>> president macron tells the president he will not sign a g-7 statement without concessions. lira as policy makers announce a decision today wondering if it will prompt yet more tightening. the london stock exchange finally due to open after an hour-long delay. ♪ welcome to surveillance. let's check in on the markets,

stocks are raising amidst trade concerns which do not seem to be dampening sentiment. the european benchmark up a half of 1%. the euro rising in its fourth consecutive day. discuss its qe --gram at the crucible crucial meeting next thursday. there is no guarantee there will be an announcement, and the fact it's on the table is a massive forward, hence we saw a move in the euro yesterday. 118, we are seeing a move in the italian 10 year yield. two days, we have seen it shoot up by 40 basis points. yield has gonehe up but it has come down since then. ,rading is up today in london

you can see the 100 is up by one half of 1%, that's a two day move. they said the opening option was delayed, a bit of a rare outage for the london stock exchange. the one-day move, already up by one half of 1%. coming up, we will talk trade with megan green, and our brexit show we are joined by a member of the house of lords. day, we speak to chief executive. donald trump is set to meet japan's shinzo abe ahead of next week's historic summit. -- the white house wants kim jong-un to commit to a .imetable

however, north korea has insistence that it must disarm to receive anything in return. we will bring you that trump on a news conference. -- abe news conference. larry kudlow said trump will meet one-on-one with canadian prime minister justin trudeau and french president emmanuel macron during the two-day meeting. >> we are talking everything through. disagreements, i regard this much like a family quarrel. i am always the optimist, i believe it can be worked out. >> meanwhile, france has joined in germany in warning donald trump they will not sign a joint payment at 27 this week. emmanuel macron has signaled that progress on tariffs, the iran nuclear agreement, and the paris climate

accord must be made. minister -- he spoke to prime minister justin trudeau ahead of the summit. and the prime minister reassuring markets. spoke about citizen income and a two-tiered flat tax that could cost 100 billion euros in the first year. global news in more than 120 countries, i am taylor riggs, this is bloomberg. thank you so much. getting some data out of china. the estimate was 4.3.107. france has warned the u.s. that they will not signed a joint

statement at g7 in quebec, according to a french official. macron signaling that progress must be made on tariffs, iran, and the paris climate accord, before he would be willing to back a collective message. that follows the german chancellor's message to challenge president trump's america first doctrine. kudlow, trying to play down the dispute. i regard this much like a family quarrel. the optimist, i believe it can be worked out. mark: will other g-7 countries succeed in watering down u.s. protectionism? megan, a family quarrel, is that how you view this g-7 summit in canada?

or is it something a bit more sinister? megan: maybe something like my family. [laughter] like they have said, i have never seen the united states so isolated. , and i doly on trade think the u.s. will be incredibly isolated. surprised ife germany in particular refuse to sign a communique the end of it. i think these trade tensions are set to get worse. mark: will markets continue as megan says? going tothink you are see an increase in volatility. you do expect these trade risks to increase. it relates to europe, but also north korea, china, xcode, and canada.

i think volatility is on the rise. mark: should the fed take into account trade? how closely are central banks looking at g7 andy biggs summit in singapore? -- and the biggest summit in singapore? megan: they are certainly watching it. to model the implications of trade skirmishes on growth and inflation. macro take a normal forecasting model and try to shop it for these different scenarios, there is actually not a huge impact. cannott is because you get so granular that you can input disruptions to global supply chain, and that will be the biggest impact. it is hard for the fed to figure out exactly how that will impact their forecast. mark: what about e.m. central banks.

are they modeling? i certainly think some emerging markets like mexico are looking at nafta negotiations very carefully. i think elsewhere, the risks are more diffused. certainly, in a ago they have more hawkish ahead of the fed, simply because of the massive risk. could trump go bilateral when it comes to nafta? forward, is that viable? lupin: when it comes to trump, we cannot rule anything out. near-term,very having a nafta agreements before the mexican election seems much less likely than we thought. mark: how are you feeling about china versus the united states? china may be will spend more on u.s. imports is the latest figure.

be progressing, but mid-june is the deadline to get to some sort of agreement. how do you foresee that china u.s. a dialogue, and is it going to blowout? is all athink that sideshow, but politically important. all ourchina buys stuff, it's not like they're sitting there with loads of capacity. if we are selling more to china, it just means we are selling less somewhere else. you shouldn't really be looking at bilateral trade balances anyhow. what this is all fundamentally about is who is going to be the global leader in artificial intelligence, machine learning. tariffs are a bit of a sideshow. on that, neither the u.s. or china will back down. so i think we can expect the skirmishes to continue. mark: if they don't back down, what happens there? lupin: essentially, what i said

about volatility, that is likely to continue. impact in other emerging markets, particularly those tied to the chinese production cycle. i did expect that certain asian markets are likely to be affected. both stay with us today. up, ass plenty coming turkey's market rout continues despite this emergency rate hike. we will look ahead to today's policy decision. to make aresa may set showdown with her brexit secretary over plants. this is bloomberg.

♪ mark: let's get the bloomberg business flash. >> the london stock exchange has resumed trading after a rare outage. immediately provide more information about europe's largest cash equity market. they are among those affected. jobss said to be cutting to focus on china and sustainable investing. bloomberg has been told of the division has eliminated at least 100 decision in recent months, about 30 of them in the u.s.. forecasts after lowering their midterm profit targets and posted the highest

cost-income ratio in all divisions. deutsche bank says they will probably report in other quarter as itlining revenue june, scales back investment banking operations and cuts jobs. the german lender is accelerating their focus on europe and a retreat from wall street, having announced plans to slash 7000 positions. multiple turnaround plans have failed to deliver desired result. that is your bloomberg business flash, mark. mark: thank you very much. turkey's essential bank has another shot at quelling investor concern. lira pushingn the inflation toward a 14 year high, a road in real returns for bond investors. the institute of finance says the rapid price gains have left the real rate largely unchanged, so will turkish policymakers

tighten a second time? -- lupin, analysts are divided on what we will see today. where are you headed, what side of the camp are you in when it comes to the turkish rate announcement? lupin: what they should do is hike, much more than is priced in. what they will most likely do is remain unchanged. central bank has not only hiked three hundred basis points but have allowed a wide corridor for their liquidity windows. they could-by tightening that window. but this is a central bank that is a much more dovish and behind the curve. as targetingsed inflation as targeting the lira, so we expect them to be dovish. mark: and if that happens, just

looking at dollar lira, we are off the lows of last week. they do nothing today, the risk is the lira continues to fall. megan: yet. -- yep. the lira,moves and how much inflation has accelerated, we could see that happen again. think, fundamentally, institutions in turkey have lost credibility. at this stage, if they hiked it might not do any good and i could well see them being some kind of credit line from imf. chart,ook at this wonderful chart. here is turkey's political risk showing it is worsening. interesting the e.m. score essentially since april has

flat, whereas turkey's has risen. argentina, there is so much. potentially, brazil is the next domino to fall. is that how you feel it? that turkey is on the rise when it comes to political risk but that the other part of the e.m. space is stable. lupin: i think turkey is an outlier. there are certainly other risks in emerging markets, but they are bit more contained. brazil, these elections will be extremely uncertain and decisive in taking resell on an improving credit path or a declining at. -- pat. -- path. but brazil's institutions, the credibility of their bank, the

nature of the media and accountability you have from the masses, is a lot stronger than you have somewhere like turkey. area where political stability is on the rise is somewhere like mexico, where we may have a left-leaning president coming in, and the market is giving him the benefits of the doubt in terms of his action. in reality, we don't know which the mexican fist goal situation is going to take. one, this is this latin american currencies versus the rest of the e.m. space. you can see they have underperformed, and just keep it up, this is the final one i want to show you. showing you the dollar versus e.m. space this quarter. choose your big worries.

we know what has happened in the pace of the reality, the lira, the peso, the ruble. next, -- domino , where would it come next? turkey brazil and argentina are big enough. but i think they are deteriorating at the same time and having counterpoints to one another in terms of response. i am less worried about argentina, particularly now that they had the backing of the imf turkey could well be the next. where should we be buying sovereign debt? lupin: south africa has a strong story at the moment. they have gone through a tough. , but with their president, there have been signs of optimism. mark: so ignore the weakest growth in more than nine years? lupin: i think this is the start

of the cycle of improvement. we will start to see a tightening in the fiscal side, and improvement in institutional and government indicators. us,: thanks for joining megan will stay with us. deutsche bank drama. the german lender says there is likely to be more bad news with next quarterly earnings. this is bloomberg.

