>> good morning. i'm anna edwards. this is bloomberg daybreak. these are today's top stories. ande face-off in quebec france joined germany in challenging president trump ahead of the g-7 summit. the last hike may not have been enough for turkey to the central bank announces its rate decision at noon u.k. time today. bank warns of yet another quarter of phone revenue . ubs is said to be cutting wealth

management jobs to focus on growth in china. ♪ anna: good morning, everybody. welcome to the program. did you 6:00 here in london. it is 6:00 here in london. the focus really on the u.s. economy once again. the export numbers out of the indebted states, record u.s. exports underlining potential trends. perhaps it is the dollar where we see more of the g-7 tensions around trade reflected. the third day out of for that we have seen week is coming through. recalled low says these are just family quarrels -- larry kudlow

says these are just family quarrels. latest warnings from france and germany suggested they might not have enough substance or even platitudes to burn in a g-7 committee k -- to put in a g-7 communique. we are not seeing a lot of upward momentum. we are range bound on the futures at the moment. euro-dollar, the euro that little bit higher again as next week will have a live conversation around the timing of the ending of the qe program. we look forward to that with interest. than the group ceo michael spencer will be joining the bloomberg team. it's his first interview after

agreeing to the company takeover by cme group. perhaps brexit will get a mention, perhaps gender equality as well. juliette: donald trump is set to meet shinzo abe next week. the white house wants kim jong-un to commit to a timetable or to surrender his country's's nuclear arsenal at the meeting. however, north korea has publicly gristle that -- at armytence to agree to this -- to disarming. advisor,ump's economic larry kudlow said trump will meet with justin trudeau and emmanuel macron.

joined germany to one donald trump it will not sign a joint statement at the g-7 this week. emmanuel macron has signaled that tariffs and the paris climate accord must be agreed to before he signs an agreement. the u.k. prime minister is facing a cabinet rebellion that could destabilize a whole government. david davis is said to be furious over the plan to tie britain into european customs rules after the country leaves the block . month and sheext ease thes necessary to gridlock.

environment secretary -- ael grove says in guatemala, the number of people killed by the volcano or corruption has risen to 99. authorities say at least 200 people are missing five days after the mountain erected without warning. -- erupted without warning. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg. asian stocks on track for

a weekly gain. we see the nikkei up about .8% in late trading. assets really started to rise yesterday after that resignation from the country's central bank governor. there's been more movement in malaysia. of telekomn the ceo malaysia resigning today, just over a year after he joined the company. there's a lot of signs we see a lot of cleanup coming through in that country with the new prime minister. kong, poly energy is rising -- gcl poly energy is rising. in japan, shiseido writing --

rising, morgan stanley upgrade in the stock due to strong growth coming through for japanese cosmetics. anna: thank you very much. warning a deeps split at the upcoming g-7 summit, saying she will challenge president trump and his america first policies. france is now also warning that it won't sign a joint statement at the summit. larry kudlow tried to play down the dispute. >> we are talking everything through. there may be disagreements. much like ahis as family quarrel. i'm always the optimist. i believe it cane anna: he is ty kudlow.

let's get more from stephen engle. couple of days ahead in canada. what is thebe overcome? when you look at the list of things france is unhappy with the united states about, tariffs are just part of the story. your family might be very peaceful, but any family quarrel that i've had oftentimes lead to a deep rifts in trust because the parties involved care, unless you have one family member who doesn't care. so that family quarrel analogy from larry kudlow maybe not ringing to true to some of the to some ofoo true the allies that the united states is distinct itself -- distancing itself from. one of the most outspoken donald against what

trump has done as far as that tariffs on steel and aluminum, against the nafta partners, canada and mexico, trudeau has called it insulting. they will call -- talk about nafta as well. they are willing to walk away from these negotia said let's ha bilateral with mexico and a bilateral with canada. it will be interesting, if not devices, thanksgiving dinner there. anna: indeed. he likes to keep things one-on-one in these trade conversations. what if we don't manage to achieve a joint statement? what is fascinating for me, when meetingsg7's and other like this, the things that mean much are full of platitudes.

right.: that's it is tradition that the seven members would come up with a joint statement. already, couple of members, saying i'mmacron, not going to sign this joint statement at the end if there's not progress done on these theffs moves but also on iran nuclear issue and the paris climate change accord, which trump has pulled out of. it does not look like there will be much harmony. at this stage, no statement coming from the g7, so no unity among the biggest economies in the world. anna: thank year. -- thank you. larry kudlow characterizing this as a family quarrel.

