, revenue, and earnings, rather than just speculation about the future.

he says valuations are not very stretched and it does not expect that to change anytime soon. and that is your bloomberg business flash. francine? francine: oil has halted its slide near $65 a barrel after the climbing -- declined 5% in the last session. crude lost its grip on the highest level more than three years after saudi arabia proposed easing output cuts. joining us now with the very latest on this is bloomberg's executive editor for energy and commodities. joining us for the rest of the hour is jordan rochester, fx strategist at nomura. sharon bell from goldman sachs is to with us. so what exactly is going on? it seems like the big slide has capped. we went through a technical level. jordan: it did. it looked like a fairly major

u-turn by saudi arabia. they're coming with this eting june 22 and it will be every can remember.tentious that they have waspressuring th to raise output lower prices. ave russia wanting to raise production. arabs who wantlf to keep production where it is and get higher prices. seems to be against everything. good luck getting an agreement between all those parties. the oil market is pricing in higher production. the question is: how much and by when? francine: let me bring you to a simple chart looking at riggs, wti. opec withcome out of an agreement the everyone cheats on? jordan: yes. we have gotten ourselves into a

situation where they are cutting production by more than they said they would. that is unprecedented. they will pledges something and then immediately cheat on it that is a quite common thing to do. the problem that they have now is not just is opec plus. they have russia with quite a lot of spare capacity. will russia behave in the same way as opec? francine: and is also influenced by dollar. the make it jordan's take on dollar where does it go from here? jordan: you have a very strong data, a good indicator that the rest of the world's teetering on slow. in a situation where you have the dollar, things are really good. in between the two you have the italy news driving the liquidity moves in the dollar and the u.s. outperforming. i think in the short-term dollar strength, long-term it is a decline story.

for now it is a very much short-term dynamic that we're talking about. francine: if we have a trade war, is that dollar positive or negative? jordan: if you' doing emerging markets, thllar positive. dollar-yen is my hedge. dollar-yen you look -- lower would be the best but. sharon: i think it is on the margin inflationary come yes -- inflationary, yes. this will probably just increase prices. toent that it damages global growth, arguably you could say it would be deflationary. i think that is unlikely. i think it is slightly inflationary. francine: when you look at the ,ontentious june 22 meeting talk to us about the dynamics between the opec countries, russia, and the u.s. on the back is basically the price of the dollar.

>> also, disagreement within opec. we cannot go without that. arabia, united arab emirates on one side, and everyone else on the other. if you are saudi arabia and trying to stay friendly with washington, amongst others, and moscow come than a different dynamic. francine: couldn't the u.s. pressure the shale producers to turn on the tops more just tap -- taps more? like that,'t work because they do not have control over shale producers. right now there is a sitting stockpile and a huge price differential between the u.s. crude and what is going on in the rest of the world. you modelsharon, when

your equity forecast, what is your basic assumption for oil? does it actually make a big difference if there is a five dollar move on other side? sharon: five dollars does not make a big diffe although europe does not really produce any oil, you he a big oil producers in the european uity indices. the commodity companies, more bry, in the equity indices. rising commodity prices is a good thing generally. it would also be a good thing in lifting a little bit of inflation as well, because europe does not have any inflation. in year on year terms, you are really not going to see a negative impact. your to do you have seen oil companies revised the earnings off morts -- upwards. oil companies are more profitable know. -- now. to the extent that they can do all the stuff that equity investors like come and lower

oil prices. francine: at what point is there ,ind of a goldilocks price where people buy more oil without it driving it up? >> it depends where you look in the world. clearly some are more sensitive than the others. the u.s. in particular is very sensitive to gasoline prices, toys the present extent actually, maybe more so in europe. look at venezuela. i need a hundred dollars per barrel to bounce my budget. if i am at the other end of the scale and i have lots of money, i do not need to. it depends on who you talk to. francine: thank you so much for the update. that is bloomberg's executive editor for energy and commodities. sharon bell from goldman sachs and jordan rochester from nomura stay with us. the italian prime minister gives his maiden speech in parliament this afternoon. it will be the first public test of his ability to balance the

competing demands of the two populist parties who put him into office. that is followed by confidence votes in the senate and lower house later in the evening. sharon, when you look at european equities, you break down the periphery. we saw a massive selloff that generated and started in italy last tuesday, but it died down. sharon: yes, it died down. we have had this playbook sometimes in europe, political risks that we're up again, then peripheral spreads blowout. you see equities in those regions very sensitive to it. actuly, uld argue that italian equities are as sensitive to sovereign spread widening as they were during the crisis. they were extremely sensitive the last few weeks. i think that is just a reflection of the fact that there are still big problems in italy. growth is still low, debt level

is high, the new political parties a relatively vulnerable. all of those things mean that it is uncertain. francine: we were ask ourselves whether the political stalemate, or fragility of the periphery would mean that the ecb could not normalize by this year. >> if you ask any rate strategist why the ecb does not wind down there qe, it is not because they think inflation will go up, it is not because growth is amazing, it is because of the regional constraints of program. them.an loosen i think it is kind of a structural reason of the program that qe has to end. if anyone country of the eurozone blocked --. if there was a problem of italy, you go by other programs, other debt relief programs would be

the option rather than using qe as the measure. it is a very blunt instrument to use. francine: it could be politically sensitive. this could be five, i guess -- fudged i guess? sharon: they could extend the qe program and renege on the original constraints of the program. lastdy probably in the couple of weeks there was ability for the ecb to buy more italian debt, and make sure the spread did not wide enough to part. i think there is already a little bit of a fudge factor that they can do. in the end the germans want a very conservative monetary policy, whereas the italians and others want some monetary policy to stay loose, and then to expect fiscal policy. francine: what needs to happen if we how likely is it

get fresh elections that the euro takes central stage, and that partnership with eu? euro or ismpact the it too small? -- a lot am speaking of folks are speaking like it is going to worse sooner than it gets far as a politics . it is all about help italy deals with brussels in those negotiations. it is whether we get credit rating downgrades. we have actually had short-term positive news from the credit rating agencies. they will not look to review those credit ratings until after the budget is a sort of message we're getting. for the time being you have a sort of reprieve, this nice little rally. i think btp's will remain in a range. there are risks when it comes to this budget and things can fall

apart. as you have seen in italian politics, it is very fast-moving already. this coalition can still break. there are some differences between the parties. it is difficult to see how they ll find compromise. francine: jordan was talking about these spreads, beating he spreads -- btp spreads to bunds. thanks for joining us, sharon senior equity strategist at goldman sachs, and jordan rochester stays with us. special counsel robert mueller accuses trump's former campaign chairman of campaign temporary. -- tampering. we will get to that next. this is bloomberg. ♪

. retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far vered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. economics, finance, politics. this is bloomberg surveillance. i am francine lacqua. executiveway chief

suggests only a man could do his job before walking back on the comment. andpoke to our reporter when he said it, there was doing. b --ooiong. -- robertler accuses mueller accuses paul manafort of tampering with witnesses. a $3.3 billion rbs after a price bailout. traders awaiting fresh catalyst and concerns over trade wars persist. primel get the italian minister's speech. i know you look at the bloomberg universe at length. anything that caught your eye, a canary in the coal mine? currency moves this week? >> the g7 is one aspect. the trade war's is an ongoing

story. you are starting to get action. the u.s. tariffs coming into effect on june 15 on steel and aluminum, now in china and now about europe. that is the downside story. francine: maybe we will take euroyen. pmi services rising to 54. politics, special counsel robert mueller has accused paul manafort, the former chairman of the 2016 donald trump presidential campaign, of attempting to temper witnesses in the federal case charging him with money laundering and acting as an unregistered foreign agent in ukraine. he denies all charges. we are joined by stephanie baker. she follows this in minute details. .hank you for coming on

what does this mean for paul manafort? >> potentially significant, paul manafort has attempted to relax the terms of his bail and this could have the opposite effect. robert mueller is now trying to revoke his bail terms and possibly put him in jail until the trial. he has two cases. one in virginia, a tax and bank fraud case and another in washington what was about his lobbying work. it looks like -- he has been ofing to challenge the terms robert mueller's investigation and say's he has overstepped his bounds and this is more fighting back. texts hen, some of the has unveiled in the filing show that paul manafort was attempting to tamper with witnthose go back to february, march, not clear why robert mueller has decided to move now. something he was sitting on for a wild.

francine: could it have a wider implication for the mueller pr >> people are questioning why would paul manafort be taking risks like this knowing that robert mueller is tracking his every move? does it in the kate paul manafort -- does it indicate paul manafort thinks donald trump may not pardon him? or that he needs to be pulling out the stops to try to fight the case because no one else will save him? francine: can the president parted himself, legally? >> -- pardon himself, legally? >> untested ground, we have not gone to the courts to explore this. no, i think most legal experts would say that he cannot pardon himself. that is overstepping the grounds of the constitution. we will see how this plays out in the courts. francine: stephanie baker, our

senior writer who follows the trump administration closely and interviewed steve bannon. let's get to the first word news. campaign to isolate north korea will continue as preparations advance for the president summit next week with kim jong-un. the white house at a time for the verse meeting at 9:00 a.m. singapore time on june 12, although the venue has not been revealed. sarah huckabee sanders says there has been no change in what donald trump has described as maximum pressure campaign on the north koreans. majority whip john cornyn says the nafta talks have mistake you deadline and congress probably will not have time to approve a new deal this year. paul ryan said early last month that legislators would need notice of a deal by may 17 if they were to vote for the current congress stops. wiggle --be a couple

some wiggle room around the deadline of early june. the number of people killed by aatemala's most volcanic ruptured has risen to 69 and is expected to go higher, it occurred with barely any warning , leaving local residents no time to escape. it has registered a number of minor eruptions over recent years but evacuations were not ordered as first reported its activity was decreasing. global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. .rancine: thank you u.k. businesses have told theresa may to stop delaying and make key decisions over brexit according to a bloomberg source at the meeting. companies ranging from aerospace toail sat down with top government brass including philip hammond and david davies.

they talk about the lack of progress. figuresthat and pmi better than expected. what happens to the pound? reprieve, we, pmi, are in a weird tug-of-war and politics. next week is super tuesday and amendments on the eu withdrawal bill have to be voted on in house of commons. a big deal in terms of politics. the delay over brexit because the cabinet is not controlling the discussion and the house of commons rebels, they control the debate. whether the u.k. goes for a softer brexit. a big deal because there are 15 amendments over 12 hours and the house of parliament. when it comes to one of the amendment, single market asset, i do not think it will pass because the custom minas does not want it. the pound should rally in th long-term.

let's -- if i am an exporter, been to years since the referendum -- two since the referendum and i am not sure about the futures. pass, union comes to things will continue as they work when it comes to goods. investment will pick up. surprising, lackluster. theresa may might have changes in her leadership. i need to know will she survive. francine: do we need the white paper before that to tell us where we are going? >> if they bind her hands and she has to have customs unions in her mandate, alleging the white paper does not make sense because it could change next week. francine: the chances of fresh elections? >> low, 25%.

elections need a new leader first. ifsthen we need -- a few before we get there. if michael gove becomes prime minister, what happens to the pound? >> i do not get on first of politics. soft or hard brexit? hard brexit here and about the reason, they are upset about the customs union and want to have an election to change that and get a majority, and they believe that the current leadership's fall for why conservatives are not upholding high enough. this is because of the risk of jeremy corbyn winning the election. the hard labor left. and uncertainty. chancesjeremy corbyn's were low, sterling goes down because investment will be on the side when you have an

election. sterling always suffers in that environment. francine: services pmi figures, the services sector grew more than forecast -- more than forecast in may and the economy is in modest recovery. does that influence brexit negotiations? >> it does not. did you about banking and raising rates this year is still intact. q1, not globally but mostly in europe. u.k. suffered as a result with a week q1 figure. we need the numbers to rebound. to bring the rate path back into line. august is our-based case. if they do not strengthen enough, risk goes to november. if we continue on the track that pmi suggesting -- francine: i do so much. more, up, we have plenty

including roundup on clinton we spoke to the ubs chief cranny bringing us that interview. clients should stay in the markets they say. ♪

consolidation down in terms of creating size without focus, and added value to clients and your voters. they create even more problems than solutions. we need to see in the industry

is focused consolidation, where you get scale. and diversification. francine: that was the ubs chief executive speaking to our manus cranny. plenty more from this eric -- .urich in a few minutes let's get to banks and what volatility we have seen in the market. he said that investors should not take fright after the political turmoil in italy and the turmoil is sending tremors through global financial markets. he says tuesday in the market amid the volatility. let'focus on the middle east with one year since saudi arabia, uae, rain, cut ties with guitar. qatar.-uatar -- our operations are back to

normal. network is expanding. we have investing. everything is back to normal. been thatnkful has it painful as it been -- same poll has of them? >> -- painful has it been? >> on an average doing more than 20 minutes of extra flying time. every minute we fly, we keep our air points in this guy and it costs money. >> what is the longer-term strategy? how long can you withstand the situation? >> we will sustain as long as it will take. we will not slow down. we have proven this. we have big expansion plans to mitigate the networks we lost a

year ago. we have been fortunate in the sense that we have friends that have opened their airways to us to fly in and out unlimited times every day that we require for no operations. the blockade is painful financially to the airline. but we will survive. >> do you envision a point you need financial injections from the government? >> i cannot predict because we have been successful and doing better with the loss we will face. we will continue to grow our network and order -- in order to get to profitability again. as it happens, i do not think we will need capital injection. if we do, we will go to our owner but not in the foreseeable future. allowed if we

require equity, that the owner will give the equity to keep our debt equity ratio and check. united states airlines have the same privilege under chapter 11. my other airlines cannot have the same -- why other airli cannot have the same? francine: he was criticized for saying -- for what he said about his role of women. >> i was referring to one individual. i was not referring to the staff in general. we hre than 72% that our female. --emale. it would be my pleasure to have a female ceo candidate to become ceo after me. conference, a press with the annual meeting, he was asked whether a female could take over, he said it has to be

led by a man. he said because it was a challenging position. he difficulty scale back on his comments. that interview was with heidi. jordan rochester is with us. we were talking about dollar dynamics and the euro. a currency that has been used as a haven is en with elections coming up -- yen with elections coming up and a political scandal brewing. what are you looking for the fall line? >> yen outperforms when you have risk off. if trade war's do heat up, dollar strengthens versus emerging markets. anything you can call it carry trade -- the yen is not a carry trade. .he oppe access savings in japan going abroad and going to buy foreign assets. a risk off nature.

trade war's due heed up. up.rade war's do heat rade worse are the smallest for the story. like -- g10flation short-term, interest rates going higher mean currency strengthens. dollar is in the environment where rates are going up. up, short-term dollar strength but long-term weakness. that is with higher inflation u.s. francine: i have something i do not do often, dollar yen volatility. talk about euro yen?