♪ mark: you are watching bloomberg surveillance. willche bank says they probably report in other quarter of declining revenue as they scale back operations and cuts jobs. europeder focusing on and a retreat from wall street. they have already announced plans to slash 7000 positions. the comments came just before the close, didn't that -- they? they fell to a record close last week. got essentially saying, and why aren't investors reacting in a more glum way? well, they are starting

from a low point, as you point out your but this declining .evenue it is a colorful description of this vicious circle they are in. , andning revenue, costs what they need to do is get out of that circle. mark: how do you do that? elise: well exactly, he was not quite as specific. but he sees the restructuring they have got on as the means to get there. in particular, lowering the cost of space and especially so, at the investment space when they are cutting thousands of jobs. the jobere are we on there,, and while we are look at the white line, clearly lacking. where are we on the cost cutting

progress? elise: they are saying they have already cut a thousand jobs since announcing the plan. from around 97,000 now. the focus of the next few quarters will be on that, making sure that has been pushed through. mark: and senior investment bankers are leaving, is that a worry? will become a worry if it extends beyond air as they are seeking. i don't think we have that evidence yet, but that is what people will be watching for. our people leaving just because they want to? mark: megan green will stay with us. this is bloomberg.

mark: this is bloomberg surveillance. in london, bond yields continue

to rise after comments from the ecb. central banks chief economist telling investors to be ready for a crucial discussion. howcials are keen to show they will not be held hostage by the political situation in italy. still with us, megan green. shouldn't they be held hostage by italy, should they just wait? is now the time to be discussing the end of the qe process? megan: now is definitely the time. not just because it is due to end in september. i am surprised everybody else is surprised. you will probably hear something about it. they have got to avoid some kind of taper tantrum. should the ecb be held hostage by italy, not as long as there is no contagion from italy. if they did anything about it, it would only increase support for the populist anti-europe in

parties. in ecb has stepped in before 2011 and essentially succeeded in turning carlos ghosn he out. the primes going-- minister. it is hard to put that populist genie back in the bottle, and i think the ecb is quite happy to let the markets try to impose. mark: are we going to see further blowups like we saw last tuesday? down since then, in the middle of the trading range area. megan: i think we can expect more blowup. theis first day on the job, prime minister said italy has a great negotiating position, and that sounds like 2015. italyk that sounds like may just be delusional about their negotiating power and thinks they can go ahead and

pursue their agenda which will blow out italy's budget deficit. i do think we can expect some major clashes between rome and brussels. you also saw the interior minister say he is not following the eu rules on migration. i think he politicians in italy are already setting up a clash, and it is ok sometimes to break the rules as long as you play nice, spain is a great example of that. they had missed their targets for years. but if you're going in with your guns loaded, it is going to be hard not to get a crackdown from brussels. mark: this is the chart everyone looks at, debt to gdp. this is sprain versus france, versus italy. spending over 100 billion euros a year, what's that going to look like? that is where the war will be with the eu. megan: the eu and the markets.

and the basic income, which they may or may not implement. the most important peace is rolling back the 2011 pension reforms. if you look at those debt and sustainability, without those pension reforms, it looks fundamentally different. italy's huge debt burden is less sustainable without those pension reforms. that's not the chart i want. a look atme, have that chart while you are there. want is the month to the ecb hike, which i think is 5166. it is an interesting chart anyhow, because there has been concern of the ecb will run out of stuff to buy, because they have to follow the t.

be,n't think it will because yields are in positive territory. there are acids they can buy that they couldn't before. think they want to back out of these extraordinary measures, particularly northern european countries. mark: given we are talking about the end of the qe program. this is the one i wanted. estimated months to the ecb's and next type. bedle of next year seems to around the consensus, is that right? agan: that has come forward little, it was previously the end of next year. i think it has to come forward. don't forget that rates are negative in europe. the ecb knows there is a downturn coming at some point. but you have to get rates up if you want to cut them, it's an argument i hate, because you can cause a downturn in pursuing that policy.

but the fed is written by this, ecb as well. as long as they can get away with hiking rates, i think they will do it great that being said , the data has been lackluster. mark: is that why we had a window? to scuff thedow end of the program. by july, inflation might be not looking so good. think it is a good reason, but it qe is supposed to end in september -- mark: you've got to get on with it. megan: you have got to give them some sort of signal or you get paper tantrums. i think june is a time when they need to discuss it. of the qe the end program so that they could discuss this long after the italian election, that was not after mistake. with italy out of the way, which was the theory, they can start

talking and signaling. mark: is greece out of the way? crisis, a italy many week or two ago people were say is the move up in yields which we saw in greece going to affect the greece exit? re: relax about greece or not? we are relatively relaxed in the short-term. whether they exit with a precautionary line or not, it is clear they would like to have a clean exit, and i think that would be a big mistake in the long-term, but in the short term. mark: thanks for joining us. stay with us, plenty coming up today, theresa may facing her cap is over brexit. trade as trump and

the g7 head to a showdown over tariffs. this is bloomberg.

♪ mark: welcome to our brexit show live. let's get the bloomberg brexit bulletin. theresa may has been accused of failing to stand up to the u.s. over tears because she is still hoping for a preferential trade deal. in a speech, jeremy corbyn says the duties imposed by president trump are wrong and risk hurting workers around the world. ofalso accused theresa may

helping donald trump. to stay inproposed the european union's single market, which could nudge the country to keeping closer to the block after brexit. put forward an amendment to theresa may's flagship legislation, to be voted on next week. it would make it a formal goal to keep equal access to the single market which theresa may is determined to leave. senior member of theresa may's government has revised his criticism over bank of england over the fallout of monetary policy. environment secretary said the policy has unduly benefit the wealthy, and his remarks echo those he made back in 2016 when a brexit conservative lawmaker later the claim of multiple economic disasters at the feet of technocrats.

powered by more than 2700 journalists in more than 120 countries, i am taylor riggs, this is bloomberg. mark: thanks a lot. theresa may, set to face a major cabinet rebellion over brexit. been told that the cabinet secretary is furious and could quit over her plans to keep the u.k. within the eu with pay customs rules for an open-ended. . she argues it is necessary to solve the irish border issue and break the deadlock in talks. we are joined by our brexit editor and the member of the house of lords. am a, could they really walk ?way over this emma: it looks like it. at 10:00, he is going to have a meeting with may, and he is obviously furious about the open ended aspect of this.

that ifcomes down to is there is going to be any progress, the cops have to be open ended or the eu won't accept it. so that's where we are now. he did say there was evidence he might not be about to resign. he said he was meeting barney on monday. he is making plans for next week, but everything we are hearing -- mark: if davis leaves, does it crumble? well, it is a crisis for theresa may on top of all the other. this was always going to come to a head in some form. the irish border and keeping it open, which everybody says they , is impossible to do so unless you have the same customs and single market relationship as you have now within the european union with the irish republic and the northern ireland being in the

same set up. trade, people movements, services, light struck, you know, farm straddles the border. you cross it, you don't know necessarily which side you are on. it is completely open and invisible. the only way you can keep that, canve always felt, and you still do brexit, is to stay in the same customs single market relationship. the hard brexiteers, of whom davis is one, do not accept that. , andwant to break free they have never collided with reality and now they are having to. there's the partnership option, the back-checks, back-checks to, is there a viable compromise? emma: possibly.