looks as if it could be a rather fractured family affair. >> i think that is absolutely right. that u.s. is negotiating on three fronts, the trade negotiations with china, the issue of what happens with nafta, and the trade negotiations with the eu. beforet is just trade one has conversation over the split on the iranian nuclear deal. in terms of the relationship with the eu, particularly on the news that mr. macron saying s he will not sign a g7 agreemen. -- see anicult to see agreement here. the u.s. has said we will carry over europeany car imports into the united states. and the eu is setting to respond by saying, yes, we will impose tariffs on u.s. exports to

europe, whether it is motorcycles or food or other u.s. products sold in the european union. i do think that the analysis of this g7 meeting will be fractious. what does this mean for investors? we continue with investors worried about the day-to-day uncertainty, worried about the asml equityd come markets over the last few weeks have been reasonably well, driven by earnings. anna: and a focus on growth instead. >> there is this degree of investor nervousness. anna: do you sense that that has yet orimpact on markets are investors to complacent -- too complacent? they say it has taken one point $1.25trillion off --

trillion. bob: investors have been diverted by other pressure points, whether the widening in italian bond spreads or the reversal in italian equity markets relative to the dax. that has been diversion number one. divers number two has been an emerging markets, notably this with a big selloff in the brazilian bond market with 10-year yields reaching close to 12.5%, and the implication that has had for the brazilian equity markets. answer number one is we have had lots of diversions. answer number two is i ate we have there is an investor focus on sectors and stocks -- is i an investore focus on sectors and stocks.

significant outperformance by the russell 2000. there is a lot of investor behavior focusing on domestic rather than international stocks. sophie: that takes me into my next question. the dollar has different impacts on international business in the u.s.. how does the dollar respond to trade tensions? it does seem muted this week. trade trade tension, the policy from the white house dollar negative? bob: probably not. the dollar is driven more by what is happening in relative growth trends between the u.s., europe and japan. which is thatear, we are seeing a clear acceleration in u.s. growth relative to europe and japan. in addition, it is driven by expectations and went to effect,

the ecb, the bank of japan will do. i think we have clarity on what the bank of japan will do, which is qe will be intact for the rest of this year and probably the first half of next year. last 24 happened in the hours, obviously, we have had some recovery in the euro on expectations that the next meeting of the ecb will result in change in policy. it is larger and by central bank policies rather than trade tensions. anna: we will talk aboutanna: -- anna: we will talk about central later.licies before president trump heads to the g7, he will be meeting with shinzo abe in washington today. live coverage of their joint trust conference at 7:00 p.m. u.k. time. coming up, theresa may is facing a showdown. they could help break the

deadline -- the deadlock with brussels, but could they also bring down her government? we will be discussing brexit and the irish border. peter hain joins the bloomberg team. this is bloomberg. ♪

>> for the next two years, the tax reform, a structural change in the u.s. tax system, and the

stimulus that has been in the u.s. will drive the economy forward. at the end of the day, i believe what we are seeing with the way of tariffs is posturing and jockeying. we all need each other on this earth. ♪ anna: this is bloomberg daybreak: europe. the msci asia-pacific up with rallying stocks continuing this week. juliette: ubs is said to be cutting jobs to focus on china and sustainable investing. the division has eliminated at least 100 positions in recent months. about 30 of them in the u.s., leslie in new york.

the unit miss for cap -- mostly in new york. the unit missed forecast. deutsche bank says it will probably report another quarter of declining revenue for the period through june as it scales back investment banking operations and cuts of jobs. it is accelerating focus on europe and a retreat from wall street, having already announced positions.ash 7000 warren buffett and jamie dimon are doubling down to stop providing quarterly earnings guidance. dimn editorial, buffett and movingthey are urging away from quarterly earnings, saying guidance stifle long-term investments.