>> that is a nice way to talk , the it, low inflation euro is a reserve currency. in terms of emerging-market risk off, repatriations in euro and yen. that away and of teof euro-yen dynamics. short-term, a bit of the italy story to play out. more uncertainty. you have ecb normalization. bank of japan. nice way to express the ecb story. euro-yen is higher. francine: thank you so much. -- apple announces a move apple announces a move. we talk tech next. ♪

need inast thing we banking come in addition to negative rates in europ, an inversion of the euro curve in the u.s..

it is ok for the time being. there a tight. -- very tight. francine: that was the ubs chief executive from zurich speaking to manus cranny moments ago. tech, apple has made it strongest statement on data privacy and nothing moves to move data collection -- the new operating system will ask users for permission before sharing data with social networks. joining us is alex webb. does it change everything? will you say automatically share my data and then back to square one? union, youe european accept cookies, similar to that,

every time you go to a website, a yes or no. most people will say yes but could be 5%, 10% could say no and that could make a difference. francine: can you still use the apple website if you say no. >> yes, but it might say share on facebook or google plus, but twitter and so on, that bar would disappear. how many people use safari versus chrome? even on an iphone or ios device. francine: is imposed by data protection? or is this something apple is thinking about because they want? people to feel safer >> a few shareholders came to apple and said putting public good you should be asking more controls. that is what led -- that is what led to tighter controls. this is an aggressive play by apple.

they do not trade as the same valuations as facebook or google , between 20 and 30 times earnings while apple's 16, 17 times earning. this is maybe tightening the ratchet on them. tim cook said he would never be in the same situation as mark zuckerberg. francine: what happens to my data for a moment, does it go to my social media? them, yes.oes go to if you go to the bloomberg bar at which has this the top saying share on social media, it automatically sends the cookies says with -- you need this to access this -- facebook to that computer, it knows it is you, have not logged in on facebook, it just knows a tribute or is on facebook. -- computer is on facebook.

you, alex webb. bloomberg surveillance continues in the next hour. tom keene joins us from new york and we will have more on the interview with the ubs chairman. looking at a lot of the share prices. european stocks, they seem to be keeping the risk rally alive. stocks shrugging off a weak start. asian shares were up and most majors -- major currencies traded in a tight range. ♪

francine: resilient equities,

european stocks trade higher after records on wall street with oil housing back, above the $65. minister givesme his maiden speech. in an exclusive interview, the vs give executive -- the ubs tv ecutive says consolidation could reinvent the european banking landscape. this is "bloomberg surveillance." i am francine lacqua with tom keene. economy doing pretty well. the rally in the markets continues. tom: the market is doing quite well, make -- mexican peso with the recent weakness at the stock market is extraordinary. francine: let's get straight to the bloomberg first word news. here is taylor riggs. offor: u.s. not backing

north korean sanctions economically and says there has been no change to put maximum pressure on kim jong-un while reparations continued for the summit next week. a spokesperson said sanctions will stay on north korea unless it gets rid of its nuclear weapons. a key republican senator says congress will not have time to approve a new north american free trade agreement this year. john cornyn says it looks like negotiators from the u.s., canada, and mexico, are close. john cornyn said the trade negotiator robert lighthizer has kept lawmakers out of the loop. the first public test for the new italian prime minister, giuseppe conte, to makes his first speech to parliament today , lawmakers and the public want to see if you can navigate between the competing demands of the populist leaders who got him appointed. the five-star movement wants state subsidies for the poor while others want a tax-cut.

the ceo of qatar airways says only a man can do his job after becoming chairman of the international air transport association board of governors. he said his airline could only be led by a man because it is a challenging position. he later clarified his statement in and in review with bloomberg. >> i was only referring to one individual, not the staff and general. -- it would bean my pleasure to have a female ceo candidate i could develop to become ceo after me. taylor: global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: equities, bonds, currencies, commodities.

quieter day today and the list continues and equity. 21% but in up small, the region of 25,000. further curve flattening. not record. currency markets churning. on to the next screen. vix. for the nasdaq 100 makes the headlines. i want to show a real nasdaq 100. 12.71 is extraordinary. mexican peso makes the headlines today. francine: this is what i'm looking at, european stocks shrugging f a weak start to cleat -- keep the global rally in risk assets alive. we spoke to the ubs chief executive and he says despite of the volatility, we should remain constructive in the market.

most major currencies trading in a tight range with oil climbing. attemptingupwards, the first gain in five days. the dollar steady against most of its major peers. tom: the dollar peso, the one currency today, turkish lira as weollar pace of off of nafta, dollar peso off of mesa -- mexican elections. a huge depreciation of the peso. here is the donald trump election. the abrupt weakness and the big recovery with a stronger peso. recent action, over 20. to go through these highs would be a big deal but not near there. is a benchmark on weaker peso, get your attention for trade for the day. francine: i am looking at emerging-market stocks. we have been talking about them.

i brought you my chart. this is a chart that matters. the last months slump emerging-market assets with emerging markets indexnto a bearish technical pattern. it is the 50 day moving average, breaking below the 200 a counterpart for the first time in about 1.5 years. i will push it out on social media. us thatf executive told investors should not take fright after political turmoil. clients tomend still be in the market because the underlying profitability growth we see are still supportive of equities in general terms. we are also very careful in signaling that a cyclicality may come in and geopolitical risks i mentioned before may be there.

francine: let's bring in our from cbater kinsella, europe and antio barroso of teneo. wars, is it insurrectionary or deflationary? --from trump, entry increasing tariffs will have an inflation impact because steel users, your car, car manufacturers, they will have to pay more for steel. it looks to be inflationary. it is coming at a time when the overall output cap in the states is pretty much gone. at this stage, it can only be inflationary. francine: does it mean we seek world growth? >> the global synchronized growth we have in most of last

year seems to have d.c. united in the first quarter and now starting -- imf estimates, 3.9% growth this year and report just 3.7 in 2020 and thereafter. tom: one of my themes today is dollar ambiguity. we do not know what theme to take wit the dollar. what is the commerzbank theory or theme, strategy with the u.s. dollar? >> from our perspective, we are not as consuctive on the dollar as other market participants reflecting the fact that more of the fed rate hiking cycle is priced in. you see headlines cpi in the states relatively elevated. the core cpi measure is just given the fact we will get a twin deficit scenario in the states over the energy or two, i think we will see the dollar continued to depreciate over the coming months and years. tom: what euro level does europe

nt? europeecb and broader are not concerned about the euro. once wrote an inflation does with the ecb thinks it will do. if we see inflation coming toward trend, 1.5%, if we see core cpi in the eurozone grind higher to 1.2%, 1.2% and gdp growth around 2%, the ecb will not be concerned. only if we see inflation decrease in the eurozone as a result of the higher euro. if inflation and growth does what the ecb thinks, they will not be bothered by the euro. francine: talking about italy and spapolitical turmoil and betray concerns. how much of an impact -- the tray concerns, how much does it have for these countries and europe a large, integration, if

they cannot defend themselves >> it is a problem. a line between france and germany. we know they will have exposure to the u.s. markets. germany is trying to walk a fine u.s. for what they coning the be unfair measures, and protecting the markets for their domestic producers. you have france, macron is trying to develop an alliance with trump. the position you see at the end of the day likes to put together the two. francine: thank you. antonio barroso and peter nsella will be staying with us. a chief economist at 6:00 a.m. new york and 11:00 a.m. in new -- london. we will talk about u.s. growth, and inflation. this is bloomberg. ♪