we haven't even gotten there. now is are talking about just keeping the border open, and the eu is saying by june, we need some kind of solution on the irish border issue. all this fight is about is about the irish border backstop. theresa may, in february, said what the eu had proposed is unacceptable. what the brexiteers see here is this kind of stealth move to keep the u.k. in the eu customs orbit. and why it is important if davis resigns is it will be seen as evidence that theresa may have the trade brexit calls. it would be interesting to hear what you think. brexiteer lawmakers to send those letters in prompting a

leadership challenge. it's not just that you are losing your chief negotiator. that practical elements could probably be overcome. mark: you said it will come to a head, is this it? it, the withdraw when it comes back to the house. it feels like we are getting to a moment here, am i right? peter: possibly. [laughter] there is uncertainty for reasons i understand very i am so uncertain. give theresa may credit, and i don't give her much credit, has always managed to maneuver around and live to fight another day. came it all starts is it to first of all in december of the european council, where britain had to accept regulatory

alignments and other words around the irish border. the samealways meant customs arrangement, say market arrangements to whether we are in the european single markets or the european customs union, it has to be the same. brexiteers, including davis and boris johnson, have gone along with that and then again in march when there was a different reformulation. and now the europeans are saying you signed up already, now we want to see what this all means in detail. , andhey have shied away she has pushed over the horizon each time, a confrontation over what that actually means in detail. and the hard brexit people are coming up against the reality. it was always going to be the achilles heel of a hard brexit position, the irish border. there was never any way you

could resolve this, as they said they wanted to, and pursued this dogmatic brexit in a way they don't have to. you can leave the european union and stay in a customs union and a single marketplace, but they don't want to do that. in thist to break free nirvana of britain sailing off on her own. emma: the other thing is we are not sure what this paper says will be acceptable to brussels. what brussels has been saying all year is hold on, northern island has to be northern ireland specific, it not can -- it cannot be u.k. wide. it seems like a proposal on the table is u.k. wide. -- peter: i think you are right. that, are recognizing

like it or not, it is a legal other thanes-based. a bit of tweaking, they cannot make a fundamental breach in that just to satisfy britain. andnext thing is the polls they hung gary italians taking a load of immigration from across the mediterranean, they will demand a special deal. before you know it, the whole thing unravels. that is why brussels is playing hardball. not just to be difficult, but because this is a legal entity. you breach it over northern ireland, the whole thing unravels. mark: thank you for joining us. next, the labour party proposing a plan to stay in the single market. we continue our brexit conversation. this is bloomberg. ♪

mark: welcome to our brexit show. the u.k. proposes their plan to stay in the single market and

could not the country to keeping closer ties to the block. jeremy corbyn put forward an amendment to theresa may's flagship legislation. former secretary of state for northern ireland peter hayes is still with us. day of debates, exciting times for you. how is this going to unfold, how many obstacles are there? of them, and we are not at the end of the road yet. episode, iflatest he doesn't resign, then there is a major crisis. mark: let's say he doesn't. peter: then, tuesday is a series of big decisions. theresa may and her colleagues about what to do. what the house of lords is hasn't done is we have asked the house of commons to think again about these issues, the northern

ireland border which we were discussing earlier. customs arrangements with the eu, and to protect our trades that have no tariffs and barriers, and penalties for our economy. remember, half of our trade is with the eu. then, a series of other issues about parliament having the final say on what type of deal is negotiated. not a take it or leave its, but the ability to influence. amendments might be of the most tricky nature. which ones much he faced defeat? peter: the northern irish border issue, which is expressed in a way that gives her some flexibility, but insists on regular terry -- regulatory alignments and so on.

and then the customs union issue. those are probably the ones that are most important. will all the tories fall in line? how does she tackle that, navigate those three? peter: i think it is a moment of truth for the conservatives who have been vocal. very prominent and respected conservative politicians, it is a moment of truth for them. it is difficult if you are opposing your own wit and government. it is very difficult. they have to make their minds up. but i think a lot of them feel as i feel, you have got to put the country first. but the economy first. whatever your political objectives in europe, the economy, people's jobs and prosperity.

why did corbyn go for this? we have the amendment yesterday, but it is not the ea version. why doesn't corbyn just say look, we were not going to go for the ea, and that he is aligned with the tory rebels, then theresa may has a real problem. peter: indeed. mark: is he one step away from embracing the option? peter: i can't speak for him. he has undoubtedly moved on the single market. dogmatics to have a objection to the single market thinks it will prevent re-nationalization the railways, for example. and the crisis they are points to a different solution. i don't think that is true, i disagree with him, and most people have looked at how the

also agree with me that you can't re-nationalize and can take government states to sort out the railways. all, french railways are nationalist. german and spanish railways. virtually every other. mark: it's doable. peter: but he has an ideological objection to that. in the end, he will have to revise that position. mark: we could talk forever. surveillance continues, nejra cehic is in london and tom keene joins us. this is bloomberg. what's a gig of data?

well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way.

that's why xfinity mobile lets you pay for data one gig at a time. and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. ♪ tom: this morning, ubs passive,

they will jettison the active managers. revenuessche bank, again,ged, 25,000 great bull market. stranger danger, em currencies in the way, challenged. the world is being reorganized. chancellor angela merkel in an extraordinary speech on the many visions of president trump before the g7 meetings. this is "bloomberg surveillance," i'm tom keene in the new york. london, the london stock exchange did not open on time. that has not happened since henry viii? >> wasn't the same when henry viii was around? , it opened an hour late because of a technical glitch, no details on that.

the ftse 100 struggling for direction. we will talk more about that in a secondary let's get the first word news. france has joined germany and warning the u.s. on the verge of the g7 meeting in quebec. signaledmacron has that without major concessions from the u.s. he will not sign the statement that is traditional at the end of the summit. france is looking for process on the global climate accord and iran. china willing to increase imports from the u.s. if the trump administration needs it halfway. the chinese ministry of commerce talksides have detailed on farm in energy products. officials say increases and imports is established strategy. shinzo abe has his own agenda when he meets president trump today at the white house. he wants the president to press north korea next week on the state of 12 japanese citizens kidnapped four decades ago.

he has made their return a key political issue. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. tom: thanks so much. equities, bonds, currencies, commodities, 25,000, extraordinary. curve steepening, expected. 1822, stronger euro. the vix, 11.75, really something. 9.10 is where we were last time, up up and there is the dow about 25,000. german two-year yield, higher yield should be green, a little confusing with the negative yield. german two-year space, and brazil is important. weaker dollar.

nejra: let me take a look at european equities, continuing the rally in global equities. you pointed to the dow, the nasdaq hit a record high yesterday. tightening, ifad you look at bundy deals. andeuro, a death cross cable on the front foot. dollar weakness in the session. tom: the brazilian charts, em hour 2015een in this llar, the quieto year in complacency. this is an elegant chart with convexity and acceleration to a weaker brazilian. nejra.e, got it. [laughter] nejra: [laughter]

not on thenitely same page with our names but we are with these charts. you have just shown brazilian, i have asian emerging-market currencies, leading in the last week. the chart is normalized, we are talking losses from the start of the year. asian en effects leading, same with equities, i wanted to keep the chart simple but this is an other affect classes. it begs the question -- do you separate asia from the rest of em? let's turn to g7. angela merkel warning of splits at the summit, saying she will challenge president trump on tariffs and his america first policy. leaders prepare to head to quebec and france's warning it will not 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 as as family quarrel. i am always the optimist, i believe it can be worked out. nejra: joining us now from hong kong is our chief asia economic correspondent, great to see you. we are focusing on the tensions between europe and the u.s. how is china looking on to this? reporter: good morning. this is a critical summit to see first and foremost whether the u.s. and he trading allies can sort out their own differences over trading. that will set the tone for global trade debates, china at the center. we note the u.s. and china -- the u.s. wants to shrink the trade deficit with china but it is playing to china's advantage if the u.s. is bickering with allies.