china's biggest carmaker says the industry faces a major shakeup in the next four years. beijingrman of the automotive made the comments in the recent interview with bloomberg. >> some will survive. some will be consolidated. while some will be eliminated. in my opinion, at least one third of the chinese auto manufacturers will be squeezed out of the game sometime between 2020 and 2022. juliette: that is your bloomberg is this flash. anna: now to britain and the u.k. prime minister is set to face rebellion over brexit. furious overs plans to tie the u.k. to eu customs rules for an open-ended period of time after the country leaves the block. she argues it is necessary to break the deadlock in talks. backstop plan, not

the primary planet theresa may had in mind. in a speech yesterday, davis criticized the plan. put simply, the commission's position seems to be shooting itself in the foot just to prove that the gun works. this is not an issue isolated to galileo. the same is at risk of happening with the union defense fund. how much are you focused on the politics of the cabinet at the moment? it does seem a tense time here at home for theresa may. david davis refusing to put aside questions asked to whether he would resign over this backstop issue. investors -- let me answer that question with a

question. how can investors make rational decisions when you are dealing with a raft of uncertainties? we have the split within the cabinet. we have the changing position by the labour party, which is nowing for super soft exit -- brexit now. we have a lack of clarity on the status of negotiating's -- negotiations between britain and union.opean and the summit at the end of june will only focus on how to deal with the issues of the northern irish border. that still has not been resolved. the only real way to resolve that is for the you pay either stays in the customs union or it goes for what i have always been arguing since the referendum results is that the u.k., in the end, will end up with a similar deal to that of norway and that the u.k. will become a member of the european economic area. that has always been my view. i see no reason to change that.

anna: there is a vote on that subject next week in the house of commons. >> and another point of uncertainty of course is that we have part of the parliamentary tory party who may vote with labour. we also have opposition from the house of lords. to come back to your question, investors are looking at this and of uncertainty and find incapable to make investment decisions based on what will happen on brexit outcomes. we don't know what the government doesn't know itself. anna: what does the pound risk on brexit? bythe pound is more driven expectations of the bank of england. weak first-quarter economic data, notably in the service sector. the service sector pmi has recovered. that has driven it vacations at the bank -- that the bank of -- that has driven expectations

that the bank of england will raise rates. and improvements in inflation could either stop or reverse, given what has happened to commodity prices and with the weakness in the pound against the u.s. dollar over the last two months. expectations at the bank of england will raise rates. i think they have to raise rates. it is supported for the pound. we have very strong support, irrespective of the brexit outcomes. towards recover back 1.36 on the basis of a bank of england rate increase. anna: back to focus in that. >> the risk, if we do get an adverse event on brexit, i.e., no progress whatsoever and change that the u.k. will crash out of the european union, the risk on sterling is skewed to the downside. the u.k. mermen secretary

critical of -- the u.k. environment secretary critical. he's not the first to make this point. it's not the first time he has made it. >> a number of bank studies have reviewed the impact of qe. i would answer that two ways. if we had not had qe, whether from the bank of england are from the fed, bank of japan or the questionto ask what would have happened to the global economy and the u.k. economy since the financial crisis 10 years ago? the answer is we would have had a much worse economic outcome. i think qe has worked. it has boosted economic activity and demand. obviously, linked to that is the vision to equity markets. --, if we had not had equity

if we had not had qe, equity markets would not be where they are today. anna: he stays with us on the program. turkey's market continues to rally after an emergency rate hike a week ago. this is bloomberg. ♪ retail.

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♪ anna: this is bloomberg daybreak: europe. the dollar against the yen on the move a little bit. we have a little bit of weakness in the dollar. .2%, the dollar against the yen. we have earnings coming through .rom ramik him tro it is just a shade below the estimate.

it does seem to be a positive outlook statement coming through of winepany, this maker and spirits and cognac. talking about an excellent q4 and suggesting comments around fx that could move things that they havet listed their full-year 2020 up ready margin seen as a positive. you just showed a touch of yen strength against the dollar on the fx lower. in asia, japanese equities not affected by the slightly strong again. by the msci in asia asia index continuing the global rally that's all the nasdaq hit a record high in the u.s. session. asia andore deeply at

em come emerging markets very much in focus today as we get the rate decision from perhaps resolve the next domino to fall with u.s. contagion. these two charts are normalized from the start of the year. although we have seen losses from the start of the year, asia still hasn't in doing quite as bad. it does during the question, in the emerging market space, asia is more resilient to rising rates are the stronger dollar. the dollar, a touch of weakness against major peers. receive euro strength. we head a 1.18 handle. yesterday, we had a two-week high on hawkish signals from the ecb and from peter pratt basically confirming the june meeting is live, however you interpret that.