taylor: let's get you a bloomberg business flash. the british government reducing its majorities think and while they go scotland -- vacant royal bank of scotland. helped the state for a decade that held the stake for a decade. the government own 62% of rbs. apple taking steps to limit facebook's ability to collect , and updating iphone, ipad macintosh software so the default browser will ask users

permission before loading buttons from social networks. those make it easy to share web content but allow facebook and others to collect user data. ceo is cautious when it comes to bank mergers. he says consolidation could reshape the european banking industry, but there is a downside, he spoke with bloomberg's manus cranny. >> consolidation done in terms ,f creating size without focus and added value to clients and shareholders, they create even more problems than solutions. what we need to see in the industry is focused consolidation where you get scale and diversification. taylor: that is bloomberg business flash. francine: be italian prime minister giuseppe conte gets his

maiden speech in parliament this afternoon, the first public test balance thety to competing demands of the parties who put them into office, followed by confidence vote in the senate and lower house. peter kinsella is with us from cba europe and antonio barroso from teneo. is the ital turbulent stabilized? can they last longer than 12 months? >> it will be difficult. we need to pay attention to the level of noise coming from the government. over the last 48 hours, the government is on campaign mode, talking about what they will do in terms of migration while delaying some of the measures like be flat tax. you will see a lot of noise, especially towards europe. not sure they will get a lot done. francine: should we worry about spain?

do the next elections in italy revolve around the euro, and spain, they have a pro-european government? >> on the italy question, one of the main issues but not exclusively. much more prominent. on the issue of spain, different situation. the difference is that, when you have populist parties, they tried to exploit the discontent in europe and use the crisis to make an agenda. for blocks the space populist party. europe --fallout is less european integration? not want to get involved with country's second either way and if the populace do not manage to do what they want this time around, pollswhen you look at the

, five-star movement and the league polling at around 55%, 60% of the vote, the majority but that does t mean they will vote to get out of the european union because when you vote for a party, you vote for many different things. the possibility in the next election to have a strong vote in favor of populist parties who are skeptics. 61: italy has been with governments since 1945, i stand corrected if i am off for five. what is different -- four or fi ve? what is different? >> nothing in italy, the same agmentation and bickering. you have both governments actively on campaign mode -- parties on campaign mode, tells you that there will be an

election sooner rather than later. spain is different, fragmentation because of the last election never seen in the past and that means that shorter governments and that means it is more difficult to make decisions. this is one of the problems that developing economies have to struggle with. tom: to your wonderful phrase, bickering, is that is what the italians want? do they enjoy bickering and on structure of a tying governments? the reasonsne of you up to populist parties getting so much of the boat, -- vote, they are skeptical of political parties. profit.t to that is why you have two populist parties with 60% of the vote. francine: i know you do not want to talk about brexit that the must have anion

application on how brussels is brexit, the baby more difficult on the brexit people? the eu works the rules and one agent that is commission and has a mandate to negotiate. that is the way youf compx with member states -- you saw conflicts with member states. has an impact on anyeign policy ideas you may develop. on brexit, a constant line and they will -- tom: peter kinsella and antonio barroso with us. coming up on bloomberg radio, the nasdaq on a tear, i will do a real nasdaq chart in a bit. and the resiliency of the markets on capitalism from the nasdaq.

stay with us. this is bloomberg. ♪

"luke surveillance -- "bloomberg surveillance." tom keene and francine la watch by the under special counsel, at home, may

.nd up back in jail stephanie baker is with us and those the story so well. let's start with the basic foundation. paul manafort seems to be fighting tooth and nail, unlike others, why is that? >> that is a really good question. ,here had been some speculation perhaps taking risks by reaching out to potential witnesses in his case. robert mueller has accused him ofness tampering by reaching out to them and shaking what they tell him. him.apiing what they tell some think he thinks donald trump will not pardon him and he is facing too much legal pressure. turning up the pressure on him intensely and he has fought be terms of his bail. it looks like he could face jail or more stringent bail terms.

saysthe washington post the basic idea is there is person a and person d and person d1, mistry people within these documents. andhey have an impact effect on the president of the united states, or is this a discrete investigation away from all of the other trump stuff? >> we know person a to be consistent with a person who worked with paul manafort four years but we do not know who is that looks2 like a consulting firm that looked with paul manafort on consulting work and they appear to have thrown paul manafort under the bus by disclosing text and emails in which they were in contact with paul manafort in recent months. the impact on the donald trump

investigation, it turns up the heat on paul manafort. there has been speculation that mueller has been trying to turn manafort and make camp a cooperating witness -- and make him a corporate witness. -- cooperating witness. francine: does this have wider implications or credit for the mueller investigation -- click it for the mueller investigation? >> it could. manafort may think twice about how he wants to handle these cases,he is facing two one that starts in july and the other in september. there is a huge f legal pressure on him. his former partner rick gates is cooperating with the special counsel. does he want to go to jail? will he consider incorporating to reduce punishment --

cooperating to reduce punishment? francine: can a president pardon >> why he had the question, no court president. -- president. not been tested in the courts but seems to go against the spirit of the constitution that you cannot be a judge in your own case. this could be fought out in the courts in the next few months. francine: peter kinsella stays with us. coming up, more of our intervie he ubs chief executive. this is bloomberg. ♪

>> this is bloomberg surveillance. let's check in with what is trending across the bloomberg universe.

i've rarely seen a story gets a much pickup. special counsel robert mueller accuses paul manafort of tampering with witnesses. our most read stories on the bloomberg terminal. billion ibs $3.3 stake. fresh concerns over trade war's persist. we look ahead to the italian premier's speech. let's get back to peterkin cella. we are going through our most read stories. it gives us some insight into what market traders and investors are looking for. >> the next risk for me is on the political side particularly in the states.

we're going to see how the midterm elections translates into the various trade war's. all of the tariff responses from the chinese and europeans are aimed at trump supporting states. if we get a democratic controlled house in november, that could change the arithmetic. it could change the various trade wars we're seeing. beinge seen tariffs lamented by the u.s. and counterterrorist being amended by that you u. by the e. francine: do you worry about germany? >> not too much. the germans are walking a very fine line at the moment between doing so much trade with the world. between doing that and they want

to keep the rules-based system and play. -- in play. you are dealing with the trump administration that has no problem in taking unilateral action. cba is congress bank of germany, is it every nation for itself? is it going to be run collegially out of brussels to go against the trump administration? seen, ithat we have seems to be a multilateral european response. it does not seem to be unilateral based on one country or another. it seems to be a collegial style of response. that is what the germans would want to see continue. they want to see the multilateral trade framework continue. it is going to be difficult. even if the europeans take the

wto, these court rulings take an awfully long time to manifest. you could be talking anything from five to seven years. that, but -- that complicates the picture. tom: we are going to mention lawrence summers in our next hours about the strategic imperatives of the trade talk. could europe agree and act with china against the u.s.? >> i am not so sure they will. you have different competing interests. the europeans put up tariffs on chinese steel imports to that you as a result -- to the e.. . as a result of the trump terrace -- tariffs. the scope or potential of a

joint chinese and european response is limited. they all have different competing interests. trying to get a lowest common denominator policy would be difficult between the europeans and chinese. that european block and the chinese block versus the states at the moment. francine: thank you so much, peter kinsella. let's get straight to new york. here is taylor riggs. >> and the u.k., jeremy corbyn will accuse prime minister theresa may of failing to stand up to president trump. he will say in a speech that he will not fight back against -- she will not fight back against tariffs because she wants a trade deal. meanwhile, president trump meets with senate republicans who are unhappy about the proposed limits on chinese investment in the u.s.. bloomberg has learned the

lawmakers will tell the president -- they went to discuss his investigation into chinese violations. the deh toll from the volcano in guatemala has risen to 69 and is likely to go higher. caught, smoke, and lava people living in a remote mountain town off guard. workers are digging through the debris and mod for more victims. howard schultz is starting to sound like a potential presidential candidate. he is stepping down from his job. he said he is thinking about a range of options. he tells the new york times he has become deeply concerned about the u.s. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. chiefne: ubs

executive sergio ermotti says -- he discussed european banking and consolidation in the fce industry with bloomberg. it is difficult to make a comparison. back then, what we did is we focused on our strengths and reshape our balance sheet. i think deutsche is going through a similar exercise. it is the right thing to do. -- we havet to make quite different business models. >> want to understand how the market should be focusing on deutsche bank.