sign up for its part has made clear from the beginning -- they are willing to come to the table, they are willing to buy more goods from the u.s. the question is -- will avoid and quantity of what they are are they willing to take bigger structural changes inside their economy that washington is demanding? has a long way to go. tensions we look at ramping up ahead of g7, is it looking like not america first but america alone? >> pretty unusual, anyone who follows g20 or g7 summits, the degree of collegiality is typically a meeting of minds, certainly economic, that can be different from security summits. they have this language of jesus g6 plus one, it is

very striking within the context of g7, which is more an alliance of key trading allies. it shows you how delicate and nervous it is. extraordinary, the last 24 hours. particularly in america, this will be a major theme of "bloomberg surveillance," over the next 48 hours -- the trail to quebec. to do the chinese respond the diplomatic chaos we see g7, and what, g6, was once the g8? reporter: they are playing a cool hand. they are more than capable of seeing what is happening and they are playing the same card. they are responsible stakeholders, willing to be defenders of the global order, whether you believe that or not and that they themselves are

willing to come to the table and make offers and concessions to buy more u.s. goods, to play a role in resolving trade tensions. they are happy to strengthen alliances they have with europe and others. china wants to be seen as a responsible stakeholder. whether or not you agree they are sincere, is part of the debate and a whole other issue. nejra: thank you so much. the chief asia correspondent from hong kong, and joining us bhanu. good morning and welcome. let me show you a chart about past protectionism. is the dollar vulnerable into the g7? we have seen weakness this week. >> it is a different situation this week.

in the past when we saw protectionism it was limited. no one feared we would see a full-blown trade war between the u.s. and china. this week was not so much about trade, protectionism, as it was about the good news on the other side. we had comments from ecb a lot of people have come into june hoping that may is behind them and they can go back to trades. for now it is a great thing to run with. --: let me go to you on this have you synthesized what these tariffs mean? have you taken a estimate? bhanu: yes. if you look at the amount of exports in europe and how much this will hit, the numbers are .01-.03% these are not necessarily

meaningful. that is not the point. this reduces business confidence globally. that is the channel through which you are likely to see growth impacted, likely to see capx. the actual impact on gdp, the markets, will be significantly higher than the second decimal place, or the amount of inflation. i don't think that will be quite relevant. pmi coming up 95%, close to distribution and the risk is they go lower, and the global cycle cools. it is not the direct impact. it is the impact to confidence. nejra: a global synchronized recovery -- is that at risk? bhanu: the synchronized recovery was 2017 phenomena. you have seen the synchronization this year. your upcoming lower, asia --

europe coming lower, asia has come lower. the u.s. has taken leadership and that is what we are seeing in the markets, why the dollar has been on the front foot. but is a funny asset class if there is one thing that drives the dollar -- at as -- fx is a funny asset class. beenycle since 2009 have farthered by china. the dollar has been on the run. there is still time for it to rally. tom: we will come back on the u.s. dollar and on e.m. market currencies. elsa with us. it is an annual event, a casual mr. putin. taking calls from across russia, obviously staged and choreographed, but it is a huge deal in russia.

it is like a call in tv show with mr. putin. get a call from 1600 pennsylvania avenue as well. live in moscow as we speak. we thank our moscow bureau for that. this is bloomberg. ♪

♪ this is "bloomberg surveillance," let's get the bloomberg business flash. warren buffett and jamie dimon urging companies to and the practice of offering quarterly earnings guidance. they say quarterly guidance

often leads to unhealthy focus on short-term profit at the expense of long-term strategy. european union antitrust regulators preparing to fine google or hindering competition with the android mobile phone system. they could be imposed as soon as july. fined a record number for antitrust regulation. economic slowdown may be getting worse. factory orders unexpectedly fell for a fourth month in april declining 2.5%. orders from the eurozone plunged nearly 10%. tom: thank you. we are in an advantage with an emergency market insight, elsa and bhanu, thrilled to have both em andon to talk about

what it means for the global system. elsa, let me begin with you. this is turkish lira back 20 years. the red circle is the advent of mr. erdogan and up, up we go. events untilcrete they are not. are we at the point where argentina, brazil, turkey, separate entities coalesce into an em challenge? we are seeing markets are far less willing to overlook policy mistakes. argentina and turkey are very similar in that pay central bank, for different reasons, lose market credibility and they have been struggling to get it back. we have seen the turkish lira come under pressure, after the interview that aired one gave to -- that mr. erdogan gave to bloomberg in london. they've just managed to get credibility back.

that is what we're seeing, global markets are far less willing to forgive policy mistakes from central banks. tom: how much of this is echoing 1998 and other toys moments for em? em, infrastructure, gdp and links to the developed world? bhanu: that is the same old e.m. in some respects, turkey is very 1990's. that has the original sin of borrowing in dollars and going through with irresponsible monetary policy, which makes regimes unsustainable. the medium term prognosis has to be quite poor for the turkish currency, also because of the elections, this may not be the right time to get super negative in medium terms. the broader context for em -- one where they have borrowed but not in dollars. think of china. that comes with different

problems. problems are severe but they don't blow up in our faces the way turkey potentially can because you do not have investors asking you to put money on the table right away. you bleed over a long time as opposed to a severe crisis. it is a slow motion issue. nonetheless, brazil, south africa, mexico, over time, china, the fiscal lever is being exerted and that is where the pressure points in em are likely to be. we do not have a big deficits except in places like turkey and argentina. contrasts withe 2013 in the 1990's, we are missing the point that there are other vulnerabilities, not just external financing, up or places like brazil, public debt is an issue. nejra: inflation is less of a concern? bhanu: inflation is not a concern.

argentina and turkey -- two aspects -- the amount of dollar debt due in the amount of policy mistakes induced. for the rest of em -- consider, poland. that is one place where the output gap has closed two years back, similar to sweden. most of asia, very low inflation. globalization of disinflation is prevailing across converging -- emerging markets and policy has been conservative. turkey and argentina stand out as exceptions. tom: let's continue. i will defer to simon kennedy and michael mckee but we are setting up for one of the most extraordinary g7 meetings since world war ii. that discussion will begin this afternoon at 2 p.m.

shinzo abe on his way to quebec. the president and shinzo abe in the 2:00 hour, worldwide on bloomberg. ♪

♪ i am in london with tom keene in new york. streak,oday losing large swings in the assets. telling investors to be ready for a crucial discussion on qe next thursday. to bhanu, elsa.

call.ionally, 1.18, your does this week change your call? elsa: we have a long euro position. you have to distinguish between what is a short-term up move in euro, make sense, too much pessimism last week on the back of italy. longer-term view which is, more mixed. while i think we will get active discussion in june, ecb does not want to give the italian government a free pass. where heading toward the exit on qe. that does not meet euro-dollar is skyrocketing to 1.30. nejra: how much does this factor into the broader eurozone picture, italian specifically? elsa: italy is a gargantuan

problem but more long-term. weather tensions from the current ecb and eu leadership and the italian government will crystallize is when we get the next recession or crisis in italy. at the moment you could see things fumbling along the background without effecting a single currency. favorjority of italians remaining in the eu. nejra: is europe prepared if we get the next crisis coming from italy or elsewhere? bhanu: i don't think so. especially if ecb, if they continue to move along and withdraw monetary policy stimulus because we have moved to a normal world -- that will dampen growth in europe. eye on to keep an china, where one credit cycle

older in china. theill be difficult to use same cardigan and europe is very open. it asia is slowing down, europe will feel that heat. tom: thank you so much for being with us. extraordinary day. mr. putin is doing a call in across russia, this is choreographed and staged, but there could be important headlines. russia will not abandon a flat income tax, on a domestic basis they will not introduce a sales tax. no word whether vladimir putin echkin fromt on ov the washington capitals. go capitals! this is bloomberg. ♪

♪ tom: welcome, "bloomberg surveillance," nejra cehic in london, i'm tom keene in new york.