we look at the euro-dollar, one week risk reversal. we have gone above zero. out bullish on foreuro against the dollar the first time in quite a while, since april. to the last one, this tells us sentiment.bout risk the copper-gold ratio has been climbing bets on global growth. gold haven has been stalling. this copper-gold ratio at the highest this year. we have to go back to january to see it reads the sign. gold on track for its first quarterly loss in a year. anna: thank you. now to an exclusive conversation. kerry wood you has defended the central bank decision to raise interest rates twice in two weeks. he spoke to bloomberg about possible future hikes and how

closely the decisions will be influenced by the fed. lessons, the key [indiscernible] you have to preempt uncertainty. the possibility are the impact --fiscal bloomberg.com [indiscernible] preempting this bout of uncertainty, our ruby and [indiscernible] haslinda: is there a need for another rate hike. goldman sachs saying you probably need one in the third quarter, if not in june itself. >> we will continue to calibrate the economic environment globally and domestically.

call.s the clear there is the possibility of a rate hike. coast, the magnitude and the tummy will be measured and it will depend upon our calibration .f new information haslinda: you talked about being ahead of the curve. what assumptions are you making about the fed next weekend how closely are you watching it? how closely will your own policy decisions be linked? >> are domestic economy -- our domestic economy is strong.

, we wanted toterm be lower. banking is quite fine. haslinda: you talked about the repair -- about wanting the rupiah to be stronger. >> it is always dynamic. [indiscernible] in february, capital outflows,

not strengthening again. we see the development of inflows again. haslinda: how deep is the pocket? how much can you intervene to prop up the currency? we are seeing pressure in the market. this is beyond normal. this is the thing that the markets are in the process of adjustment. this is where we need to step in, not to interfere in the market, but to answer the adjustment -- but to ensure that the adjustment is small. conversation.ing

decision fromy turkey central bank today. analysts are divided on today's policy decision. last month 300 basis point rate increase hasn't stopped the market route. some investors say more are needed to restore confidence. us. to have you with talk to me first about the real yields we are seeing in the turkish market. when you look at turkish policy rates adjusted for inflation, the real yields don't look so bad. why are investors so negative on the lira? i guess politics have something to do with it. >> politics is part of the problem for many investors. distaste forogan's

high interest rates is no secret. and there is a lingering concern about the central bank's independence. that said, the emergency rate hike last month, 300 basis-point move, has health to -- has rebalance the market. many investors want the central bank to prove that it is getting ahead of the curve in terms of managing inflation and anchoring inflation expectations. the currency has depreciated 20% so far this year. that strength filters through to import prices, pushing inflation even higher. a lot of them will be waiting for another rate hike today. anna: so we will watch and see that.y do there is the global picture around emerging markets, the get and the dynamics

specific to turkey, the political risk, the rising political risk, president economic unorthodox views, are they still a problem for investors? >> that is definitely part of the problem. the other big question for investors is, well, turkey is headed to elections. there is uncertainty about the results. market also weighing on sentiment definitely. yesterday, president erdogan told us, if there is a political deadlock with president erdogan winning the presidency but the opposition winning the parliament, they would consider holding a second round of elections. all of that uncertainty is weighing, not just about interest rates. anna: is there a case to be made that they are balancing a couple of dynamics in turkey?

is trying to underpin economic activity after the coup. , thatt that up against perhaps that is coming at the expense of stability. is that a live conversation in turkey? >> that is definitely an argument that people have -- are making. the government doubled them growth, tried to boost growth after it failed to recess of ted economic activity. but that did, the expense of inflation and a ballooning account deficit. anna: thank you very much. bob, your thoughts on turkey as

we head into another rate decision after the surprise ones? bob: first of all, the high current account deficit, secondly, the fact that it has been financed by volatile, short-term capital flows as opposed to more stable, long-term investment in turkey. andhigh level of inflation, an economy that is dealing with very high levels of bond yields in nominal terms. there was clear evidence that the economy was overheating earlier in the year. those high interest rates are starting to slow down, moderate. i would not say the economy is decelerating rapidly, but it is moderating from what was clearly overheating at the beginning of the year. the other very fundamental program is the investor perception of political risk. that political risk can be

summed up in the pressure on the central bank not to raise rates. the independence of the central bank is a critical issue. where do we go from here? i think the turkish economy will benefit. export ruptured benefit from these over devalued turkish lira. assuming a trading range for the rest of the year between 4.5 and five. broadly, the argentine sl, the brazilian real , this is over the past month, emerging markets against the dollar. the focus is for investors. where do the em risks lie for you? and where do we see too much