if counterparty risk is taken away, that is the beginning of crises. >> i do not think there is any counterparty risk. it is difficult for me to make a judgment at this stage. i do not think there is any counterparty risk that is meaningful. cap threee a market times the size of deutsche bank. juncture, -- at some you must run across other banks and institutions. y there a point in time that this can offer value, deutsche bank? >> i am not going to comment on consolidation. general, not necessarily for ubs, consolidation may be part of the solution to reshape the banking industry in europe that

is overcapacity. consolidation may be one part of the equation. francine: that was sergio ermotti speaking to bloomberg. you had a wide-ranging interview. you asked whether this was still the right time to be in the market. they did not take any huge positions off the table last week. no material exposure on the periphery. they are very happy with where they are in that context. the next pc talks about in terms of consolidation was that regulators- what about an american institution they came in and bid for deutsche bank? he said regulators and governments have got to have the aptitude to create stronger

institutions and that regulators would be open to the possibility. and thedge yourself, regulators have an appetite to see if and when that deal happens. francine: does he expect more market volatility? mentioned trade and geopolitics and political issues. you just finished speaking with peter about that. he came back to trade and geopolitics. week,latility we saw last is that a warning shot to the market? , what you saw last week was a small spike. there was nothing prophetic. it came back to base because we found our way through. we muddled through. it was a reminder that you need to be heading. tom: i thought you'd get -- you

did a great job to get him to say anything. he wanted to get to macro and euro. is ubs the jpmorgan of europe? >> yes. >> is ubs the jpmorgan of europe? >> yes. you want to elaborate on that? >> ok. let's think of it this way. sergio ermotti is the longest-serving bank ceo. he has seen two or three different variations. they are picking up flow and effects and equities. efficient in terms of capturing the market share they want at a price they are prepared to do business at. he is the italian jamie dimon.

francine: he does not like being called italian. >> he is swiss italian. tom: thank you so much. bomberg daybreak. this is bloomberg. ♪

>> this is bloomberg surveillance. let's get your bloomberg business flash. the u.s. has asked saudi arabia and other opec members to boost production.

the trump administration wants another million barrels a day to be pumped. gasoline prices have hit their highest level in three years. president trump has publicly complained about opec and rising oil prices. the visit -- the biggest maker of semi conductors for smart phones has come up with a new chip for person or -- for personal computers. qualcomm is trying to get its mobile technology into the computing market dominated by intel. insurance company cigna says it is exposed private information for some customers. the company is not saying how many people are affected. the ceo explains how the company reacted. asia, and operational change, a coding problem beinged in some data

revealed. external auditors brought in credit protection being put in place for individuals. nd it?estion is how fast do you hoast you understand it? you bring a third-party into validated. you atone for the mistake. >> that is your bloomberg business flash. francine: thank you so much. let's get back to central banks. tom has a couple of -- is bloomberg's editor of economics. first of all, we were on a path of divergence. aerything is complicated by possible trade war. how should central banks look at these foreign policy geopolitics? >> next week, you have the big

three central banks of the fed all meeting. you are going to see the fed likely hike. the ecb flirt with the exit. the bank of japan carrying on as they are. they are being buffeted by the trade war talk. it is important to know how wall street economists -- most of the big banks are not actually reducing their foreca for global growth this year. inflation.level of the bank saying the bigger problem is the trade war. it really builds up and for the moment they are confident in their assumption that there will not be too much.

they have all this noise. implemented,s are you will have an inflationary and deflationary effect. francine: is it deflationary or inflationary? it seems that it is still lacking around the world. >> very fewal banks are hitting the target. powell pushingr toward high interest rates. most analysts are trying to side with the trade war being more deflationary than inflationary. something that would require the central banks, if it was to slow the hiking or withdraw the stimulus. francine: is it the inflation we were expecting all along? >> it has been 10 years this

awesome -- this autumn -- the inflation is starting to pick up. not necessarily the good inflation that is driven by demand. that is what the central banks want to see. they are leery and the fact that it could take off. it has been a poor that in recent years. tom: how linked are the banks? you have years of experience reading between the lines. how linked are the banks in their discussion right now? >> i am sure there is communication going on. lots of forums. the g7 meeting at the weekend. if you look at what mike mckee was talking about about how shocked he was. everyone beating up treasury secretary mnuchin.

it is quite interesting on that topic. it is not -- what message are they sending to the emerging markets? jay powell and the fed talking --ently in zurich about that about that the u.s. sets its monetary policy itself. you see the message yesterday from the indian central banker about how other central banks are having to adapt to withdraw the stimulus from the fed. it is an issue how central banks communicate. interesting one is what messages are the emerging markets taking? an important g six plus one meeting. on crude oil, the spread is really widening.

it has been a bit of a rollover. chart ray longer-term over on the right side. west texas is always lower. stay with us. this is bloomberg. ♪

tom: surveillance correction. fran from london emails and and says there are 65 governments in italy not 61. i miss counted the italian governments since world war ii, francine. the italian governments.count apple has made its strongest statement yet on data privacy. it has moved to limit data collection on companies including facebook. it is the latest privacy crackdown. the operating system will ask you permission before sharing data. let's just remind everyone listening to us what happens

now. i go and read somewhere an article, and it gives that information to our social websites. >> most websites do this. if there is a sharing banner at the top that says share on facebook, google plus, twitter -- that s the moment you hit that website, it sends a cookie irrespective of whether you are facebook user or not to facebook. if you are signed in on one of those networks, it knows that you have visited that website. francine: what is apple trying to do? are they trying to make us safer and use our data better or is it a direct play at, look at facebook who are doing it wrong? toapple is trying very hard position itself as an anti-google and anti-facebook

and the way they approach privacy. google and facebook monetize your data. they are then able to deliver targeted ads. apple has a very different business. hardware and increasingly services. -- or has not said, sorry. the wall street journal has a scoop that they are trying to get back into the advertising space. if you are preventing the competition from gathering data on people, that means your ads could be just as well targeted. tom: the company has really stumbled. they are only up 24 percent a year for the last 10 yea we are going to get to a trillion dollars at some point. what was the tone in that room? was it an upbeat tone with developers? >> absolutely. these are events where people applaud. it is not a press conference. these events are focused on the software. they do not tend to have the

rdware announcements. it is showing you the widgets the developers play with. what seems to us is very incremental foem could be colossal. tom: thank you very much. greatly appreciated. 100 has done better than good recently. i have a nasdaq chart. we will put that out on twitter. coming up, my interview of the day. john riding of our dq economics on chairman powell and a make america great again economy. this is bloomberg. ♪

tom: it is a make america great again economy, but how long can the boone sustain?