g7, angela merkel and emmanuel macron out front. right now, interesting, let's look to russia. putin: russia, vladimir is confident prospects for long-term economic growth in russia. he said on the whole, russia is moving in the right direction. he said the country will not introduce a sales tax. programs live televised . theresa may is facing a major cabinet rebellion over brexit. david davis is furious over her plan to break the deadlock in talks with the eu. she wants to tie the u.k. into the eu customs rule for an open ended period of time next year. are rumors he could quit. the european union finding it difficult to fix the iran

nuclear deal following the u.s. withdrawal. asking to been exempted from sanctions. president trump wants senate republicans to block attempts. the president asked them to push back against a proposal that would require congressional approval to levy tariffs on national security grounds, as he did last week. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thanks so much, taylor. deutsche bank will report another quarter of declining revenue scaling back investment banking operations and cutting jobs. the lender accelerating focus on europe and a retreat from wall

street, announcing plans to slash 7000 positions. joining us, our finance managing editor. good to see you. deutsche bank shares higher today. i wonder if the statement from the cfo yesterday was an attempt to lower expectations? reporter: expectations are already strained for the second quarter. this would be the sixth consecutive shrinking in revenue. six quarterly contraction in revenue. what he painted was a picture of a vicious circle, there which he is seeing a reduction in revenue, cost remaining high, funding expenses picking up. what he needs to do is to turn that, make that into a vicious circle, which is not quite doing it. nejra: it is interesting he pointed to that cycle. are there any positives? reporter: what he is also

sticking with quite aggressively, cost-cutting, which the bank is giving more guidance on and providing updates regularly now. job cuts, 1000 jobs since the announcement last month have been cut. that is what the focus will be among investors, that the cost side comes under control. nejra: ubs said to be cutting asset management jobs amid a pivot to china. they talk about this emphasis on sustainability. what do you read? reporter: the asset management business has been the problem child at ubs. it is smaller but it has also been the one where they have struggled the most to adapt the model to a shift toward passive investing. on the cost side, that was also a concern. them tackling that is potentially a positive. tom: i will pick on nick silver,

who works for deutsche bank in he he leftccident -- in the last 24 hours to credit suisse. based on your team's work, i don't see it. switch, link leadership everyone has their resume out, mr. silver exits stage right -- i get it. how do you link that into revenue and revenue dynamics forward? reporter: this will be, they will try and answer in the next few months. theicularly on equity, entrenchment they are pushing through is quite unprecedented. we have not had an investment bank so big in equities pullback. not yet clear to anyone how they will maintain the leadership in the market that benefit from equities presence, areas they

want to keep. that will be what we will get a feel for in the next few months. tom: reorganization in asia, i get that. we wish mr. silver luck. you had a set of stories in the last 48 hours about senior vice president types exiting. do they have the bench to pull people up to those positions or do they have to go outside and try to sell the future of the bank to people coming in? reporter: it is interesting. we interviewed the head of equities some months ago now. he pointed to a very different recruiting strategy, to get younger people and, fresh blood. you have to give it a try. tom: from where? that is the key question. i love what you are saying but where do those younger people come from? reporter: they come from the places where they have always been coming from, top colleges.

from what we have understood, cost base at the front has remained too high, because senior talent has not been contributing as much to buying. tom: thank you. we have all seen this before and the valueay, people, work, i don't mean to make light of this deutsche bank, but i wonder where the replacement bodies come from? nejra: thinking more broadly in much, there is a focus on automation attack -- will they start hiring much more from the academic sector, more so than finance and business backgrounds? that is another topic. elisa, always adding value for

us. thank you so much. up, joining from beijing. that is at 8:30 a.m. in new york, 1:30 p.m. in london. this is bloomberg. ♪

♪ tom: "bloomberg surveillance," with nejra cehic and tom keene. yesterday, uproar as the president of the united states took mr. trudeau of canada to task because canada burned down the white house. a great volume on this. here is the photo. think harry truman, this is what they found.

this is a photo from the smithsonian, they have a great article out on this. the major issue is, in american schools when we were kids, we were told the white house was charred. the british burned it to the ground and all that was left was the outside walls. if they had knocked on the walls -- it is like a house with would. that is one -- with wood./ that is one of the coolest photos. uber the white house down. nejra: -- the? me? history within the show. turning to europe and getting back to trade. tom: let's go to brussels. richard, these extraordinary events, not just the president talking reductive. this is a combination of chancellor angela merkel's

extraordinary speech yesterday and mr. comments -- and comments from mr. macron. how coordinated are they when they go to quebec? reporter: it appears they are unified. it is rare to see this much unity among eu states. they see this as an existential threat. as they go to g7 tomorrow, you will see that is a common theme from eu leaders. donald tusk wrote this morning in the new york times that unity is the one thing that eu needs to hold onto if trump keeps pushing the bounds of the transatlantic relationship as he is. tom: within the eu relationship, i thought the speech hearkened back, absolutely extraordinary as she talks about a reorganization. in american media today, they sidebar the idea of a more enhanced german military. how sensitive of an issue is

that across europe? well, enhanced military is something that is a sensitive topic but it is funny you mention that. there is a big meeting at nato in brussels today among defense ministers, mattis will be here. all eyes will be on him because steel and proposed car tariffs from the u.s. are done on the justification of national security grounds. there is some question as to whether or not other nato defense ministers will push him on that topic. allies couldther the eu have it tensions really ramp up with the u.s.? is it turning to face china more strongly? is in a: that eu similar position as china. there are indications that china

and the eu could form something of a unified front. chinareported recently, has been making overtures to the eu on this trade issue. ast is a possibility but european council president said, they really want to hold onto that transatlantic bond and they are warning member states from using the current tensions as an excuse to turn to russia or china. we really will see that play out in canada at g7. it is on everyone's mind. nejra: thank you so much, richard bravo from brussels. bhanu is still with us. we keep talking about trump against the developed world as g7 approaches. are we seeing a more polarized

world that could pose a threat to global growth? a slightly different take on a question from earlier. bhanu: that is a big risk. what has happened in the u.s., italy, emerging markets, the levine's, india, you are seeing politics become polarized. italy is a prime example. two parties from the right and left coming together, both with extreme stances -- there is a greater risk of that happening. populism coming into the markets, because growth is not being shared. the bank of england appointed a new member. why? he has done a lot of work on it investment going from tangible to intangible. this means that this wealth accrues to a few. we are not doing enough work on this. this is reducing em's global growth.

the u.s. is improving but that is not helping mexico. past relationships are coming into question as you are investing in software opposed to structures. amazon is increasing jobs and retail firms are declining. this change in the global economy has not come to the focus yet. this move from tangible to intangible. nejra: if we see a more polarized world, does it make it harder as an investor to find opportunities because everyone is suffering? bhanu: think about the sectors. we often do markets from a macro perspective. i think it is more important from a center perspective. technology has done well. if you take it out, europe has done as well as the u.s. we must view it through a different lens. i think the high-value added part of the economy, including gm, china, korea, taiwan -- this is why problems for the true em

countries, that is where the bigger longer-term challenges are. they have not gone up. tom: this is brilliant. em or to say this but frontier economies, the debate, russia -- it is the in between countries that are caught in the vice of new technology? bhanu: indeed. which em countries have benefited? this is a tiny sliver in north asia. the rest are suffering. fintech but the question is, whether commodities do well? that is why the shift from the chinese housing market to intellectual property, it is not neutral. tom: help us here with the landmark ubs research of a decade ago on demographics.

how does china demographically fit in to that new sliver of em in asia and the other struggling? how does the dynamic for china fit from their pacific rim countries into western china? can they handle that shift? bhanu: i think they can. the way to think about demographics is changing. think about japan and the returns the market has given over the last three years. think about china. a phenomenal return, despite the fact that china's working age population is up to 54 and will shrink by 100 million over the next 10 years. will drope population by 100 million and despite that, china is investing in robotics, electric vehicles and electronics -- the market has done well. internet has done well. by contrast, turkey, south

africa, great demographics. the entire middle east, great demographics. but they have not done that. old-time notions of demographics equals success are being called into question. nejra: on that high-value add theme, is china and asia going to overtake the u.s. and other parts of the developed world? bhanu: it is early to say that. let us distinguish between china and the rest. i don't think there is anything automatic, there is no assembly line in em. taiwan, thenore, china, then india and bangladesh. there is nothing automatic about that, especially in a world where globalization is on a plateau. i don't think there is anything automatic. china and korea and taiwan have made that leap, successfully.