selling and there is a good buying opportunity? bob: i think the asian currencies are stable. in the last two weeks, we have seen pressure on the indian rupee, pressure on the indonesian rupiah, and other currencies have stabilized. even with the fed raising rates probably in june, a high probability that the markets are correct in discounting at least the further to rate increases by the fed this year. asiang pressure on the currencies and the asian markets is probably now behind us. plus, in america, there's a raft of issues. i do think the the argentine central bank has taken decisive act in -- action and stabilizing the peso. brazil clearly has that ongoing challenge when dealing with its fiscal deficits. and this big selloff -- fiscal deficit. and this big selloff we have had in bond yields is a major issue

for the economy. we have seen the weakness in the brazilian real. we had another leg down to around 3.85. the risk in brazil has certainly increased. mexico, we have the nafta issue, plus the election. and if we do get mr. lopez over a door as president, which is highly likely, i think investors exitprobably quite rightly capital positions for mexico. the recent weakness in the mexican peso was traded through 20. anna: very specific idiosyncratic stories within latin america. your thoughts on those emerging markets. we use a lot of charts and os 15 minutes. if they went by too quickly, -- we used a lot of charts in the

last 15 minutes. if they went i too quickly, join the bloomberg terminal. you can bring all of those up and use them in your own work. next, live from your -- from room. this is bloomberg. ♪ -- from rome. this is bloomberg. ♪

♪ good morning, everybody. s&p futures up 5.1%. pu .1%. in italy, the new prime minister sought to reassure the market

with plans to reduce the massive debt burden. latest is now for the kevin costello from rome. the flat tax program is getting a lot of attention. what is going on? what is it about that that speaks the markets? kevin: it is one of those programs that could actually increase the deficit and the debt. the government is already on the defensive. in fact, some people are saying flat taxtwo tiered program could unfairly benefit the rich. they are already defending themselves in the government. the whole program of the government could in fact increase the debt of italy. that is a major point right now. anna: wind -- what would ecb have to do with all of this?

hallowed does the ecb winding qe, how does that affect of the italian story? has an inflated from the quantitative easing program. it has kept down government borrowing costs in italy. itthe program's wound down, could create huge difficulties for the new government. anna: thank you very much. sylvia, what does the ecb move tell us about italy? is is a negative because ecb is being tough, withdrawing something that the italians have

relied on? for is it a positive because the ecb is not too concerned with the italian political situation? sylvia: it is a positive. the ecb is not overly concerned. but it also means that ecb wants to interfere with the political process. it is important for a central bank to keep its independence. also, i will stress, of course, the ecb is tapering. bondse stock affect the that the ecb is holding, will stay there for a long time as the ecb continues to invest. therding to our estimates, stock that the ecb is holding, they continue to put downward pressure. according to our estimates, it italiantinue to reduce

-- anna: when we talk about the is, i have this chart, this showing the estimated months until the ecb's next rate hike. we saw investors were pushing out expectations for when we get the next hike during the height of the italian crisis. then they started coming down again. does that play to your point the ecb and others are expressing some confidence that the italian situation can be contained? sylvia: yes. but goes in the same direction. in away, the market reaction was correct. it looks like the ecb is determined to bring its program to an end. delay atary, it will -- it will delay to the start of

the investing cycle. we try and i just with the market is concerned about in italy. is it fiscal policy from this new italian government? is it tension with brussels? is it what they plan for the euro? what is it you are focused on when you listen to the italian administration? sylvia: at this stage, concerns about union membership. i think all components of the government have been quite clear, that euro exit is not a priority at all. at this stage, the main concern is fiscal sustainability. the public that is used, more than 130% of gdp in italy. clearly, sustainability depends

on the prime minister on the ability, of the government to contain [indiscernible] and also on the interest rates that financial markets are conceding to the government. i think the threat of fiscal slippage just so there. but the government has realized it needs financial markets on its side to proceed with some fiscal measures. anna: they said so, just sippy giuseppe conti said. you do need to give financial markets on site. has that been a change in their outlook amongst the five-star in the league.

sylvia: i think some key figures in the government, in the cabinet suggest they have gotten the message from financial markets and the have come to the conclusion that they need them on their site to provide some fiscal stimulus to the country. anna: what are you looking for the ecb to do? do you think they will give us a date for when qe start stash qe stops -- for when qe stops? i was surprised by the comments yesterday. he said the ecb will discuss the future in the upcoming meeting. and we might get more information. at this stage, i expected that draghi will probably extend qe for another quarter, until the end of the year. december might be the dates. anna: thank you very much.