ryding on dollar ambiguity. monahander dimon volcker inht of america banking. suggests mr.ounsel manafort is not playing by the rules. good morning, everyone. this is bloomberg surveillance. live from our bloomberg headquarters in new york. what is the follow-up on unicredit's? to day three on the idea of bank mergers in europe? francine: we understand from regulators there is more of a chance they would welcome a merger. a merger that would be healthy. we heard yesterday that theoretically this make sense.

we have not heard from either side that this is something they would go ahead with. each chief executive is focusing tom: we will touch on mr. ahmadi and -- in a moment. here is taylor riggs. >> the u.s. has quietly asked saudi arabia and other opec members to boost their production. u.s. retail gasoline prices have hit their highest level in three years. president trump has publicly complained about opec and rising oil prices. the u.s. is not backing off its campaign to isolate north korea economically. the white house says there has been no change in its program even while preparations continue for next week's summit. a spokeswoman reiterated that sanctions will stay on north korea and lessig gets rid of its nuclear weapons.

it is the first public test for italy's new prime minister. lawmakers and the public want to see if he will be able to navigate between the competing demands of populist leaders who got him appointed. the league once a tax cut. the ce of cutter airways says only a man can do is to. qatar airways says only a man can do his job. he said his job can only be led by a man because it is a challenging position. he clarified his statement. >> i was only referring to one individual. the staffreferring to in general. we have more than 33% who are female. it would be my pleasure to have a female ceo candidate -- co candidate.

day onal news 24 hours a air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 20 countries -- more than 60 countries. tom: let's look equities. there is some news there. up 56 as we touch 25,000. curve flattening. the dollar spot was 94. the vix showing price to perfection markets. what i am looking at is oil investment chart of the day. it seems the global rally in risk assets have sent u.s. stocks to a 12 week i. -- 12 week hig european equities struggling for a little bit of traction. the government bonds mixed.

a little bit of perspective on nasdaq 100. a more concentrated nasdaq composite. very apple heavy. this is inflation-adjusted. we are way over where we were at the 2000 peak. what did you do here? doom and gloom down here. francine loaded the boat right there. she called up her broker and went on margin. francine at the lehman low? francine: i was a toddler obviously. unfortunately, we cannot trade. matters.hy this chart we have been talking about oil for the last couple of months. this is on the back of inflation.

it is nowhere as solid as central banks was hoping it would be. it did decline. we are seeing more price volatility before the opec and allies meet. tom: thank you so much, francine. cirilli.de into kevin policysident's trade violates strategic rules. i like that. it is impossible to know what the administration's policies are. a will a strategy is to unite your friends and divide your potential adversaries. the united states seems to be doing the opposite. the current u.s. approach to mexico could hardly be better designed for the objectives of electing a leftist radical as president in mexico city. joining us is kevin cirilli. what is the republican response

on capitol hill? >> i think there is a frustration in the sense that is not appear to be a cohesive strategy. comes at a time in which many republicans are either frustrated with what risk -- with what the president is doing. their frustrated at the president will not allow it to play out. tom: are you looking for a catalyst? a tip point where things change? >> i think we had one last week when retiring representative trey gowdy broke with the administration and said they had gone too far with their criticism of what the president calls spy gate. he is someone who led the benghazi hearings. the is not seeking reelection. that would signal there is a pathway for altra conservatives to bake -- to break with the

administration. francine: when you look at the mueller and metaphor latest, could this have wider -- manafort latest, could this have wider implications? >> it shows that bob mueller's investigative team is not going to be hindered. in terms of the charges we have seen, former trump campaign chairman paul manafort is charged with arguably the most severe charges. conspiring against the united states of america. this is someone who has been the central focus and central point of all of the charges that have been brought against any individual. there might be more charges. paul manafort playing a central role. for bob mueller's team to say you are trying to tweak what witnesses are doing, that signals they are not letting him get out of it. tom: the president seems to want

to pardon the former governor of illinois. you just assume he is going to pardon paul manafort? >> there are a lot of sources i talked to that suggest to me these pardoning's such as the bringing up of pardoning of martha stewart is a signal that he can do that. i am not inside the presidents had. i dot to -- president's head. the people i talked to suggest that is what he is trying to signal. tom: what you and charlie cook lathered up for in the california primary? what are you going to watch for in the california primary? >> i want to see who has momentum. i want to see the young -- if they can seize

on a moment and grabbed the microphone from a democratic party where anyone is up for grabs. meanthat specifically will for the democratic party for the next six or eight years. i also have my eye on something else that happened. that is with everybody's famous starbucks former ceo announcing he is open to serving and public service. what does that mean? this is going to be a crowded democratic primary. it is up for grabs who is going to lead the democratic party. you a bind the curtain in the oval office yesterday. thank you so much. our chief washington correspondent. we are going to spend some time with john ryding of rdq economics. he is someone who understands economic theory. we are going to get smarter in

this hour. you are legendary about an economist named new pixel -- nute vixell. what is the policy of chairman powell? is he within the arcane economics? >> his policy is relatively straightforward, which is to get the u.s. economy and interest rate market back to a neutral second. 3.8% unemployment rate. inflation pretty much at the feds target. that is the problem is the earch for neutrality. i am a little bit concerned. not hugely concerned, but concerned that theed's thinking that neutral based on incoming president john williams that the interest rate is still low.

they see long-term interest rates ending up somewhere around 2.9%. saying weint, the fed have to go n how do we engineer a soft landing to sustain a low unemployment rate? right now, the path the economy on -- is on is to drive the unemployment rate lawyer. ultimately -- rate lower. that leads to reduced stabilizing circumstances. francine: let me ask you something that is maybe a little more topical. is inflation going to go significantly up? army going to go to a waiting to a-- are we going to go waiting situation? are we going to

broaden out what is happening on tariffs to a broader trade war? that is going to push inflation up. double-digit growth in steel orders and aluminum orders. we are going to cut that segment of the market off. that is going to drive prices higher. that becomes broader. that is a factor. it is sustaining the path. we are very accommodative. we are at the inflation target. francine: i just wanted to ask you, if you look at trade and trade wars, is that inflationary? >> yes it is. we are in a global economy. the u.s. has made a tremendous benefit of global supply chains

to keep costs down. if we disrupt the supply chains, it is inflationary and contractionary. we were talking about a coherent trade strategy. what is the coherent trade strategy that people can plan around? right now, i am a little bit concerned that we could have both an inflationary and contractionary if the trade war gets out of hand. if we focus on the trade deficit, that is going larger. aggregate demand growth is exceeding aggregate supply growth. demand is growing close to 3%. the trade deficit is going to get er. are we going to have more interventions to try to correct that? francine: thank you.

economics.of rdq chart.a we saw -- the request comes after d.c.'s decision to reimpose sanctions on iranian crude exports. this is bloomberg. ♪

tom: bloomberg surveillance. with us, john ryding. let's bring up the chart right now. a lot of face -- a lot of fancy economics. and elevated rate saying we ought to be higher and higher.