it will be difficult to argue they will overtake the u.s. the bigger question -- the rest of em? they are not looking like they are getting out of that low value added manufacturing/commodity universe. that is where the bigger problems are. the bigger issue in medium-term, you make stuff the world does not consume anymore. nejra: fascinating. bhanu, staying with us. vladimir putin taking questions from across russia in a live television phone in. have you managed to get through, tom? wish i got that many calls. tom: we have our team in the control room calling. they are doing it. we will get through. nejra: [applause] [laughter] tom: what about ovechkin? please comment, mr. putin.

a big deal. a gasoline tax, sales tax, domestic issues for the people of russia. please stay with us worldwide and in moscow. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance," let's get the bloomberg business flash. positionn has built a in a drugmaker. what is not known is the size or motivation. preparing to spin off antibiotics division, the company is best known for botox. a grim forecast for china's auto industry. the largest electric carmaker says one third of vehicles will get squeezed out of business once the country opens up the market to global competition. the competition is not a bad thing. cord,ans have cut the when it comes to telephones. a majority of u.s. households are wireless only.

a new survey says 54% of american homes have only wireless phones, fewer than 6% have only one landline phone service. that is your bloomberg business flash. tom: thank you so much. bhanu, with our global macro strategy. the question of the moment. dollar ambiguity. bring up the chart. this is good mathematics of a bundled dollar. weak dollar and a strong dollar rally to where we are now. what is the ubs call? bhanu: near-term, we are likely to see increased euro going forward. we believe the euro because of ecb, will be supported. given that growth, given that italy will be a problem near-term, it will be difficult for euro to break 1.20.

where the dollar was strengthen unambiguously, against emerging markets. that is the access that will continue to see weakness as u.s. monetary policy adjusts, trade related weakness on the fx side and equities will catch up. nejra: is the dollar relationship going to continue? bhanu: i think it will in the near term. that is what has happened, it has been repriced after comments from ecb. european access has moved more on the rates, the euro doing well. it is difficult. now you are pricing ecb changes, over the next years, you have 150 basis points, the fed is much further on in the cycle. that relationship with differentials is likely firm in the near-term. european current account surplus will help euro medium-term.

differentials do matter and will continue to support the dollar and emerging markets, despite low inflation, will need to adjust rates in order to stand still. otherwise, pressure will continue on the fx side. tom: great breathing before the g7.- great briefing before coming up, the placement of equities. david will join us. a lot more coming up particularly talking to kevin cirilli, all of a sudden, quebec is important. this is bloomberg. ♪

tom: this morning, ubs will

jettison managers. the exodus from deutsche bank. revenues challenged. again, an unloved market. stranger danger, they are challenged. the world is being reorganized. chancellor merkel in an extra ordinary speech takes on the many visions of president trump before an important g7 meeting in québec. in new york.e nejra cehic in london. , this is a big meeting. nejra: it is. peopleen asking a lot of is the prospect of an all-out getting greater. some of them said yes. tom: to me it is a diplomatic

issue. all eyes turned to québec and a historic g7 meeting. here is taylor riggs. vladimir putin says he is confident at the country's prospects for long-term economic growth. was answering questions on the tv call in show. he said russia is moving in the right direction and said the country will not introduce a sales tax. it is putin's first live television program since he was in march. china will increase imports if the trump administration meets it halfway. the chinese ministry of commerce said the two sides had deep and detailed talks on farm and energy products. is anrease in imports established strategy. has his own agenda

when he meets president trump today at the white house. the u.s. to press on the return of japanese citizens. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. doubt 25,000 data check. it is an unlovable market. again today. dow futures up. euro put some strength on. next screen. the vix with a vengeance. indication of what is out there. even the german yield does better. that read should be green. the brazilian currency and a

moment. european equities struggling for direction. some gains earlier. .he euro on the front foot cable on the front foot. ,he spread tightening up italian yields lower, german yields higher. tom: let me show you the brazilian real. writingel-erian something up this morning. here is stability. this is recent 18 months. this is an elegant chart. oft curve has a sense acceleration to a weaker real. an emerginge markets-theme chart. this is a relevant chart.

asia's emerging-market currencies have been leading other emerging market peers. we are still seeing declines on this normalized chart, but asia emerging markets outperforming. tom: superb chart. gtv .eal that off nejra: i will be generous. will go intorilli the attic of the white house and look at the charred ruins of 1814. kevin, let's rip up the script. what is the president doing taking a shot at the president of canada over the war of 1812? discussed. kevin: it is the backdrop of nafta and the president heading to the g7 tomorrow and during a

time in which they both threatened to not strike a deal on nafta. i think we are headed towards bilateral talks one way or the other. it will be interesting to see what happens today with prime minister shinzo abe given the fluid nest of the past 24 hours. what will the president do in québec? 500 plus days where he does not change his mind. he does not listen to the debate, discourse, multilateral discussions with mr. trudeau, but after other comments, does he walk out of the g7? ed: it is possible. headedirilli we are towards finality with a nafta. this is a president who has shrugged his shoulders at the rest of the world regarding

trade. kevin: the way he could change his mind has much less to do with what allies in canada are saying and more with what republicans in his own party are saying. nejra: to that point, trump summoning 13 gop senators to the oval office for a late afternoon meeting yesterday. what happened? they have been urging him to reconsider what he is going to do on trade, and they are hopeful he would be able to walk back or change course and direction, but we have seen this president be unpredictable in terms of the final outcome. the republican party is not with president trump on trade in congress. tom: thank you so much. it is a joy to bring you this morning a gentleman from the university of robert frost,

amherst college. he learned poetry at amherst and went on to a storied career in the hedge fund business here it he joins us now representing citigroup. we have to go political. i thought chancellor merkel's speech yesterday was absolutely extraordinary. you are talking to citigroup kleins today. how do you dovetail this debate and the rest into doubt 25,000 -- dow 25,000? you don't. you are living in a schizophrenic world, the political world and this multipolar versus global economy , the idea we should expect trump is going to change his mind or backtrack. there is no evidence of that. if you think about how many agreements we have withdrawn from or renegotiate, he is playing to a domestic audience

who believes america was untreated unfairly in the past and his job is to clean that up. tom: your colleague in crime anded us yesterday, enthusiasm for equities even at these violations. for citigroup private bank, how do you frame this market? >> it is only unloved in the last six months. 2017, sogreat level 44 you have to look at it from a data perspective. two things are driving the market. earnings are growing in the u.s.. year.increase year over when you look at emerging markets or developed markets, the earnings story is not driven by taxes and we are seeing a 10% to 50% increase this year. the fighting rations at the end of the year are not expensive.

they go back to historical norms , 16 p is not expensive. white peoplery should on equities on an outright basis. nejra: david, good to see you. i want to ask you about risk appetite. are your clients seeing more desire for wealth preservation than wealth creation? flows, it is aat three to one ratio. people are putting money to work in discretionary portfolios three times the amount they are putting in in fixed income portfolios. we have seen a lot of people hedge portfolios and use capital protected roddick's to get exposure on the equity side, but limit downside risk. that activity has been significant for private clients.

it is a two edged sword. there are those who are outright bullish, but there are people who want to hedge their portfolios in significant ways. nejra: what our markets getting wrong at the moment? >> when we think about long-term than, they will be higher where they are now for sure. announcementecb that qe could end in europe, and that will make bonds less attractive, so rates will rise more than people might expect. the surprise story is largely the continued performance of developed markets and earnings incorporations and the fact the global market will be strong, and that is not what the markets are pricing in today at all. that is where the debate is, and the schizophrenia between politics and economics.