up next, summit showdown. deepa merkel warns of a split at g7. we will be joined by [indiscernible] next. this is bloomberg. ♪

anna: france joins germany in challenging president trump. larry kudlow said it is a family quarrel. the last hike may not have been enough. the central bank announces its

rate decision at noon u.k. time. this is muhammad ali el-erian puts brazil on his emerging-market watchlist. deutsche bank warns that another quarter of falling revenue. abs is said to be cutting wealth management jobs to focus on growth in china. good morning to you. this is "bloomberg daybreak europe." it has gone 7:00 a.m. in london. looking at breaking news coming through on the bloomberg month german april factory orders, 0 -- the estimate was for an increase. that seems to be lower than estimated. we will see if it has an impact on the euro. signals that nervousness in the german factory complex will be looked at carefully by investors. let's talk about what is on the futures. this is the picture on the ftse futures, dax and cap futures. opening up in positive territory.

on the dax .51% futures this morning. the global optimism around growth seems to be offsetting concerns about level trade. that has been the theme of the week. we have the u.s. export data yesterday. as aem to underline that market theme. as we move toward the g7, perhaps we do focus more on the comments of larry kudlow and the like around trade. we will be keeping trade in the crosshairs. he has been talking about how trade tensions are a family quarrel. we will see what kind of family sits around that table in the g7. let's have a look at the risk radar. asian equity markets up i .61%. with the global growth story. futures up by one -- .1 of 1%. european how performance moderates later in the day. the euro against the dollar, up

another point to of 1% in the single currency. what we heard yesterday, expectations around that ecb having been rethought. what next week's meeting might been. -- ring. there is concern about the april factory number down by 0.1 percent. that was weaker than estimated. let's bring in the bond picture. btp was on the move as a result of giuseppe speaking. is coming upu what on bloomberg television later on. michael spencer is the next group ceo. infrastructure the story in the city of luncheon -- london. he will be joining us at 8:30 a.m. withantial strategic news

-- from them. m&a will be on the agenda. let's get the bloomberg first word news. here is juliette saly in singapore. juliette: donald trump is set to meet japan's shinzo abe ahead of next week's historic north korean summit. the white house wants kim jong-un to put commit to a timetable to surrender his country's nuclear arsenal. north korea has bristled at u.s. officials' insistence it must agree before reserving -- receiving anything in return. we will bring you the news conference live from 7:00 a.m. u.k. time. donald trump's top economic advisor has attempted to ease concerns over trade disputes. he said trump will meet one-on-one with justin trudeau and french president emmanuel macron during the two-day meeting. >> we are talking everything through.

it may -- that may be disagreements, i regard this as much like a family quarrel. i am always the optimist. i believe it can be worked out. juliette: italy's new prime minister is seeking to reassure markets with a pledge to gradually reduce the countries massive debt burden. giuseppe content had unnerved investments -- investors with promises including a citizen's income and a two-tiered flat tax that could cost 100 billion euros in the first year. brazil's central bank is under pressure to join emerging-market peers working to shore up currencies. the real posted the worst performance among major currencies yesterday, heading toward the barrier that has not been seen in more than two years. the slump carried over from tuesday, when policymakers offered $1.5 billion in extra swap contracts failed to stem a round. -- rout.

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 . we are saying that release coming through in two -- relief coming into asian markets, catching the tailwind from what you saw in europe and the u.s. ecb comments weakening the end area japanese stocks posted a solid move. the nikkei closing higher by point -- .9 of 1%. you're seeing general buying across the region. we have seen a good pickup in a lot of the tech players like tencent, also mining players. let's have a look at the stocks we have been watching. around aopper holding three high. a big boost coming through in the big mining layers. bhp closing higher by more than 2%. toshiba is in focus on news it will sell part of its pc is mr. sharp. number of has affirmed its neutral rating at is jumping the

most since november last year. a little bit of corporate maneuvering happening in malaysia. a couple of ceos resigning including ahead of esther malaysia -- astro malaysia. she wi.ll leave the company on good terms and january. anna: breaking news coming through from the middle east. the divide-based asset manager him a -- manager. it has been trying to get agreement with creditors to [indiscernible] on debt payments. it seems it has not agreed with all. kuwait funds which is -- has filed the petition for holdings to go into liquidation. they filed this in a newspaper in the middle east. keep an eye on that story. warning of deep