we are talking about the reticence here. it is a quadratic function, how many rate increases until it begins to affect the economy like you and i remember? >> we are nowhere near that. unfortunately, i like in the search -- it is like trying to climb a hill in the fog. sometimes, you do not know you reach the top until you have gone too far. that is why i like to look at signals like commodity prices. tom: what are the signals right now? >> they are telling us there is still some way to climb up the hill. i think the fed is going to keep going. it is going to be difficult for the fed to pause at a press conference meeting without repeating a mistake they made in march of 2016 when the market started to take interest rate

hikes out of the future. tom: how does john writing respond to the -- fragility isix of enough where we only get one or two increases? >> i am not worried about the consumer. to consumer is not the driver of the economy. that consumer spends what they make. my concern is more on the profit side of the economy. macro profit margins contracted a couple of years ago. there is no clear driver. tom: is the president distorting the economy? >> i do not think so. the most important thing he did was cutting the corporate tax rate through. that is a long-term positive for u.s. capital spending for u.s. productivity. a long-term positive. the balance between labor cost increases and prices is not one for strong profit growth.

i would say watch the profit growth. watch capital spending and hiring. the consumer becomes a problem if that part of the economy falters. tom: maybe we will get to some world cup chatter here. a lot to talk about. david westin today, balance of power. interesting guy. mike rounds. republican, south dakota and the new our. stay with us. this is bloomberg.

francine: this is bloomberg surveillance. we cast our eyes on the italian prime minister's maiden speech to parliament. it will be his first public test of his ability to navigate public finances and to navigate contrasting demands of the leaders who got him appointed. we understand the government program will be based on a coalition deal. still with us in new york is john ryding. concern be an economic because it could put in jeopardy more integration and europe? they could put into jeopardy budget rules. or is it more of a standalone political case? >> you were right.

i think he said 65 italian governments since the end of world ii. i believe that was the number. political turmoil in new government in italy are thing that we in the u.s. with a much more stable political calendar kind of have a little difficulty getting our heads around. we cut through the detail and say, what is in the best interest of what the italian public wants? more than 60% of italians are in favor of staying in the euro. greece cannot leave the euro. when it comes to the markets, let's cut to the detail and say, what is the end game? how we got there last week was throwing out the person who was nominated to be finance minister and putting in a more euro friendly finance minister. i think that in the end, italy

will navigate its way through this. there will not be a euro breakup. italy will stay the course. francine: will a euro coalition be tested numerous times? >> the markets like to test it. this is not a bunch of currencies tied together. this is an omelette that has been made by a bunch of eggs. now the on what has been cut. -- has been cooked. have you get an individual egg out of it? -- how do you get an individual egg out of it? it is almost impossible to conceive. the turmoil of not having a currency plunges into a deep recession. lots to talk about within banking and within the american economy.

we show the nasdaq 100 chart inflation adjusted pretty good. deana friedman is chief executive officer. .ook for a deana clear, this is a quiet and calm her day. futures higher. the stock market driving ever higher. watching the euro asell at a level. york, this is bloomberg. ♪

francine: a cap -- the italian prime minister's first speech to

parliament in his first public test to navigate between populist leaders. it looks to be a watch on the markets. he is saying the social rights will be athe core of any italian government action and says the government will target corruption, fighting with new tools. he says they want to seek a more efficient health system. --l monitor those headlines we will monitor those headlines and bring you any news from the speech. here is taylor riggs. taylor: labour party leader jeremy corbyn will accuse theresa may of failing to stand off with president trump. he will say in a speech today that may won't fight back against steel and aluminum tarriffs. terrace -- were unjustified and deeply troubling.

senate republicans were unhappy about proposed limits on chinese investment in the u.s.. bloomberg has learned lawmakers will tell the u.s. unilateral investment curbs are not popular in congress. they want to look into chinese violations of intellectual property rights. from that volcano in guatemala has risen to 69 and is likely to go higher. the hail of ash, smoke and lava caught people living in a remote town off guard. emergency workers are digging through the debris to search for more victims. howard schultz is starting to sound like presidential candidate. the billionaire chairman of starbuck stepping down from his job. he is thinking of a range of options from philanthropy to public service, he tells the new york times he is them -- deeply concerned about the u.s.. global news 24 hours a day on air and twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm taylor riggs, this is bloomberg. inncine: in my bit -- tom: my visits to the white house over the yeaoffee has atrocious so he can do something to improve the coffee that is all upside. desk johnon our writing of our dq economics, dino kos joins us. again ouragged on michael mckee in terms of economics and really someone who has been in the hallways and trenches of nafta. simple today, next peso weaker. nafta, is it dead? this whole debate. >> i will go back to the "princess bride."

it is mostly dead, at least for 2018. periodwith a comment before it -- they vote on it. tom: is this a victory for canada and mexico because it's mostly dead? >> they would tell you it's not because they wanted agreement. , theexican election mexican candidate who is an overwhelming leader this point has the dust has been characterized as anti-u.s. but is pro-nafta. there may have to be some changes made to the agreement, which also complements this test complicates this. writing ince summers the washington post talks about strategy. do we have a trade strategy in washington? issues,nk we have trade but it's sort of somewhat using a shotgun to shoot a dartboard.

some of the shots are on target and some of the shots miss. i am concerned -- we have an integrated north american economy. we export a lot of parts to new mexico -- to mexico. if we were to go further down naftaots of breaking down , this doesn't go well. this will be very bad for business in the u.s. and i think a more coherent strategy would be thinking about those business consequences. francine: you could also argue that with such an abundance -- because the trump administration is so predict -- unpredictable that the chinese back down and some of the reforms they per promised will just be given a lot quicker because they are afraid. that is absolutely right in

there is a really big issue and that's chinese treatment of intellectual property, but i don't see how putting tariffs on goods from canada and mexico on defense grounds helps with chinese electoral property. in some game theoretic sense the randomization could mess up the pieces on the board, but whether you -- we could be lucky and that could work out that way. likely -- doesis it turn worse or detentions deescalate and if it does turn ugly will we see some kind of trade agreement with all nations around the world? >> tough to see how you will get that all the around the world. process fell apart over the last few years and we've gone into these regional and bilateral pacts.

nafta is going in the wrong direction as we talked about. a break from nafta will be really bad for the agreement supply chain. so trade is going in the wrong direction and we need to find a way out of it. mckee, you have been involved in these extensions. the washington post talking about a few days ago. the distinction between finished goods and imports. the president looks of finished goods. the looks of it watching the scene from china. thathe fact is this idea they mentioned of finished goods versus imports is critical. what do canada and mexico want? >> they want different things. basically the idea is to get enough of the inputs to be regional to make a whole car be produced more by the u.s..

thereare ways to get within nafta. the probably with china the initial tariff contains a lot of input so if he put the $50 billion in sanctions as originally suggested, it would hurt the u.s. economy almost as much as china. many companies would have to pay more for raw materials of the imports into the products they assemble which is why a lot of people will be looking when they publish that list to see if they have modified it at all. acrossat does it mean that river between detroit and windsor? what is always hot air mean for just that extra square miles? >> car seats. as a company that manufactures , their car seats go across the border seven times. as they add different components to the car seats.

if you disrupt that supply chain by putting tariffs -- tom: is there anyone saying this to the whise? give larry a lot of credit for trying to push away from certain to the receipt. is there anybody aware the car .eats go across that river is there anybody that knows that in the white house? aware sure larry is very and is representing that side, but there is between the free trade side of the administration ,nd the peter navarro side there's a real battle for the president's attention. ovechkin on the edge of a stanley cup. >> hard to believe. they look great. tom: we went to again ages ago and ovechkin, we sat where that shot is. he can do it.