tom: the second week of february were you at your desk and someone said go to cash? >> yes, i spent time being a psychologist in february and one when trump was elected. tom: you think this is a romantic job on tv, baloney. go to cash. let's continue. dow 25,000. we are thrilled to bring you worldwide a gentleman who has thought very much about labor, about ancient and modern capitalism. steve keene at the half hour. this is bloomberg. ♪

>> i am taylor riggs. your bloomberg business flash. european antitrust regulators are preparing to find google for its android system. the funds could be imposed as soon as july. last year, the eu find google $2.8 billion. areen buffett and jv dimon warning on earnings guidance. they have an opinion article in the wall street journal and say the quarterly earnings guidance leads to an unhealthy focus on short-term profit at the expense of long-term strategy. in germany, signs of an economic slowdown may be getting worse. factory orders unexpectedly fell for a fourth month in april,

declining 2.5%. orders from the eurozone plunged 10%. that is your bloomberg business flash. tom: thanks. a sane now have conversation about the emotions of the market. i want to bring up this chart. lot in this chart a february and march. it is the emotion we all lived through in february, the big and, then we tapered out stayed above the iconic 200-day moving average. they said it in february. they said go to cash. case that cash isn't the place to be. >> there are several reasons. one is the availability of good yields. what i mean by cash is someone leaving money in their bank account or brokerage account.

lots of short-term opportunities to make 2%, 3% and the u.s. dollar, but you're talking about why they should stay invested. we did a survey of our clients. we did that over the last 1-3 years. 3% average client lost 2%, and they tried to time the market in any material way. tom: the hardest part is getting back into the market once you get out. somebody walks in and they say i am wrong. we are up 19% trailing on the dow. how do you cajole someone to be brave and get in donald trump's 25,000? >> to look back. these are long-term investors. private bank clients have their wealth and want to think about their wealth for the next 5-10 years.

the way to do it is look back and say is there a five-year time as a baseline. you look at the relative opportunities. have had 20% cash balances since 2008, how much does it cost them? it is a huge amount of money. we showed them that. it is about half the total rate of return over the same time. .ll that is historical suppose they are not rational. you look at the capital markets and you see would you can do from a derivative standpoint. where volatility was a week ago, you could create structures where a client could take 5% downside risk, take a basket of stocks, then simply on that. they give up the upside for the downside. what is the best way to

diversify right now? >> if i can say one thing to almost every person, 80% of our clients are concentrated in their home market. 70% of clients are outside of the u.s.. is tost important thing build a club will portfolio. u.s.crises happen in the or something takes place unexpectedly in latin america, clients with of those portfolios are more resilient. we looked at that historically, but we think all the markets are asynchronous right now, the u.s. being the most mature. that is the most important thing for someone to do. that will generate an absolute high return and a better experience in the markets. nejra: stay global, stay diversified. david is staying with us. russian president putin taking

questions from across russia in a live television phone in. we are expecting 1.5 million people to phone in. we have been trying to get through the haven't week, tom? this is bloomberg. ♪

let me bring you some

headlines about theresa may, and update on brexit. had constructive discussions with david davis. no one has threatened to resign, declined toeswoman comment on a backstop. a cabinet rebellion, david davis furious over the plan to tie the u.k. into the customs union after the u.k. leaves the eu. tom: very good. thank you. we are going to look at the european banks. a bloomberg story, 100 bodies restructured, but this continuing story at deutsche bank. our guest is with us out of frankfurt. he looks at banks and supervision. that they are looking

at a lot of resumes. how are they going to attract talent to a fractured deutsche bank? >> we had a comment from the cfo yesterday saying they will be paying competitively, good bonuses and good retention for those people they need. they will beis losing people in the coming days and weeks. are they going to be losing people they want to lose, or people they need to grow? that will be the key thing to navigate. or bloomberg idea of the an percent decline in revenue, flat, 10% smaller, 20% smaller in revenue 36-60 months out?

, the cfo was saying they are baking in moderate increases in revenue over the coming years to reach profitability goals. i think it is 4% year they want to be increasing revenue. that far out is hard to tell. you have to think about the interest rate curve and how it looks like rates could be rising , but this yearb it will be a darker picture. the second quarter alone we are expecting a decline. see a are we going to virtuous cycle? could protect things like that. theoretically, maybe?

they come outwhen from under these negative headlines. if you have the circle of negative headlines in terms of your business and the conditions for that, like credit ratings you do have the negative headlines because of misconduct, that does weigh on sentiment against the bank. if you can get out of that and say we are making progress and retaining staff, then yes, you could, but that is a big if. tom: we have to leave it there. thank you for the quick briefing on the continuing discussion of deutsche bank. much more to talk about. please stay with us. this is bloomberg. ♪ his is bloomberg. ♪

really interesting week in terms of brexit.

another headline, theresa may spokesperson saying she is confident david davis will stay as brexit secretary, this after the prospect of a rebellion in her, with davis over her plans was furious. here is taylor riggs. >> president trump one senate to ask them to push back against a proposal that would require congressional approval to levy tariffs on national security grounds as he did last week. his finding union it difficult to stick to the iran nuclear deal following the u.s. withdraw. asking to been exempted from likely sanctions. if the eu cannot provide guarantees come it will resume its nuclear activities.

in houston, authorities have evacuated hobby airport. passengers were ordered to leave the terminal. hundreds were first to evacuate -- forced to evacuate. officials are not saying why. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. thanks so much. this will be an extraordinary moment. david with his from citigroup. steve keen as well. now the comments from angela 7 meeting ingc québec. he is no relation to me. he grew up and a distinguished family and a strayer where is i grew up with a bunch of deadbeats. i want to talk about the gilded age we are in.

would you explain how a guy like president trump in this gilded age has such a resonance with people you study, the people who have struggled over the last generation? >> well he is a clastic american shyster, and shyster's how to appeal to their audience. is the has latched onto extent to which the american working class has become the leisure class because they no longer have factory jobs. the best they can manage his security jobs. the love phil of wealth they are existing on in the iron belt has led to enormous protests at the state of their economic and social circumstances. the democrats used to be their party. the republicans stole those votes without doing anything to improve their situation.

trump has come along and saying i'm going to drain the swamp. of his promises. tom: what type of capitalism does angela merkel and emmanuel macron bring to québec today? what is their view of capitalism in this fractured g7 that they will bring and really push up against mr. trump? >> well, they are still the classic neoliberals. neoliberal.classic people living in the u.k. have had 40 years of privatized railways to decide whether that works or not. they will travel over to the continent and find the government runs them better, so the contrast is there.

, if the neoliberals had worked, we wouldn't have me on this program. which it hasy in failed, and trump is forcing that. he will not listen to that spin because he does not read books. nejra: on that point about whether trump has a point in ,hat he is saying, the manner does he have a point when it comes to the u.s. losing out in terms of the import costs and defense spending? >> the ultimate target is china. china arguing the currency is undervalued, they have used a loophole for the benefit of developing countries in american trade legislation, and i was in china when they were constructing the free trade zone. i met with the people managing that.

vision was to attract american corporations with low month ofying for one labor what they used to pay for one day of labor. you must have a chinese partner, and the chinese partner within five years must own 50% of the business. think about the enormous attraction of the low-wage cost. that is where foxconn came from. china was creating the capitalist class, getting american technology, but american corporations have screwed their workers, which is a popular american sport, and now the american workers are complaining at the ballot box. nejra: who is going to back down first or are we set for an all-out trade war? >> i think we are set for a trade war because trump will not theirsuaded this is in mutual interest.