splits at the upcoming g7 summit saying she will challenge donald trump on his america first policies. france is also warning that it will not sign a joint statement at the summit. let's get more from bloomberg's chief asia correspondent who is with us right now. what is the likelihood that these divisions can be overcome? the french are referring to a host of issues on which they do not see the world in the same light as the u.s. this is not just about tariffs. there are plenty of other issues. >> that is quite right. expectations among economists and people watching the meeting are relatively low. there is significant concern, that where do -- where the tensions are heading. triggeringking

retaliation from key trading partners such as canada, mexico, and europe. has beenhe economy somewhat modest, the fear is as long as these protected -- protracted tensions linger -- in months or now, all of th [indiscernible] will show up and indicators. it will be interesting to see if there is progress or if we was a as we were which steady path. anna: how significant would it be if we do not see the g7 leaders come to an agreement? we just missed these joint sessions. haveis what many investors done in the past.

can be agreedes on, that could be substantial. khamenei kay's are often areegarded -- communiques often disregarded. it would suggest the trade dispute is more protracted than people anticipated. that is why it would be critical to see what language are common ground could come out of the meeting. it is not just the u.s. g7 trade tensions but also the u.s.-china trade tensions that are bubbling alongside this. we'll see if there is a meeting of the ways or if the world economy is heading down a much more protracted death to a longer and steeper trade dispute and the consequences that will have on economic growth and activity. anna: thank you very much,

bloomberg's chief asian economic correspondent. joining us here in london on set, good to have you with us this morning. we will come to the european side of things. the global tensions around trade, europe versus the u.s., canada versus the u.s., the tensions are clear, they are not being hit in. how significant would it be for you if we do not see agreements on a final statement or communicate after the g7 meeting? that theyd be a sign are serious. we would see at this meeting that america first basically means america alone. i do not think that this will impress trump very much. have someer time, impact on the u.s. political debate. if we do not get a statement, it would be a clear sign that this is very much america alone which even america should not be able

to afford. anna: jpmorgan has been trying to put a number on what kind of impact we see from the trade tensions on stock market performance. are you trying to put numbers around how much the trade tensions and protectionist measures we have seen, how much they are taking off global growth, or is that missing the story? maybe the rhetoric is more significant. >> the numbers are not very significant. the impact of the trade impediment imposed so far on global gdp is well below 0.1% of -- probably more in the 0.0 1%. that is almost insignificant. what matters is the fear factor. what is next? is the global order being put in jeopardy or even shattered? it is this fear factor that weighs on confidence and confidence is the major driver of the business side.

it is difficult to quantify. it probably makes for europe the difference between above trend growth which we had until the end of last year to now a growth rate in the eurozone which is around trend rather than above it. anna: where does this leave the u.s. economy? -- america first is designed to put america first as the name suggests. does it benefit the u.s. economy or does it mean consumers pay more? >> it helps the u.s. economy. it hurts consumers, it hurts companies. we have this massive tax stimulus at the same time. -- the u.s. does not notice how much it costs because it is hidden by the tax stimulus. it will be visible in the long run. at the moment, consumers do not feel it. thanks to the tax cuts, they can afford the rise in prices that come from these trade impediments. much are we looking at two

fiscal stimulus or not? >> this is the wrong time of the business cycle for the u.s. to have a fiscal stimulus. much of the growth that we see in the u.s. is a reflection of deregulation and the tax system that for companies is actually better. the tax reform part of it is good. the tax stimulus part of the package is not needed. that is something which, in the end, will mean the u.s. is at more risk of overheating, which means down the road, eventually, the u.s. side could end earlier than what have been -- would have been for the stimulus. anna: we will look at what is going on in the u.s. economy and the european reaction. g7.ill also talk about the he will be meeting with the japanese prime minister, shinzo abe. we'll have coverage.

we have seen trudeau and macron meeting. up, deutsche bank drama. the troubled lender said there is likely to be more bad news. we are live in frank for it for the latest. downsizing the debt. conti's words. this is bloomberg. ♪

anna: good morning. this is "bloomberg daybreak: europe." is 7:18 a.m. in london, 818 a.m. in germany. ordersfactory unexpectedly dropped for a fourth month in april. the prospect of economic slowdown at the start of the

year may be worsening. the euro against the dollar is a little bit stronger. still holding the fort. talk about what is going on in the banking sector. deutsche bank says it will report another quarter of declining revenue as it scales back investment banking operations and cuts to jobs. it is accelerate its focus on europe and announced plans to cut 7000 positions. that's bring you -- let's ring you steven arons joining us now from frankfurt. more bad news this week. how bad is the outlook for deutsche bank? steven: it is bad, but it was to be expected. they are cutting people, cutting jobs, cutting back in the investment and carefully. it is not a huge surprise and the share price did not move much yesterday.