>> this year seems for the first year they have an actual chance, they may not fold. a 3-1 lead is interesting. francine: great. we will do the world cup next. premier is speaking, preparing and to take the reins in italy. t of macro strategists are fretting about the meaning of last week's in the -- in the markets. and what it means for asset prices. italian bonds were throws of unprecedented selloff and now things are a little bit calm her. his speech isw received by the markets. this is bloomberg. ♪ ♪

taylor: let's get your bloomberg business flash. the biggest maker of semi conductors for smart phones can elevated chip. samsungoa as a customer and is offering free wireless data based on the chip. they are trying to get their mobile technology into the market dominated by intel. six executives have been charged by a straley and new zealand banking groups. among them the former head of citigroup and deutsche bank units in australia. the banks deny wrongdoing. health insurance company cigna says it expose private information of some customers in asia. the company is not saying how many were affected.

companyexplain how the reacted. he spoke the bloomberg summit in new york. operate -- anbang operational change resulted in data resulting customer data. t a financial issue. ,elf identified, self-reported several auditors brought in, credit protection being put in place. not something you like, the question is how fast can you find it and understand it. you bring a third-party validated -- to validate it. taylor: that's your bloomberg business flash. francine: the chief executive of ubs says investors are getting cautious but urges clients to stay in the market despite recent volatility. bloomberg in an

exclusive conversation in germany. back to the levels of the vix, in general you look at fx movements, it's not a lot of volatility compared to the standards. overall investors are very cautious and they are out there observing the situation, they are not panicking. they are starting to get concerned. did you take any risk off the table? >> i think we have been very focused on managing our risks for a while now and this is clearly not an environment which you put on more risk. >> what about italy, to have material exclusion? exposures in terms of countries is well within our risk appetite and uncomfortable

to communicate there is no substantial -- to europe. on wasthing i foc between sovereign risk and banks was alive and well. it hasn't gone away. i at the end of the day banks transmission and if the underlying economy or political landscaping is possible banks are suffering. europe in banks in general are in a much better shape than they were this time years ago. i am pretty convinced the system would be able to absorb any shock related to any bank. the program will be what the rest of the shocks outside the sector. think it's much more about

thatces and the structures needs to be implemented to create a better environment. bank whicht deutsche has credit default swaps. know withus to this bank in 2012, is deutsche than ita worse position was this time last year? comparisonake the what we did is we focused on our strengths and our balance sheet and i think deutsche is going through -- and i think the right thing to do at this stage. it's very difficult to make because we also have quite different -- >> one of the things the market

is how the market should be focusing on deutsche bank. is it about risk? if that risk is taken away, that is the beginning of crises. >> i don't think there is any and i think risk it's very difficult for me to make a judgment about the bank at this stage. i don't think is any risk that meaningful. tom: we now turn our discussion to american banking. with us, john riding. a chief regulatory officer, this sutherland cbs, what do you do--

as a regulation officer? not just the white house, but anywhere in washington -- the chief regulatory officer is responsible for managing relationships with key regu thatas 20 central banks look over the committee. my job is to take care of them. the volcker rule then was three pages long. then it became a lot longer. what is the rule? banksis the rule that should not be speculating with depositor money. depositor money should not be used to speculate on proprietary positions or invested in hedge funds or private equity or other kind of risky investments. he pushed that for years, he was to theful selling it

president in the obama administration and became of. frank. --was and lamented implemented by the regulators but is very complicated. there is a lot of gray areas and fine lines and it's proved to be more complicated than the simple idea i asked rest. what's happening now is regulators are finding way to ease the rules in parts to make implementation easier. banks will have a little more flexibility. the banksdoes it mean in the u.s. will be over or under regulated? the banks always think they are overregulated, no matter where you are in the cycle. easedlcker rule will be into certain ways. it should make it easier for the banks. francine: john, what is your take on the next financial crisis and whether we are focusing too much on bank

regulation instead of trying to find where the next crisis will stem from? andy of theof with bank of england which is simpler regulation, easier to understand rules. andty of bank capital unfortunately a lot of have obscuredes the state of banks. when -- was rescued it was well in compliance with the regulatory capital. and would like simple rules less rules that are more complicated. >> it's more focus of simple ratios. they rely on more compensated

machines so we have gone in that direction and arguably the banks are at least -- certainly in the u.s. are stronger now than they were a decade ago in the crisis. peoplee: -- tom: want to know is the trust of our major banks. the fact of the matter is we don't care about billions and all that. the banks screwed up, aig screwed up. do we have any better understanding of the shadow banking -- all these nightmares from 10 years ago, are we smarter and safer than we were then? safer, there are reforms that were put in place. a lot of derivatives are going through central counterparties, clearinghouses so we know more about what is there. the risk is being managed better. directionally we are in a better place.

half we flushed out everything in the shadows? no. there is more that we probably don't understand. it's a lot better than 2007. tom: we have a duel vice-chairman system of the fed now. that's got to be an improvement? >> i think so. one thing we gotten worse, political anger. >> i want to make clear that mr. riding live this. >> political anger has taken away some last resort towers and so in the event of a systemic crisis that is something that concerns me that the fed can't make those moves that it made with regards to bear stearns that it didn't make with regards to lehman brothers in the moment you were talking about earlier. and it did do with aig, those from the great depression ever rules. the fed had its power curtailed

and that could be a problem. just that president trump out when he talked about economic value 've added. boy is that a squishy concept. i don't know any president to could do that bragging moment. what is economic value in this economy? you've got me at a disadvantage giving me a treat rather than a tweak. -- tweet. point since the election and now? a $20 trillionut economy in terms of gdp. tom: most of it is routine growth. >> the job creation is going well. that was friday, job creation is going well. the unemployment rate is low.

i think that's what matters to oft people in terms evaluating the state of the economy. francine: how much does this have to do with tax cuts and how the u.s. will fund them? >> we will run big deficits. you don't fund the tax cut. it's a tax cut. that will mean bigger deficits and over time if the administration is correct we will get much stronger economic growth and that will work to curtail some of the losses. but it's a case that budgeteers overestimate the revenue losses related to tax cuts because they don't count in the dynamic effect. the question is how big of the cinnamic effect. we get the permanent sustained 3% growth that will reduce the revenue losses substantially. but i think we will see large deficits. tom: this is the inflation-adjusted nasdaq 100.

hart. it's a 30 year profits of a better quality now than they were at that spite in 2000? the answer is yes. >> undoubtedly. let's get back to the point we just talked about on the fiscal side. have bigger fiscal deficits because of the tax cuts and spending plan, but also they will have to absorb not the sales, but the security the fed will not be reinvesting. the fed is working on its balance sheet as securities mature, the market will have to absorb those. you not just a deficit that will have to be absorbed, but securities the f will be feeding out into the market. it will be a lot of pressure for bond market over the coming in that something that we will have

to deal with in the short-term. tom: thanks so much. both be with us with jonathan ferro on blooo. promise we will do a world cup update on italy, america and the rest of the nations. out at bloomberg radio. it will be a good thing as well. stay with us. includingg on primaries coast-to-coast. stay with us through the day. this is bloomberg. ♪ this is bloomberg. ♪

alix: mixed messages. the ubs ceo says klein should

stay in the market despite fall till death volatility boat warns volatility butet warns of cyccal markets. fang.ble in goldman sachs is tackle rule for will ruleays tech for decades. david: i hope you didn't want to run an airline because -- alix: my bucket list net -- now for qatar airlines is cack. i'm like you can't walk that back. it's too hard, you need a strong person. alix: in the markets it feels like a very calm, quiet