when you look at what trump's whotude is as a dealmaker believes there is a winner and loser and every deal. if you try to persuade him there will be two winners, he will say forget it. my chronic and merkel will turn themselves blue trying to persuade him they can both win. nejra: i guess he has not heard of the word compromise. >> oh no. tom: david is with us as well. keen'stail on professor comments, what portion of the profits of america, of the spirit of the american corporation and american capitalism, is an engineered spirit versus actual productivity and actual societal gain? banku have to put it into contacts. if you're running a corporation

and doing it for your shareholders, you have to decide how you are deploying that capital. you can acquire assets and manage them better. you can manage your own assets better. in the event you have too much capital and your stock is undervalued, you can buy it. you are actually returning capital to the shareholders come so i'm not sure i agree that is financial engineering. what is happening in this country is you have an extraordinary amount of capital and the data this year is showing the amount of buybacks is increasing. you would have expected that given the financial stimulus applied in the u.s.. if that is the method as usual in the united states, should governments intrude on that? >> governments can. one of the great fallacies is to believe governments are like a household and balances is budget. in fact, that is a fallacy

because the government crates the money -- creates the money we use in the private sector. why is one of the reason sector boroughs and we get in property bubbles. meanseology of the day the government is not doing that, and that is partly where the decay in public services and decline in industrial capacity is coming from. money tove enough finance the trade and investment you need to have. nejra: david, in an increasingly polarized world, if we were to howa fresh crisis tomorrow, different with that look for the market? >> it depends on the nature of the crisis. there are two crises we have to think about. one is an economic crisis where you have a situation like in argentina, put on a far larger

scale. will be old institutions, imf, world bank, will they respond and be effective? our view is they will become a but there won't be the global listen that was the creation. the larger risk is what would happen in the event of an international crisis that required real corporation and the continuity of policy that we are seeing break apart right now. that is something the markets can't price but is a significant risk over the remainder of the trump administration. tom: this time where we celebrate and study carl marx, how is labor doing? you said labor has power at the ballot box. can shift they dialogue in the united states, germany, and other countries? >> not think labor is being cauterized for the last 40 years.

the neoliberals argued let's abolish trade unions and monopolies. we forgot to abolish monopolies, but we have abolish trade unions. workers have no bargaining power. the use to be a collective of unions representing the workers and collective of corporations on the other side. collection of corporations and individual workers. going to happen is you won't see any movement in wages or power until the man gets so tight that the firms have to pay more to get people through the door. i think we will see a spike in inflation courtesy of that. if the unions had been here we would have decided more gradually the cusp trump has a driven up demand and his fiscal are causing an increase

in money in circulation. when that comes through, you will see a spike in inflation, then the markets will react and you will have our next crisis. tom: we will continue your morning briefing on radio coast-to-coast. radioo that on bloomberg on bloomberg daybreak. this is bloomberg. ♪ this is bloomberg. ♪

i am trying to get through

to mr. putin. i will hold. yes. no, i don't speak russian. that is ok. it is not about gasoline. it is not about taxes. bring up the chart. about gasolineg or something. this is something for hockey players. tonight his stanley cup for his washington capitals. we say good morning. postand the washington talking about their unique relationship. we tried to get through here at bloomberg to putin. i was trying. nejra: i want putin to have a see youevery day to

make a phone call and attempt russian. let's turn to europe. economist is telling investors to be ready for a discussion on qe. italy's prime minister has tried to reassure investors with a pledge to reduce his country's debt burden. from parliament, but candy convince the market? steve, let me take you to a chart of the bund spread to compare with 2011. the spread is telling us this is not 2011. are there any similarities? crunch point.e that problem was terminated i mario draghi's what ever it takes principle. it has not removed the fiscal stranglehold the euro has on

spending. it won't be an effective challenge. that's why it was a major challenge to them. i think they got quite a shock. with the italian said we will not form a government, that is not what the greeks were doing. and the to come back , but it is a challenge to the legitimacy of the euro, not the viability of the euro. nejra: is it a challenge for eurozone growth? >> eurozone growth has been screwed by the euro. talked about the ascendancy of the italian economy over england. since then england has grown 42%

and italy has grown 9%. even england managed to overtake italy. why? because england doesn't have the euro. left, i time we have want to talk about the new china and the new president xi. that wants to go back to a marxist theology. >> even though he is a throwback to mao, there has been nobody like him since mao. he is caught in the deng xiaoping vision. been chinaas always is a capitalist nation. it is a state capitalist nation and the communist party is extremely powerful and he has cemented his power there in the

usual ruthless fashion. system withatized the state at the top. nejra: david, when investors look at the emerging market arena, should they be looking at china separately? >> we think they should. if the markets were open today, china would have 20% of the world equity markets. it was just admitted to the msci index with a .3% weighting. if you look at their economy and growth weight, they are underrepresented and they have a plan to open their markets because they want access to capital, but also legitimacy in their ability to support their currency. we think china should the in every core portfolio. we are telling private bank clients they should have an overweight to china. for the next several years for sure when there is a scarcity of chinese securities and great

growth prospects for their economy, we want our clients to be exposed to that. tom: thank you so much. , we greatlyen appreciated. i want to show you how i do this. i'm going to steal from nejra cehic. i'm going to go to page two. this is a chart i want. i click on the chart. up comes the chart, actions. come down here. this is save a copy, which is french for steal from nejra. gtv -- this is bloomberg. ♪

>> let's get your bloomberg business flash. tapping theica brakes when it comes to risk. they have become more selective on deals and easing off in certain overseas markets.

advising on deals fell 27% in the first quarter. has built al icahn small position in our. -- allegan. it is planning to spin off a division. it is best known for its botox antiwrinkle treatment. german airline is not concerned about rising fuel prices. lufthansa ceoe to in berlin. >> short-term we tend to be hedged in a better way than most competitors. but rather less concerned than some of my competitors. will be goodices for the industry longer-term. >> that is your bloomberg business flash. tom: thank you so much. single best chart. this goes to international investment. we steal a chart.

this is a chart. nejra: what a date to be alive. tom: this is the j.p. morgan asia index. they are doing better than the emerging market index down here with nice delta. this brings up the idea that if you're going to be in international investments, you have to hedge currency exposure. i think that's a great way to lose money. >> i agree with you. you have to think about your portfolio and decide whether it is important. if you had a choice to hedge your emerging market currency exposure, you probably wouldn't at this juncture. dollar strength has been the theme for the last couple of abate andnow going to we get a weakening trend. the whole idea of having a global portfolio is to blend all of this together and deal with the cyclicality of emerging and

developed markets in a cogent way. nejra: does that chart tell us that emerging-market contagion is possible? >> the answer is yes. in thends on where it is world and the central bank policies in brazil and how they deal with the fact the fed rates will go higher. it depends on the response and how they want to manage their economies and inflation. no concern for the u.s. fed and the impact on emerging-market currencies. after the brazilian elections later this year, there will be more certainty about government policy, and that is having an impact on currency value. dow 25,000 again. our people psychologically ready for a legitimate 10% correction bull market? 18%

are we ready for that? >> my answer is no. there has been a long time since we had a 50% come 20% down draft. when that happens, people will overreact. moments whene rare you have correlated global downturns. we think people overreacted. it was a great buying opportunity to put capital into the market. tom: thank you so much. we will continue worldwide. we will talk world cup on bloomberg radio. world cup. germany tonight. world cup. st. petersburg. ♪ st. petersburg. ♪ two, down, back up!

our phones are more than just phones. they're pocket-sized personal trainers. last minute gift finders. [phone voice] destination ahead. and discoverers of new places.

it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet which could save you $400 or more a year. it's a new kind of network designed to save you money. click, call, or visit a store today. alix: cracks in emerging

markets, turkey's moment of central banks decision moments away. forget g7, g six now. germany and france isolate the u.s. as they say they will not sign a communicate without concessions from the u.s. president trump stands his ground. let's hike. it is risk on in europe. david: welcome to "bloomberg daybreak" on this thursday. we are waiting for turkey central bank to raise rates am a maybe not? the repo rate is 16.5%. analysts think if they don't hike by 100 basis points, that will be a disappointment. david: the answer is? 17.75, a 125-point rate hike