even though they did say they are going to have another quarter of declining revenue which would eat the six consecutive quarter of revenue decline. the cfo said they need some tailwinds now, especially interest rate rise and we will see if that is going to happen. anna: what are they doing to solve these problems? id the introduction, mentioned a few of the measures they are using to retrench. stephen: they are recognizing they cannot compete with the in investment banking. they decided to scale back. they concluded a global equities review and decided to decrease their prime brokerage, cash equities, there will be strong backs, and they are hoping this

leave them with the parts that are profitable where they can compete and they are hoping they can be successful. much thank you very joining us in frankfurt. let's talk about what is going on in the eurozone from the economic front, disappointing data out of germany. prime minister succeeded in getting support from italy's lower house, having won an earlier vote in the senate on tuesday. can he gain the backing of the markets and what does it mean for the ecb in its unwinding of qe? italy if i back to may. german factory orders unexpectedly dropping for a fourth month in april. is this something that worries you or do you point to the fact that it is not a complete annual picture, it is just a month so do not get more agitated?

very volatile.re we have to see the longer run trend. the trend over the last few months has been somewhat down. this points to a slowdown in german industry going on at the moment. we need to keep in mind that germany late last year had a bonanza in orders. industry was not able to work on all these orders. they had a huge backlog of orders. for a while, they can do was fewer new orders coming in and still keep up production. i do not think this points to a dramatic slowdown, but it does point to some slowdown in response to trade in the germany -- german economy. economy sector is saying the backlog is high. percentageto what does this play a role? is external environment, is that

he you from his protectionism from the u.s. >> yes. that is the major disturbing factor. italy may be another factor but we are talking about the april data which was the peak of the trade tensions come a when these trade things made headlines of most every day. doubly that has an impact especially on german orders as germany exports investment goods, machinery, and business investment is what is being held back by sentiment that has now been manufactured by trump. anna: let's talk about the ecb and how that relates to italy. how do you see the italian conversation, the drama playing out in rome, how do you see that impacting on what we hear next ?eek from mario draghi >> he will hopefully say nothing about it. that is not his turf.

it has to look at the overall euro zone economy, which is still doing ok, if not quite as well as last year. italy has to sort itself out. the ecb is not there to help italy in anyway. the ecb will not help italy. anna: they have to decide how long they keep buying bonds and from whom. they happened buying lot -- a lot in the past and they keep on doing that. >> as to -- they basically stick to the capital key. i do not think they want to deviate from that, and they cannot really deviate from that without sending controversial political messages which they do not want to do. ending the bond purchases -- they would be running out of some bonds sometime early next year. the economy is doing well enough. inflation is taking up. they have all reasons to and asset purchases by the end of this year.

anna: i have a chart that shows inflation picking up in the eurozone, but it is not core inflation. it is headline inflation. it is at 1.9%. this down to mario draghi and how much is there a long way to go on the inflation front? >> there is a long way to go. we have core inflation extracting around 1.1%. it will trend up modestly over the balance of the year. even if the ecb stops buying assets by the end of this year, the monetary policy will encourage a further rise in core inflation. at least as core inflation -- the ecb should be forward-looking and adjust to it according to its schedule. anna: we started this conversation talking about global trade and the t7. what are you watching for from

angela merkel as she goes to -- as they go to the g7 and quebec question mark they have been pretty vocal on things they disagree with trump on. how do you think angela merkel will approach this question mark she has talked about the threat to the world order. she has talked about the threats to the global infrastructure that trump represents. >> the key point about merkel, macron in this context is they give trump the same message. there is a bit of a feeling in europe that trump is trying to deal not with the eu, which is a big beast, but is dealing individually with countries. any bilateral negotiations, the u.s. is the big one and germany is the small one. the message to be delivered to trump i merkel and macron and italy and theresa may from the u.k., they are -- the eu is

united and trump is alone. anna: thank you very much. the chief economist at ehrenberg joining us in london. the european open is next. this is bloomberg. ♪

guy: good morning, welcome. this is the european open. we are live from our european headquarters in london. i am guy johnson alongside matt miller. matt: stocks extend gains across asia. futures are pointing up in europe and markets remain buoyant despite tensions ahead of the g7 summit. the cash trade is less than 30 minutes away. ♪ guy: trade tensions rise a